Whenever a transaction, perfectly regular in its external form, lacks the absolute consent which is regarded as essential, equity will give relief. As stated in 2 Pomeroy's Equity Jurisprudence (3d Ed.) § 943:

"The equitable conception of true consent assumes a physical power of the party, an intellectual and moral power, and that he exercised those powers freely and deliberately."

The same author, in section 948, says:

"Whenever one person is in the power of another, so that a free exercise of its judgment and will would be impossible, or even difficult, and whenever a person is in pecuniary necessity and distress, so that he would be likely to make any undue sacrifice, and advantage is taken of such condition to obtain from him a conveyance or contract which is unfair, made upon an inadequate consideration, and the like, even though there be no actual duress or threats, equity may relieve defensively or affirmatively."

In 1 Story, Equity Jurisprudence (14th Ed.) § 339, the learned author says:

"Circumstances also of extreme necessity and distress of the parties, although not accompanied by any direct restraint or duress, may in like manner so entirely overcome his free agency as to justify the court in setting aside a contract made by him on account of some oppression or fraudulent advantage or imposition attendant upon it."

And in 13 C. J. 409, the rule is stated as follows:

"Where one party has taken advantage of another's necessities and distress to obtain an unfair advantage over him, and the latter, owing to his condition, has incumbered himself with a heavy liability or an onerous obligation for the sake of a small or inadequate present gain, equity will relieve him. So agreements between lender and borrower are closely scrutinized, because they are not always at arms length."

Innumerable instances may be cited and a wealth of authorities is given in the text-books above quoted. Even where at the time of the transaction parties were permitted to make their own agreements as to interest, in default of the existence of usury laws, the courts decline to enforce hard and unconscionable bargains for excessive interest. Brown v. Hall, 14 R. I. 249, 51 Am. Rep. 375; Miller v. Cook, L. R., 10 Eq. 641. And where a waiver of the equity of redemption is made a part of the mortgage itself, the courts refuse to enforce such a provision. 27 Cyc. 1373, and cases cited. Over 100 years ago it was said in Wood v. Abrey, 3 Madd. 417, at page 423:

'With respect to value, mere inadequacy of price is of no more weight in equity than at law. If a man, who meets his purchaser on equal terms, negligently sells his estate at an undervalue, he has no title to release in equity. But a court of equity will inquire whether the parties really did meet on equal terms; and if it be found that the vendor was in distressed circumstances, and that advantage was taken of that distress, it will avoid the contract."

In Baxter v. Wales, 12 Mass. 365, the court had before it an onerous contract for hiring of cattle. The opinion tersely says:

"If they [the contracts] are unreasonable and oppressive, the principles of the common law will give relief against them, as in other cases of that descrip tion."

(182 N.Y.S.)

A very interesting discussion of the subject is found in Van Dyke v. Wood, 60 App. Div. at page 212, 70 N. Y. Supp. at page 327: "The principle upon which men are relieved from their contracts procured by duress has been greatly extended in recent years. In the time of Lord Coke no one would have been permitted to avoid his contract for duress, unless the duress was such as not only to put him in fear of illegal imprisonment or great bodily harm, but went so far as to be something that a man of ordinary firmness would not be able to resist. No possible loss to his land or property would be sufficient to enable him to avoid a contract which he had made to prevent it. Bacon, Abr. tit. 'Duress,' A. But gradually and by slow degrees the strictness of that rule was abated, until finally it has come to be the rule of law in this country, although perhaps not in England, that where one is presented with the contingency of serious loss or damage to his property, or of a submission to an extortionate claim, if he pay the claim or make a contract which is extorted from him, it is not to be considered a voluntary act, and it may be set aside on the ground of duress. Vyne v. Glenn, 41 Mich. 112; Harmony v. Bigham, 12 N. Y. 99; Hatter v. Greenlee, 26 Am. Dec. 370, note pp. 376, 377."

The court then proceeds to support its views with numerous authorities.

In the recent case of Carr v. Sacramento Clay Products Co., 35 Cal. App. 439, at page 447, 170 Pac. 446, at page 450, the court set aside what it denominates an apparent contract, upon the ground that it was in violation of section 1575 of the Civil Code of California, which provides that undue influence consists, among other things, in the taking of "a grossly oppressive and unfair advantage of another's necessities or distress." And a similar statute of the state of Oklahoma was upheld in Snyder v. Rosenbaum, 215 U. S. 261, 30 Sup. Ct. 73, 54 L. Ed. 186.

