#### Kuelkamp vs. Hidding

Equity — Ebaud. *For what misrepresentations a conveyance of land will he cancelled.*

1. It may Tie true, in general, that the misrepresentations for which equity cancels a conveyance of land, are such as’ relate to the quantity, quality, situation or value of the property, or the pecuniary responsibility of the purchaser, or something of that nature.

2. But equity does not limit itself by strict rules and strict definitions in matters of fraud. It leaves the way open to redress wrongs committed by means of fraud, in whatsoever forms it may appear.

3. A misrepresentation producing terror and confusion of mind, unsettling the judgment, and depriving the party of the free use of the reasoning faculty, where such misrepresentation was purposely made in order to take advantage of the resulting fear and mental derangement to secure a hard and unconscionable bargain, *held*to be a fraud, against which equity will relieve, in a proper case.

4. While a sale and conveyance will not be set aside solely on the ground of inadequacy of price, yet such inadequacy, especially if gross, is evidence of fraud.

5. The complaint shows that when the plaintiff conveyed his lands to defendant, he was illiterate and ignorant of business; that he was agitated with fear by reason of misrepresentations as to his personal peril from the anger of his neighbors, artfully made to him by defendant to induce him to part with his property for less than its value; that the sale and conveyance were made hastily and in secret, giving plaintiff no opportunity to consult with friends or counsel; and that the price paid did not exceed one-third of the value of the lands. *Held,*on demurrer, that these averments show good ground for equitable relief.

*504' APPEAL from tbe Circuit Court for *Racine*County.

Action to have certain conveyances of land from plaintiff to defendant annulled for fraud, and to bave defendant adjudged to reconvejr, etc. Tbe facts alleged in tbe complaint as tbe ground for tbis relief are substantially as follows:

