Hawkins v. Randolph

Hart, J. (after stating the facts). We think the decision of the chancellor was correct. In. the case of Kelly’s Heirs v. McGuire, 15 Ark. 555, the court recognized that the law does not seem to have attempted to draw any discriminating’ line by which to determine how great must be the imbecility of mind to render a contract void; or how much intellect must remain to uphold it. The reason that no exact general rule as to incapacity to contract can be laid down is because each case will be found influenced by its own peculiar' circumstances. In discussing the subject the court said: “While the solemn contracts between men should never be disturbed on slight grounds; yet it may, perhaps, be assumed, as a safe general rule, that, whenever a person through age, decrepitude, affliction, or disease, becomes imbecile, and incapable of managing his affairs, an unreasonable or improvident disposition of his property will be set aside in a court of chancery. In re James Barker, 2 Johns. Ch. Rep. 232. * * * “If a contract is freely and understanding^ executed, by a party, with a full knowledge of his rights, and of the consequences of the act, it must stand. This court disclaims all jurisdiction to interfere on account of the improvidence or folly of an act done by a person of sound though impaired mind. But, on the other hand, contracts have been set aside and canceled, when want of consideration, or the improvident nature of the transaction has raised the presumption that fraud and misrepresentations were employed. Shelf or d on Lunacy, 267. "When a gift is disproportionate to the means of the giver) and the giver is a person of weak mind, of easy temper, yielding disposition, liable to be imposed on, the court will look upon such gift with a jealous eye? and strictly examine the conduct and behavior of the person in whose favor it is made, and if it can discover that any •acts or stratagems, or any undue means have been used, to procure such gifts; if it see the least speck of imposition, or that the donor is in such a situation with respect to the donee as may naturally .give him an undue influence over him; in a word, if there be the least scintilla of fraud, a court of equity will interpose.” (Citing cases.) The court has continued to recognize this as the general rule since that time. Campbell v. Lux, 146 Ark. 397, and Nelson v. Murray, 145 Ark. 247. In the • application of the doctrine to the facts of the present case it may be said that the evidence shows that Randolph freely and willingly entered into the contract in question and executed the deed of release to the mortgage ; but his action, measured as it must be, by the testimony of the witnesses as to the circumstances surrounding the transaction, does not show that intelligent participation characteristic of one who understands what he is doing and comprehends the nature of his act. The evidence shows that Randolph and Hawkins had lived on the terms of the closest friendship for thirty years, and that Randolnh alwavs advised, with Hawkins in regard to his affairs. He had full confidence in his judgment and integrity. He was an uneducated man and usually followed the advice of Hawkins in all his business transactions. Courts regard with a jealous eye transactions between persons connected by fiduciary relations. The principle is not confined to technical cases of fiduciary relationship. It is applicable to all cases where the relation between the parties gives one the controlling influence over the other. It is true that, where the parties are capable of contracting, courts will not set aside their contracts for mere inadequacy of price, but where the inadequacy is accompanied with other facts showing concealment on the part of the one who obtains a benefit on account of old age, ignorance, incapacity, etc., on the part of the one granting the benefit, courts of equity will readily grant relief. The direct testimony of the witnesses, standing alone, shows that Randolph had always been capable of attending to his own affairs, and that he still had intellect enough to make a disposition of his property, but his situation and the surrounding circumstances are proper to be taken into consideration in determining whether á court of equity should interpose. Randolph was over eighty years of age, and was an ignorant person, unable to read or write. Hawkins had. been his confidential adviser for thirty years. Randolph had already sold him his farm and had taken a mortgage back to secure most of the purchase price. His fears about the taxes eating up his lands were groundless; for after the sale he had nothing to do with paying the taxes on the land. Hawkins owed Randolph $10,000, which was secured by a mortgage on the farm. Randolph exchanged this secured indebtedness which bore interest at the rate of six per cent, per annum for an agreement on the part of Hawkins to pay him an amount annually which would be less than the interest. The only benefit that he could possibly derive was to receive this pa3unent- quarterly instead of annually. "While his mortgage was taxable, there is nothing to show that exorbitant taxes were about to be assessed against it. The whole substance of the transaction was to give up a secured debt of $10.000. bearing interest at six uer cent, per annum, for an unsecured debt of $¿R0 annuallv for the rest of his life. If Randolph bqd lived twentv years longer, which is altogether improbable, these small payments would net have consumed the principal, numb less the interest. The interest would hav® amounted to '$600 per annum as against $4-30 under the new contract. It is evident that Randolph thought that he was getting a pension, and that Hawkins knew that he thought so. This fact is shown, not onlv bv the testimony of Hawkins . himself, but by the testimony of the witnesses introduced by him..- Now a pension is a regalar allowance paid to, an individual by tbe government in consideration of past services, or in recognition of merit. Tbe whole resources of tbe government are pledged to tbe payment of pensions. Here, as we have already seen, Randolph already bad tbe obligation of Hawkins to pay him $10,000 with six per cent, interest per annum, and in addition this obligation on tbe part of Hawkins was secured by a mortgage on tbe land. Randolph exchanged this for the unsecured promise of Hawkins to pay $480 per annum as long as be lived. Tbe record shows that the amount promised was no more than sufficient to support Randolph in bis old age if be continued in reasonable health. If be became sick ■and bis expenses thereby materially increased, it will be readily seen that be bad deprived himself of tbe means of being supported and cared for in that condition, while if be bad retained bis property be would have bad ample means for that purpose. It is just such conditions 'and situations as this that equity scrutinizes closely and always interposes to grant relief. It follows that tbe decree will be affirmed.