Harrison v. Town

Gamble, Judge,

delivered the opinion of the court.

The decree rendered by the Circuit Court is objected to upon two grounds:

*2421. That the consideration which Town was to receive under his contract with John, William, Henry and Dalzell Smith, for . one half of the lot then claimed by Town, was so inadequate that a court of equity ought not to execute the contract.

2. That the decree which was rendered, recognized Harrison as entitled to a larger interest, under the contract, than was really his, and that the other parties in whose favor the decree was given, should have had a larger and he a smaller interest, although, if the contract is fully executed, as is directed by the decree, the defendants who resist its execution, and who are appellants, have no interest in the question whether Harrison has too large or too small an interest in the lot.

1. Upon the question whether inadequacy of consideration is an objection to the specific execution of a contract, when standing by itself, unaccompanied by any other evidence of fraud or imposition, and when not so gross as to be of itself what some courts call conclusive evidence of fraud, the courts in England, as well as those in the United States, have entertained very different opinions. All courts agree that the specific execution of contracts by the power of a court of chancery, stands upon the discretion of the chancellor; but that discretion is not an arbitrary discretion, to be exercised without rule, and according to the caprice of the chancellor. It is a sound legal discretion, to be exercised according to the known principles of equity jurisprudence.

Again, it is agreed on all hands, that the circumstances under which a court of equity will refuse its aid in the execution of a contract, are different from those which would authorize the court to set aside the contract. The court will not carry into execution, by its decree, a contract which appears to have been obtained, although not by fraud, yet by any advantage of one party over the other, where the contract is inequitable and unjust, when the court would not, under the same circumstances, set the contract aside.

When these principles are stated, the question is presented in this 'case, whether the circumstances attending this contract' *243are such, as to require that a court of equity should refuse to execute it. There is nothing stated in the evidence, of the relations of the parties, or their relative capacity, or of any circumstances attending its execution. The whole objection stands upon the inadequacy of the consideration.

In the case of Seymour v. Delancey, 3 Cowen, 445, Chief Justice Savage, in giving his opinion in the court of errors, examines the cases in the English court of chancery for specific performance, in which the objection of inadequacy of consideration was made.

The case came to the court of errors by appeal from the decree rendered by chancellor Kent, whose opinion will be found in 6 John. Ch. R. 223. The chief justice went as far back in the citation and review of cases, as that of the City of London v. Richmond, 2 Vern. 423, and came down to Western v. Russell, 3 Ves. & Beames, 193, embracing most of the cases cited in the opinion of the chancellor, and he arrives at the conclusion that the chancellor was correct in the doctrine, that inadequacy of consideration was, in itself, a sufficient ground to resist the specific execution of a contract, when the inadequacy was so great as to render the bargain hard or unconscionable. Nine senators concurred with the chief justice, and voted for an affirmance of the chancellor’s decree. Senator Sudam delivered an opinion in favor of reversing the decree, expressing his dissent from the doctrine “that inadequacy of price may, of itself, and without fraud or other ingredient, be sufficient to stay the application of the power of a court of chancery to enforce a specific performance of a private eon-tract to sell land. Thirteen senators concurred in the opinion delivered by senator Sudam, and so the decree of the chancellor was reversed.

In this state, it was held, as far back as 1829, in Bean and others v. Vallé, 2 Mo. Rep. 132, that mere inadequacy of price was not an objection to a court of equity enforcing the specific execution of a contract. This doctrine is supported by high authority both in, England and America, as well *244as its opposite, and we think it has the support of the better reason.

