6 Johns. Ch. 222 | New York Court of Chancery | 1822
The question in this case is, whether it be fit and proper, under all the circumstances, to decree a specific performance of the contract of sale.
The main objection to the exercise of this, power of the Court, in the present case, is the great inadequacy of price which the plaintiff was to allow for the two farms, of which he seeks title. ...
By the articles of agreement, Thomas Ellison, the ancestor of the defendants, was to convey, by the first of June, 1820, two farms, lying in the towns of Montgomery an<j Wallkill, in Orange county, and containing, in the whole, 763 acres of land, and the plaintiff was to give, in exchange, the one equal undivided third part of two lots of land, in the village of Newburgh. The agreement was executed the 14th of January, 1820, and, by the terms of it, each party was at liberty to take possession of the estate to be conveyed to him, and to receive the profits to his own use ; and it is in proof, that each party did enter into possession, on the execution of the agreement.
The witnesses differ greatly in their estimates of the value of these respective pieces of land. I think, the weight of testimony fixes the value of the village lots, (I
The question then recurs, is it the dictate of sound legal discretion, that this agreement should be specifically carried into execution by the authority of this Court ? It is an application to sound discretion. This has been the uniform language of the Courts of equity. It is not a case requiring the aid of the Court ex debito justicies. It is a settled principle, that a specific performance of a contract of sale is not a matter - of course, but rests entirely in the
_
The specific Sf^rontract ¡^d^i-csts °j[ the discretion of the Court, upon a view of stances.irCUm"
Lord Somers, more than a century ago, stated the check that existed to the exercise of this extraordinary jurisdiction, when he observed, in the case of the Marquis of Normandy v. Lord Berkley, (cited in 5 Viner, 539.) that the Court would not carry an agreement into execution unless the contract was reasonable and fair in every particular, because Courts of equity cannot mitigate damages upon the circumstances of the case, as a jury may do, but must decree the whole contract to be performed. This doctrine was sanctioned by Lord Macclesfield, in Young v. Clerk; (Prec. in Ch. 538.) and he refused to decree the specific performance of articles concerning land, when there was a great undervalue, and the contract appeared to foe unreasonable, though good in law; but dismissed the bill, and left the party to his legal remedy for damages. Several cases are cited (1 Maddock's Ch. Rep. 9. note.) from the MS. tables of Lord Marcourt, in support of the established maxim, that equity will not carry hard or unreasonable agreements into execution. One of these cases, (Squire v. Baker, decided in 1726, and cited also in 5 Viner, 549. pl. 12.) the Court expressly took the distinction, and would not execute an unreasonable agreement, but yet allowed the party to make the most of it at law. Afterwards, in Savage v. Taylor, which was decided by Lord
Lord Maccles-
Lord Har- " totfcarry hard or unveasonable agreements into ex-the‘"party bfe medyaUaw*3*
These cases show the antiquity of the doctrine of the-Court, and that the power of awarding the specific execution of contracts for the sale of land, rested in sound judicial discretion, and -was not to be applied to eases that were hard, or unfair, or unreasonable, or founded on very inadequate considerations.
<y In the case of Thompson v. Harcourt, (2 Bro. P. C. 415.) a cross bill was filed in the Exchequer, in 1721, for the specific performance of a contract concerning stock, and the bill was dismissed, and the decree affirmed in Parliament, on the ground of the great inequality of the agreement, to pay 9200 pounds, for that which was not worth 1000 pounds, at the time of performance. The agreement was deemed a hard one, though fairly made, without fraud, surprise or ignorance.
This principle received continual approbation, and more full and clear illustration, in the various cases in which it was afterwards applied. It was established with great authority, and with great precision, in the time of Lord Hardwicke.
Lord Hardwieko.
Barnadiston v. Lingwood, (2 Atk. 133.) Lord Hardwicke said, 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. Again, in Baxter v. Lister, (3 Atk. 385.) he observed, that nothing was better established in Chancery, than that every agreement or contract of sale
The last case which f shall cite, from the decisions of Lord Hardwicke, is that of Faine v. Brown, (cited in Ramsden v. Hylton, 2 Vesey, 304.) decided in December, 1750. A person owned a small estate, which had been left him by will, on condition that if he sold it in 25 years, half the purchase money should go to his brother, and he agreed in writing to sell it, and afterwards refused to carry that agreement into execution, pretending to have been intoxicated with liquor at the time. A bill was brought to compel execution of the agreement j and Lord H. said,
opinion?"
The case of Day v. Newman, (2 Cox, 77.) came before Lord Mvanley, in 1788 ; and there was an agreement in writing for the purchase of an estate for 20,000 pounds, which was proved not to be worth above 10,000 pounds. There were no circumstances of fraud or surprise in the case, and he thought the inadequacy of price alone was sufficient not to induce him to decree a specific performance. He held it to be a foolish bargain, made by the parties with their eyes open; and he followed the distinction taken by Lord Talbot, and which is sustained through all the books; and held, that though the agreement was not to be executed, it was not to be delivered up and cancelled^ and the original bill for a specific performance, and the cross bill for cancelling the articles, were both dismissed.
It is difficult to reconcile this decree with one made by the Court of Exchequer, in the same year, in the case of Collier v. Brown, (1 Cox, 428.) where it was held, on a bill for specific performance, that if the parties bargained with their eyes open, and without imposition or surprise, mere inadequacy of price was not, of itself, sufficient to prevent the Court from administering its usual equity. But, in that case, the inadequacy of price was less than half, as the price agreed on was £275, and the seller was,
If, then, there was any thing in the case of Collier v. Brown, to disturb the harmony of the adjudged cases which had preceded it, that difficulty was entirely removed by this subsequent decision.