[8, 9] It is therefore apparent that the doctrine is firmly imbedded in our jurisprudence that where one takes an undue advantage of another's situation and circumstances, and thereby obtains an unfair and unconscionable contract the court may grant relief. This condition applies to the making of leases at the present time. Landlords and tenants cannot contract on an equal basis. The tenant is compelled by sheer necessity of having a place to dwell in to agree to any conditions that may be imposed by the landlord. As the statute well says, the freedom of contract is impaired. Chapter 136 does nothing else but what equity has decreed should be done in similar cases. It permits the equitable defense of oppression to be set up in an appropriate case. That under our procedure equitable defenses may be interposed in actions at law is unquestioned. The remedy given by the Legislature is not an innovation. It only puts in statutory form what has been the law from time immemorial. The Legislature has determined by enactment what is public policy.

[10] I am, however, of the opinion that the statute does not apply to the case under consideration. The lease which fixed the rent was made prior to April 1, 1920. The law is prospective in its effect, and not retroactive. The statute does not merely work a change of procedure, but it affects a substantial right by creating a new defense. At the time of the making of the lease the rights of the parties were fixed by law. The plaintiff had the absolute right to rely upon the

182 N.Y.S.-33

recovery of the rent as it became due, subject only to the defenses as they existed at the time of making the lease. If the Legislature thereafter passed a law which compelled the plaintiff to prove certain facts, and invested the defendant with a defense which he theretofore had not possessed, new and essential elements were injected into the relations of the parties, and substantial rights were modified. In Jacobus v. Colgate, 217 N. Y. 235, 111 N. E. 837, Ann. Cas. 1917E, 369, it was held that to supply a remedy where previously there was none is to create a right of action, and cannot have any retroactive effect. As said by Cardozo, J., at page 242 of 217 N. Y., at page 839 of 111 N. E. (Ann. Cas. 1917E, 369):

"What we emphasize now is the distinction between statutes which merely change the procedure for the enforcement of a right and statutes which supply a remedy by which a right for the first time becomes enforceable."

[11] By parity of reasoning this is the situation here. It is the general rule that statutes will be construed to operate prospectively only. As stated in Union Pacific R. R. Co. v. Laramie Stockyards, 231 U. S. 190, 199, 34 Sup. Ct. 101, 102 (58 L. Ed. 179):

"The first rule of construction is that legislation must be considered as addressed to the future, not to the past. The rule is one of obvious justice, and prevents the assigning of a quality or effect to acts or conduct which they did not have or did not contemplate when they were performed. The rule has been expressed in varying degrees of strength, but always of one import, that a retrospective operation will not be given to a statute which interferes with antecedent rights, or by which human action is regulated, unless such be 'the unequivocal and inflexible import of the terms and the manifest intention of the Legislature.'"

In Sayre v. Wisner, 8 Wend. 661, it is said:

"It is a general rule that no statute is to have a retrospect beyond the term of its commencement. It may have such retrospect, but not so as to take away a right of action which the plaintiff was entitled to before the time of its commencement. 6 Bac. Abr. 370. A statute never ought to have such a construction as to divest a right previously acquired, if it be susceptible of any other, giving it a reasonable object and full operation without such construction."

To the same effect is N. Y. & Oswego Midland R. R. Co. v. Van Horn, 57 N. Y. 473, at page 477:

"It is always to be presumed that a law was intended, as is its legitimate office, to furnish a rule of future action to be applied to cases arising subsequent to its enactment. A law is never to have retroactive effect, unless its express letter or clearly manifested intention requires that it should have such effect. If all its language can be satisfied by giving it prospective operation, it should have such operation only."

Among the numerous other authorities may be cited Rhodes v. Sperry & Hutchinson, 193 N. Y. 223, 85 N. E. 1097, 34 L. R. A. (N. S.) 1143, 127 Am. St. Rep. 945; Winfree v. Northern Pacific Railway Co., 227 U. S. 296, 33 Sup. Ct. 273, 57 L. Ed. 518; Cameron v. United States, 231 U. S. 710, 34 Sup. Ct. 244, 58 L. Ed. 448.

[12] From the foregoing it is clear that the rule is firmly fixed that no retrospective operation can be given to a statute, unless the

(182 N.Y.S.)

language employed and the intention manifested is so clear that it will admit of no other construction, and this rule is applicable with peculiar force where the statute, if retrospective, would impair the obligation of contracts or interfere with vested rights. There is nothing in the language of chapter 136 which compels retrospective construction to be given to the statute, nor is such a construction indicated to be the manifest intention of the Legislature, so as to supply the insufficiency of the language. The word "shall," in the expression "it shall be a defense to an action," indicates simply the future tense, and, this must be given weight. Huttlinger v. Royal Dutch West India Mail, 180 App. Div. 114, 116, 167 N. Y. Supp. 158.

