presumed to arise from the intrinsic nature and subject of the transaction itself, without any violation of fiduciary relations.

A transaction may be inherently fraudulent-that is to say, its fraudulent character may be inferred from its very nature-— for one of two reasons, either, first, because of its terms; or secondly, because of its subject matter.1

And, first, a contract may be inherently fraudulent from its very terms. Of contracts of this kind, instances will be found in those cases in which inadequacy of consideration sometimes justifies a rescission.

Ordinarily inadequacy of consideration will be insufficient to set a bargain aside, or to justify a refusal to enforce its specific performance. Where, however, the inadequacy is so great as to "shock the conscience" (which is the phrase usually employed), the contract may be rescinded. Cases, indeed, very rarely occur in which inadequacy of consideration exists alone as a ground for rescission; for it is but seldom that a man would make a bargain of such a character, unless he were deceived by actual fraud, or were deficient in intellect, or were subject to undue influence, all of which circumstances would of themselves call for equitable interposition. A case, therefore, of fraud from inadequacy of consideration, pure and simple, and unmixed with any other kind of fraud, is of very rare occurrence. Nevertheless the rule must be considered as well settled, although rather by dicta than by decisions, that a transaction will be set aside if there is "an inequality so strong, gross, and manifest, that it must be im

It will be observed that many of the contracts which are discussed in this section are of an illegal, rather than of a strictly fraudulent nature. The relief, however, which equity affords in such cases is usually considered as falling under the head of fraud (see 1 Story's Eq. Jurisp., chap. vii.), and is, therefore, so treated in the present work.

2 Harrison v. Guest, 6 De G. M. & G. 424; 8 H. L. Cas. 481; Erwin v Parham, 12 How. 197; Slater v. Maxwell, 6 Wallace, 273; Osgood v. Franklin, 2 Johns. Ch. 1, 23; Bedel v. Loomis, 11 N. Hamp.

9; Park v. Johnson, 4 Allen, 259; Lee v. Kirby, 104 Mass. 420, 428; Seymour v. Delancy, 3 Cowen, 445; Wintermute v. Snyder, 2 Green, Ch. 489; Shepherd v. Bevin, 9 Gill, 32; Cribbins v. Markwood, 13 Grat. 495; Butler v. Haskell, 4 Desaus. 651; White v. Flora, 2 Tenn. 426; January v. Martin, 1 Bibb, 586; Steele v. Worthington, 2 Ohio, 182; Warner v. Daniels, 1 Wood. & Min. 92; 1 Sugden V. and P. (8th Am. ed.) 419.

3 See Haygarth v. Wearing, L. R. 12 Eq. 320.

possible to state it to a man of common sense without producing an exclamation at the inequality of it.""

The relief, however, in such cases is granted (it is said) not on the ground of inadequacy of consideration, but on the ground of fraud as evidenced thereby."

Equity, moreover, will sometimes refuse to enforce the specific performance of a contract, where the consideration is grossly inadequate, although it might not interfere to rescind the contract if executed.3

220. There was, however, until recently, an important class of cases in which inadequacy of consideration has been held sufficient to set the contract aside, although it may not amount to that gross and shocking inequality mentioned above.

These are cases of sales of their interests by heirs and reversioners. The law upon the subject was altered, by statute of 31 & 32 Vic., c. 4; but as the former English doctrines have been considered and adopted in several decisions in this country, it will be proper to notice them. Heirs and reversioners were supposed in the eye of the law to be so liable to imposition, and to be so exposed to chances of being induced to make hard and unfair agreements touching the disposition of their expectant interests, that it has been deemed a matter of policy to lay it down as a general rule, that he who deals with them has cast upon him the burden of showing that the purchase was a fair one, and the price paid a reasonable sum, and of the full value.

Heirs and reversioners are very often driven by great distress to make these bargains, and those who deal with them are prone to take an inequitable advantage of their condition, and the parties do not stand upon equal terms. It has, therefore, been

Per Lord Thurlow in Gwynne v. Heaton, 1 Bro. C. C. 8. See, also, James v. Morgan, 1 Lev. 111 (the horse-shoe case); Summers v. Griffiths, 35 Beav. 27; Byers v. Surget, 19 Howard, 303; Eyre v. Potter, 15 Id. 60; Osgood v. Franklin, 2 Johns. Ch. 1; Morriso v. Philliber, 30 Missouri, 145; Gifford v. Thorn, 1 Stock. 702; Butler v. Haskell, 4 Desaus. 651: Sime v. Norris, 8 Philada. R. 84; Coffee v. Ruffin, 4 Cold. 507.