The doctrine involved in this inquiry, has been repeatedly brought into discussion since the time of Lord Eldon, and it will be instructive to examine the most material of the late cases on the point.
In White v. Damon, (7 Vesey, 30.) Lord Eldon was inclined to say, that a sale by auction could not be set aside for mere inadequacy of price. This was an .auction case, which undoubtedly rests on peculiar grounds, and thé
Lord Eldon,
The subject underwent a very full and able discussion, in Mortlock v. Buller, (10 Vesey, 292.) which was also a bill for the specific performance of a contract for the sale of an estate. The question, whether performance ought to be denied upon the single ground of great inadequacy of consideration, was much considered; the Lord Chancellor gave no opinion upon the doctrine of inadequacy of value, and said, he did not mean to decide upon it, though he treated the rule as not now to be questioned, and as perfectly settled, that the Court was 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. So, he afterwards observed, in Willan v. Willan, (16 Vesey, 83.) that “ there were many cases in which the Court would not disturb an agreement that has been executed, though it would have refused to carry that agreement into execution;
In Western v. Russell, (3 Ves. & Bea. 187.) the bill was against the heir of the vendor, for a specific performance of a contract to sell, and the defence was gross inadequacy of consideration. The Master of the Rolls said, that it was not necessary to determine the general question, whether inadequacy of price might not be a ground for refusing performance; and he decided that case upon its special circumstances, and held, that as the vendor was not alleged to be under any incapacity, or deficiency of judgment, and set his own price, and obtained it, and lived a year and a half after the completion of the bargain, and never expressed any dissatisfaction, but accused the purchaser of delay, the agreement ought to be carried into execution.
It will be observed, that in these later cases, there is a doubt thrown over the question, whether inadequacy of price alone, though not so great as to be evidence of fraud, will be sufficient, in any case, and without any other ingredient, as infirmity of mind, surprise, &c. to withhold the decree for a specific performance. But, after so much recognition of the general doctrine, that equity will not enforce hard, or unreasonable, or unequal bargaihs, but rather leave them to a jury at law, to mitigate or apportion the damages, as the justice of the case shall appear; after the decisions in Young v. Clark, Underwood v. Hithcox, Faine v. Brown, and Day v. Newman, on the wry point of inadequacy; and, after what was said by Baron Thompson, in Tilly v. Peers; and, after Lord
Though mere inadequacy of price, is not, of itself, sufficient to set aside a sale of land ; yet it is sufficient to induce the Court to refuse to decree a specific performance of a private contract of sale of land, and to leave the party to his remedy at law.
I conclude, then, 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 j though it may be trufe as the Lord Ch. Baron said, in Griffith v. Spratley, (1 Bro. 179. note.) that mere inadequacy of price, independent of other circumstances, is not sufficient to set aside the transaction. In the present case, the inadequacy is so great as to give the character of hardship, unreasonableness and inequality to the contract, and to render it discreet and proper, under the established principles of the Court, to refuse to decree a specific performance, and to leave the plaintiff to seek his compensation in damages at law.
Rule of the civil law»
If it were to be granted that an inadequacy, great as that in the present case, was not sufficient to stay the powers of the Court, without the weight of some _additignal_ingredient, we have that ingredient in this case.
Ellison, the ancestor of the defendants, was, in the last year or two of his life, rendered, for a considerable part of Ms time, unfit for business, by habitual intoxication. His mind must have felt the pernicious effects of that habit, and have lost its original strength, when he made the bargain in question. The proof is abundantly sufficient, to render the fact of his competency to contract, with the requisite judgment, doubtful. One of the witnesses says, that for the greater part of the last two years of his life, he was incompetent. The answer sets up this defence, in terms sufficiently intelligible to admit the proof, and to prevent the objection of surprise. It states, that for some time previous to his death, he was occasionally incapable of attending to business. The contract was made in January, and he died in August, 1820 ; and this language is, perhaps, as direct and explicit as children could have been inclined to use, and it was no doubt well understood by the plaintiff, for the habitual intoxication of Ellison appears to have been a matter of public notoriety in the village of JVewburgh. This fact adds greatly to the force of the considerations growing out of the inadequacy of the price, and is clearly sufficient, within the view of all the cases; to render it highly discreet and just to refuse the aid of the
There is another circumstance in the case which ought to be taken into consideration, when the plaintiff comes here seeking a specific performance. He was not in a condition to give a good title to the village lots, either when he contracted, or when the deeds were to be exchanged, or at the time of the death of Ellison. The lots were under mortgage for 5000 dollars, which I consider as their full value, and that mortgage was not redeemed until after Ellison’s death. The plaintiff was in default on the first of June, 1820. He ought to have shown himself able and ready to convey on that day. One of his witnesses, who is a physician, says, that Ellison, from June to within a week of his death, was competent in mind to do business. The plaintiff shows no sufficient excuse for his want of readiness and ability; and I cannot but persuade myself after having examined most of the English cases, that the united force of the circumstances of this case would have overcome the scruples of the most cautious mind that has ever investigated and expressed any opinion on the subject; and that a bill with so much fact against the equity of the claim, has never been sustained.
I have not heard or examined proof as to the competency of the plaintiff, now, to make a title. It was not necessary ; and where a case of specific performance turns upon that point, it is the usual course of the Court, to refer the inquiry, as to title, to a master.
1 am, consequently, of opinion, that the bill be dismissed, without costs.
The following decree was entered':
‘ It is declared, that from the great inadequacy in value of the lots in the village of JV., which the plaintiff contracted to convey to E., deceased, for the two farms in