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.
14 Marks v. Gates, 154 Fed. 481, 83 C. C. A. 321.
15Butler v. Duncan, 47 Mich. 94, 41 Am. Rep. 711, 10 N. W. 123; Hough v. Hunt, 2 Ohio 495, 15 Am. Dec. 569.
16 Stotesbury v. Huber, 237 Fed. 413.
17Howells v. Building Co., 21 Utah 45, 81 Am. St. Rep. 659, 60 Pac. 1025.
18Slater's Trust, L. R. 11 Ch. Div. 227; Miller v. Cook, L. R. 10 Eq. Cas. 641; Aylesford (Earl of) v. Morris, L. R. 8 Ch. App. 484.
19 Brown v. Hall, 14 R. I. 249, 51 Am. Rep. 375.
An agreement by illiterate persons, who are heirs to an estate, to give to one who informs them of the. existence of the property and their title to it, facts which they did not know, one-half the net amouqt thereof, will be set aside as an improvident bargain obtained by taking an unfair advantage, where the property is in the hands of a public trustee, their title is clear, and no litigation is contemplated.23 An agreement between members of a communistic society, that if any member withdraws, or dies, neither he nor his representatives shall be entitled to an account of his property, is not unconscionable.24 An agreement for gratuitous services, such as the gratuitous storage of goods,25 though unenforceable as far as executory, is not so unconscionable that the party rendering such services can recover compensation in spite of the agreement.
Land was laid out in city lots, and certain lots were sold out of said tract with the expectation of establishing a city thereon. Subsequently, after the project had failed, the vendor agreed to take a reconveyance of part of such property in payment of an unpaid part of the purchase price. The land at that time was useful only for farming and grazing purposes; and the fact that the lots already sold, amounting to nearly a third of the entire tract, were located at various places on such tract, made the portion recon-veyed of but slight value for grazing purposes. However, the. price already paid by the vendee exceeded the reasonable value of the entire tract. It was held that the vendor could not avoid the contract for reconveyance as unconscionable.26 A compromise agreement, by which thirty-three thousand dollars was to be advanced for an issue of forty thousand dollars, par value, of first mortgage bonds of a corporation, is not unconscionable.27 A provision in a contract of loan, that the debtor is not to be permitted to discharge his debt by borrowing money unless it is borrowed from the creditor, is unconscionable.28 Such contracts are said to be void as against public policy.
20Boyce v. Fisk, 110 Cal. 107, 42 Pac. 473.
21 Means v. Anderson, 19 R. I. 116, 32 Atl. 82.
22"The former claim (i. e., that the whole contract is unconscionable), we suppose, must stand on the question whether or not it is illegal." Union Central Life Ins. Co. v. Hilliard, 63 O. S. 478, 494, 81 Am. St Rep. 644, 650, 59 N. E. 230.
23Rees v. DeBernardy &1896], 2 Ch. 437.
24 Baker v. Nachtrieb, 60 U. S. (19 How.) 126, 15 L. ed. 528; Speidel v. Henrici, 120 U. S. 377, 30 L. ed. 718; Schwartz v. Duss, 187 U. S. 8, 47 L. ed. 53; Schwartz v. Duss, 93 Fed. 528; Gaselys v. Separatists' Society, 13 O. S. 144; Schriber v. Rapp, 5 Watts (Pa.) 351, 30 Am. Dec 327.
25 Knight v. Commercial Co., 6 Wyom. 500, 46 Pac. 1094.
A provision for payment of attorney's fee by the debtor in case of suit is held to be void,29 whether in a note,30 or mortgage,31 or trust deed.32 If invalid in a note it is said that "for a stronger reason the stipulation would be invalid in a mortgage or deed of trust where the opportunity for oppression is greater."33 In other jurisdictions, however, such a contract is held to be valid. The latter view, as will appear from the cases cited, has the support of the majority of the courts.34 Since such a contract is said in some states to be void, the courts using the term correctly must regard the subject-matter as defective; and this we find to be the case in some jurisdictions. Such a contract is said to be usurious,35 ahd to be a contract for a penalty,36 as well as to encourage litigation,37 and be in violation of statutory provisions concerning costs.38 So a provision in a bond and mortgage that the mortgagor shall pay "expenses included in procuring and continuing abstracts of title for the purposes of the foreclosure suit," is invalid.39
26Banner v. Rosser, 06 Va. 238, 31 S. E. 67.
27 Franklin Trust Co. v. Electric Co., 57 N. J. Eq. 42, 41 Atl. 488 [affirmed, 68 N. J. Eq. 579, 43 Atl. 1098].
28Union Central Life Ins. Co. v. Champlin, 11 Okla. 184, 55 L. R. A. 109, 65 Pac. 836.
Contra, under a similar contract with the same insurance company. Sheneberger v. Ins. Co., 114 la. 57S, 55 L. R. A. 269, 87 N. W. 493.
