This section is from the book "The Law Of Contracts", by William Herbert Page. Also available from Amazon: Commercial Contracts: A Practical Guide to Deals, Contracts, Agreements and Promises.
The relation of parent and child is one of trust and confidence. Transactions between parents and children but slightly past the age of majority are sharply scrutinized by the courts.1 Such contract, however, is said not to be prima facie void.2 It has been held that even if advantageous to the parent, fraud and undue influence are not presumed if the child is of full age.3 A gratuitous deed made by one who is just of age to one in loco parentis has been held not to be prima facie voidable for constructive fraud.4 So where a daughter a few months after arriving at majority deeded to her mother her interest in her deceased father's estate at the request of her mother, it having been largely accumulated by the efforts of her mother, it was held that there was no constructive fraud.5 In other jurisdictions such transactions are said to be prima facie fraudulent.6 In all jurisdictions such contracts must be made with "uberrima fides, that fullness of candor and fairness required in transactions between parent and child."7 The utmost good faith is necessary.8 Misrepresentations which between parties not in confidential relations would fall far short of fraud,9 or suspicious circumstances attending the transaction,10 may amount to constructive fraud.11 So if in reliance upon the parent the children convey to him under an unenforceable oral contract, as a contract by him not to convey the property away, but to manage it during his lifetime;12 or a contract to destroy the conveyance and thus keep it from the record and never to make use of it,13 breach of such contract may amount to constructive fraud. Conveyances, gifts. and other transactions advantageous to the child are not presumed to be caused by fraud but to be by way of advancement.14 The burden of proof rests upon those who allege that the child is dominant.15 If the child is shown to have actual influence and control over the parent. the burden may rest on the child to explain suspicious circumstances.16 A conveyance by a parent to the child under an executory contract, as under a contract by the child to sell for the parent's benefit,17 may be avoided in case of breach, on the theory of constructive fraud. If A acts in reliance upon his son B, A's act in signing an instrument presented to him by B without reading it, which conveys his interest as the heir of his deceased daughter, is not negligent if A believed
21Martin v. Collison, 266 111. 172, 107 N. E. 267.
22Landes v. Landes, 268 111. 11, 108 N. E. 691.
23Landes v. Landes, 268 111. 11, 108 N. E. 691.
24 Stratton v. Wilson, 170 Ky. 61, 185 S. W. 522.
25 Illinois. Butler v. Eechleman, 18 111. 44.
Iowa. Guptill v. Verback, 58 la. 98, 12 N. W. 125; Williams v. Fahn, 119 la. 746, 94 N. W. 252.
Nebraska. Stratton v. Dole, 45 Neb. 472, 63 N. W. 875.
Oregon. Kelley v. Highfield, 15 Or. 277, 14 Pac. 744.
Tennessee. Goodall v. Thurman, 38 Tenn. (1 Head.) 209.
26Van Houten v. Morse, 162 Mass. 414, 44 Am. St. Rep. 373, 26 L. R. A. 430, 38 N. E. 705 (as that her family was poor and that she was part negro).
27Van Houten v. Morse, 162 Mass. 414, 44 Am. St. Rep. 373, 26 L. R. A. 430, 38 N. E. 705.
1Jenkins v. Pye, 37 U. S. (12 Pet.) 241, 9 L. ed. 1070; Williams v. Canary, 249 Fed. 344.
2 Alcorn v. Alcorn, 194 Fed. 275; Williams v. Canary, 249 Fed. 344.
3 Mallow v. Walker, 115 Ia. 238, 88 N. W. 452; Gregory v. Bowlsby, 115 Ia. 327, 88 N. W. 822; Coleman's Estate. 193 Pa. St. 605, 44 Atl. 1085.
4Couchman v. Couchman, 98 Ky. 109, 32 S. W.283.
5Murray v. Hilton, 8 D. C. App. 281.
6Wright v. Vanderplank, 8 De G. M. & G. 133, 2 Kay & J. 1.
7Taylor v. Taylor, 49 U. S. (8 How.) 183, 12 L. ed. 1040.
8Pevehouse v. Adams, 52 Okla. 495, 153 Pac. 65.
