CATCHING AND UNDERHAND recent contro versy over the unconscionable and usurious practices of a certain class of money-lenders and the legislation following thereon has apparently allowed the public to infer that, apart from special legislation, the borrower of money is always at the mercy of the lender—that the courts will always, apart from the limited provisions of the Money Lenders Act, enforce every contract connected with such a transaction. But this is not the fact, especially in cases of dealings by money-lenders with expectant heirs and reversioners, and others in a similar position. Such contracts, indeed, are not encouraged by the law, for they generally proceed from excessive prodigality on the one hand and extortion on the other, which are so disastrous in their conse quences as to make it the duty of a court, if it can, to restrain them. Apart from these particular instances, a court of equity has an undoubted jurisdic tion to relieve against every species of fraud.
Fraud may be of several kinds : actual, arising from plain facts of imposition ; apparent, from the intrinsic nature and subject of the bargain itself, where it is one which no man in his senses, and not under delusion, would make on the one hand, and which no honest and fair man would accept on the other ; and presumptive, where one person takes surreptitious advantage of the weakness or necessity of another. There is a further kind of fraud which may be inferred by the Court itself, from the nature and circumstances of the transaction, as being an imposition and deceit on other persons not parties to the fraildulent agreement. Thus, where a daAwf entors into a deed of composition with his creditors for, say, 10s. in the pound, all the creditors being required to execute it within a certain period, if the debtor privately agrees with one creditor to induce him to sign the deed, that he will pay, or secure a greater sum in respect of his particular debt—in this there is no particular deceit on the debtor who is party thereto, but it tends to deceit of the other creditors, who relied on an equal composition and did it out of compassion to the debtor. The Court will
relieve against all such underhand bargains. Particular persons, in contracts, must not only transact bond fide between themselves, but must not transact mala fide in respect of other persons who stand in such a relation to either as to be affected by the contract or the consequences of it ; and as the rest of mankind, beside the party contracting, are concerned, such relief may be said to be dictated by public utility.
A further head of fraud on which the Court grants relief is that which infects catching bargains with heirs, reversioners, or expectants on the life of another, Rzc. These are generally mixed cases, compounded of all or several species of fraud, there being sometimes proof of actual fraud, which is always decisive. There is always fraud presumed or inferred from the cir cumstances or conditions of the parties contracting—weakness on one side, usury on the other, or extortion or advantage taken of that weakness. There is always an appearance of fraud from the nature of the bargain, appearing merely from its intrinsic unconscionableness. To set aside the purchase of an interest in possession as distinguished from one in reversion or expectancy, there must be an inequality so strong, gross, and manifest that it must be impossible to state it to a man bf common sense without producing an exclamation at the inequality of it. But with regard to interests in ex pectancy or reversion the mere inadequacy of price is a sufficient ground for rescinding contracts or dealings therein. Such cases would arise where a rever sioner has mortgaged his reversion, or granted an annuity for an unreasonable and inadequate price. In order to obtain relief it is not necessary for the rever sioner to be of comparatively tender age, or that he did not understand the nature of the transaction, or was in financial distress at the time. Should the purchaser of a reversion at an inadequate price resell it for its true value the reversioner may recover, notwithstanding the re-sale where the subsequent purchaser knew at the time of purchase of the under value on the original sale.