## Facts

- William H. Neibuhr owned 91 shares of stock in Gage, Hayden & Co.
- W. F. Gage accused Neibuhr of grand larceny and threatened to have him criminally prosecuted unless Neibuhr transferred the shares to Gage.
- Neibuhr claimed he was innocent, but believed Gage would falsely testify against him in a larceny case.
- Fearing immediate arrest if he did not comply, Neibuhr transferred his shares to Gage.
- Neibuhr later brought an action at law seeking damages on the theory that the transfer was procured by duress.
- A jury returned a verdict for Neibuhr in the amount of $8,478 (the value of the shares).
- The trial court denied Gage’s motion for judgment notwithstanding the verdict, but granted Gage a new trial.
- Both parties appealed: Gage challenged the denial of judgment notwithstanding the verdict, and Neibuhr challenged the order granting a new trial.

## Issues

1. Whether a person compelled by duress to transfer property has the same remedial choices as a person induced by deceit (fraud).
2. Whether the victim of duress may affirm the transaction and maintain an action at law for damages, rather than being limited to rescission and restitution.
3. Whether the equitable doctrine of laches can bar an action at law for damages based on duress, when the suit is filed within the statute of limitations.
4. Whether the evidence was sufficient to support the jury’s finding that the stock transfer was obtained by duress.

## Decision

- The Minnesota Supreme Court reversed the order granting a new trial and directed entry of judgment for Neibuhr on the jury’s verdict.
- The court held that duress and deceit are different methods of accomplishing fraud for remedial purposes, so the same types of remedies are available.
- The court held that a victim of duress may leave the transaction in place and sue at law for damages; rescission is not the only remedy.
- The court held that laches does not apply to an action at law for damages; timeliness is governed by the statute of limitations.
- The court held the evidence supported the jury’s verdict finding duress.

## Legal Principles

- Duress and deceit are alternative methods by which fraud is carried out; the same remedial elections generally apply.
- A party injured by duress may choose among fraud-type remedies, including:
  - affirming the transaction and suing at law for damages caused by the wrong;
  - rescinding by the party’s own act (with appropriate restoration where required) and suing at law for what was parted with; or
  - seeking equitable rescission and related relief.
- In an action at law for damages, laches does not bar the claim; the statute of limitations controls timing.
- A contract or transfer procured by duress is voidable, but that characterization does not eliminate the option to seek damages at law rather than rescission.

## Conclusion

The court treated duress as a form of fraud for remedy purposes and held that Neibuhr could affirm the stock transfer and recover damages at law without first rescinding; because laches does not apply to a legal damages claim filed within the limitations period and the evidence supported the jury’s finding of duress, the order granting a new trial was reversed and judgment was ordered on the verdict for Neibuhr.


Neibuhr v. Gage, 108 N.W. 884, 99 Minn. 149 (1906)