2 Kerr on Fraud and Mistake, 187. 3 See Graham v. Pancoast, 6 Casey, 97; Osgood v. Franklin, 2 Johns. Ch. 123; Eastman v. Plumer, 46 New Hamp. 464; though see Powers v. Mayo, 97 Mass. 180.

4 See Webster v. Cook, L. R. 2 Ch. App. 546. Though in some cases it has been held that the rule stated in the text does not apply to reversioners. Cribbins v. Markwood, 13 Grat. 495.

found necessary to lay down the rule, that in all these transactions distress and consequent inequality will be presumed to exist, and the onus of proving that the price is an adequate one is thrown on the purchaser.1

It was at one time held that the circumstance that the father knew of the design of the son to dispose of his expectant interest, and did not oppose the same, would alter the general rules, and render the transaction unimpeachable. But the truer doctrine seems to be that the right to set the transaction aside is the son's equity, and cannot be taken away from him by any knowledge or consent on the part of the father.3

Where there is a family arrangement made between father and son in regard to the disposition of the reversionary interest, in which no undue influence appears to have been used, the transaction will be upheld.*

Sales of reversionary interests may be made at auction, or, it seems, after a fair valuation;5 and the rule as to the voidability of these contracts does not apply in cases where the holder of the particular estate joins with the reversioner, for there, both owners constitute, as it were, one party controlling the whole fee, and dealing with the purchaser on equal terms.

221. It was stated above that the law upon the subject of sales by reversioners has recently been altered in England. This was effected by Stat. 31 & 32 Vic., c. 4, by which it was enacted

1 Shelly v. Nash, 3 Maddocks, 235; Earl of Aylesford v. Morris, L. R. 8 Ch. App. 490; Savery v. King, 5 H. L. Cas. 627; Edwards v. Burt, 2 De G. M. & G. 55. See, also, Jenkins v. Pye, 12 Pet. 241; Butler v. Haskill, 4 Desaus. 651; Boynton v. Hubbard, 7 Mass. 112; Poor v. Hazleton, 15 N. Hamp. 564; Larrabee v. Larrabee, 34 Maine, 477; Powers's Appeal, 13 P. F. Sm. 443; Mastin v. Marlow, 65 N. C. 695; Lowry v. Spear, 7 Bush, 451; Varick v. Edmunds, 1 Hoff. Ch. 382; Fitch v. Fitch, 8 Pick. 480; Trull v. Eastman, 3 Met. 121; Nimmo v. Davis, 7 Tex. 26; Needles v. Needles, 7 Ohio N. S. 432; Notes to Chesterfield v. Janssen, 1 Lead. Cas. Eq. 428; 1 Sug.

V. and P. 426 (8th Am. ed.). In some cases the court will direct an inquiry as to the value of the reversionary interest. 1 Sug. V. and P. 427.

2 King v. Hamlet, 2 My. & K. 456, approved in 3 C. & F. 218.

3 See the remarks of Lord Chancellor Selborne in Earl of Aylesford v. Morris, L. R. 8 Ch. App. 491; Sugden, V. and P. 316 (11th ed.). Note to Chesterfield v. Janssen, 1 Lead. Cas. Eq. 485.

4 Tweddell v. Tweddell, T. & R. 13; 1 Sug. V. and P. 427 (8th Am. ed.).

5 Shelly v. Nash, 3 Mad. 232; Lord v. Jeffkins, 35 Beav. 7.

6 See notes to Chesterfield v. Janssen, 1 Lead. Cas. Eq. 605 (4th Eng. ed.).

that no purchase made bona fide, and without fraud or unfair dealing, of any reversionary interest in real or personal estate, shall be hereafter opened or set aside merely on the ground of undervalue. Under a proper construction of the language of this act, however, it has been held that the exception in the statute leaves unfair dealings untouched, and that the statute has not repealed the doctrines of the court of chancery, by which protection is thrown around unwary young men in the hands of unscrupulous persons, ready to take advantage of their necessities."