The fact that the conditions which brought about the emergency were in existence prior to April 1, 1920, cannot turn a prospective statute into a retrospective direction. The Legislature by its enactment established a particular date from and after which the defense given by the statute may be availed of. If it were otherwise, it would be impossible to determine for how long a period prior to the passage of the act this statutory defense may be invoked. A law should not be construed as retrospective, which introduces a new policy and radically changes an existing law. Winfree v. Northern Pacific R. R. Co., supra, 227 U. S. 302, 33 Sup. Ct. 273, 57 L. Ed. 518.

[13, 14] If this statute is held to apply to a contract made prior to its passage, it would change the substantial rights of the parties and make a new contract between them. This would be a clear violation of the constitutional provisions against the impairment of the obligation of contracts. To repeat the quotation from Freund on Police Power, supra:

"The Legislature may operate upon future contracts, but not upon those already in existence."

It is a well-established rule of statutory construction that, where a statute is capable of two constructions, one of which would render it invalid and the other valid, the construction which will uphold its validity must be adopted. The defendant therefore cannot succeed upon his defense. He relied entirely upon the defense given by the statute. If I am correct in my views herein expressed, a contract which calls for an unconscionable rent may be avoided in certain cases, even without the aid of the statute; but the evidence in this case falls far short of the proof required for such a purpose.

[15, 16] It may not be amiss to state that the statutory defense may be set up against excessive rents, where the tenancies are monthly or from month to month. In tenancies of that class the contract is renewed from month to month, and though the same rent may have been paid prior to April 1, 1920, the exaction of the rent after April 1, 1920, is not based upon the contract made prior to that date, but upon a renewal of the contract from month to month. In other words, a new and separate contract for rent is made monthly.

The plaintiff is entitled to judgment for the amount demanded in the complaint.

(111 Misc. Rep. 55)

In re ULRICI'S ESTATE.

(Surrogate's Court, Bronx County. March, 1920.)

1. Taxation 895 (3)—Transfer tax appraiser cannot arbitrarily fix value higher than that disclosed by evidence.

Where, in a transfer tax proceeding, the only evidence as to the value of decedent's realty is the amount stated in the affidavit of an appraiser filed on behalf of the executrix, the transfer tax appraiser cannot value the property at a higher figure; for, if the comptroller was dissatisfied with the value stated in the affidavit, he should have examined affiant or submitted an appraisal.

2. Partnership profits.

86-Agreement may be modified as to apportionment of

A partnership agreement, providing that upon the dissolution of the partnership the partnership property was to revert to the estate of a certain partner, and setting forth the respective shares of the profits each partner was to receive, may legally be modified, so as to provide that each partner receive one-third of the profits, instead of the proportion fixed in the first agreement.

3. Taxation 893-In imposing transfer tax on deceased partner's property, continuation of partnership beyond term limited may be proved.

In a proceeding to impose a transfer tax on the property of a deceased partner, the continuation of the partnership beyond the term limited in the partnership articles may be proved.

4. Partnership 61-Continuation after term limited in articles constitutes partnership at will.

Where a partnership for a limited term is continued by the partners after the duration of the term, the partnership becomes one whose duration depends on the consent of the partners, unless ended by death of one of them.

5. Taxation 864-Partnership property held to revert to deceased partner's estate at death, and not at time limited in articles.

Where partnership articles provided that after the expiration of a certain time certain partnership property was to revert to decedent, who was a member, and it appeared that the partnership was continued by consent after the expiration of such time upon decedent's death, such property reverted to his estate as of that time, and not as of the time limited in the articles, so far as calculation of a transfer tax was concerned. 6. Taxation 865-Finding that proprietary medicine business had good will held proper.

In a proceeding to impose a transfer tax upon the estate of a deceased member of a partnership handling proprietary medicines, held, that the business had a good will.

7. Taxation

865—Taxable element of “good will” of business stated. One of the essential elements of "good will," which gives the value so far as a transfer tax is concerned, is the right of the owner or successor in interest to continue an established business under the old firm name. [Ed. Note. For other definitions, see Words and Phrases, First and Second Series, Good Will.]

8. Partnership 257-Evidence held to sustain finding that good will of partnership reverted to estate of deceased member.

Under a partnership agreement, whereby at a stated time the property of the partnership was to revert to the estate of the deceased member, evidence held to require a finding that it was the intention of the partners to make the good will of the business also revert to such estate.

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