Inadequacy o£ price, when connected with circumstances of unfairness, overreaching or oppression, may and ought to be an objection to executing the contract; but when the parties Qtand upon equal grounds, with equal means of information, and .not in any confidential relation, and without any artifice practiced, it is difficult to discover any good reason for refusing the execution of a contract, because the consideration is inadequate. The language is often employed by judges, that the inadequacy of consideration may be so great as to be conclusive evidence of fraud, but it is difficult to make the application of such a rule in any given case, for, in almost every case, the fact that the consideration is inadequate, stands connected with some weakness of the party against whom the contract is to be enforced, or some relation of confidence, or some overreaching, or some surprise, or some other circumstance that gives a fraudulent color to the transaction. The only way to test the correctness of the rule, is to attempt its application in a case where the parties are confessedly equal in their capacity, means of information, and in all other circumstances, and where no relation of confidence existed. In such case, gross inadequacy of consideration would as well prove the motive of the party who was to make the conveyance, to be some feeling of generosity to the other party, as it would prove fraud in the party who was to receive the conveyance. Courts of equity will not ordinarily lend their aid to carry into effect contracts which are purely voluntary, but even in such cases, the objection does not rest upon the ground of fraud.

In the present case, the inadequacy in the consideration is supposed to be, at the time the contract was made, the difference between one half of the lot and one-third of the value of the whole lot, or, that the consideration is less, by one-third, than the value of the premises to be conveyed. When it is considered that property in the city of St. Louis, is constantly and rapidly appreciating, the testimony of witnesses who *245speak of the value of a lot several years back, is to be received with caution, unless reference can be made to actual sales of property in the same vicinity. No such sales are in this case referred to. But if the evidence should receive the fullest credit, and have all the weight that can be asked for it, it will not show a greater disparity between the price and the value of the half of the lot, than one-third of that value, and this, too, in a bargain which was not to be carried into effect until the termination of a suit in chancery.

When this is the full amount of the alleged inadequacy of consideration, and when Town not only appears to have acted with his eyes open, and with entire deliberation, acknowledging the contract before a justice of the peace, more than six months after its execution, there appears to be no sufficient ground for refusing a specific execution of this agreement.

But a farther objection is made to the execution of this contract, because of its hard, unreasonable and oppressive character, in requiring Town to pay the note held by the Smiths, if his suit for a specific execution of the covenant of Smith, Lisa and Bates, for the conveyance of the lot, should fail.

It is to be observed that the covenant by Smith, Lisa and Bates was to convey the lot to Town, upon the payment of the notes he had given for the consideration, and it appears that he had filed his bill to have this contract executed, when one of these notes was outstanding and unpaid in the hands of the heirs of Smith. Now he might well feel that he would be embarrassed in obtaining a decree for the title, if the heirs of Smith should oppose it on the ground that he had not paid or offered to pay the note for a part of the consideration money which they held. If he could prevent that opposition by interesting the Smiths in his obtaining the decree, he would be relieved from the necessity of advancing the money, and would have their aid instead of their opposition in obtaining the decree.

This was probably the object in entering into the contract for a portion of the lot. The stipulation that he would pay the *246note, even if be failed in obtaining the title, did not, in fact, change bis obligation, if we throw out of consideration the lapse of time. He was already bound for its payment. But in respect to the obligation of the note, or of this stipulation in the agreement, it is to be borne in mind, that if there was really in law any obstacle that would prevent bis obtaining the title to the lot, be would not only be entitled to be discharged from the payment of this note, however solemnly it might have been promised, but be would have been entitled to reclaim what be bad already paid, either from the covenantors, if alive, or their representatives after their death.

Again, the very persons with whom this contract was made were, themselves, the owners, by descent from their father, of a portion of the legal title to this lot, according to the recitals in the contract itself; and it was impossible, without an abandonment of the suit, that it should altogether fail, when the parties, defendants to that suit, acknowledged the contract for the conveyance of the lot and its present obligation.

2. There appears to be no solid objection to the execution of this contract, because of this stipulation ; nor is there any thing available in the position that Harrison has, by the decree, been found entitled to a larger portion of the property than should have been decreed to him. Whether the interests of the different parties, who are entitled under the contract, are correctly adjudged by the Circuit Court, cannot affect the appellants, who are resisting the execution of the contract to any extent, or in favor of any party. The parties whose interests are said to be diminished by the decree do not complain of it.

The decree of the Circuit Court is, with the concurrence of the other Judges, affirmed.