THOMAS J. O‘HARA, as Administrator of the Estate of Mary Lynch, Deceased, Respondent, v. THOMAS J. WATTSON, as Executor of the Last Will of Kate Lynch, Deceased, Substituted in Place of Kate Lynch, Appellant.
S. F. No. 6383
In Bank.
May 3, 1916.
172 Cal. 525
J. M. Seawell, Judge.
Id.—Determination of Trial Court as to Adequacy.—The determination of what is to be deemed an adequate consideration in each case, under the circumstances surrounding the transaction at the time the contract was made, is a question upon which the decision of the trial court must, in large measure, control.
Id.—Discretion of Court—Grounds for Refusing Specific Performance.—On the question of decreeing specific performance of
Id.—Adequacy of Consideration, How Determined.—Exact or even substantial equality in the value of the property at the time of the contract, as the court finds it to be, and the price fixed by the contract, is not the only circumstance to be considered in determining the adequacy of the consideration. The relations of the parties, and their love, affection, or regard for each other, as well as the object to be attained by the contract, may be given some effect.
Id.—Part Performance of Oral Contract—Effect of—Statute of Frauds.—Part performance by the vendee of an oral contract for the conveyance of land only raises an equitable estoppel against a plea of the statute of frauds. It does not relieve the contract from a defense based on inadequacy of consideration, injustice, or unfairness, or that it was obtained through oppression or by fraud.
Id.—Finding of Inadequacy—Love and Affection of Vendor for Vendee.—The supreme court cannot say that the trial court abused its discretion in holding the consideration for the oral contract in question to be inadequate, where it appeared that the property was worth eight thousand dollars, and was agreed to be sold for two thousand dollars, payable in monthly installments of less than the actual rental value of the property, that the vendor after the sale continued to pay taxes and insurance on the property, as before, and that the size of the monthly installments of the purchase price, show that the transaction was in effect a gift by the vendor to the vendee, notwithstanding the facts that the vendor had great love and affection for the vendee and was actuated by a desire that the vendee should be the owner of a home, and that a part of the consideration was that the vendee should move her residence from another part of the city where she resided to the premises in question.
Id.—Refusal of Specific Performance—Cancellation of Contract.—In an action by the personal representatives of such vendor to recover the possession of the property from the vendee, in which the latter sought specific performance of the contract, the court had power to render a decree which, in addition to refusing specific performance, will do complete justice between the parties. Under the circumstances of this case, a decree annulling the contract was proper.
The facts are stated in the opinion of the court.
Walter Perry Johnson, for Appellant.
P. F. Dunne, H. H. McPike, and J. C. Murray, for Respondent.
SHAW, J.
In this case a rehearing, after the decision in department, was ordered mainly for the purpose of having the whole court consider and pass upon an important question frequently arising and upon which our decisions seem to be considered uncertain.
There is no difficulty in reaching the conclusion that, under subdivision 1 of
It will not do to say that the consideration must be held inadequate unless the value of the property at the time of the contract, as the court finds it to be, exactly or even substantially equals the price fixed by the contract. The court must ascertain the value from the evidence, which ordinarily consists mainly of the opinions of witnesses. There are few subjects on which witnesses are more likely to differ than that of the value of property, and few are more difficult of satisfactory determination. Exact accuracy is not to be expected. And after the value is determined, the question of adequacy is not necessarily settled thereby, for other circumstances may affect the question. Undoubtedly the relations of the parties, and their love, affection, or regard for each other, as well as the object to be attained by the contract, may be given some effect. Just how far such matters should incline a court, in its sound discretion, to conclude that a price less than the value as found, is nevertheless adequate to justify specific performance, we cannot state by any general formula of words. Nor need we do so in this case, for we cannot say that the court below erred in holding that a price of two thousand dollars, for property worth eight thousand dollars, is inadequate, under the circumstances. That the vendor had great love and affection for the vendee and was actuated by a desire that the vendee should be the owner of a home, and that a part of the consideration was that the vendee should move her residence from another part of the city where she then resided to the premises in question, are circumstances proper to be considered as tending in some slight degree to show that a price less than the fair value was not inequitable to the vendor and should not be considered inadequate by a court
We are satisfied with the opinion of Justice Henshaw, rendered in department, and adhere to the views there expressed.
The judgment and the order denying a new trial are affirmed.
Henshaw, J., Melvin, J., Sloss, J., and Lawlor, J., concurred.
The following is the opinion of Justice Henshaw rendered in Department Two, on July 23, 1915, adopted and approved in the foregoing opinion:
HENSHAW, J.
