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.
Inadequacy of consideration has a peculiar and special meaning in this connection. Though at one time it was held that the value of the reversionary interest was to be determined for the purposes of applying these principles as in other cases, by determining the value of the life estate from tables of mortality and deducting this value from the full value of an estate in fee in possession in the property in question,1 this rule seems to have been generally abandoned on the ground that it is "gambling upon the lives of the ancestors and life tenants and so against public policy."2 The rule now in force is that the incumbrance of the life estate is not to be considered in determining the adequacy of the consideration for the remainder-man's conveyance of the fee.3 In some of the cases in which this rule is laid down, other circumstances than mere inadequacy are found. Thus a conveyance of a remainder in property the value of the entire fee of which was three thousand dollars, was made by one who had just come of age, to relatives with whom he had lived, who had great influence over him, and who prevented him from learning the value of his interest, in pursuance of a contract made by him during minority, in consideration of five hundred sixty-two dollars. The conveyance was set aside.4 One of the leading cases on the subject of inadequacy of consideration in loans to expectant heirs,5 has had the fortune to furnish an opinion which has formed the text of most of what has since been written on the subject, while the actual ground of decision has been often either ignored or misunderstood. In that case, A, an expectant heir, aged thirty-five, and not in very good health, borrowed five thousand pounds of B; and gave therefor his single bond to pay ten thousand pounds on the death of his ancestress, the Duchess of Marlborough, if he survived her. He then gave a penal bond in the sum of twenty thou-sand pounds conditioned on the payment of the first bond. After his death which followed that of his ancestress, his executors resisted payment of the bonds. Equity gave relief against the penal bond, but enforced the single bond. So where three hundred and fifty pounds was borrowed and a bond for seven hundred pounds payable when a reversion should vest in possession was given the transaction was upheld.6 A bargain much like that in Chesterfield v. Janssen, except that judgments were entered into instead of bonds, was avoided on payment of the amount borrowed with interest.7
13Aylesford v. Morris, L. R. 8 Ch. 484; Chambers v. Chambers, 139 Ind. Ill, 38 N. E. 334; M'Kinney v. Packard, 29 Va. (2 Leigh.) 149, 21 Am. Dec. 601. • A remainderman or reversioner is for such purposes "considered as an expectant heir." Gowland v. De Faria, 17 Ves. Jr. 20.
14 "Such a sale is not within the equity rule, which enables the court to relieve expectant heirs." Parmelee v. Cameron, 41 N. Y. 392.
15Foster v. Roberts, 29 Beav. 487; Chambers v. Chambers, 139 Ind. Ill, 38 N. E. 334.
16Beynon v. Cook, L. R. 10 Ch. 389; Bridge v. Kedon, 163 Cal. 493, 43 L. R. A. (N.S.) 404, 126 Pac. 149; Butler v. Duncan, 47 Mich. 94, 41 Am. Rep. 711, 10 N. E. 123.
The actual loan with reasonable interest may be recovered. Bridge v. Kedon, 163 Cal. 493, 43 L. R. A. (N.S.) 404, 126 Pac. 149.
17Chesterfield v. Janssen, 2 Ves. Sr. 125.
18 Peak v. Peak, 228 Mo. 536, 128 S. W. 981.
19 Nolle v. Thompson, 173 Mo. 595, 73 S. W. 599; Nolle v. Parks, 173 Mo. 616, 73 S. W. 596.
1Gowland v. De Faria, 17 Ves. Jr. 20. .
2Chambers v. Chambers, 139 Ind. 111, 120, 38 N. E. 334.
3Aldborough v. Trye, 7 Cl. & F. 436; Chambers v. Chambers, 139 Ind. Ill, 38 N. E. 334.