29 Bendey v. Townsend, 109 U. S. 665, 27 L. ed. 1065.
30 Witherspoon v. Musselman, 77 Ky. (14 Bush.) 214, 29 Am. Rep. 404; Bullock v. Taylor, 39 Mich. 13T, 33 Am. Rep. 356; Tinsley, v. Hoskins, 111 N. Car. 340, 32 Am. St. Rep. 801, 16 S. E. 325; Brisco v. Norris, 112 N. Car. 671, 16 S. E. 850; Myer v. Hart, 40 Mich. 517, 20 Am. Rep. 553.
31 Kittermaeter v. Brossard, 105 Mich. 219, 55 Am. St Rep. 437, 63 N. W. 75; Balfour v. Davis, 14 Or. 47, 12 Pac. 89.
32 Williams v. Rich, 117 N. Car. 235, 23 S. E. 257; Turner v. Boger, 126 N. Car. 300, 49 L. R. A. 590, 35 S. E. 592.
33 Turner v. Boger, 126 N. Car. 300, 302, 49 L. R. A. 590, 35 S. E. 592.
34 California. Luddy v. Pavkovich, 137 Cal. 284, 70 Pac. 177; Woodward v. Brown, 119 Cal. 283, 63 Am. St. Rep. 108, 51 Pac. 2, 542.
Illinois. Sweeney v. Kaufmann, 168 111. 233, 48 N. E. 144; Uedelhofen v. Mason, 201 111. 465, 66 N. E. 364 [affirming, 102 III. App. 116].
Indiana. Johnson v. Hosford, 110 Ind. 572, 10 N. E. 407.
Iowa. Schmidt v. Potter, 35 la. 426.
Maryland. Bowie v. Hall, 69 Md. 433, 9 Am. St. Rep. 433, 1 L. R. A. 546, LB Atl. 64.
Minnesota. Murray v. Chamberlain, 67 Minn. 12, 69 N. W. 474.
Pennsylvania. Walter v. Dickson, 175 Pa. St. 204, 34 Atl. 646.
Washington. Gordon v. Decker, 19 Wash. 188, 52 Pac. 856.
Wisconsin. Mosher v. Chapin, 12 Wis. 453.
A clause in a lease that the landlord should not be liable in damages for future distraint is invalid.40 A provision .in a lease that if the tenant attempts to remove his property from the premises, makes an assignment for the benefit of his creditors, and the like, the rent for the entire term shall become due at once, is not invalid.41 A provision in a contract for the sale of property on the installment plan, the title passing and a chattel mortgage being given, to the effect that if the purchaser fails to pay any installment when due, the vendor is authorized to take possession of the property sold, is not invalid in the absence of statute.42 A contract to sell land for fifty dollars down and payments of twenty-five dollars a month for twenty-eight months, with a provision for forfeiture of payments made if the vendee should allow payments to be in default for a specified time, or if the vendee should change his residence without notice to the vendor, is not unconscionable so as to be unenforceable if the vendor sues for the unpaid installments.43 So a purchase by one partner of the share of the other at such a price that the investment will yield an annual income of from twelve to twenty-two per cent., can not be set aside at the instance of the vendee as unconscionable.44
A sale of land for a small cash payment and without any security for deferred payments other than the land, is not unconscionable if the vendee is amply solvent.45 A contract to sell for thirtyeight hundred dollars land which is worth about forty-five hundred dollars is not unconscionable.46 A contract whereby the inventions of the employe should become the property of the employer is not unconscionable.47 A contract to convey "on demand" is not unconscionable if construed to mean "in a reasonable time."48 A sale of stock which the seller knows is absolutely worthless for a substantial amount, is invalid,49
35 Toole v. Stephen, 31 Va. (4 Leigh) 581. See Sec. 1001.
36 Witherspoon v. Mueselman, 77 Ky. (14 Bush.) 214, 29 Am. Rep. 404.
37 Witherspoon v. Mussehnan, 77 Ky. (14 Bush.) 214, 29 Am. Rep. 404; Bullock v. Taylor, 39 Mich. 137, 33 Am. Rep. 356; Myer v. Hart, 40 Mich. 517, 29 Am. Rep. 553.
38 Bullock v. Taylor, 39 Mich. 137, 33 Am. Rep. 356.
39 Northwestern, etc., Ins. Co. v. But-ler, 57 Neb. 198, 77 N. W. 667.
40 Watson v. Boswell, 25 Tex. Civ. App. 379, 61 S. W. 407.
41 Platt v. Johnson, 168 Pa. St. 47, 47 Am. St. Rep. 877, 31 Atl. 935.
42 Singer Mfg. Co. v. Rios, 96 Tex. 174, 97 Am. St. Rep. 901, 60 L. R. A 143, 71 S. W. 275.
43 Meagher v. Hall, 173 Mass. 577, 54 N. E. 347.
44 Loftus v. Maloney, 80 Va. 576, 16 S. E. 749.
45McCluskey v. Scott (la.), 124 N. W. 796. See also, Mitchell v. Mutch, 180 la. 1281, 164 N. W. 212.