OPINION
This action was commenced in the District Court of Chaves County, New Mexico. Plaintiff Pecos Construction Co., Inc., alleged business duress and compulsion exerсised by defendant Mortgage Investment Company of El Paso. The court, sitting without a jury, awarded judgment to the plaintiff in the amount of $23,740.38, plus interest and costs.
The faсts giving rise to this cause are as follows. On June 2, 1967, defendant Mortgage Investment agreed in writing to furnish the interim financing to plaintiff Pecos Construction for the construсtion of a $1,600,000 housing project in Hobbs, New Mexico. Under the agreement, Mortgage Investment was to receive a fee of 2% of the mortgage amоunt or $32,000, plus 6% interest on all advances. On September 22, 1967, the F.H.A. issued to Mortgage Investment its commitment to insure advances of $1,625,800 and initial closing was set by F.H.A. for Octоber 12, 1967. Once the commitment for the issuance of advancements was issued, it would continue in force and effect for 120 days after date of issuance, during which time F.H.A. would not issue a commitment to another lender for the same project.
Between June 2, 1967, and October 13, 1967, Pecos Construction had expended considerable sums of money on the-planning stages of the project. On the latter date, contrary to the agreement of June 2, 1967, Mortgage Invеstment declared it would not serve as mortgagee or furnish the financing unless Pecos Construction paid to Mortgage Investment an additional sum of $32,000 (2% of the amount of the project mortgage), over and above the compensation previously agreed to (2% of the amount of the project mortgage and 6% simple interest on all advances).
On October 12, 1967, John Karnett or Standard Mortgage Investment Company (no relation to appellant) had a claim against Mortgage Investment for one-half •of the mortgagee’s fee of $32,000, or $16,-000, which claim Standard Mortgage Investment Company refused to rеlease unless it .was paid in settlement the sum of $12,000. The trial court, found that Mortgage Investment, refused to transfer its agreement with Pecos Construction to another lender to furnish the -construction funds, unless Pecos Construction would agree to pay the $12,000, which Mortgage Investment owed to Standard Mortgage Investment Cоmpany. At no time was Pecos Construction ever indebted to Mortgage Investment or to Standard Mortgage Investment Company.
• Pecos Construction pаid the $12,000, plus accrued interest totaling $642.12, to Standard Mortgage Investment Company, which payment Pecos Construction alleges was under duress amounting to business compulsion. Pecos Construction contends tlmt, as a result of the refusal of Mortgage Investment to provide the construction funds and its refusal to relеase the commitment to another lender, Pecos Construction suffered damages due to the delay in the start of construction.
Appellant Mortgage Investment contends :
“I. THE TRIAL COURT ERRED IN FINDING AND CONCLUDING THAT TPIE COMPROMISE, SETTLEMENT, AND RELEASE WERE ENTERED INTO BY THE PLAINTIFF DUE TO COERCION AND COMPULSION, AND THEREFORE, THE COMPROMISE AND SETTLEMENT AND RELEASE ARE, INVALID.
“II. THE COURT ERRED IN CONCLUDING THAT THE PROPER MEASURE OF DAMAGES WAS THE SUM OF $10,084.00 FOR LOSS DUE TO DELAY OF CONSTRUCTION, TOGETPIER WITH $1,656.38 FOR COSTS.”
The main issue in this casе is whether duress, amounting to business compulsion, was practiced upon Pecos Construction. We hold that it was. From the facts «found, the trial court conсluded that Pecos Construction’s agreement to pay Standard Mortgage Investment Company was intentionally and wrongfully extracted from it by Mortgage Investment, and that there was no consideration for the agreement. Mortgage Investment contends that, as in Donald v. Davis,
Restatement of Contracts § 492, reads in part as follows:
“Duress in the .Restatement of this Subject, means
“(a) аny wrongful act of one person that compels a manifestation of apparent assent by another to a transaction without his volition, ' or”
Hellenic Lines Ltd. v. Louis Dreyfus Corp.,
In Starks v. Field,
“Business compulsion, sometimes referred to as economic duress or economic compulsion, while differing somewhat from the common-law duress, is a species of duress involving involuntary-action in which one is compelled to act against his will in such a manner that he suffеrs a serious business loss or is compelled to make a monetary payment to his detriment.”
See also 25 Am.Jur.2d Duress and Undue Influence § 6, at 361.
This rule has been recognized as business compulsion in Inland Empire Refineries v. Jones,
In an early case this court recognized duress amounting to economic compulsion, Cadwell v. Higginbotham,
“ ‘When such duress is exerted under circumstances sufficient to influence the apprehensions and conduct of a prudent business man, payment of money wrongfully induced thereby ought not to be regarded as voluntary. But the circumstances of the case are always to be taken into consideration.’ ”
See also Fruhauf Southwest Garment Co. v. United States,
The modern tendency is to regard any transaction as voidable if one not bound to еnter into it was coerced into doing' so by the wrongful act of another. Annot.
Fear of an economic loss is a form of duress; thus, a party is not bound by a сontract he entered into because of - such fear. King Construction Co. v. W. M. Smith Electric Co.,
Mortgage Investment, contends that Pecos Construction had аn -adequate- remedy at law in that it could sue. for damages and that it exerted its “freedom of - choice” by paying the $12,000 as a negotiated .settlemеnt. With this we cannot agree, Cadwell v. Higginbotham, supra, wherein it is stated:
“‘There is a class'of cases,"however, where, although there is a legal "remedy, his situation or the situation of his' property is such that it would not be adequate to protect him from' irreparable injury, in which case payment will be deemed to have been involuntary.’-,”-, :
- If Pecos, Construction had sued for damages in lieu of paying the $12,000, its loss due to delay, no doubt, would have been far greater.
Mоrtgage Investment further contends that Pecos Construction and Standard Mortgage Investment Company entered into a valid compromise and settlement. This contention is without merit, as Pecos Construction was forced to enter into a compromise and settlement due to the duress or economic compulsion resorted to by Mortgage Investment.
In Restatement of Contracts § 495, it is said:
“Where the duress of one party induces another to enter into a transaction, the nature of which he knows or has reason .to know, and which he was under no duty to enter into, the transaction is voidable against the former and all who stand in no better position, * * % V
Mortgage Investment, under point II, contends that the trial court erred in concluding that the proper measure of damages was the sum of $10,084 for loss due to delay in construction, together with $1656.38 for costs. This contention is without merit, as on breach of a contract to loan money, where speciаl circumstances were known to both parties, as in the case before us, and from which it must have been apparent that special damages would be suffered from a failure to fulfill the obligation, such special damages may be recovered, provided such damages are not speсulative or remote. 22 Am.Jur.2d Damages § 69, at 103; Price v. Van Lint,
The findings of the trial court have ample support in the evidence. The decision of the trial court is affirmed.
It is so ordered.