JUDICIAL DECISIONS

General Consideration

A court of equity will not lend its aid to a party to a contract founded upon an illegal or immoral consideration; if the contract is executed, it will be left to stand, and if it be executory, neither party can enforce it. Fender v. Crosby, 209 Ga. 896, 76 S.E.2d 769 (1953).

A person executing an instrument is not defrauded because he failed to read or understand it. Manget Realty Co. v. Carolina Realty Co., 169 Ga. 495, 150 S.E. 828 (1929).

Where one party fraudulently induces his adversary to withdraw his defense, the judgment will be set aside. Walker v. Hall, 176 Ga. 12, 166 S.E. 757 (1932).

When a litigant keeps the opposite party from court, equity will relieve against the judgment obtained in his absence. Walker v. Hall, 176 Ga. 12, 166 S.E. 757 (1932).

The mere failure of a party to disclose to the court or to his adversary matters which would defeat his own claim or defense is not such fraud as will justify or require a vacation of the judgment. Buice v. T. & B. Bldrs., Inc., 219 Ga. 259, 132 S.E.2d 784 (1963).

A mere failure to comply with a promise on the part of a grantee is insufficient to establish fraudulent intent. However, where a petition alleges an oral promise by the grantee to perform an act in the future as the inducement or consideration for the execution of the deed by the grantor and where the promise is made with the present intention on the part of the grantee not to comply with it, the petition sets forth a cause of action for cancellation. Smith v. Merck, 206 Ga. 361, 57 S.E.2d 326 (1950); Sutton v. McMillan, 213 Ga. 90, 97 S.E.2d 139 (1957); Hinson v. Hinson, 221 Ga. 291, 144 S.E.2d 381 (1965); Cowart v. Gay, 223 Ga. 635, 157 S.E.2d 466 (1967); Dye v. Dye, 231 Ga. 533, 202 S.E.2d 418 (1973); Cone Mills Corp. v. A.G. Estes, Inc., 377 F. Supp. 222 (N.D. Ga. 1974).

The mere failure to comply with a promise to perform an act in the future is not fraud in a legal sense. Hinson v. Hinson, 221 Ga. 291, 144 S.E.2d 381 (1965); Lanning v. Sockwell, 137 Ga. App. 479, 224 S.E.2d 119 (1976).

While the mere failure to comply with a promise is insufficient to establish an inceptive fraudulent intent, fraud will authorize equity to cancel and annul a deed no matter how solemnly executed. Sutton v. McMillan, 213 Ga. 90, 97 S.E.2d 139 (1957).

Cited in Bank of Penfield v. Colclough, 154 Ga. 222, 114 S.E. 33 (1922); J.R. Watkins Co. v. Herring, 51 Ga. App. 396, 180 S.E. 525 (1935); McGhee v. Minor, 188 Ga. 635, 4 S.E.2d 565 (1939); Saliba v. Saliba, 202 Ga. 279, 42 S.E.2d 748 (1947); McGahee v. McGahee, 204 Ga. 91, 48 S.E.2d 675 (1948); Johnson v. Hutchinson, 217 Ga. 489, 123 S.E.2d 551 (1962); Rushing v. Bashlor, 219 Ga. 119, 131 S.E.2d 775 (1963); Brogdon v. Purvis, 220 Ga. 28, 136 S.E.2d 719 (1964); Gaines v. Watts, 224 Ga. 321, 161 S.E.2d 830 (1968); Watts v. Gaines, 226 Ga. 503, 175 S.E.2d 871 (1970); DOT v. Livaditis, 129 Ga. App. 358, 199 S.E.2d 573 (1973); Hall v. Hall, 230 Ga. 873, 199 S.E.2d 798 (1973); Roberts v. Cameron-Brown Co., 556 F.2d 356 (5th Cir. 1977); Morgan v. Hawkins, 155 Ga. App. 836, 273 S.E.2d 221 (1980); Wessinger v. Spivey (In re Galbreath), 475 Bankr. 749 (Bankr. S.D. Ga. 2003).

