Williams v Bayley
House of Lords
Citations: (1866) LR 1 HL 200.
The appellant’s son delivered promissory notes to the respondent bankers supposedly indorsed by the appellant. In fact, the son had forged the appellant’s signature. When the forgery was discovered, the respondent demanded a settlement. The appellant agreed, fearing that if he did not his son would be arrested for fraud. To this end, he agreed to make an equitable mortgage of his property. The appellant later sought to have the mortgage set aside for undue influence.
- Could the mortgage be set aside for undue influence?
The House of Lords held in favour of the appellant. Even though the bank had never suggested that they would ensure that the son was prosecuted, it was clear that if the father did not agree to the settlement they would be in a position to do so. The possibility of prosecution had even been mentioned in their presence. The fact that the appellant feared this meant that he did not enter the transaction as a free and voluntary agent. Accordingly, the court would not enforce the transaction under the principles of equity.