Tbe plaintiff has been for many years last past a resident of Burlington in said county; and on tbe 6tb of December, 1871, be was, and for ten years immediately prior thereto bad been, tbe owner in fee and in possession of certain lands in said county, described in tbe complaint. On tbe 1st of December, 1871, be returned to bis borne in said town of Burlington, after a brief absence, and found bis wife lying on the floor in an unconscious condition, and sbe shortly after expired. A *post mortem*examination of her body was subsequently made by a j)hysician of Burlington, at which plaintiff was present, and said physician said that tbe deceased came to her death from ah injury upon tbe bead. An inquest was then held upon the body by a coroner’s jury, which found that said deceased came to her death in the manner just stated. Soon afterwards tbe defendant and his son came to the plaintiff’s house, and defendant then and there represented to plaintiff that it was currently stated and generally believed that he (plaintiff) had hilled his said wife (of which charge ¡flaintiff was wholly innocent); that the people would come after him, and be would be arrested and imprisoned for hilling bis' wife, if be himself was not hilled by the people; that his life was in danger, and that it was necessary for his safety, and bis only chance of safety, that he should dispose of and convey his property and leave tbe country. Defendant further represented that one Luech, of said Burlington, tbe chairman of tbe board of supervisors of said town, a man of position and influence in the community and in whom plaintiff bad .great confidence, had also said concerning tbe plaintiff that be must get out of tbe way, and that tbe people would not interfere with him for tbe next day or two if he would leave. Defendant then and there further represented to *505plaintiff tbat be was plaintiff’s best friend ; tbat be was advising bim for bis best interests and welfare in tbe matter, and desired to assist bim in getting away from Burlington and out of tbis state ; and tbat, for tbe purpose of assisting him to dispose of bis property, and to facilitate bis escape from threatened arrest and tbe violence of tbe people, be, defendant, would purchase of plaintiff the premises before described, for $1,500, and would retain $500 of tbat sum for tbe purpose of becoming bail for tbe plaintiff, which he stated would be necessary, as the latter might be arrested. Defendant at tbe same time further represented to plaintiff tbat be, plaintiff, must at once execute conveyances of land to bim, said defendant, and tbat be would have deeds prepared immediately for plaintiff to sign. Plaintiff is a German, wholly unable to read or write English, very. illiterate, and ignorant of tbe usages of business. At tbe time of the representations aforesaid, be was laboring under great excitement and depression by reason of tbe death of bis wife, and said inquest and examination; and he was induced by said representations to believe tbat be was about to be arrested and imprisoned on said charge of murder, and was in great and instant danger of bis life at tbe bands of tbe people, and tbat bis only safety was to instantly leave Burlington and its vicinity, and to dispose of bis property to defendant. Relying wholly upon said representations of defendant, and believing them to be made in good faith, for the purpose of befriending him, plaintiff, on tbe 6th of December, at Burlington, executed, acknowledged and delivered to defendant a warranty deed of tbe premises aforesaid, except a certain described portion thereof, of which be executed and acknowledged a quitclaim deed tbe next day, at tbe city of Racine, upon tbe further representation of defendant tbat in order to convey to him a full title to said premises it was necessary that plaintiff should instantly accompany defendant to Racine and execute a further conveyance; in pursuance of which representations plaintiff came to Racine with defendant on tbe last named day, arriving *506there in tbe evening, and tbe same nigbt was taken to some store or saloon in said city, and defendant then went for and returned with a notary public, bringing said last mentioned deed fully drawn and prepared, whereupon it was executed, acknowledged and delivered to defendant. Defendant thereupon paid plaintiff $250 in money, promised to discharge for him an indebtedness of $60, and also executed and delivered to plaintiff five notes for $150 each, dated December 6, 1871, and due, without interest, on the 1st of October in each of the years 1872, 1873, 1874 and 1875 ; and this was the only consideration received by plaintiff for said lands. The representations made by defendant as aforesaid, were false and fraudulent, in that plaintiff was not in immediate danger of arrest upon said charge, nor in any danger of personal violence or interference from the people, and his life was not in peril, nor his liberty in immediate jeopardy; and clefendant well knew that his representations were false, and made them for the sole purpose of inducing plaintiff to execute said conveyances; and “ in the exercise of an undue influence over the plaintiff, and taking advantage of the confidence reposed in him by plaintiff, by reason of plaintiff’s long acquaintance with him, and by virtue of said representations and statements, as well as of the excited state of plaintiff’s mind and the condition of alarm created by said representations, and of the circumstances aforesaid, all of which were known to defendant, and intending to cheat and defraud plaintiff,’’ he induced and procured plaintiff to execute and deliver to him the conveyances aforesaid, without adequate consideration. The interest of plaintiff in the land so conveyed was, at the time of such conveyance, worth $3,000 and upwards, and this fact was well known to defendant; the consideration agreed to be paid for them was grossly inadequate, and plaintiff was induced to make said conveyances solely through undue influence and through fear and alarm created by the fraudulent representations of defendant. Before the commencement of this action plaintiff offered to return to defendant *507bis said notes, and each of them, and tendered to bim tbe full amount of money received from bim as before stated, together with all moneys laid out and disbursed by bim on account of tbe indebtedness of plaintiff, with interest on tbe whole thereof, and demanded of defendant that be execute a quitclaim deed of tbe premises to plaintiff, but defendant refused said tender, and refused to execute such deed.

Tbe defendant demurred to tbe complaint as not stating a cause of action, and appealed from an order overruling bis demurrer.

*Johnson &*Beiibrock, for appellant,

argued that a contract will not be set aside for misrepresentation unless it be, (1) of a material fact constituting an inducement to tbe contract; (2) of something in regard to which tbe one party places a known trust and confidence in tbe other; (3) of a matter of fact and not of opinion merely ; and (4) of something of which tbe party making it has peculiar means of knowledge (Story’s Eq. Jur., §§ 195, 200; *Smith v.*Bicharás, 13 Pet., 26, 37; *Smith v. Mariner,*5 "Wis., 551); and that tbe misrepresentations alleged in tbe complaint were not of this character. They further argued that if plaintiff, under tbe influence of tbe same representations, bad sold bis property at a sacrifice to some third person, he could not have maintained an action against defendant for damages, and therefore, by tbe test applied in *Mariner v.*Smith, be could not maintain an equitable action for alleged fraud based upon those representations. They also contended that in tbe absenee of any averment that plaintiff’s ignorance and excitement were such as to affect bis capacity to contract, tbe other averments in relation to them are of no importance. *Farnam v. Broolcs,*9 Pick., 212.