Equitable Relief Generally

To determine whether equity will set aside an award for fraud, §§ 23-2-54 and23-2-60 must be construed together. Tinsley v. Maddox, 176 Ga. 471, 168 S.E. 297 (1933).

Fraud will authorize a court of equity to set aside a written instrument. Lanning v. Sockwell, 137 Ga. App. 479, 224 S.E.2d 119 (1976).

When the failure to perform the promised act is coupled with the present intention not to perform, fraud, in the legal sense, is present. This is known as inceptive fraud, and is sufficient to support an action for cancellation of a written instrument. Hinson v. Hinson, 221 Ga. 291, 144 S.E.2d 381 (1965); Lanning v. Sockwell, 137 Ga. App. 479, 224 S.E.2d 119 (1976).

Where it is alleged that the sole consideration for the execution of the deed from the grantor to the grantee is the promise of the grantees to support, maintain, provide, and care for a third party, and that this promise is made by the grantees fraudulently and for the purpose of securing the signature of the grantor, to the conveyance, and that the grantees never intend to comply with their agreement, the allegations are sufficient to state a cause of action on the ground of inceptive fraud. Bucher v. Christopher, 211 Ga. 317, 85 S.E.2d 760 (1955).

Any representation, act, or artifice intended to deceive, and which does deceive another, is such a fraud as may authorize cancellation of a written contract, but a party to a contract who can read must read or show a legal excuse for not doing so, and ordinarily, if fraud is the excuse, it must be such fraud as prevents the party from reading; nor in such case will a mere fraudulent statement by the opposite party or his agent as to the contents of the writing furnish a legal excuse. And where the contract is a deed to land, the rule will generally apply to the grantee as well as the grantor. Livingston v. Barnett, 193 Ga. 640, 19 S.E.2d 385 (1942).

A cancellation obtained by fraud or mistake without payment may itself be canceled by equity. Grimmett v. Barnwell, 184 Ga. 461, 192 S.E. 191 (1937); Lanning v. Sockwell, 137 Ga. App. 479, 224 S.E.2d 119 (1976).

If the execution of the contract was merely one of the incidents or stages by which the deed plaintiff sought to cancel was procured, evidence tending to show that the contract itself was procured by fraud was admissible for the purpose of canceling the deed. Morton v. Wallace, 177 Ga. 856, 171 S.E. 720 (1933).

While the terms of an absolute deed cannot be varied by limiting the grantee to a use of the land in a manner not restricted by the express terms of the deed, it may nevertheless be alleged and proved that it was induced by fraud, without denying or varying any of the stipulations or conditions contained in the deed. Bucher v. Christopher, 211 Ga. 317, 85 S.E.2d 760 (1955).

Where land is owned by two persons, and one obtains a deed from the other to his interest by means of an intentionally false and fraudulent promise to sell the land at its true value and pay off an encumbrance and account for the balance, or failing to find a purchaser, he will procure a new loan to discharge the present encumbrance, and after obtaining the title he retains and claims the property as absolutely his own, this transaction by which the ownership is obtained is such a fraud as will entitle the grantor to have the deed canceled. Smith v. Merck, 206 Ga. 361, 57 S.E.2d 326 (1950).

Equity will grant relief where the transfer of a valuable property has been fraudulently extorted, for a grossly inadequate consideration, from a person while in such a state of intoxication as to render him incapable of transacting business. Ealy v. Tolbert, 209 Ga. 575, 74 S.E.2d 867, later appeal, 210 Ga. 96, 78 S.E.2d 26 (1953).

Where a party at the time of entering into a contract or executing an instrument is intoxicated to such a degree as to deprive him of his reason and to disqualify his mind to apprehend the nature of his act and its probable consequences, a court of equity may grant relief by rescission and cancellation. McKaig v. Hardy, 196 Ga. 582, 27 S.E.2d 11 (1943); Ealy v. Tolbert, 209 Ga. 575, 74 S.E.2d 867, later appeal, 210 Ga. 96, 78 S.E.2d 26 (1953).

