
    
      Samuel Gasque v. William F. Small.
    
    Charleston,
    Jan’y- 1848.
    The Court refused to decree the specific performance of an agreement for the purchase of land, where the value was grossly inadequate to the price, although fraud could not be inferred.
    The inadequacy of price which will prevent the Court from enforcing specific performance, ought to be palpably disproportioned to the real and market value of the property, so as to constitute a hard, unreasonable and unconscienable contract.
    The Court is not bound to decree a specific performance in every ease where it will not set aside the contract, nor to' set aside every contract that it will not specifically perform.
    
      Before Johnston, Oh. at Georgetown, 1847.
    Johnston, Ch. This is a bill for the specific execution of a contract for the sale of a tract of land.
    The plaintiff, Gasque, being indebted by two judgments, the first of which was for about f , and owned by Thomas N. Gadsden; and the second and junior for about $ , owned by the Bank of Georgetown ; and being, in fact, utterly insolvent, some time in the summer of 1846 advertised for sale his plantation of about 1400 acres of land, lying on great Pee Dee, with the ferry thereto belonging, called Godfrey’s Ferry. By the advertisement, persons disposed to purchase weie invited to confer with Gasque, the proprietor, who lived on the premises, or with his agent, Samuel Kirton, who resided in Georgetown. It appears that Kir-ton was responsible, as indorser of Gasque, on the note upon which the judgment of the Bank of Georgetown had been obtained. Sometime in September, 1846, the defendant Small, then recently of age, and who lived in or near Georgetown, and at a distance from the premises to be sold, called on Kir-ton for information as to the qualities and value of the land. Kirton made very encouraging representations of both; and gave it as his opinion that the body of land was very valuable, that the ferry was worth $500 per annum, and that the place would afford a good stand for a store; but as he was not informed of the price set by Gasque on the premises, he advised Small to go up with him in order to confer with Gasque, and to inspect the premises. Kirton owned a line of stages running from Georgetown to Godfrey’s Ferry; and shortly afterwards, by Kirton’s invitation, Small went up with him by this conveyance to Gasque’s. After a very cursory examination of a part of the premises, near the dwelling house, Small professed himself satisfied with the property, and with the price, which was $5000. He said he did not wish to examine the premises further, having hada description from one Harral, who formerly resided there. But he wished to con-suit his friends before closing the bargain, particularly his for-1 mer guardian, Mr. Atkinson, who it appears still had his property in his hands, and transacted business for him. On their way home, they accidentally met Mr. Atkinson, near Georgetown, who being consulted, said he was very little acquainted with the country about Godfrey’s: and Small then stated that he would come to a conclusion in a day or two. By the terms proposed, $1000 were to be paid by the purchaser to Gasque, and $4000 to the Bank, upon titles being made. And as to the' titles, Kirton, who was examined, says that he told Small that Gasque’s title was good; but to put the matter on the surest footing, it was agreed that titles should be made by the Sheriff.
    In the interval taken by Small for reflection, Kirton, by his request, consulted the officers of the Bank, and obtained their promise to indulge Small for so much of the purchase money as was to be paid to the Bank; but the promise was indefinite, or if any time was limited, the witness forgot it. Small having made up his mind, informed Kirton of that fact; upon which Kirton proposed that they should make a memoran dum, in writing, of the contract, to be forwarded to Gasque, his principal; and accordingly, the following was executed on the 28th of September, 1846:
    “ A memorandum of agreement, between Samuel Gasque, of one part, and W. F. Small, of the other part:
    “ Said Samuel Gasque agrees to sell to W. F. Small the plantation and ferry known as Godfrey’s Ferry, on Pee Dee, Marion District, with adjoining lands on both sides of the river, and to give him a Sheriff’s title; on the following condition : that W. F. Small, when the title is executed, is to pay said Gasque one thousand dollars in cash; to pay to the Bank of Georgetown, S. 0., four thousand dollars; which is to be in full for said purchase.”
    (Signed) Sam’l. Gasq.ue,
    per Sam’l. Kirton.
    28th September, 1846.” W. F. Small.”
    About three weeks afterwards, Small addressed the following note to Kirton, declining the purchase:
    “ Dear Sir, — I have been advised best to let Godfrey’s ferry alone; thanking you for the trouble that you were about to undergo on my account: you can get another purchaser.
    Yours, with respect,
    (Signed) W. F. Small.”
    21st. Oct. 1846.”
    Measures were immediately taken to put matters in that condition that he could be compelled'to complete the purchase. A levy was made (of the Bank’s execution, I suppose,) on the land, by the Sheriff of Marion, and it was exposed to sale. There was considerable competition among the bidders, but Kirton, acting as the agent of the Bank, bid it off at $1500 : and by their pleadings, a tender is made on behalf of the plaintiff and the Bank, to give the defendant a good and unincum-bered title, either by directing the Sheriff to convey immediately to him, or by taking the Sheriff’s title to the Bank, and superadding the Bank’s conveyance. I understand the tender to be, that the title shall be good and sufficient, and clear of all incumbrances-.
    The question is, whether Small shall be compelled to take such a title, and complete the purchase.
    He objects: that a hard and unconscionable bargain has been imposed on him; that advantage has been taken of his youth and inexperience by crafty men, who induced him to purchase by highly colored representations, amounting to misrepresentations and fraud : that the land is for the most part of little value, and sickly j and that a small portion of it is productive; that the ferry brings not more than one-third of the income represented; and that as for a store, the neighborhood, on both sides of the river, is too poor to afford customers ; and that on one side access is debarred by Lynch’s creek, which running within four miles of the place, cuts off all beyond.
