Long v. Harrison , 134 Va. 424 ( 1922 )

Sims, J.,

after making the foregoing statement, delivered the following opinion of the court:

The question upon which the decision of this case turns is as follows:

1. Were the judgments, and the notes upon which they were entered, obtained by the defendants by fraud by the use of undue influence upon M. A. Long, the maker of the notes, exerted either directly by the defendants themselves or indirectly through others in conspiracy with the defendants to defraud the said Long?

The question must be answered in the affirmative.

The law applicable is well settled and, indeed, is not the subject of any controversy between counsel, so that no review of the authorities cited will be here undertaken. We shall content ourselves with setting forth the statements in some of the authorities of the established principles which are pertinent to the ease before us.

As said in Ohitty on Contracts, page 1050: “Although weakness of intellect, short of insanity, in one of the contracting parties, is no ground per se for invalidating a contract, it may have that effect if additional facts, betraying an intention to overreach, can be proved.” This statement of the law is approved by this court in C. & O. R. R. Co. v. Mosby, 93 Va. at p. 94, 24 S. E. 916.

In 1 Elliott on Contracts, secs. 157-8-9, pp. 275-281, this is said: “The contract of a person mentally weak, on which account he is liable to imposition, will be set aside in courts of equity if the circumstances justify the conclusion that such party has not exercised a deliberate judgment but has been imposed upon or overcome by undue influence.

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“In general, mere inadequacy of consideration uncombined with other circumstances does not afford sufficient ground for the rescission of a contract, or the cancellation of a written instrument. A contract will be set aside for inadequacy of consideration only when a consideration is so grossly inadequate as to shock the conscience and then a court of equity interferes because under such circumstances it constitutes satisfactory evidence of .fraud or undue influence. But this does not mean that inadequacy of consideration is not an important factor in determining the validity of a contract. It, in connection with other circumstances, may well be evidence of fraud or undue influence.”

In Black on Rescission and Cancellation, sec. 265, p. 700, the doctrine is stated: “While a contract made by a person of fair understanding should not be set aside merely because it was a rash, improvident, or hard bargain, yet if made with a person of impaired mind or feeble intelligence,' the inference is that it was obtained by imposition, deception or undue influence, so as to cast upon the other party the burden of showing its fairness. And it is said that a comparatively slight degree of mental incapacity will justify a court in setting aside a contract for which no valuable consideration has been received. In these cases, also, it is not necessary that the inadequacy of the consideration should be such as to ‘shock the conscience.’ A court of equity will see to it that a bargain made with a person of weak intellect shall be fair.”

In Gates v. Cornett, 72 Mich. 420, at p. 434, 40 N. W. 740, at p. 746, this is said: “The burden of proof was upon the complainant to show mental incompetency, and we think it has been made out. When a party deals with a man whom he knows to be of weak intellect, and the good faith of such dealings is challenged, the burden of proof is with the party who has dealt with the weak-minded person to show that no undue advantage was taken. The law throws its protecting shield around mentally incompetent persons, from whatever cause, and while in some cases it is permitted them to make contracts so long as they are not under the restraint of guardianship, these are binding only so far as they rest upon adequate considerations, and are free from fraud or overreaching.”

In 2 Pom. (3rd ed.) sec. 947, p. 1727, et seq., the author says: “It is well settled that there may be a condition of extreme mental weakness and loss of memory, either congenital, or resulting from old age, sickness or other cause, and not being either idiocy or lunacy, which will, without any other incidents or accompanying circumstances, of itself destroy the person’s testamentary capacity, and a fortiori be ground for defeating or setting aside his agreements and conveyances. It is equally certain that mere weak-mindedness, whether natural or induced by old age, sickness or other infirmity, unaccompanied by any other inequitable incidents, if the person has sufficient intelligence to understand the nature of the transaction, and is left to act upon his own free will, is not a sufficient ground to defeat the enforcement of an executory contract, or to set aside an executed agreement or conveyance. If, as is frequently, if not generally, the case, the mental weakness and failure of memory are accompanied by other inequitable incidents, and are taken undue advantage of through their means, equity not only may, but will, interpose with defensive or affirmative relief. Finally, in a case of real mental weakness,'a presumption arises against the validity of the transaction and the burden of proof rests upon the party claiming the benefit of the conveyance or contract to show its perfect fairness and the capacity of the other party.”

