admitted that fraud is a fact, inferred like other conclusions of fact from the evidence, with the aid of convenient presumptions, no rule of law can be laid down as to the amount of inadequacy necessary to produce the resulting fraud. I think, also, for the same reason, that the old manner of stating the doctrine, viz.: that the inadequacy must be conclusive evidence of fraud, is erroneous. The true doctrine is, that fraud is always a sufficient ground for the recision of agreements; inadequacy of consideration is evidence of fraud, slight or powerful, according to its amount, and other circumstances; when it is satisfactory, or in other words, when, from the proof of the inadequacy, the triers, jury or judge, are convinced that fraud, as a fact, did exist, then the recision follows as a necessary consequence, by operation of law. Instead, therefore, of saying that the inadequacy must be so great as to be conclusive evidence of fraud, I prefer to state the rule as follows: When the inadequacy of the consideration is such as to be satisfactory evidence of fraud, the fraud, so proved, is a ground for setting aside the contract. (1)

SEC. 194. The important question for our consideration is: How far will the inadequacy avail as a defense to the relief of specific per

(1) Griffith v. Spratley, 1 Cox, 383, 388, 389; Fox v. Mackreth, 2 Dick. 689; Stilwell v. Wilkins, Jac. 280; Osgood v. Franklin, 2 Johns. Ch. 1; Wintermute v. Snyder, 2 Green's Ch. 489; McCormick v. Malin, 5 Blackf. 509; Knobb v. Lindsay, 5 Ham, 468; Wright v. Wilson, 2 Yerg. 294; Hardeman v. Burge, 10 Yerg. 202; Green v. Thompson, 2 Ired. Eq. 365; Butler v. Haskell, 4 Dessau Eq. 651; Juzan v. Toulmin, 9 Ala. 662; Delafield v. Anderson, 7 Smed. & Mar. 630; Holmes v. Fresh, 9 Mo. 201; White v. Flora, 2 Overton, 426; Stubblefield, v. Patterson, 3 Heyw. 128; Newman v. Meek, 1 Freem. Ch. 441; Kidder v. Chamberlin, 41 Vt. 62; Worth v. Case, 42 N. Y. 362; Davidson v. Little, 10 Harris, 245, 252; Harris v. Tyson, 12 Harris, 347, 360; Cribbins v. Markwood 13 Gratt. 495; Eyre v. Potter, 15 How. (U. S.) 42. Where it appears that the parties have knowingly and deliberately fixed upon any price, however great or however small, there is, of course, no occasion nor reason for interference by a court, for owners have a right to sell their property for what they please, and purchasers have a right to pay what they please. See Harris v. Tyson, 12 Harris, 360; Davidson v. Little, 10 Harris, 245, 247. But where there is no evidence of such knowledge, intention or deliberation by the parties, the disproportion between the value of the subject-matter and the price, may be so great as to warrant the court in inferring therefrom the fact of fraud. Such a gross inadequacy or disproportion between the value of the subject-matter and the price, will certainly call for explanation, and shift the burden of proof upon the party seeking to enforce the contract, and call upon him to show, affirmatively, that the price was the result of a deliberate and intentional action by the parties; and if he fails to prove such action, the fact of fraud will be more readily and clearly inferred. This, as it seems to me, is the true theory, and the language of some of the earlier cases upon this subject, is, therefore, misleading. See Davidson v. Little, 10 Harris, 245, 247, and other cases cited in the former part of this note.

formance? The earlier English cases professedly treated it merely as a particular instance of unfairness, or hardship, and the rule was established by them, for a while, that simple inadequacy, either in the price or in the value of the subject-matter, wholly independent of any suggested fraud-that is, without treating it as furnishing evidence of fraud-may prevent the court from decreeing the execution of an agreement, on the ground that such inadequacy renders the contract unfair, unequal, or oppressive.(1) The same opinion has been maintained by American judges of the greatest ability and experience; and the rule still remains in several of the states.(2) Notwithstanding these early authorities Lord ELDON, as Chancellor, and Sir WILLIAM GRANT, as M. R., introduced the doctrine which has since their time prevailed unchallenged in the English court, and has, although not without strong dissent and protest, been generally followed throughout the United States, that mere inadequacy in the price or the subject-matter is not such a hardship or unfairness as will prevent the enforcement of contracts; but that when the inadequacy furnishes satisfactory evidence of fraud, the remedy of specific performance will be refused. In short, inadequacy as a negative defense against the relief of execution, and as an affirmative ground for the relief of recision, are put upon an equal footing and governed by the

