76 due influence, or something more must be shown than the mere inadequacy of consideration, before equity will be moved to set it aside." But relief has been given in cases where, besides the inadequacy of price, it was shown that the grantor was young and inexperienced, of weak mind and easily influenced, and was also defrauded in the particular bargain, or that he was in needy circumstances and ignorant of the value of his property, and was advised and urged by the grantee, who possessed superior knowledge," or that an unconscientious advantage was taken of the improvidence and distress of the seller,78 or that he was a young and dissolute spendthrift and was grossly cheated." In a case in New York, an action was brought to set aside, on the ground of fraud, a deed from plaintiff to defendant conveying a remainder limited after a life estate. It appeared that the plaintiff had just passed his twenty-first year, and that the price paid was not more than one-third the value of the remainder and probably less, but there was no other evidence of fraud than the inadequacy of the consideration. It was held that, while the plaintiff was entitled to relief, yet, as the proof of actual fraud was not clear, the deed would be allowed to stand as security for the sum actually advanced by the defendant.80 § 175. Gross Inadequacy Raising Presumption of Fraud. Equity may decree the rescission or cancellation of a contract or conveyance where such a gross inadequacy of consideration is shown as to shock the conscience, because in this case the disparity between the value of the subject and the consideration given for it is regarded as raising an irrefragable presumption of fraud, or (according to most of the authorities) as constituting in itself conclusive evidence 75 McAdams v. Bailey, 169 Ind. 518, 82 N. E. 1057, 13 L. R. A. (N. S.) 1003, 124 Am. St. Rep. 240; Cribbins v. Markwood, 13 Grat. (Va.) 495, 67 Am. Dec. 775; Varick v. Edwards, 1 Hoff. Ch. (N. Y.) 382; Mastin v. Marlow, 65 N. C. 695. 76 Jones v. Galbraith (Tenn. Ch. App.) 59 S. W. 350. 77 Beard v. Campbell, 2 A. K. Marsh. (Ky.) 125, 12 Am. Dec. 362. 78 McKinney v. Pinckard's Ex'r, 2 Leigh (Va.) 149, 21 Am. Dec. 601. 79 Butler v. Duncan, 47 Mich. 94, 10 N. W. 123, 41 Am. Rep. 711. 80 Friedman v. Hirsch, 63 Hun, 630, 18 N. Y. Supp. 85, 87. 83 of fraud.81 But the inadequacy must be gross. It is not sufficient to show that one of the parties got the best of the other in a bargain or trade. 82 There must be "such a shocking inadequacy of consideration that the court may presume fraud," 88 or the inequality must be "so gross and palpable as to shock the conscience and convince the judgment." 84 It is of course impossible to lay down any exact measure by which to determine whether or not the inadequacy of consideration shown in the particular case is shocking. Each case must be judged on its own facts. But by way of illustration it may be stated that the sale of an annuity worth over $20,000 for less than $2,700 has been set aside as unconscionable,85 and the same is true of cases where only $5 was paid for a tract of land estimated to be worth $1,800 or more, and where $5 was given for property worth $1,000, the seller being an ignorant old man,87 or where the value of the land sold was shown to be five times greater than the 81 Ballentyne v. Smith, 205 U. S. 285, 27 Sup. Ct. 527, 51 L. Ed. 803; In re Throckmorton, 149 Fed. 145, 79 C. C. A. 15; Smith v. Collins, 148 Ala. 672, 41 South. 825; Cofer v. Moore, 87 Ala. 705, 6 South. 306; Saltonstall v. Gordon, 33 Ala. 149; Juzan v. Toulmin, 9 Ala. 662, 44 Am. Dec. 448; Hoyle v. Southern Saw Works, 105 Ga. 123, 31 S. E. 137; Missouri River, Ft. S. & G. R. Co. v. Miami County Com'rs, 12 Kan. 482; Shacklette v. Goodall, 151 Ky. 20, 151 S. W. 23; Bevins v. Lowe, 159 Ky. 439, 167 S. W. 422; Hays v. Hollis, 8 Gill (Md.) 357; Nickerson v. Bridges, 216 Mass. 416, 103 N. E. 939; German Corporation of Negaunee v. Negaunee German Aid Society, 172 Mich. 650, 138 N. W. 343; Newman v. Meek, Freem. Ch. (Miss.) 441; Phillips v. Pullen, 45 N. J. Eq. 5, 16 Atl. 9; Smith v. Duffy, 1 How. Prac. N. S. (N. Y.) 340; Hodges v. Wilson, 165 N. C. 323, 81 S. E. 340; Bruner v. Cobb, 37 Okl. 228, 131 Pac. 165; Barker v. Wiseman (Okl.) 151 Pac. 1047; Sherman v. Glick, 71 Or. 451, 142 Pac. 606; Coffee v. Ruffin, 4 Cold. (Tenn.) 487; Deaderick v. Watkins, 8 Humph. (Tenn.) 520; Hardeman v. Burge, 10 Yerg. (Tenn.) 202; Birdsong v. Birdsong, 2 Head (Tenn.) 289; Burch v. Smith, 15 Tex. 219, 65 Am. Dec. 154; Howard v. Edgell, 17 Vt. 9; Hale v. Wilkinson, 21 Grat. (Va.) 75; Risch v. Von Lillienthal, 34 Wis. 250; Peacock v. Evans, 16 Ves. 517; Gwynne v. Heaton, 1 Bro. C. C. 9. Contra, see Carman v. Page, 59 N. C. 37. 