In Todd v. Sykes, 97 Va. at pp. 146-7, 33 S. E. at pp. 518, 519, this is said: “The burden of proof in this case is on the plaintiff to prove the fraud and undue influence alleged in the bill, and such proof must be clear and convincing, but if indicia of fraud be proved so that fraud may be presumed from the circumstances and condition of the parties contracting, or if it is proved that the parties stood in an intimate and confidential relation, one to the other, either as parent or child, or in any other way, the burden of proof shifts to the defendant, and he is obliged to repel by strong and clear evidence the presumptions of fraud and undue influence arising from the circumstances of the transaction and the relations of the parties, and in such eases he must prove the truth of the defense set up in his answer. Fishburne v. Ferguson, 84 Va. 111, 4 S. E. 575; Hickman v. Trout, 83 Va. 491-2, 3 S. E. 131; Waite on Fraud. Con. secs. 225 and 271; Bump on Fraud. Con. secs. 249, 256, and note to 67; and Francis v. Cline, 96 Va. 201, 31 S. E. 10.

“If from the relations of the parties and the surrounding circumstances a doubt is thrown around the payment in good faith of the consideration for the conveyance of the property, the grantee must prove the payment of the consideration (Hickman v. Trout, supra).

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“It is not necessary to prove fraud by direct and positive evidence. Circumstantial evidence is not only sufficient, but in most cases is the only proof that can be adduced. Armstrong, etc., Co. v. Lachman, 84 Va. 728, 6 S. E. 129; Moore v. Ullman, 80 Va. 311; Hickman v. Trout, supra; Saunders v. Parrish, 86 Va. 592, 10 S. E. 748; Ferguson v. Daughtrey, 94 Va. 308, 26 S. E. 822; Hazlewood v. Forrer, 94 Va. 703, 27 S. E. 507; Francis v. Cline, supra.

“A transaction may of itself and by itself furnish the most satisfactory proof of. fraud, so conclusive as to outweigh the answer of the defendant and even the evidence of witnesses. Jones v. McGruder, 87 Va. 360, 379, 12 S. E. 792, and authorities cited; Hazelwood v. Forrer, supra.”

In Fitzgerald v. Frankel, 109 Va. 605, 64 S. E. 942, is quoted with approval, the following excerpt from Hazlewood v. Forrer, 94 Va. 703, 27 S. E. 507:

“A transaction may of itself and by itself furnish the most satisfactory proof of fraud, so conclusive as to outweigh the answer of defendants, or even the evidence of witnesses. The circumstances attending and following a transaction are often of such character, as to leave not even a shadow of a doubt as to the real object and motive of the parties engaged in it. * * * Experience attests that in a majority of cases fraud can only be established by circumstances. The motives and intentions of the parties can only be judged by their actions, and the nature and character of the transaction in which they are engaged. They often furnish more conclusive evidence than the most direct testimony.”

On applying these principles to the evidence in this cause we are of opinion that the fraud of the defendants in question has been proved. The material facts, as we consider them clearly and convincingly established by the evidence, are set forth in the statement preceding this opinion and need not be restated here.

We do not think that young Long was incapable of making any valid contract. He was capable of making simple contracts and of arriving at reasonable conclusions from uncomplicated facts, where his mind was not influenced to the contrary by the' suggestions of others. But, as especially material in this case, his weakness was that he was abnormally subject to the influence of any one who chose to exert it in order to dominate and direct his action in any business matter. As said in Gates v. Cornett, supra (72 Mich., at p. 427, 40 N. W. at p. 742, a case strikingly similar in its facts to that before us): “He could transact business with honest people without detriment or loss to himself, but easily fell a prey to the vicious and designing.”