    The evidence is, that the land is not estimated to be worth what he promised to give for it, though it abounds in rich beds of marl, which, if properly applied, must make it very valuable. Portions of the arable land have produced excellent crops, though these portions are quite limited. There is great diversity of opinion among the witnesses as to the real value of the place. There has never been a store on the premises, though Gasque was, at the time of the contract,, erecting one •, and whether one would do a profitable business- or not is conjectural; no clear evidence was exhibited as to the value of the ferry. But what must govern me in this case, is, that Small, although very young and inexerienced, is proved to have ordinary capacity, and to have acted for himself. He opened the treaty, and having full opportunity for examination and deliberation, decided upon his own judgment. Kir-ton says, that what has been attributed to him as representa-tation, was given by way of opinion, and was so understood • and he still retains the opinions expressed. He states that he requested Small to protract his examination, and to judge for himself; but that he replied he had seen enough, with what Harral had told him, (upon whom he depended) to satisfy him of the value of the property.
    It appears to me that these circumstances are decisive. If any other person of unquestionable capacity and judgment had made this contract, I suppose his obligation to fulfil it would not be disputed. But Small had legal capacity, and that is. always coupled with legal obligation. It is true, there was no comparison, according to the testimony, between his capacity and that of those with whom he contracted. Mr., Coachman says he was no match for them, and I think there is no doubt of it. But equality of intellect is not necessary to the> validity of bargains; if it were, very few indeed could stand. But all the witnesses attributed to Small a legal capacity to contract; and having that, his contracts must be binding.
    7 Ves. 33.
    It is said, however, that this is a hard bargain, and should not be enforced. I do not think it reflects much credit on Kir-ton and Gasque; and if I had the official right, I am not wanting in inclination to refuse its enforcement; but lean lay hold of no principle or authority upon which to found such a decision. It is admitted, that there is a clear distinction between enforcing and rescinding a contract. A Court of Equity may, in many cases, refuse to enforce a bargain, while at the same time it may not be authorized to rescind. When the circumstances are not sufficiently strong to justify an active interposition to set aside the contract, they may yet be of such force as to induce 'the Court to refrain from enforcing it; in which case it will leave the parties where it found them, without interposing for either. The Court is said to have a discretion in such cases. But the discretion is not the discretion of the Judge, but belongs to the former ,; it is not a personal, but an official discretion; as is said in White v. Damon, “ giving a specific performance is matter of discretion, but that is not an arbitrary, capricious discretion ; it must be regulated upon grounds that will make it judicial.”
    There was no fiduciary relation between the parties — no relation of confidence — there is not proof amounting to undue influence. The parties acted at arms length, each for himself, and upon his own judgment. The inadequacy of value in the property, as compared with the price, is not clearly made out; and if inadequacy were established, is not so gross as to infer fraud. I must, therefore, reluctantly leave this young man to the bargain he has made. I cannot shield him from it without establishing a precedent, tending to shake the sanctity and validity of contracts in general, than which there is not an evil more pernicious to society or more to be shunned by judicial tribunals.
    I shall refer it to the Commissioner to inquire and report whether, by either of the methods proposed in the pleadings, a good and sufficient title clear of incumbrances can be made to the defendant Small. If it becomes necessary, the Commissioner is authorized to have a survey made, and if there be any portion of the land encumbered by an outstanding title, let it be designated in the plat, and in the Commissioner’s report; and let the Commissioner report .upon evidence, whether the part thus encumbered formed an essential consideration in the purchase, so as to enable the Court to decide contract may or may not £,9 enforced by allowing compensation. And it is so ordered,
    If either party should object to the Commissioner’s acting, on the ground of his official connexion with the Bank, upon giving notice to the other party, application may be made to either of the Chancellors, at Chambers, to substitute a special referee in his place. And it is so ordered.
    Final decree reserved till the coming in of the report.
    The defendant, Small, appealed from the decision of his Honor the Chancellor, and moved to reverse it, on the following grounds, viz :
    1st. Because the real value of the land in question, was so greatly disproportioned to the price contracted to be paid for it, coupled with the gross misrepresentations of the complainant’s agent, Kirton, in relation to its value, as to amount to conclusive evidence that fraud and undue influence had been practised on this defendant, in procuring his signature to the agreement; therefore complainant is not entitled to the aid of this Court in enforcing its specific execution, but should be remitted to his remedy at law.
    2d. That the agreement was void for want of mutuality, inasmuch as there never was a period from its execution to the present time, when it was in complainant’s power to procure even a Sheriff’s title to the land, and the only way in which he proposes to procure one now, is through the agency of another, who is not a party to the agreement.
    3d. Because the Bank of Georgetown has no interest whatever in the matter in controversy; on the contrary, its position in the present suit does not arise out of any interest which it has in the agreement in question, or otherwise, but is merely that of a volunteer, and upon whom no decree, which this Court can make in the matter, will be binding.
    4. Because this defendant submits, that he ought not to be compelled to accept a title from the Bank of Georgetown, who is not only a stranger to the agreement in question, but whose' rights, if it have any in the matter, accrued long subsequently to its execution, and against whom this defendant never had a remedy for its violation, either at Law or in Equity.
    Munro, for appellant.
   Caldwell, Ch.

