July 16, 2012
Authored by: Luke Lantta
It’s no easy task to set aside a deed based on fraud. Yet, because fraud is so difficult to prove through direct evidence, courts have established ways for plaintiffs to prove fraud by circumstantial evidence. In Georgia, great inadequacy of of consideration, joined with great disparity of mental ability in contracting a bargain, may justify equity in setting aside a sale or other contract. Where these two elements exist, a deed may be set aside without proof of anything else as to fraud.
In Slaick v. Arnold, the Georgia Court of Appeals recently got to apply this framework.
The court didn’t go into deep analysis of the great inadequacy of consideration prong. There was no dispute that there was great inadequacy of consideration in the disputed conveyance. The grantor conveyed a piece of real property to a grantee. In consideration of the conveyance, the grantee was supposed to execute a deed conveying to the grantor a reciprocal interest in the subject property. The record reflected an absence of the reciprocal deed.
The question turned on the great disparity of mental ability in contracting a bargain prong. With regard to a disparity of mental ability, mere weakness of mind “not amounting to imbecility” is not sufficient mental incapacity to justify setting aside a deed.
Here, there was insufficient evidence showing between the grantor and grantee a great disparity of mental ability in contracting a bargain. While there was a comment that the grantor “couldn’t keep a checkbook,” no witnesses testified concerning the grantor’s mental capacity to contract around the time the deed was executed. There was no evidence that the grantor was uneducated or lacked the ability to read or write, and that the grantee, in contrast, was an experienced businesswoman. Therefore, there was no basis upon which to set aside the deed.