82 Van Gundy v. Steele, 261 Ill. 206, 103 N. E. 754. 83 Fairchild v. Dement (C. C.) 164 Fed. 200. 84 McArtee v. Engart, 13 Ill. 242. 85 Roux v. Rothschild, 78 App. Div. 637, 79 N. Y. Supp. 1145. 86 Henderson v. Sublett, 21 Ala. 626. 87 Stephens v. Ozbourne, 107 Tenn. 572, 64 S. W. 902, 89 Am. St. Rep. 957. 90 purchase price paid, and where property worth $2,000 was transferred for $500 to a stranger, to the exclusion of the grantor's natural heirs.89 In another case, the plaintiff gave a written contract permitting a power company to go upon his land, and to construct and maintain steel towers carrying electric wires, with the right to enter for the purposes of inspection and repairs, and to cut away trees and clear obstructions to the line, for the consideration of one dollar for each tower, and it was held that the consideration was so grossly inadequate as to justify a submission of the question of fraud to the jury. But on the other hand, a price of $450 for land worth $800 is not so shockingly disproportionate to its value as to call for the interposition of equity,"1 and though land worth $13,000 was taken in satisfaction of a mortgage which, with accumulated interest, amounted to $8,000, this was regarded as not such inadequacy of price as to raise a presumption of fraud. And further, it is important to notice that, in order to determine whether a consideration given was so grossly inadequate as to amount to proof of fraud, the court must look at the facts as they existed at the time the contract was made, and not at the time when application for relief is made." Thus, an allegation that land was sold by one of the parties to the other for a certain named price, and that soon afterwards it was sold for more than eight times that amount, is not a sufficient averment of inadequacy of consideration. And again, the smallness of the price paid is not necessarily an evidence of fraud in the case of a risky or speculative purchase. In a case in West Virginia, it appeared that the defendant had induced the plaintiff to sell to him all her interest in certain land which had formerly belonged to her, and which she and her husband had conveyed to third persons who were then in possession. The land was actually worth about $8 Turner's Trustee v. Washburn, 25 Ky. Law Rep. 2198, 80 S. W. 160. 89 Johnson v. Woodworth, 134 App. Div. 715, 119 N. Y. Supp. 146. 90 Leonard v. Southern Power Co., 155 N. C. 10, 70 S. E. 1061. 91 Storthz v. Arnold, 74 Ark. 68, 84 S. W. 1036. 92 Talbott v. Manard, 106 Tenn. 60, 59 S. W. 340. 93 Steinfeld v. Nielsen, 12 Ariz. 381, 100 Pac. 1094. 94 Rhino v. Emery (C. C.) 65 Fed. 826. 83 81 984 of fraud. But the inadequacy must be gross. It is not sufficient to show that one of the parties got the best of the other in a bargain or trade. 82 There must be "such a shocking inadequacy of consideration that the court may presume fraud," 88 or the inequality must be "so gross and palpable as to shock the conscience and convince the judgment.' It is of course impossible to lay down any exact measure by which to determine whether or not the inadequacy of consideration shown in the particular case is shocking. Each case must be judged on its own facts. But by way of illustration it may be stated that the sale of an annuity worth over $20,000 for less than $2,700 has been set aside as unconscionable,85 and the same is true of cases where only $5 was paid for a tract of land estimated to be worth $1,800 or more, and where $5 was given for property worth $1,000, the seller being an ignorant old man,87 or where the value of the land sold was shown to be five times greater than the 81 Ballentyne v. Smith, 205 U. S. 285, 27 Sup. Ct. 527, 51 L. Ed. 803; In re Throckmorton, 149 Fed. 145, 79 C. C. A. 15; Smith v. Collins, 148 Ala. 672, 41 South. 