O'Hara v. Wattson

157 P. 608, 172 Cal. 525, 1916 Cal. LEXIS 569

• Court: California Supreme Court
• Decided: May 3, 1916
• Docket: S. F. No. 6383. In Bank.
• Status: Published

Opinions

[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] In this case a rehearing, after the decision in department, was ordered mainly for the purpose of having the whole court consider and pass upon an important question frequently arising and upon which our decisions seem to be considered uncertain.

There is no difficulty in reaching the conclusion that, under subdivision 1 of section 3391 of the Civil Code, the courts of this state should not enforce specific performance of a contract unless the consideration therefor is adequate. So far the code declares our law and settles the question. The difficulties will be found in the application of the rule, and chiefly in the determination of what is to be deemed an adequate consideration in each case, under the circumstances surrounding the transaction at the time the contract was made. This is a question upon which the decision of the trial court must, in large measure, control. Much may be learned as to the meaning of the term "adequate consideration," as used in the code, by a perusal of the opinions of Chancellor Kent inSeymour v. Delancey, 6 Johns. Ch. 222, and of Chief Justice Savage in the same case on appeal, in 3 Cowen, at page 504. The code provision was framed with the intention of restating the rule declared in these opinions. Chief Justice Savage states the opposing doctrines thus: "The one class maintain, that the court will not lend its aid to enforce the performance of contracts, unless they are fair, just, and reasonable, and founded on adequate consideration. The other class maintain, that unless the inadequacy of price is such as shocks the conscience, and amounts in itself to decisive and conclusive evidence of fraud in the transaction, it is not of itself a sufficient ground for refusing a specific performance." (Page 517.)

His own conclusion is summed up as follows: "On the question of decreeing specific performance of executory contracts, the court of chancery must exercise its discretion; not an arbitrary, but a sound judicial discretion. If the contract be free from objection, it is the duty of the court to decree specific performance. But if there are circumstances of unfairness, though not amounting to fraud or oppression, or if the inadequacy of consideration be so great as to render the bargain hard and unconscionable; on either ground the court may refuse its aid to enforce the contract, and leave the parties to contest their right in a court of law." (Page 521.)

It will not do to say that the consideration must be held inadequate unless the value of the property at the time of the contract, as the court finds it to be, exactly or even substantially equals the price fixed by the contract. The court must ascertain the value from the evidence, which ordinarily consists mainly of the opinions of witnesses. There are few subjects on which witnesses are more likely to differ than that of the value of property, and few are more difficult of satisfactory determination. Exact accuracy is not to be expected. And after the value is determined, the question of adequacy is not necessarily settled thereby, for other circumstances may affect the question. Undoubtedly the relations of the parties, and their love, affection, or regard for each other, as well as the object to be attained by the contract, may be given some effect. Just how far such matters should incline a court, in its sound discretion, to conclude that a price less than the value as found, is nevertheless adequate to justify specific performance, we cannot state by any general formula of words. Nor need we do so in this case, for we cannot say that the court below erred in holding that a price of two thousand dollars, for property worth eight thousand dollars, is inadequate, under the circumstances. That the vendor had great love and affection for the vendee and was actuated by a desire that the vendee should be the owner of a home, and that a part of the consideration was that the vendee should move her residence from another part of the city where she then resided to the premises in question, are circumstances proper to be considered as tending in some slight degree to show that a price less than the fair value was not inequitable to the vendor and should not be considered inadequate by a court of equity. But the facts that the vendor, after the sale, continued to pay the taxes and insurance on the property, as before, and to make very considerable repairs thereon, and that the price was to be paid in monthly installments of less than the actual monthly rental value of the premises, show that the transaction was, in effect, a gift by Mary Lynch to Kate Lynch, and was practically without any consideration other than love and affection.

We are satisfied with the opinion of Justice Henshaw, rendered in department, and adhere to the views there expressed.

The judgment and the order denying a new trial are affirmed.