P is D's sister. D helped P run her farm after the death of P's husband.
P approached D about selling 31 acres of land to D since P was in need of money. D did not want to buy the property but did so because of P's need for money. Paid $275.
D found after buying the land that it had valuable timber on it. He cut and sold the timber for $2,353.42.
P had never seen the land and knew nothing of the timber on it. When P found out, she demanded to know how much money D had sold the timber for.
Procedural History:
Lower court ruled for D. Said there was no actual fraud.
Issues:
Can a K willingly entered upon and understood by both parties be thrown out?
Does the relationship between the signers of the K affect its enforceability?
Does the court have a duty to remedy unfair Ks? (equity)
Holding/Rule:
When the inadequacy of price in a K is so great, it can be considered constructive fraud and the K can be vacated.
Reasoning:
Elements of constructive fraud were present.
The confidential relation of the parties
The reliance by the plaintiff upon the advice and judgment of the defendant in her business affairs
The gross inadequacy of the price paid
Her offer to restore the purchase price and rescind the transaction
His rejection of the offer
Gross inadequacy of consideration
Mutual mistake
Dissent:
None offered.
Notes:
In this case, the Court simply wanted to make the D give money to the P. They created an argument to make it stick, one that wasn't present at all in the case presented at trial.
Characterization plays an important role in lawyering.
Cases fall into different categories of law (decided upon by lawyers), then we can begin analysis of how to approach the case based upon the category.