■ This view of the case (and the facts that young Long was robust and amiable, and was, as is admitted by the testimony, for the defendants, absolutely honest, being himself a menace to no one, and having therefore the natural right to enjoy the use of his own property and to live his life in an environment best suited to his capacities) satisfactorily accounts for the circumstances referred to in the opinion of the court below — (namely, of the marriage, of the son being entrusted by the father with the control of valuable property, of his service as a juror, which was at a single term of court and upon simple cases, involving no difference of opinion among the other jurors, and the “other items of evidence appearing in the case”) — consistently with the fact that the young man, in his business dealings was, in truth, but as wax when in the hands of designing men. This view, too, accounts for practically all.of the testimony of the witnesses for the defendants, who express opinions favorable to the competency of young Long, except the testimony of the defendants themselves, and that of Neff and Taylor; as such other testimony, without exception, was given by witnesses who never tried and never saw anyone else try to exert any dominating influence over the young man and had the simplest of transactions with him, if any, and in many eases none at all.

In view of the evidence actually in the cause, we do not feel that the conclusion we have reached therefrom is affected by the failure of the father to take the deposition of the son or of his wife. The deposition of the son would have given the court no personal observation of his demeanor and the actual failure of the father to get any help from him when trying to ascertain the facts to be introduced in evidence, and while depositions .were being taken in this cause, and the known propensity of the son to fabricate statements of fact and his vanity and unconsciousness of his own defects, fully justified the action of not taking the son’s deposition, as we think. The deposition of the wife was not vital to the case for the plaintiff; and the probability that her testifying would have been considered by the son, her husband, as hostile to him, is of itself a sufficient excuse for not putting her upon the witness stand.

2. With respect to the measure of the restitution which the plaintiff should make to the defendants — we think that a decree of reference — similar to the part of the draft for a decree on that subject which was tendered by the plaintiff, but rejected by the court below, will accomplish an equitable result.

It is well settled that, even where a contract is set aside for fraud in its procurement, the party at whose suit the rescission is granted must return whatever value he has received under the contract; but where by the acts of the adversary party complete restoration is rendered impossible, rescission will not thereby be defeated. That is to say, where a note, or judgment thereon, is rescinded for fraud, the maker of the note must, so far as the acts of the payee leave it practicable, account for the benefit he has received in the transaction. 3 Elliott on Contracts, sec. 2434, 2435; Gates v. Cornett, supra (72 Mich. at pp. 435-6, 40 N. W. 740).

In the case last cited the court held that this rule applied to contracts set aside on the ground of undue influence upon the plaintiff, who was a person of weak mind, and the appellate court there undertook, from the evidence in the record, to ascertain and decree the amount for which it would allow the contracts (being mortgages) to stand as supported by actual consideration received therefor, and declined to refer the case to a master for that purpose, saying “If we fail, through insufficient testimony, to allow the defendant as much as we ought, it will be owing to his own fault in not furnishing the proof.” The evidence in that case, however, was more specific than in the case before us on the subject of the actual consideration received by the plaintiff; and we feel that equity will be more nearly done and the ends of justice more fairly attained by reference of the cause to a master on the question of the actual consideration furnished to the plaintiff. But on such reference, upon the principles above alluded to, the defendants should bear the burden of proof of the actual consideration which was furnished to young Long for the notes on which the judgments were entered, such consideration to be ascertained by computing as nearly as practicable, from the evidence now in the record and such as may be introduced before the master in behalf of the plaintiff or defendants, the amount of money and of the market value, at the time it was received, of all the property received by young Long in all of his transactions with the defendants and with said Neff, Taylor and Sellers and Taylor, and deducting therefrom the amount of money and the market value, at the time it was received, of the property obtained by such parties or any of them, from young Long, in all of their transactions with him; and the judgments should be allowed to stand in favor of the respective defendants for such amount or amounts only, if any, as the defendants may show affirmatively are supported by valuable consideration.

The decree under review will therefore be reversed and the cause remanded to the court below, with direction that such decree of reference be therein entered as is above indicated and for further proceedings not in conflict with the views expressed in this opinion.

The death of D. B. Harrison, pending this appeal, having been suggested, the cause may be revived in the court below and thereafter proceed to final decree against his personal representative.

Reversed and remanded.