Case ID: iowa_71/html/0017-01.html
Source: Caselaw Access Project
Author: {"author": "Reed, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Clough v. Adams.
    1. Pleading: amendment during argument: allegations not controverted admitted . Where the ground upon which plaintiff sought a rescission of a conveyance of real estate was that it was obtained by fraud and undue influence, and for a grossly inadequate consideration, held that an amendment to her petition, in which she alleged that she and her husband were of weak intellect, and were wanting in capacity to engage in important business transactions, and that, at the time of the transaction in question, they were in financial distress, was -material to tbe case, but did not state a new cause of action or ground of relief, and that under Code, § 2689, it was properly allowed to be filed after tbe evidence was all in, and during tbe argument of the case; also, that theaverments contained in the amendment, not being denied, were to be taken as true, under Code, § 2712, in the further consideration of the’ case.
    2. Contracts: incapacity and undue influence: relief in equity.' The acts and contracts of persons who are of weak understanding, and-who are thereby liable to imposition, will be held void in courts of, equity, if the nature of the act or contract justifies the conclusion that the party has not exercised a deliberate judgment, but that be has been imposed upon, circumvented, or overcome by cunning or artifice or undue influence; and held that the facts of this cáse (see opinion) ir which, plaintiff and her husband were induced to convey their homestead for a patent right, worthless in their hands, bring it clearly within the rule above stated.
    
      Appeal from Clinton District Court.
    
    Thursday, March 3.
    Action for the rescission of a conveyance of real estate, 6n the alleged ground that it was obtained by fraud and undue influence, and for a grossly inadequate consideration. The district court entered judgment for plaintiff, and defendant appeals.
    
      Robert' T. T. Spence, P. J: Clausen and W. C. Qrohe, for appellant.
    
      Pilis McCoy, C. W. Chase and Á. T. Wheeler, for appellee.
   Reed, J.

Plaintiff alleged in her original petition that she was induced to enter into the transaction, and to part with her property, by certain false and fraudulent representations, made by Garland and Hpham, as to the value of the right they proposed to trade her. ' . , . Also that they obtained an undue influence over her, and by their importunities and persuasions overcame her will, and induced her to make the.trade. Also that the right assigned to her husband was valueless,'and constituted no adequate consideration for the conveyance of her property. After the evidence had all been introduced in the district court, and while the cause was being argued by counsel, plaintiff asked and obtained leave to file an amendment to her petition, in which it was alleged that'both she and her husband were of weak intellect, and were wanting in capacity to engage in important business transactions, and that, at the time of the transaction in question, they wei;e in financial distress. Defendant moved to strike the amendment from the files, because it was filed out of time, and it introduced a new issue or cause of action, and the allegations contained in it were immaterial. This motion being overruled, defendant elected to stand on that ruling, and did not answer the amendment; and the overruling of the motion is one of the matters complained of on this appeal.

We are of the opinion that the motion was properly overruled. The amendment did not materially change the issue. No new cause of action or ground of relief was pleaded in it. As stated above, the ground upon which plaintiff sought a rescission of the conveyance was that it was obtained by fraud and undue influence, and that the consideration paid jjbr it was grossy inadequate. The matters pleaded in the amendment were material to the case as made by the original petition and answer. • The fact that plaintiff and her husband yere of weak understanding, standing alone, would afford no ground for rescission, there being no claim that they were non compos. Put when considered in connection with the other circumstances of the transaction, it may be of the highest importance in determining whether the parties are entitled to relief in equity. And tlie same is true as to the allegation that the parties were in financial distress at the time uf the transaction. That fact alone would not have entitled them to relief; but, if true, it might be an important circumstance in the case. Under Code, § 2689, the insertion, by way of amendment, at any time, of allegations material to the case, is allowable. • The question whether an amendment shall be allowed is addressed largely to the discretion of the lower court; and, in the present case, we are very clear that there was no abuse of that discretion.