As against one who by fraud during the lifetime of deceased husband induced the latter to execute to him a deed to realty, equity will afford the widow, as personal representative, a remedy to cancel and set aside the deed and incidentally to preserve and apply rents issuing from such realty. Ealy v. Tolbert, 209 Ga. 575, 74 S.E.2d 867, later appeal, 210 Ga. 96, 78 S.E.2d 26 (1953).

Equity has jurisdiction to reform written instruments where there has been a mistake on the part of one of the parties, accompanied by fraud or inequitable conduct on the part of the other party, just as in cases where there is a mutual mistake. Thompson v. Thompson, 203 Ga. 128, 45 S.E.2d 632 (1947); Wellborn v. Johnson, 204 Ga. 389, 50 S.E.2d 16 (1948).

Petition contained sufficient allegations to show mistake on the part of the petitioner and fraud on the part of her own attorney, known to the attorney for the husband, and alleged a cause of action for reformation of contract between the parties and for modification of the judgment in the divorce suit accordingly. Thompson v. Thompson, 203 Ga. 128, 45 S.E.2d 632 (1947).

The general rule that an infant is bound by a judgment rendered in a suit in which he is represented by a next friend, to the same extent as though he were an adult, is subject to an exception in case of fraud, collusion, or like conduct on the part of the next friend, in which case the judgment may be set aside at the instance of the minor, even though it may be a consent judgment. Nelson v. Estill, 190 Ga. 235, 9 S.E.2d 73 (1940).

A decree adversely affecting the interests of minors, even though it be entered by consent of their father as next friend, may, if induced by fraud, duress, or the like, be set aside at their instance in a proper proceeding, and for that purpose they may sue by their mother as next friend. Nelson v. Estill, 190 Ga. 235, 9 S.E.2d 73 (1940).

As between the original parties thereto, fraud in its procurement voids a contract, and this upon the theory that, the consent of the parties being necessary to the binding force of a contract, if one, apparently consenting by the execution of a written contract, can show that he did not in fact consent to its terms as therein expressed, but that his apparent consent was induced by false and fraudulent practices, by means of which he was overreached by the other party, and, without negligence upon his own part, really deceived as to the terms of the contract, he would be entitled to be relieved from its apparent obligations. McKaig v. Hardy, 196 Ga. 582, 27 S.E.2d 11 (1943).

Statute of Limitations

An action to cancel a fraudulent deed must be brought within seven years from the discovery of the fraud. Harrison v. Holsenbeck, 208 Ga. 410, 67 S.E.2d 311 (1951).

While a deed to land procured by fraud will not ripen into prescriptive title regardless of the period of time possession is held thereunder, yet an action to cancel such deed upon the ground that it was fraudulently procured must be brought within seven years from the time the fraud is discovered, and is barred thereafter. Harrison v. Holsenbeck, 208 Ga. 410, 67 S.E.2d 311 (1951).

Pleading and Practice

While fraud may not be presumed, being in itself subtle, slight circumstances may be sufficient to carry conviction of its existence. Ringer v. Lockhart, 240 Ga. 82, 239 S.E.2d 349 (1977).

Slight evidence of fraud and undue influence may authorize the jury to cancel the deed. Harper v. Harper, 229 Ga. 583, 193 S.E.2d 616 (1972).

It is incumbent upon a party who attempts to rescind a contract for fraud to repudiate it promptly upon discovery of the fraud. Webb v. City of Atlanta, 188 Ga. 485, 4 S.E.2d 154 (1939).

Possession retained by the vendor, after an absolute sale of real or personal property, is prima facie evidence of fraud, which may be explained, and after the possession is proven, the burden of explaining it rests upon those who claim under the sale. Schoen v. Home Fed. Sav. & Loan Ass'n, 154 Ga. App. 68, 267 S.E.2d 466 (1980).

With proper pleadings and parties a judgment may be set aside in a court of law for fraud. Benton v. State Hwy. Dep't, 220 Ga. 674, 141 S.E.2d 396 (1965).

RESEARCH REFERENCES