*Fuller & Dyer*(with *Chas. H.*Lee, of counsel), for respondent,

cited Willard’s Eq., 170, 202-204; Story’s Eq. Jur. §§ 192, 246; 1 Mad. Ch., 214; *Sears v. Shafer,*2 Seld., 272; *Tinder-hill v. Horwood,*10 Yes., 249.

*508DixoN, O. J.

Counsel for tbe defendant are especially clever and adroit in argument, and certainly make tbe most of their side of tbe case; but we still think their demurrer go tbe complaint was correctly overruled, and that tbe order appealed from must be affirmed. Tbe authorities cited by counsel opposed are full to tbe points in all directions, that tbe complaint states a good cause of action for rescinding tbe sale and can-celling tbe conveyances on tbe ground of fraud, misrepresentation, false impressions produced, imposition, violation of trust and confidence, undue influence obtained over the mind of a weak and illiterate man, still further enfeebled by present anxiety and excitement, or undue advantage taken of tbe ignorance, necessity and distress of such a man, amounting to oppression on tbe one side with no power of resistance on the other, or whatever else, in tbe vocabulary of equity and of equity lawyers, tbe true ground for relief may be said to be. The complaint seems to reach out in all directions, and to present and satisfy all these grounds; and, besides, tbe grossest inadequacy of price is alleged.

Counsel for tbe defendant argue that the misrepresentation must have related to tbe quantity, quality, situation or value of tbe property sold, or tbe pecuniary responsibility of tbe purchaser, or to something of that nature; otherwise equity will not grant relief on that ground. Such may be conceded to be tbe general rule in equity, or tbe most frequent form of misrepresentation met with in tbe books; but it does not follow that there can be no other which will constitute the basis of equitable interference and relief. Equity does not limit itself by set rules nor by precise definitions, particularly in matters of fraud. Fraud is so multiform as to admit of no such rules or definitions; and hence equity always leaves tbe way open to punish frauds, and redress wrongs perpetrated by means of them, in whatsoever new form they may appear. A misrepresentation producing confusion and terror of mind, unsettling tbe judgment and depriving tbe party of tbe reasoning faculty, *509so that be cannot think or act deliberately or with knowledge and composure — such a misrepresentation purposely made in order to take advantage of tbe mental derangement and fear which ensues to secure a bard and unconscionable bargain, is certainly a fraudulent misrepresentation in tbe eye of a court of equity, and one against -which that court will grant relief in a proper case. Such is tbe misrepresentation complained of in tbe present case. Tbe sentiment or impulse of fear is a very overpowering one, especially in weak and uneducated minds; and to take unfair and dishonest advantage of it, whether produced by fraudulent misrepresentation or not, ought to be no less a fraud, in tbe consideration of equity, than to take such advantage of an insane person, a lunatic, or an idiot.

If the conveyances in the present case bad been obtained from the plaintiff when under arrest by tbe mob, no doubt they would have been void, or could have been avoided on tbe ground of duress. If they bad been obtained under the same circumstances with tbe addition of a threat to lynch or murder him, *a fortiori*would tbe same consequences have followed. How much better, upon tbe facts stated in tbe complaint, was tbe actual situation of tbe plaintiff, so far as tbe use and exercise of a free will and judgment were concerned, at tbe time the conveyances in question were executed? He was harassed by tbe same tormenting fears, though less perhaps in degree and intensity. He was fleeing from the same mob, and from the terrors of tbe same lynch law, attended part of the way by the present defendant, who, under tbe guise of friendship, but in reality to accomplish bis own sinister and selfish purposes, stimulated and nursed bis fears, and urged him on in bis flight. The defendant succeeded under such circumstances in obtaining conveyances of tbe plaintiff’s farm for one-tbird its value, and yet it is said to have been no fraud on tbe part of tbe defendant.