(1) In Tilly v. Peers, cited arg., 10 Ves. 301, Ch. B. EYRE déclared, concerning such an agreement, even where there was no suggestion of fraud, that "the court upon the mere consideration of its being so hard a bargain will not enforce it." In Day v. Newman, 2 Cox, 77, cited arg., 10 Ves. 300, a contract was made for the sale of an estate worth 10,0007, for 6,000/ down and 14,000/ payable at the death of a person sixty-five years old, without any fraud, pressure, or other inequitable incidents. Lord ALVANLEY refused a specific performance solely because it was a hard bargain, but at the same time refused to decree a recision. In Savile v. Savile, 1 P. Wms. 745; 5 Vin. Abr. 516, pl. 25, a person, during the South Sea mania, contracted to buy a house for 10,500l, paying a deposit of 1,000l. Lord Ch. MACCLESFIELD refused to enforce the contract against the vendee on his forfeiting the deposit, on the ground that the whole nation was at the time in a condition of financial excitement, almost insanity, and the values put upon all property were imaginary-in this instance as well as in others.

(2) See Seymour v. DeLancey, 6 Johns. Ch. 222, 224, 225, in which Chancellor KENT, after a very elaborate and exhaustive review of all the then existing authorities, English and American, including those opposed to his conclusion, held that mere inadequacy of price would be a defense, since it rendered the contract unreasonable, unequal, and hard. His decree was reversed by a bare majority of the court of errors, in Seymour v. DeLancey, 3 Cow. 445, notwithstanding a most able opinion, concurred in by all the supreme court judges, which maintained Chancellor KENT's views. See, also, Clitherall v. Ogilvie. 1 Dessaus. Eq. 257; Gasque v. Small, 2 Strobh. Eq. 72; Clements v. Reid, 9 Sm. & Mar. 535.

same rule.(1) Where a sale is made at a public auction, conducted in a fair and open manner, with opportunity for a real competition, the rule is even more stringent; for in such case fraud cannot be inferred from any inadequacy in the price, without other circumstances showing bad faith.(2) The formula, that the inadequacy "must be so