delivered the opinion of the Court.

The question in this case, is whether, under the circumstances, the disproportion between the real value of the land, (which the plaintiff, by his agent, agreed to sell to the defendant,) to the price to be paid for it, is a sufficient ground to refuse the specific performance of the contract. There is a material difference between a party who seeks to rescind and one who seeks to enforce an agreement, as it requires much stronger evidence to effect the former, than will be sufficient to enable the defendant to resist the latter; and in applying either of the remedies, an important distinction must be observed between executory and executed contracts. It seems, from what is said by all elementary writers on this subject, that the specific performance of agreements is not an absolute right in the party, but a question of sound discretion in the Court; not that the exercise of this discretion is either arbitrary or capricious, but is, like all other judicial powers, dependant upon principle and precedent.

Story E. J. S. 769.

Sugden on Vendors, 189.

1 Had. Ch. 267.

Where there is a plain and adequate remedy at law on a contract, the Court of Equity will not enforce a specific execution of it. And there are certain qualities that every contract must possess before it can come within the class of cases entitled to'this extraordinary remedy: “generally it may be stated,” says Justice Story, “ that a Court of Equity‘ will decree specific performance when the contract is in writing, -is certain and fair in all its parts, and is for an adequate consideration, and is capable of being performed, and not otherwise;” and therefore if any of these essential ingredients be wanting, relief would not be granted : and he strengthens and illustrates the proposition by saying, “ the Court will not decree specific performance in cases of fraud, or of hard and unconscionable bargains, or where the decree would produce injustice, or compel the party to an illegal act, or where the performance has become impossible, and generally not in cases where it would be inequitable under all the circumstan-stances.” There is no difficulty in cases where one is induced to give an unreasonable price for an estate, by the fraud or gross misrepresentation of the vendor, or by an industrious concealment of a defect in the property, as equity will not only not compel the purchaser to perform the contract, but will at his instance rescind it; and Mr. Sugden adds, “when these circumstances do not appear, but the estate is a grossly inadequate consideration for the purchase money, equity will not relieve either party.”

“ Mere inadequacy of price,” says Mr. Maddock, “ unless it amounts to what is termed gross inadequacy, is not a ground for annulling an agreement, although executory, if the same appears to have been fairly entered into, and understood by the parties, and capable of being specifically performed ; still less does such inadequacy form a ground for rescinding an agreement executed; but under such circumstances the Court will not decree a specific performance of an executory agreement.”