222. Another class of contracts which are fraudulent because of their terms, are contracts which stipulate for usury. Usury is defined to be an exorbitant profit for the use of money;2 and it is a subject which, in most countries, is regulated by statute.

No usury laws now exist in England, having been repealed by statute. It has, nevertheless been decided that the repeal of these laws did not alter the doctrine by which the court of chancery affords relief against improvident and extravagant bargains.3

By the former English acts contracts tainted with usury were absolutely void. In some of the United States the usurious excess over the lawful rate alone is void.

Courts of equity, following the rule of law laid down by the statute, will not assist a lender to enforce a usurious contract ;4 and it will, on the other hand, aid the borrower to recover back the amount paid for usurious interest, or may decree a surrender of securities left as collateral for a usurious debt.5

But if the borrower, before repayment of the loan, comes into court to have the transaction set aside, the court will afford relief only upon condition of paying the amount actually due, i. e., the principal sum borrowed with lawful interest."

Equity will also relieve in cases where the usurious loan assumes the appearance of a sale. The goods in such a transaction are usually taken by the borrower at an exorbitant rate on

Miller v. Cook, L. R. 10 Eq. 641; Tyler v. Yates, L. R. 6 Ch. App. 665; Earl of Aylesford v. Morris, L. R. 8 Ch. App. 484. 22 Black. Com. 456.

3 Earl of Aylesford v. Morris, L. R. 8 Ch. App. 484. See, also, Sime v. Norris, 8 Philada. R. 84.

4 Fanning v. Dunham, 5 Johns. Ch. R. 142.

5 Peters v. Mortimer, 4 Edw. Ch. R. 279.

6 See Whitehead v. Peck, 1 Kelly, 140; Ballinger v. Edwards, 4 Ired. Eq. 449; Rogers v. Rathbun, 1 Johns. Ch. 367.

credit, and are then sold by him, so that the transaction substantially amounts to a loan of the sum realized by the resale, at a usurious interest. In such a case equity will set the transaction aside, upon repayment of the sum produced by the resale, with lawful interest.1

223. Still a third class of contracts, which are regarded with disfavor both at law and in equity, on account of the iniquity of their terms, is that which embraces gambling transactions. A bet at common law was good, unless there was some special ground of invalidity by reason of public policy-as, for example, a wager upon elections.

An act of parliament passed in the reign of George II. prohibited wagering contracts of insurance; and by statute of 8 & 9 Vic., c. 109, § 18, all agreements by way of gaming or wagering are made null and void.2

In the United States the general tendency is to regard all gaming and wagering as opposed to public policy, and therefore void. The subject is regulated by statutes in most of the States.3

The rule, both at law and in equity, in regard to gambling transactions, now seems to be that the courts will not only refuse to lend their aid for the purpose of enforcing such contracts, but they will not assist the losing party in setting the contract aside or recovering back the money paid. The maxim applicable to such cases is potior est conditio possidentis:*

It had been decided in England that a bond given to secure a sum of money lost at play, might be ordered to be delivered up. But there is a decision the other way in the United States."

Waller v. Dalt, 1 Ch. Ca. 276; 1 Dick. 8; Barny v. Beak, 2 Ch. Ca. 136; Barker v. Vansommer, 1 Bro. C. C. 149.

2 "Provided that this prohibition shall not apply to any subscription or agreement to subscribe towards a plate, prize, or sum of money awarded to the winner of any lawful game, sport, pastime, or exercise." Horse races, steeple chases, and foot races are considered among the lawful games. See Addison on Contracts, 893.

3 See Wilkinson v. Tousley, 16 Minn.

Basanquet v. Dashwood, Cas. Temp. Talb. 41; Adams v. Barrett, 5 Georgia, 404; Thomas v. Cronise, 16 Ohio, 54; Cowles v. Raguet, 14 Ohio, 55; Spalding v. Preston, 21 Verm. 9; Gotwalt v. Neal, 25 Maryl. 434. See, also, Pope v. Chafee, 14 Rich. Eq. 69; though see Rawden v. Shadwell, Ambler, 268, and Chapin v. Dake, 57 Ill. 295. See 2 Kent Com. 467.

5 Rawden v. Shadwell, Ambler, 268. 6 Cowles v. Raguet 14 Ohio, 55.