(1) Coles v. Trecothick, 9 Ves. 246, per Lord ELDON: "Unless the inadequacy of price is such as shocks the conscience and amounts, in itself, to conclusive and decisive evidence of fraud in the transaction, it is not itself a sufficient ground for refusing a specific performance." Stilwell v. Wilkins, Jac. 282, per Lord ELDON; White v. Damon, 7 Ves. 30, per Lord ELDON; Underhill v. Horwood, 10 Ves. 209, per Lord ELDON; Burrowes v. Lock, 10 Ves. 470, per Sir WM. GRANT; Lowther v. Lowther, 13 Ves. 103, per Lord ERSKINE; Collier v. Brown, 1 Cox, 428; Bower v. Cooper, 2 Hare, 408; Borell v. Dann, 2 Hare, 450; Griffith v. Spratley, 2 Bro. C. C. 179; 1 Cox, 383; Stephens v. Hotham, 1 K. & J. 571; Abbott v. Sworder, 4 DeG. & Sm. 448. Land was bought for 5,0001, which V. C. Knight BRUCE held to be worth only 3,5007; but he and Lord ST. LEONARDS held that this excess of price was no objection to decreeing a specific performance at the suit of the vendor. American cases hold the same rule. Seymour v. DeLancey, 3 Cow. 445; Hale v. Wilkinson, 21 Gratt. 75, decided very recently in accordance with this doctrine; Garnett v. Macon, 2 Brock. 185; Rodman v. Zilley, Saxton, 320; White v. Thompson, 1 Dev. & Bat. Eq. 493; Fripp v. Fripp, Rice Eq. 84; Bean v. Valee, 2 Mo. 126; Lee v. Kirby, 104 Mass. 420; Booten v. Scheffer, 21 Gratt. 474; Curlin v. Hendricks, 35 Tex. 225; Western R. R. v. Babcock, 6 Metc. 346; Black v. Cord, 2 Har. & G. 100; Burtch v. Hogge, Harring. Ch. 31; Crocker v. Young, Rice Eq. 30; Sarter v. Gordon, 2 Hill Ch. 121; Harrison v. Town, 17 Mo. 237; Cathcart v. Robinson, 5 Peters, 263. In Seymour v. De Lancey, 3 Cow. 445, the opinion of the senator, concurred in by the majority, said: "It is not to be denied that it is the settled doctrine of the court of chancery, that it will not carry into effect, specifically, a contract when the inadequacy of the price amounts to conclusive evidence of fraud." In Cathcart v. Robinson, 5 Pet. 263, the United States supreme court said: "Excess of price over value, though considerable, if the contract be free from imposition, is not, in itself, sufficient to prevent a decree for specific performance." In Westervelt v. Matheson, 1 Hoff. Ch. 37, land was purchased for $2,900, and its highest value being assumed to be $3,500, the court held that the inadequacy was not sufficient to infer any fraud. In Viele v. Troy & Boston R. R., 21 Barb. 381, the rule was stated, that in a suit for a specific performance, a court of equity will not inquire into the adequacy of the consideration, unless the inadequacy is so great as to raise a conclusive presumption of fraud.

(2) White v. Damon, 7 Ves. 30, per Lord ELDON, who was of opinion that a sale at auction could not be impeached for mere inadequacy of price. Borell v. Dann, 2 Hare, 450, per WIGRAM, V. C.: "Fraud in the purchase is of the essence of the objection to the contract on the ground of inadequacy. The only exception to the rule for decreeing the specific performance of an unexecuted contract, on the ground of inadequacy of consideration, is that it is so gross that, of itself. it proves fraud or imposition on the part of the purchaser. The case, however, must be strong indeed in which a court of justice shall say that a purchaser at public auction, between whom and the vendor there has been no previous communication affecting the fairness of the sale, is chargable with fraud or imposition only because his bidding did not greatly exceed the amount of the vendor's bidding."

great as to be of itself conclusive evidence of fraud," was first used at a time when courts were in the habit of regarding fraud as a conclusion of law, established by means of legal presumptions, and it has been, like so many other expressions, unthinkingly and carelessly repeated by case after case, without any notice of the complete revolution which has taken place in the theory of fraud. As fraud is now regarded as a fact, and its existence is ascertained, like that of any other fact, by comparing and weighing the evidentiary matter, it is plain that the phrase "conclusive evidence of fraud " is, from the very nature of the case, an absurdity and impossibility; what would be abundantly conclusive to one judge or jury will come far short of convincing another judge or jury. The phrase, and the thought which it contains, belongs alone to a system in which fraud is always the result of legal presumptions. Inadequacy is evidence, and the only rule which can possibly be laid down is, that it must be, to the judgment of the triers, satisfactory evidence of the fraud.(1) The rule thus finally settled by the cases, is plainly founded upon motives of convenience and not upon the analogies of principle. Thoretically considered, inadequacy in the price, or of subject-matter, is a species of inequality and unfairness, and may be an instance of hardship and oppression. That it is not governed by the general rules applicable to these incidents of a contract, is due entirely to the great difficulty of deciding, in each particular controversy, upon the numerous and different considerations and motives which enter into and affect the question. Rather than meet this difficulty, which necessarily arises

