Great inadequacy of consideration, joined with great disparity of mental ability in contracting a bargain, may justify equity in setting aside a sale or other contract.
(Orig. Code 1863, § 3110; Code 1868, § 3122; Code 1873, § 3179; Code 1882, § 3179; Civil Code 1895, § 4033; Civil Code 1910, § 4630; Code 1933, § 37-710.)
Cross references.- For further provisions regarding inadequacy of consideration, see § 13-3-46.
Law reviews.- For article discussing effect of contracts involving fraud or inadequate consideration, see 4 Ga. L. Rev. 469 (1970).
JUDICIAL DECISIONSANALYSIS
Cited in Thompson v. Thompson, 190 Ga. 264, 9 S.E.2d 80 (1940); Armour v. Lunsford, 192 Ga. 598, 15 S.E.2d 886 (1941); Livingston v. Barnett, 193 Ga. 640, 19 S.E.2d 385 (1942); Jones v. Hogans, 197 Ga. 404, 29 S.E.2d 568 (1944); Scott v. Gillis, 202 Ga. 220, 43 S.E.2d 95 (1947); Johnson v. Boyd, 202 Ga. 531, 43 S.E.2d 524 (1947); Pacific Nat'l Fire Ins. Co. v. Beavers, 87 Ga. App. 294, 73 S.E.2d 765 (1952); Tillman v. Byrd, 211 Ga. 918, 89 S.E.2d 479 (1955); Sheppard v. Broome, 214 Ga. 659, 107 S.E.2d 219 (1959); Brogdon v. Purvis, 220 Ga. 28, 136 S.E.2d 719 (1964); Hobbs v. Clark, 221 Ga. 558, 146 S.E.2d 271 (1965); Norman v. Van Gerpen, 221 Ga. 698, 146 S.E.2d 769 (1966); Fender v. Fender, 226 Ga. 129, 173 S.E.2d 211 (1970); Titshaw v. Carnes, 226 Ga. 430, 175 S.E.2d 541 (1970); Fender v. Fender, 228 Ga. 202, 184 S.E.2d 590 (1971); Mullinax v. Shaw, 143 Ga. App. 657, 239 S.E.2d 547 (1977); Guillebeau v. Yeargin, 254 Ga. 490, 330 S.E.2d 585 (1985); Kimbrell v. Connor, 218 Ga. App. 812, 463 S.E.2d 376 (1995).
Applicability of Section
Applicability of section.
- Before it is applicable, this section requires great inadequacy of consideration joined with great disparity of mental ability. It follows, therefore, that both must exist. Bailey v. Williams, 215 Ga. 395, 110 S.E.2d 673 (1959).
Under the principle enunciated in this section, a deed may be set aside in equity, on proof of the two elements stated (in this section), without proof of anything else as to fraud. Sutton v. McMillan, 213 Ga. 90, 97 S.E.2d 139 (1957); Titshaw v. Carnes, 224 Ga. 57, 159 S.E.2d 420 (1968); Jackson v. Rich, 227 Ga. 149, 179 S.E.2d 256 (1971); Harrell v. Wilson, 233 Ga. 899, 213 S.E.2d 871 (1975).
Principle of this section is applicable whether the consideration be the payment of a sum of money or the rendition of services. Fuller v. Stone, 207 Ga. 355, 61 S.E.2d 467 (1950).
Failure to show disparity of mental ability in foreclosure sale contract.
- Superior court did not err in granting a purchaser summary judgment in the purchaser's action seeking specific performance pursuant to O.C.G.A. § 23-2-131 requiring a mortgage company to deliver a deed conveying certain property because the company failed to demonstrate any merit in the company's contention that the superior court improperly refused to invoke the court's equitable power to relieve the company from performing under the foreclosure sale contract on the ground that the opening bid the company set forth was a mistake; although the company complained that the high bid was inadequate, the company failed to establish how that complaint allowed for the company to avoid the foreclosure sale contract, and the company did not cite any evidence authorizing a finding of any such disparity between the company and the purchaser. Decision One Mortg. Co., LLC v. Victor Warren Props., Inc., 304 Ga. App. 423, 696 S.E.2d 145 (2010).
Inadequate Consideration and Mental Disparity Generally
1. In General
Want of consideration for a conveyance, coupled with mental weakness or old age and undue influence, will authorize equitable relief. Harden v. Weaver, 184 Ga. 652, 192 S.E. 384 (1937).
"Great inadequacy of consideration, joined with great disparity of mental ability in contracting a bargain, may justify equity in setting aside a sale or other contract." Under that principle, a deed may be set aside in equity, on proof of the two elements stated, "without proof of anything else" as to fraud. A fortiori, the same rule would apply with at least equal force in case of such mental disparity and a total absence of consideration. Stow v. Hargrove, 203 Ga. 735, 48 S.E.2d 454 (1948).
Conflict as to issue of disparate mental ability.
- When, in a wrongful death action, a railroad argued there was no evidence presented to show a disparate mental ability between anyone representing the railroad on the one hand and the plaintiffs on the other at the time of their signing of a contract of release, but plaintiffs showed that the plaintiffs were in a highly emotional state following the death of their son and that treatment for their stress included valium, and a psychologist, who tested the plaintiffs found their I.Q. levels to be in the "mentally defective" range, while the railroad agent involved, on the other hand, was college educated and had some 20 years' experience in claims investigation and settlement, under the "any evidence" standard, the railroad was not entitled to a directed verdict. Southern Ry. v. Lawson, 256 Ga. 798, 353 S.E.2d 491 (1987).
Mental disparity.
- Generally, this section is applied in those instances where great mental disparity is relied upon by one of the parties to the contract. Moore v. Wells, 212 Ga. 446, 93 S.E.2d 731 (1956).