Plaintiff, administrator of the estate of Mary Lynch, deceased, brought his action in ejectment against Kate Lynch to recover possession of improved real estate in the city and county of San Francisco. Kate Lynch answered and likewise filed her cross-complaint, the two pleadings setting forth substantially the same matters. These matters are the following: Mary Lynch acquired the major part of the property in controversy by succession as heir of her husband, who owned it all, and, by purchase, of the other undivided portion of the property from his other heirs. Mary Lynch and Kate Lynch were cousins by marriage, and for many years a warm affection and close intimacy had existed between them. In June, 1898, Mary Lynch expressed to Kate Lynch her desire that Kate Lynch should acquire and own a residence of her own, and made an oral offer to put Kate Lynch in possession of the premises in question and to sell her the same for the sum of two thousand dollars, to be paid in monthly installments of $30 a month, “and that when said sum of two thousand dollars should be paid, it was agreed that Mary Lynch should execute and deliver to said Kate Lynch a good and sufficient
The court found the oral contract pleaded; found the entry into possession by Kate Lynch with the consent of Mary Lynch under the contract; found that the payments were made by Kate Lynch to Mary Lynch under the contract as pleaded; found that Kate Lynch did not expend $450 in improvements, but that she expended small sums for repairs which in the aggregate did not exceed one hundred dollars, but that, upon the other hand, Mary Lynch “frequently made and paid for valuable improvements and additions to said premises and paid all taxes levied or assessed upon said premises“; found that the value of the property at the time of this oral agreement and continuously thereafter was and is eight thousand dollars. The court also found that the rental value of the premises during the whole period of Kate Lynch‘s occupancy was $35 per month.
The court denied specific performance, and as by its judgment it has decreed a restitution of the premises to the administrator, it necessarily set aside the oral contract, at least so far as the right of possession was concerned. From this decree defendant has appealed.
Upon the appeal it is argued that, admitting the disparity between the actual value of the property and the contract price, mere inadequacy of price is not alone sufficient in equity to justify the avoidance of such a contract as this,
It is to be noted that while the court found the existence of the contract as pleaded, there are no findings touching the relations of friendship and love asserted to exist between Mary and Kate Lynch. But this is of slight consequence, since it is at least fairly inferable (fraud or deceit not being charged) that some such consideration moved the vendor to the making of the contract which the court found to exist. And therefore for the purposes of this consideration appellant‘s contention that such relations did exist will be treated as well founded.
The cross-complaint will be scanned in vain to discover therein any allegation of the adequacy of the consideration moving from defendant to plaintiff‘s intestate or of the justness and reasonableness of the contract. Yet from the early case of Bruck v. Tucker, 42 Cal. 346, consistently down it has uniformly been held that such averments are essential to a good pleading in equity for specific performance. Only a few of these cases need be cited. (
While it is of course true that part performance of contracts for the conveyance of land in certain instances is held sufficient to lift the bar of the statute of frauds, it is equally true that not every act of part performance is sufficient. We need not enter into this consideration, for again it will be assumed for the purposes of this case that the part performance here is sufficient. But precisely what does this mean? It means only that equitable considerations impel the chancellor to say that he will treat the contract as though it were duly written and signed by the parties. It raises an equitable estoppel against a plea of the statute of frauds. In no other respect, however, does it vary the terms of the contract. It does not relieve it from any other infirmity demanding its condemnation. If the consideration be inadequate, it does not make that consideration adequate. If it be unjust or unfair to the vendor, it does not remove that injustice or unfairness. If it shall have been procured through oppression or by fraud, it does not relieve it from these condemning vices. (Pomeroy‘s Equity Jurisprudence, secs. 1034, 1405; Arnold v. Trice, 39 Ga. 511; Weed v. Terry, 2 Doug. (Mich.) 344, [45 Am. Dec. 257]; Walker v. Bohannan, 243 Mo. 119, [147 S. W. 1024].)
It is quite manifest that the court denied cross-complainant the relief of specific performance under the conviction that the contract of conveyance was without adequate consideration moving to the vendor. (
There were many, and there are still some, debatable and disputable propositions touching the granting or withholding of equitable relief. Some that were debatable and over which there was a conflict of authority in equity, have been removed from the domain of argument and definitively settled by the provisions of our code. One of those much debated propositions was whether equity, where specific performance was sought, should deny relief upon the sole ground of the inadequacy of price, or other consideration. In the famous and leading case of Seymour v. Delancey, 6 Johns. Ch. (N. Y.) 222, Chancellor Kent applied his great wisdom and learning to the question, and, under an elaborate review of the authorities, held that equity would and should withhold the relief of specific performance for mere inadequacy of price, unconnected with any other consideration; that is to say, an inadequacy of price, untainted by fraud, oppression or other advantage taken. The learned chancellor‘s holding in this respect was overruled upon appeal to the court for the trial of impeachments and the correction of errors, though it is not amiss to note that no justice nor chancellor dissented from the view of Chancellor Kent, and that his decision was overruled by a vote of the senators. The learned chief justice of that court wrote the opinion sustaining the views of Chancellor Kent, and recognizing that it was a question “upon which very great men have differed and have administered the equity of the court upon diametrically opposite principles,” he reached and expressed the conclusion that not only was the weight of authority very heavily against the doctrine condemning mere inadequacy of price as a ground for withholding relief, but he arrayed by name against Lord Eldon, as the protagonist of what he called the later doctrine, many men very learned in equity, and amongst them, and not the least of them, Chancellor Kent himself. Moreover, Chief Justice Savage is at pains to point out that the doctrine announced by Chancellor Kent has been the prevailing practice in courts of equity. It is said by Professor Pomeroy (6 Pomeroy‘s Equity Jurisprudence, sec. 790), that “the earlier cases were inclined to make mere inadequacy a sufficient hardship to defeat specific performance, but this tendency