See, also, Ayers v. Baumgarten, 15 Ill. 444. An auction sale will be rescinded, and a fortiori a specific performance will be refused, on proof of actual fraud in conducting it, or that the buyer controlled it. Byers v. Surget, 19 How. (U. S.)309. (1) That is, the judge or jury must, from the fact of inadequacy, the extent of it, be convinced that the party was actually guilty of a fraudulent purpose or intent in making the contract. I do not mean, of course, that judges and juries are under no circumstances any longer aided by legal presumptions in deciding upon the existence of fraud. These circumstances, however, and the cases where presumptions are used, have been very much narrowed; and the issue of fraud, or no fraud, is generally determined in the same manner as any other issue of fact. This is certainly so in the case mentioned in the text. In order that inadequacy should be “conclusive evidence” of fraud, the amount of it must be fixed by some universal standard or criterion, and there is no pretense that this has ever been done. The proof of inadequacy is submitted to the jury or court and is treated like any other evidence. Fraud is not inferred from it by any presumption-for it is now admitted by all accurate thinkers that the expression "presumption of fact" is very misleading-and that it means nothing but the argumentive process by which, from the existence of one fact, the human judgment reaches the conclusion that another fact also exists.

from the treatment of inadequacy merely as a hardship, the courts have preferred to regard it as evidence of fraud. It may well be doubted, however, whether the difficulty has been at all lessened by the adoption of this method. (1)

SEC. 195. As inadequacy is not a hardship or an unfairness merely, but is only objectionable so far as it is satisfactory evidence of fraud, and as fraud being a mental condition of a party must exist, if at all, at the very inception of the agreement, it follows that the time to which the question of adequacy or inadequacy must be referred for decision, is always that of concluding the contract. If fraud can be fatal to a contract, it must necessarily have affected the transaction at the commencement. If, therefore, there was no inadequacy either in the price or in the subject-matter at the formation of the contract, none can arise from subsequent events or change of circumstances.(2) There is one exception to the general rule concerning

(1) In some systems of jurisprudence an arbitrary rule is adopted which furnishes a fixed standard by which to determine all individual cases of inadequacy. In the Roman law this standard was one-half the real value of the subject-matter when immovable property; if the price agreed was less than one-half the real value, the seller could compel the buyer to elect either to rescind, restore the thing, and take back the price, or to affirm and make up the deficiency. Code Lib. iv, tit. 44, 2. A like method forms part of the French law. Such rules, however, are plainly contrary to the entire spirit of our law, and to the judicial processes by which that law is administered.

(2) As for example, in a contract of which the consideration is wholly or partly an annuity to a certain person, to be paid during his life, and he dies perhaps before even the first payment, this does not render the consideration inadequate. Mortimer v. Capper, 1 Bro. C. C. 156. The same may be said of contracts of life insurance, when the assured dies, perhaps after the first payment of premium. These cases, however, are not fair illustrations, since in all such aleatory contracts, the whole agreement is expressly based upon the uncertainty in the happening of a specified event, the parties contracting intentionally with respect to such uncertainty, and the risk which it occasions. If the happening of the event sooner than was hoped, could invalidate such agreements, this would be tantamount to destroying the whole efficacy of such agreements. Batty v. Lloyd, 1 Vern. 141; Hale v. Wilkinson, 21 Gratt. 75; Lee v. Kirby, 104 Mass. 420. In the old case of Savile v. Savile, 1 P. Wms. 745, the consideration was held inadequate, because the values subsequently depreciated, but the doctrine of his case has long been overruled; but see Willard v. Tayloe, 8 Wall. 557, which was really a case of price becoming inadequate by means of subsequent events. If, however, the plaintiff, instead of being ready and prompt to obtain his remedy as soon as he was able, should unnecessarily delay, and only seek to enforce the contract when, after his laches or change of circumstances had rendered the price inadequate, a specific performance might, and generally would, be refused. Whitaker v. Bond, 63 N. C. 290; McCarty v. Kyle, 4 Coldw. 349; Hudson v. King, 2 Heisk. 561; Booten v. Scheffer, 21 Gratt. 474.