9Taylor v. Taylor, 49 U. S. (8 How.) 183, 12 L. ed. 1040.
10Gibson v. Hammang, 63 Neb. 349, 88 N. W. 500.
11Muzzy v. Tompkinson, 2 Wash. 616. 27 Pac. 456, 28 Pac. 652.
12Gregory v. Bowlsby, 115 la. 327, 88 N. W. 822.
13Peek v. Peek, 101 Mich. 304, 59 N. W. 604.
14Curtis v. Arnagast, 158 Ia. 507 [sub nomine, Curtiss v. Arnagast, 138 N. W. 873]; Carney v. Carney, 196 Pa. St. 34, 46 Atl. 264.
15Betz v. Lovell. 197 Ala. 239, 72 So. 500.
16Allen v. La Vaud, 213 N. Y. 322, 107 N. E. 570.
17Wilcox v. Mann, 115 Ia. 91, 87 N. W. 748. (This transaction was subsequently ratified by the parent.) piinciples which apply ' divorced wife, that by such who are engaged to '^-< >* dower right, and if B did which are made Ik ^f%*fo* instrument and A'a rights.11
A contract w' . • ^, ^^J^tep-ohild does not of itself imply able and not ' J'-'J^^ tract.23 A •. l^ffi* tract and3 '}**"* ^m&tsmfi** In making the contract and contract ;*-' ^ifi^^ev enter uPon the relation of mortgagor thereby, it has been held that the mortgagee can not treat such covenant as invalid if the mortgagor does not seek to avoid it.3 Accordingly, the mortgagee can not avoid a provision of a contract to the effect that if the mortgage debt is not paid at a specified time, the mortgaged property shall belong to the mortgagee absolutely, and that he shall credit a specified amount upon the indebtedness of the mortgagor; but if the mortgagor wishes to enforce such covenant, the mortgagee must credit such amount upon said debt.4
W* fj& rf^'tfies usually deal at arm's length, no especial dis tfrt*^?* ***[being reposed by either in the other. It is r" rid0**!^ \r for them to make a valid contract contem-
*** *Sle> h the giving of the mortgage whereby the right to
^fieov* "Jyed.1 A contract where the mortgagor agrees that f+dee* lS * rtg*8e is in force he will sell no malt liquor on the while except such as is bought from the mortgagee is invalid premises to clog the equity of redemption.2 as tending?*1 the mortgagor may ignore such covenant and may redeem ^ mortgaged ProPerty after the expiration of the period fixed
Morgan v. Owens, 228 111. 598, 81 v E l135. 19 Ellis v. Hogan, 147 Ga. 609, 95 S
1 England. Seton v. Slade, 7 Ves. Jr.
265. United States. Peugh v. Davis, 96
U. S. 332, 24 L. ed. 775.
Connecticut. Fritchard v. Elton, 38 Conn. 434; Lounsbury v. Norton, 59 Conn. 170, 22 Atl. 153.
Georgia. Horton v. Murden, 117 Ga. 72, 43 S. E. 786.
Illinois. Jackson v. Lynch, 129 111. 72, 21 N. E. 580, 22 N. E. 246; Cassem v. Heustis, 201 111. 208, 94 Am. St. Rep. 160, 66 N. E. 283; Shobe v. Luff, 66 111. App. 414.
Indiana. Turpie v. Lowe, 114 Ind. 37, 15 N. E. 834.
Kentucky. Skinner v. Miller, 15 Ky. (5 Litt.) 84.
Massachusetts. Desseau v. Holmes, 187 Mass. 486, 105 Am. St. Rep. 417, 73 N. E. 656.
Nebraska. State Bank v. Mathews, 45 Neb. 659, 50 Am. St. Rep. 565, 63
N. W. 930; First National Bank v. Sargent, 65 Neb. 594, 91 N. W. 595; Fahay v. Bank, 1 Neb. Rep. (unofficial) 89. 95 N. W. 505.
New Jersey. Youle v. Richards, 1 N. J. Eq. 534, 23 Am. Dec 722.
New York. Macauley v. Smith, 132 N. Y. 524, 30 N. E. 997.
Ohio. Marshall v. Stewart, 17 Ohio 356; Stover v. Bounds, 1 O. S. 107.