It is therefore put beyond the reach of successful argument that the laws of the state of California declare to its courts of equity that they shall deny the equitable relief of specific performance when they find an inadequacy of price standing alone. Such has been the universal rule of decision in this state, and herein let it suffice, amongst the many, merely to refer to Morrill v. Everson, 77 Cal. 114, [19 Pac. 190]; Newman v. Freitas, 129 Cal. 283, [50 L. R. A. 548, 61 Pac. 907]; White v. Sage, 149 Cal. 613, [87 Pac. 193], and Wilson v. White, 161 Cal. 453, [119 Pac. 895]. And it may with propriety be added in explanation of Professor Pomeroy‘s text, that while in section 790 of his Equity Jurisprudence he states the rule as above quoted, in the footnote to that section it is recognized that a different rule obtains in California, and Prince v. Lamb, 128 Cal. 120, [60 Pac. 689], is cited in illustration of that rule, with a declaration that the California rule “rests on the provisions of the
It has been said that appellant, notwithstanding our statutory rule and the observance paid to it in a long and uniform line of decisions, holds that the language of this court in Dore v. Southern Pacific Co., 163 Cal. 182, [124 Pac. 817], supports his view. It is just that that language should be quoted at length. It is as follows:
“It is a well-established rule of equity that in an action to enforce specific performance of an executory agreement for the sale of land, the plaintiff must allege and prove that the consideration received by the other party was adequate, and that the agreement is, as to him, just and reasonable; in other words, that it is not, as to the other party, an unconscionable, inequitable or hard bargain, that the value of the land and the price to be paid are in reasonable approximation to equality. (
Civ. Code, sec. 3391 ; White v. Sage, 149 Cal. 613, 615, [87 Pac. 193]; Kaiser v. Barron, 153 Cal. 788, 790, [96 Pac. 806]; Stiles v. Cain, 134 Cal. 170, 171, [66 Pac. 231]; Bruck v. Tucker, 42 Cal. 346, 353.) There are many other cases. If the other party, with knowledge of such inequality as theremay be, nevertheless desired to and freely did enter into the contract without any unfair advantage being taken of him, it will not be deemed inequitable as to him. The demands of this rule will be considered as sufficiently met by these circumstances.”
It would be indeed singular if this court in Bank should deliberately contemplate the setting aside of the code provision and the overruling of our cases following it, and in doing so should have paid such scant consideration to that rule and to those cases. It would be the more remarkable if the learned author of the opinion in the Dore case had himself designed to do this thing when in his later opinion in Joyce v. Tomasini, 168 Cal. 234, [142 Pac. 67], he reannounces our well-established and familiar rule, and bases it upon the express language of the code in the following sentence: “The Civil Code, following the settled doctrine of equity jurisprudence, declares that specific performance of an executory contract cannot be enforced against a party if he has not received an adequate consideration therefor, or if it is not, as to him, just and reasonable. (Sec. 3391.)” The truth of the matter is that the court in the Dore case was not called upon to consider the proposition here advanced and was not considering it. It was considering the degree or amount of disparity between value and contract price which would establish inadequacy, and it was further considering the nature of the evidence in the case before it establishing value as distinguished from price. It is in this respect not unlike another case to which attention will hereafter be directed. So understood, the declaration amounts to this, that if there be a reasonable approximation to equality between the actual value as found by the court and the price fixed by the contract, the vendor will not be heard to complain of such inconsequential disparity as may be found to exist, but will be bound by the fact that he desired to and did freely enter into the contract without unfair advantage taken of him. This language was, of course, most pertinent to the consideration there before the court, because the question will often arise as to what disparity between value and price amounts to the inadequacy of the statute. And in this connection we may refer, as it was above suggested we would, to Wilson v. White, 161 Cal. 453, [119 Pac. 895]. In that case our rule of decision is redeclared, and it is said that while
It requires no discussion to support the statement that the contract in this case was executory and not executed. By the very terms of it, as pleaded by the appellant, her payments were to continue at the rate of $25 per month, and it was no more within the contemplation of the contract that she could pay the money otherwise than in accordance with its terms, than that the plaintiff could put her in default by demanding immediate payment of the whole of the remainder of the purchase price.
Appellant finally argues that even if the contract be unenforceable in equity, yet it is a valid contract in law, and that so long as she conforms to the terms of the contract, her possession cannot be taken from her as is done by this decree. Herein reliance is placed upon Manning v. Franklin, 81 Cal. 205, [22 Pac. 550], and Miller v. Waddingham, 91 Cal. 377, [13 L. R. A. 680, 27 Pac. 750]. It is quite true that when parties have submitted themselves and their contract to a court of equity, that court may simply withhold equitable relief, leaving the parties to such remedies as the law affords them. But this is not the limit of the power of equity when litigants have submitted themselves to its jurisdiction. It is
The judgment appealed from is therefore affirmed.
Lorigan, J., and Melvin, J., concurred.