825; Cofer v. Moore, 87 Ala. 705, 6 South. 306; Saltonstall v. Gordon, 33 Ala. 149; Juzan v. Toulmin, 9 Ala. 662, 44 Am. Dec. 448; Hoyle v. Southern Saw Works, 105 Ga. 123, 31 S. E. 137; Missouri River, Ft. S. & G. R. Co. v. Miami County Com'rs, 12 Kan. 482; Shacklette v. Goodall, 151 Ky. 20, 151 S. W. 23; Bevins v. Lowe, 159 Ky. 439, 167 S. W. 422; Hays v. Hollis, 8 Gill (Md.) 357; Nickerson v. Bridges, 216 Mass. 416, 103 N. E. 939; German Corporation of Negaunee v. Negaunee German Aid Society, 172 Mich. 650, 138 N. W. 343; Newman v. Meek, Freem. Ch. (Miss.) 441; Phillips v. Pullen, 45 N. J. Eq. 5, 16 Atl. 9; Smith v. Duffy, 1 How. Prac. N. S. (N. Y.) 340; Hodges v. Wilson, 165 N. C. 323, 81 S. E. 340; Bruner v. Cobb, 37 Okl. 228, 131 Pac. 165; Barker v. Wiseman (Okl.) 151 Pac. 1047; Sherman v. Glick, 71 Or. 451, 142 Pac. 606; Coffee v. Ruffin, 4 Cold. (Tenn.) 487; Deaderick v. Watkins, 8 Humph. (Tenn.) 520; Hardeman v. Burge, 10 Yerg. (Tenn.) 202; Birdsong v. Birdsong, 2 Head (Tenn.) 289; Burch v. Smith, 15 Tex. 219, 65 Am. Dec. 154; Howard v. Edgell, 17 Vt. 9; Hale v. Wilkinson, 21 Grat. (Va.) 75; Risch v. Von Lillienthal, 34 Wis. 250; Peacock v. Evans, 16 Ves. 517; Gwynne v. Heaton, 1 Bro. C. C. 9. Contra, see Carman v. Page, 59 N. C. 37. 82 Van Gundy v. Steele, 261 Ill. 206, 103 N. E. 754. 83 Fairchild v. Dement (C. C.) 164 Fed. 200. 84 McArtee v. Engart, 13 Ill. 242. 85 Roux v. Rothschild, 78 App. Div. 637, 79 N. Y. Supp. 1145. 86 Henderson v. Sublett, 21 Ala. 626. 87 Stephens v. Ozbourne, 107 Tenn. 572, 64 S. W. 902, 89 Am. St. Rep. 957. 88 purchase price paid, and where property worth $2,000 was transferred for $500 to a stranger, to the exclusion of the grantor's natural heirs. In another case, the plaintiff gave a written contract permitting a power company to go upon his land, and to construct and maintain steel towers carrying electric wires, with the right to enter for the purposes of inspection and repairs, and to cut away trees and clear obstructions to the line, for the consideration of one dollar for each tower, and it was held that the consideration was so grossly inadequate as to justify a submission of the question of fraud to the jury." But on the other hand, a price of $450 for land worth $800 is not so shockingly disproportionate to its value as to call for the interposition of equity,91 and though land worth $13,000 was taken in satisfaction of a mortgage which, with accumulated interest, amounted to $8,000, this was regarded as not such inadequacy of price as to raise a presumption of fraud. And further, it is important to notice that, in order to determine whether a consideration given was so grossly inadequate as to amount to proof of fraud, the court must look at the facts as they existed at the time the contract was made, and not at the time when application for relief is made." Thus, an allegation that land was sold by one of the parties to the other for a certain named price, and that soon afterwards it was sold for more than eight times that amount, is not a sufficient averment of inadequacy of consideration. And again, the smallness of the price paid is not necessarily an evidence of fraud in the case of a risky or speculative purchase. In a case in West Virginia, it appeared that the defendant had induced the plaintiff to sell to him all her interest in certain land which had formerly belonged to her, and which she and her husband had conveyed to third persons who were then in possession. The land was actually worth about 92 94 88 Turner's Trustee v. Washburn, 25 Ky. Law Rep. 2198, 80 S. W. 160. 89 Johnson v. Woodworth, 134 App. Div. 715, 119 N. Y. Supp. 146. 90 Leonard v. Southern Power Co., 155 N. C. 10, 70 S. E. 1061. 91 Storthz v. Arnold, 74 Ark. 68, 84 S. W. 1036. 92 Talbott v. Manard, 106 Tenn. 60, 59 S. W. 340. 93 Steinfeld v. Nielsen, 12 Ariz. 381, 100 Pac. 1094. 94 Rhino v. Emery (C. C.) 65 Fed. 826. |