Tennessee. Cherry v. Bowen, 36 Tenn. (4 Sneed) 415.
Washington. Plummer v. Use, 41 Wash. 5, 111 Am. St. Rep. 997, 82 Pac. 1009.
West Virginia. Shank v. Groff, 43 W. Va. 337, 27 S. E. 340.
Wisconsin. Moeller v. Moore, 80 Wis. 434, 50 N. W. 396.
See, on this question, The Clog on the Equity of Redemption, by Bruce Wyman, 21 Harvard Law Review, 469, and Freedom of Contract in Mortgages, by E. C. C. Firth, 11 Law Quarterly Review, 144.
2 Rice v. Noakes , 2 Ch. 445.
On account of the advantage possessed by the mortgagee and the necessities of the mortgagor, subsequent contracts waiving the right of redemption are sharply scrutinized.5 "Contracts between the mortgagor and the mortgagee for the purchase or extinguishment of the equity of redemption are always regarded with jealousy by courts of equity,"6 and if unfair,7 as for an inadequate consideration,8 or without consideration in addition to the original debt,9 or if induced by the mortgagee's denial of the mortgagor's right to redeem and his refusal to assent to the correction of a mistake in expression,10 the contract and conveyance will be set aside. So a contract made after the property has been advertised for sale, by which the mortgagor agrees to forfeit certain payments already made by him will be relieved against in equity.11 To determine whether it is fair the court will look to the relations between the parties.12 If fair, such a contract will be upheld.13 It is not essential to its validity that any consideration in addition to the discharge of the mortgage debt should exist.14 So a contract whereby the mortgagor delivers a deed to the mortgaged realty in escrow, to be redelivered to him if he pays the mortgage debt in a certain time; and if he does not pay it in such time to be delivered to the mortgagee, the latter in such case to surrender to the mortgagor the note evidencing the mortgage deed, is valid even under a statute forbidding contracts in restraint of the right of redemption, no circumstances of oppression being shown.15 Whether a mortgagee who is selling or causing the sale of the mortgaged realty under a power of sale contained in the mortgage can purchase such property at such sale, is a question upon which there is some divergence of authority.16 The mortgagor may, however, assent to the mortgagee's making such purchase.17
3Gibbs v. Wallace, 58 Colo. 364, 147 Pac. 686.
4Gibbs v. Wallace, 58 Colo. 364, 147 Pac. 686.
5Ruesell v. Southard, 53 U. S. (12 How.) 139, 13 L. ed. 927; Ritchie v. McMullen, 79 Fed. 522, 25 C. C. A. 50; Seymour v. Mackay, 126 111. 341, 18 N. E. 552; Scanlan v. Scanlan, 134 111. 630, 25 N. E. 652; Holden Land & Live Stock Co. v. Interstate Trading Co., 87 Kan. 221, L. R. A. 1915B, 492, 123 Pac. 733; McBridge v. Campredon, - N. M. - , L. R. A. 1918D, 407, 171 Pac. 140.
6Cassem v. Heustis, 201 111. 208, 94 Am. St. Rep. 160, 66 N. E. 283.
7Cassem v. Heustis, 201 111. 206, 94 Am. St. Rep. 160, 66 N. E. 283.
8United States. Russell v. Southard, 53 U. S. (12 How.) 139, 13 L. ed. 927;
Peugh v. Davis, 96 U. S. 332, 24 L. ed. 775.
Illinois. Brown v. Gaffney, 28 111. 149.
New Mexico. McBridge v. Campredon, - N. M. - , L. R. A. 1918D, 407, 171 Pac. 140.
South Carolina. Hall v. Hall, 41 S. Car. 163, 44 Am. St. Rep. 696, 19 S. E. 305.
West Virginia. Thacker v. Morris, 52 W. Va. 220, 43 S. E. 141.
9Holden Land & Live Stock Co. v. Interstate Trading Co., 87 Kan. 221, L. R. A. 1915B, 492, 123 Pac. 733.
10Russell v. Southard, 58 U. S. (12 How.) 139, 13 L. ed. 927.
11Knight v. Jackson, 36 S. Car. 10, 14 S. E. 982.