2. Fraud
Fraud in the procurement renders contract void.
- As between the original parties thereto, fraud in its procurement voids a contract, and this upon the theory that, the consent of the parties being necessary to the binding force of a contract, if one, apparently consenting by the execution of a written contract, can show that one did not in fact consent to its terms as therein expressed, but that one's apparent consent was induced by false and fraudulent practices, by means of which one was overreached by the other party, and, without negligence upon one's own part, really deceived as to the terms of the contract, one would be entitled to be relieved from its apparent obligations. McKaig v. Hardy, 196 Ga. 582, 27 S.E.2d 11 (1943).
Jury instruction on fraud authorized.
- When the grantor of an "improvident or profuse" deed was not wholly incapable of entering into such a contract, but was possessed of little or no will power and was greatly under the influence of the nephew to whom the deed was executed, an inference of fraud could have been drawn by the jury, and, the evidence for the defendant grantee not being such as to rebut the inference as a matter of law, the court was authorized to charge the jury upon the subject of fraud. Stanley v. Stanley, 175 Ga. 139, 175 S.E. 496 (1934).
Fraud in realty transactions.
- As against one who by fraud during the lifetime of deceased husband induced the latter to execute to that one a deed to realty, equity will afford the widow, as personal representative, a remedy to cancel and set aside the deed and incidentally to preserve and apply rents issuing from such realty. Ealy v. Tolbert, 209 Ga. 575, 74 S.E.2d 867, later appeal, 210 Ga. 96, 78 S.E.2d 26 (1953).
3. Insanity
When the maker is insane and the other party sane, there would be great mental disparity. The law, however, presumes one to be sane. Norwood v. Norwood, 207 Ga. 148, 60 S.E.2d 449 (1950).
4. Weakness of Mind
Weakness of mind not amounting to imbecility insufficient mental incapacity to justify setting deed aside.
- The law recognizes that there is "some disparity of mental ability between all persons who deal with each other," and "weakness of mind not amounting to imbecility is not sufficient mental incapacity to justify setting a deed aside." Bailey v. Williams, 215 Ga. 395, 110 S.E.2d 673 (1959); Thomas v. Garrett, 265 Ga. 395, 456 S.E.2d 573 (1995).
5. Grief
Statement that person was "almost crazy with grief".
- In action for cancellation or rescission of deed, the mere statement that the plaintiff was "almost crazy with grief over the recent death of her son" shows neither a mental incapacity to execute the instrument nor a "great disparity of mental ability" between the parties, such as would authorize the interference of equity on account of a "great inadequacy" of consideration, even if a "great inadequacy" had been sufficiently alleged. Hutchinson v. King, 192 Ga. 402, 15 S.E.2d 523 (1941).
Will executed within days of spouse's death.
- Trial court did not err in charging the jury under O.C.G.A. § 23-2-2 in a suit by an 83-year old plaintiff to recover property from defendants, her brother-in-law and his wife, because the evidence showed that defendants took plaintiff to her bank and to a lawyer 10 days after her husband died, where she deeded her entire estate to them. Mullis v. Mullis, 245 Ga. App. 845, 539 S.E.2d 189 (2000).
6. Intoxication
When a party at the time of entering into a contract or executing an instrument is intoxicated to such a degree as to deprive the party of the party's reason and to disqualify the party's mind to apprehend the nature of the party's act and its probable consequences, a court of equity may grant relief by rescission and cancellation. Equity will grant relief when the transfer of a valuable property has been fraudulently extorted, for a grossly inadequate consideration, from a person while in such a state of intoxication as to render the party incapable of transacting business. McKaig v. Hardy, 196 Ga. 582, 27 S.E.2d 11 (1943); Ealy v. Tolbert, 209 Ga. 575, 74 S.E.2d 867, later appeal, 210 Ga. 96, 78 S.E.2d 26 (1953).
Equity will grant relief when the transfer of a valuable property has been fraudulently extorted, for a grossly inadequate consideration, from a person while in such a state of intoxication as to render the person incapable of transacting business. Ealy v. Tolbert, 209 Ga. 575, 74 S.E.2d 867, later appeal, 210 Ga. 96, 78 S.E.2d 26 (1953).
Valuation of Consideration
Questions of value are peculiarly for the determination of the jury when there is any data in evidence upon which the jury may legitimately exercise their "own knowledge or ideas." Brinson v. Hester, 185 Ga. 761, 196 S.E. 412 (1938).
Pleading and Practice
Evidence of confidential relationships raises presumption of undue influence.
- When evidence is presented of a confidential relationship, the grantor being of weaker mentality and the grantee occupying the dominant position, an issue of fact is raised as to undue influence. Fletcher v. Fletcher, 242 Ga. 158, 249 S.E.2d 530 (1978).
Charge to jury.
- When the sole question was whether the transaction was an outright sale or a loan of money, and not a question of one party overreaching the other party the court did not err in not charging this section with respect to great inadequacy of consideration and great disparity of mental ability between the contracting parties. Batts v. Bedingfield, 204 Ga. 160, 48 S.E.2d 848 (1948).
In an action to set aside a deed, an instruction that the jury might set aside a deed if the jury found the mental ability of one party merely less than the mental ability of the person with whom he or she was being compared was erroneous and, further, the giving of the charge was error because there was no evidence to warrant it. Godwin v. Godwin, 265 Ga. 891, 463 S.E.2d 685 (1995).
RESEARCH REFERENCES
Am. Jur. 2d.
- 25 Am. Jur. 2d, Duress and Undue Influence, § 35 et seq. 27 Am. Jur. 2d, Equity, § 20. 37 Am. Jur. 2d, Fraud and Deceit, § 23.
C.J.S.- 37 C.J.S., Fraud, §§ 1, 60, 67.