If tbe defendant, with fraudulent intent, had caused or produced intoxication of the plaintiff, and so had obtained tbe *510conveyances on the same terms, no one would doubt that equity would relieve against them. How does mental derangement, incapacity or pressure otherwise produced for like fraudulent ends, change or vary the application of the principle? It clearly appears to us that it cannot

For the rest we make some extracts from the authorities cited by counsel for the plaintiff, which seem to us peculiarly applicable to the case.

The second kind of fraud mentioned by Lord Hardwicke, in *Chesterfield v.*Janssen, 2 Vesey, Sen., 154, is that which “ may be apparent from the intrinsic nature and subject of the bargain itself; such as no man in his senses and not under delusion would make, on the one hand, and no honest and fair man would accept, on the other ; which are inequitable and un-conscientious bargains ; and of such even the common law has taken notice ; for which, if it would not look a little ludicrous, might be cited 1 Lev., 111, *James v. Morgan.*A third kind of fraud is, which may be presumed from the circumstances and condition of the parties contracting; and this goes further than the rule of law, which is that it must be proved, not presumed ; but it is wisely established ia this court to prevent taking surreptitious advantage of. the weakness and necessity of another; which knowingly to do is equally against conscience as to take advantage of his ignorance; a person is equally unable to judge for himself in one as the other. ”

“To make any agreement valid, ” says Judge Willard (Eq. Jur., 170), “requires the assent of the understanding of the several parties thereto. This implies freedom of action, as well as the exercise of reason, accompanied with deliberation; the mind weighing as in a balance the good and evil on either side. Every true consent supposes, first, a physical, second, a moral power; and third, a serious and free use of them. Hence it follows, that persons under duress, idiots, madmen and infants, are in general incapable of making contracts, either from a want of freedom of action, or an inability to judge of their own actions. *511Tbis disability is not in all casés total, but *sub modo*only. But tbe persons laboring under it are, at all times, tbe peculiar objects of tbe paternal guardianship and protection of a court of equity.

> “ It is upon tbis principle that courts of equity watcb, witb extreme jealousy, all contracts made by persons, *when there is any ground to suspect*imposition, oppression, *or undue advantage being taken by one of the parties ; or when one trusts to another with a blind and credulous confidence ; or when one of the*parties, *from whom an advantage has been obtained, was in circumstances of extreme necessity and distress.*Undue influence can bardly ever obtain its object without some degree of fraud; but the cases show it may exist without actual moral fraud. It has a nearer affinity to *duress*than to fraud, and in some cases it may contain a mixture of both.”

Tbe language of Judge Story is much tbe same. 1 Eq. Jur., § 192.

Speaking of inadequacy of consideration, Judge Story says it is not, of itself, a distinct principle of relief in equity ; and such is undoubtedly tbe correct rule. But gross inadequacy, such as “ shocks tbe conscience,” becomes, of itself, evidence of fraud. “As to tbe unconscionable nature of tbis bargain, I bardly know bow to express it; but must express it in terras that have been used by this court before; that, if tbe terms are so extremely inadequate as to satisfy the conscience of the court, by tbe amount of tbe inadequacy, that there must have been imposition, or that species of pressure upon distress, which in tbe view of tbis court amounts to oppression, tbis court would order tbe instruments delivered up, though courts of law might bold that judgment not within tbe sphere of their powers.” Such is tbe language of Lord Eldon, in *Underhill v. Horwood,*10 Vesey, 209, 219.

And Mr. Maddock says it has been held that a sale for one-half of the worth would be relieved against. 1 Mad. Ch., 269.

Considering all tbe facts and circumstances stated in tbe *512complaint, therefore, the ignorance of the plaintiff of business, and of the customs and usages thereof, and his illiteracy, the disturbed and agitated condition of his mind caused by the misrepresentations which were made to him, his fears and anxiety lest he might be seized and summarily punished by the mob; and considering the secrecy of the transaction and its haste, the plaintiff having had no opportunity to seek or obtain the advice of friends or counsel; and above all considering the gross inadequacy and imposition in the price — we have no hesitation in saying the complaint states a strong case for, equitable interposition, and for relief against the conveyances, and that the demurrer was properly overruled.

*By the*Court.— Order affirmed.