But this principle does not depend for its support solely upon elementary authors, as it has been repeatedly recognized and sanctioned by the highest judicial authority. It is a very ancient doctrine of this Court, that a contract which carries an equity to have it decreed in specie, ought to be without all objection. And we find several cases, as early as the time of Lord Harcourt, decided agreeably to the maxim, that equity will not carry hard or unreasonable agreements into execution: and a short time before that, in the case of the Marquis of Normandy and Lord Berkley, Lord Sommershed held that the Court would not carry agreements into execution unless the contract was reasonable and fair in every particular, because they cannot mitigate damages upon the circumstances of the case as a jury may do, but must decree the whole contract to be performed.

1736.

2 Ves. 304, 1750.

In Young v. Clark, Lord Macclesfield dismissed the bill brought for a specific performance of articles, as they appeared to him to be unreasonable and shameful, although there was no direct fraud proved. In Thompson v. Hurcourt the bill for the specific performance of a contract for stock, was dismissed, and the decree afterwards was affirmed in Parliament, on the ground of the great inequality of the agreement, to pay £9200 for that which was not worth more than £1000 at the time of performance: this was considered a hard case, though fairly made without fraud, surprise or ignorance. In 1726 the same doctrine was held in Squire v. Baker, when the Court refused to carry into execution an unreasonable agreement, but decreed that it be delivered to the party for whose benefit it was designed, that he might have an opportunity to make the most of it at law. Lord Talbot reasserted the distinction between rescinding the contract, and refusing the specific performance of it, in Savage v. Taylor, and left the plaintiff to pursue his remedy at law.

Lord Hardwicke repeatedly recognized and applied this principle in several cases during his long administration of Chancery; he held that in a case of a hard bargain that was executory only, the constant rule of the Court was not to carry it into execution ; in another case he says, “ nothing is more established in this Court than that any agreement of this kind ought to be certain, fair, and just in all its parts; if any of these ingredients are wanting in the case, this Court will not decree a specific performance; for it is in the discretion of the Court, whether they will decree a specific performance, because otherwise a decree might be made which would tend to the ruin of one party.” He reiterated these principles in Joynes v. Statham, the city of London v. Nash, and of Underwood v. Hitchcox, and expressly ruled, in Faine v. Brown, that without the other circumstances, “ the hardship alone of losing half of the purchase money,” if the contract were carried into execution, was sufficient to determine the discretion of the Court not to interfere, but to leave them to law. These two last cases were decided solely upon the ground that inadequacy of price is sufficient to prevent the specific performance of an agreement to sell land.

2 Bro. C. G. 167, 1787. Vide Under-hill v. Hor— wood, 10 Ves. -20g Gilson v. Jayes, 6 Ves. Q,_ Donnell, 2 Sch. & Left „í^ í488: in Chan. 77.

10 Ves. 29.

John- c-R-23.

In Heathcote & others v. Paignon, the Master of the Rolls extended the doctrine of inadequacy so far as to set aside a contract solely on that ground, and his decision, on an appeal to the Chancellor, Lord Thurlow, was affirmed: although this decision may now be questioned, yet it indicates the great weight that inadequacy of price had in such cases, which certainly would have been much greater in resisting an application for the specific performance of such an agreement, than in rescinding it. A written agreement, in Day v. Newman, ivas the subject of a bill for specific performance, and a cross bill for the recission of the contract. Lo:d vanly dismissed both bills. The agreement was entered into for the purchase of an estate, at a price represented on the one hand, of the value of 9 or £10,0011, and on the other, of only £5000. The amount agreed upon was for £6000, and £14,000 at the death of a person 65 years old, making it a case of a contract for the purchase of an estate for £20,000 that was not worth more than £10,000 ; and although there was no circumstance of fraud or surprise, the Master of the Rolls thought that he ought not to decree a specific perfonyiance; yet as no advantage was taken, of necessity he was not warranted to decree the vendor to deliver up the contract: this case was therefore made to turn upon the question of the inadequacy of price alone, independent of any other fact..

The case of White v. Damon, cited in the Circuit decree, is one of a peculiar class, a purchase made at auction, which cannot be put on the same grounds as private agreements, and Lord Rosslyn dismissed the bill for specific performance, merely on account of the inadequate price given for the estate, viz : £1120, and it was worth £2000; and on a- rehearing before Lord Eldon, although the decree was affirmed upon a different ground, yet he said that he was inclined to say that a sale by auction, where there is no fraud, surprise, &c. cannot be set aside for a mere inadequacy of value.