The allegations contained in the amendment, not having been controverted by any subsequent pleading, are, for the purposes of the case, to be deemed true. Code', § 2712. "We start out, then, in the consideration of the merits of the case, with two important facts admitted by the pleadings, viz.: That plaintiffs are persons of weak'understanding, and that they were under financial embarrassment at the time of the transaction. But if the transaction was fair, and the conveyance was supported by an adequate consideration, a court of equity, as we have already said, could not rescind the conveyance because of those .facts-. We will, therefore, proceed to consider the other : material facts of the transaction. As already stated, Garland is a dealer in patent-rights. He is presumed to have had some success in the business from the fact that, from being an occasional dealer in that character of property, he had come to devote all of his time and energies to the business of buying and selling it. It is also to be presumed, from the fact that his employer pays him a large salary for his services, that he possesses the enterprise and peculiar skill which is essential to success in the business. Upham had also had some experience as a dealer in patent-rights. At the time of the transaction he was the owner of a large extent of territory under the same patent. Me had also sold some territory, and he was then engaged in manufacturing and selling the patented article at Lyons.

■ There is great conflict between the testimony of plaintiff and her husband, and that of these parties, as to what took place during the negotiation. We are satisfied, however, that the advantages which would be likely to accrue to plaintiff and her husband from -the purchase of the territory were depicted in very glowing terms. Stories were told of great profits which had been' realized by persons who had engaged in the manufacture'arid sale of the articles. Other statements were made of large: profits accruing to the owner of territory, as foyalty on the manufacture of the’ article. Garland' -repre-> sented that he was the owner of two eastern states, and that he had received $2,500 as royalty for the manufacture of the articles in those states. There may have been a grain of truth in some of these statements. Others, we believe, were wholly and positively false. They were all made for the purpose of kindling in the heart of plaintiff and that of her husband a hope of gain which the parties who made them must have known would never be realized, and of inducing them to part with their property for something which it must have been apparent would in their hands be without value. The patented article is doubtless not without merit; but, on the market, it comes in competition with a great number of others of the same character, many of which are of equal merit, and some of which are now patented, so that the profits which accrue from the manufacture and sale of the article are too small to justify paying anything for the privilege of manufacturing it. Something might be realized, perhaps, by a shrewd and enterpising speculator like Garland .from the sale of the territory; but plaintiff’s husband is not of that character. It was perfectly apparent that he did not possess the enterprise nor skill that would enable him to realize anything by selling it. He unfortunately belongs to the class of “ weaklings” who are always found on the wrong side of the final deal in patent-right territory. Plaintiff and her husband readily fell into the scheme. They were led to believe, by the glowing picture that was held up before them, that the purchase of the right would afford them, not only speedy ’deliverance from their financial distress, but the means of acquiring great wealth. Their weak judgments were subjugated by the strong natures with which they were dealing. They had neither the will to resist the spell that was about them, nor the judgment to see the absurdity and folly of the act they were being led to commit. They were given no opportunity for deliberation or consultation with friends or between themselves. The moment they consented to make the trade, an -officer was sent for, and the conveyances were executed and delivered. Garland and TJpliam were careful to secure the entire consummation of the trade before giving them any opportunity for cool thought or consultation.

We think it clear that the case is one for equitable relief. The doctrine applicable to cases of this character is stated by Story, in his work on Equity Jurisprudence, as follows: “ The acts and contracts of persons who are of weak understanding, and who are thereby liable to imposition, will be held void in courts of equity, if the nature of the act or contract justifies the conclusion that the party has not exercised a deliberate judgment, but that he has been imposed upon, circumvented, or overcome by cunning, or artifice or undue influence.” Section 238. • See, also, Tracey v. Sacket, 1 Ohio St., 54 ; Freeland v. Eldridge, 19 Mo., 325 ; Earl of Chesterfield v. Janssen, 2 Ves. Sr., 124 ; Dunnage v. Whiter, 1 Swanst., 137. The pleadings and evidence in the present-case bring it clearly within the operation of this rule.

The judgment of the district court will be

Affirmed.