In the case of Mortlock v. Butter, the question of inadequacy was again discussed, but Lord Eldon distinctly reserved his opinion upon that point, although he had held that the rule was perfectly settled and not to be questioned, that the Court is not bound to decree a specific performance in every case where it will not set aside the contract, nor to set aside every contract that it will not specifically perform. In addition to these cases, it was held in Osgood v. Franklin, Chancellor Kent, that there is a very important distinction, which runs through all the cases, between ordering a contract to be rescinded and decreeing a specific performance.— Though inadequacy of price is not a ground for decreeing an agreement to be delivered up or a rule rescinded (unless its grosness amount to fraud) yet it may be sufficient for the Qom.(; refuse to enforce performance.

6 J 222°’ R’ i Bro. C. C. 179.

i Des. E. R, 250-

White y. Damon, 7 Yes. Bunws v Lock^icTves. 470. Newland on 4tli°Cox Repts

Cited in 2 Mad. Chan, 267,1733.

And in the subsequent case of Seymour v. Delaney and others, the same learned Chancellor, after an elaborate exam-¡nation of the English cases, came to the conclusion that inadequacy of price may, of itself, and without fraud or other ingredient, be sufficient to stay the application of the power of this Court, to enforce a specific performance of a private contract to sell land, although it may be true, as the Lord Chief Baron said in Griffith v. Spratley, that mere inadequacy of price, independant of other circumstances, is not sufficient to set aside the transaction. A similar view had been expressed by the Court of Equity, in this State, as early as 1792, in the case of Clitherall v. Ogilvie, where they refused to decree the specific performance of a contract for the sale of land, on the ground of the inadequacy of price, although there was no direct fraud or imposition in the purchaser, but the vendor was a very young man who had just arrived of age, was ignorant of the real value of his land, an<^ had acted ■ precipitately in concluding the contract, on being urged by the purchaser. Doubts have been occasionally cast upon this doctrine, and a few decisions may be found that apparently conflict with it, but the principle apPears to have been established by a strong current of well considered cases, and the circumstances of the case under consideration, instead of constituting it an exception, would seem to strengthen the defendant’s claim to its application.

In addition to the difficulty of applying mere abstract propositions to the practical purposes of life and the administration of justice, it has not been very distinctly defined what degree of inadequacy must exist, to authorize the Court to refuse the specific performance of an agreement.

The inadequacy must not be measured by grains, but it ought to be palpably disproportioned to the real- and market value of the property, so as to constitute a hard, unreasonable, and unconscionable contract; but it is not necessary that it should be so gross as to excite an exclamation or to indicate imposition, oppression or fraud, for this would be sufficient ground not only for refusing a specific performance, but for rescinding the contract.

Whatever wisdom there was in the civil law, prescribing a definite amount as the standard of a valid contract, that the price must exceed half the value of the property purchased, it may be doubted whether the application of such a rule, to set aside agreements, would not be inexpedient and impracticable in any, but especially in a commercial community ; it has never been adopted either in England or in this country, but it may well be considered as a fair standard of inadequa-Cyt Although in Muskeen v. Cole, where the sale was for one-half of the worth of the estate, the Court relieved against the contract, and in another very early case the Chancellor expressed a wish that the rule of the civil law should be adopted, I can find no other case in which it has been applied in rescinding agreements ; but from the established principles of equity, and from the case quoted, there is no doubt that such inadequacy is sufficient to resist the specific performance of an executory contract. In this case the defendant was a young man who had arrived at the age of twenty-one years a few weeks before the agreement, and who, from the want of sagacity, advice, and experience, was unable to cope with the other party in the contract: it is manifest that his examination of the land was utterly insufficient to enable him to ascertain its value, which from the glowing description of the advantages that he might derive from the purchase, was no doubt greatly exaggerated in his imagination, and although the case does not come within the class of contracts with young heirs who are entitled to expectations, yet it approximates the principle in practice. The weight of evidence establishes such inadequacy of value, that the most liberal calculation cannot resist the conclusion that Kirton, (who, although apparently only the agent of Gasque, is the real party m interest,) bargained the land to the defendant for double its value, and probably for three or four times as much as it would bring if sold at auction. Under all the circumstances this Court will not enforce the specific performance of the contract, but will leave the plaintiff to pursue his remedy at law, where he may recover damages more adequate to the injury he has sustained, than the price he seeks to receive here is proportioned to the value of the property.

3 as'

It is therefore ordered and decreed that the circuit decree be reversed, and the plaintiff’s bill be dismissed.

Dunxin, Ch. and Dargan, Ch. concurred.

Johnston, Ch. absent at the hearing.

Decree reversed.  