Opinion
No. 830-KA.
July 31, 1926.
Wm. A. Holzheimer, of Ketchikan, for plaintiff.
Duggan McCain, of Ketchikan, for defendant.
Considering the first cause of action, it is apparent that the plaintiff is seeking to void the terms of the written contract, by introducing a limitation of the phrase "settled out of court," and to impart a meaning other than that commonly accepted to the word "judgment," used in the original contract, by substituting the word "recovery" in place thereof. The wording of the complaint is that the written contract did not express the true intent and meaning of the `parties in the aforesaid respects, but that both plaintiff and defendant understood, agreed, meant, and intended that the paragraph should read according to and with the limitation expressed, and the substituted word set forth in the complaint.
It is difficult for one to understand exactly the purpose of the pleadings. I held on the motion for judgment on the pleadings on the first complaint that the phrase "settled out of court" had a definite meaning, and that any settlement of the cause of action, made without the intervention of the court, was "a settlement out of court," and that, as no limitation was expressed in the written contract, and because there was no ambiguity in the terms, and no mistake was alleged in the written contract in reducing the original contract to writing, its terms should govern. If its meaning was plain and unambiguous, no oral testimony would be received to vary its terms. I further expressed the opinion that, if the writing did not express in terms the original oral agreement between the parties, a remedy lay with the plaintiff, and allowed him to amend.
Mistakes in a contract may occur in many ways, but may be brought under two classifications; those concerning the subject-matter of the contract, and those concerning its terms. The first class of cases is when the contract complies with the intention of the parties, but there is an error in respect to the thing to which the contract applies; the second class of cases is where the error arises in reducing the contract to writing, and may occur in adding to or omitting some term, or changing the phraseology, so as not to express the true intent of the parties.
It is evident from an examination of these pleadings that it was the intention of the plaintiff to allege a mistake in the written contract, which arose in reducing the same to writing, and to reform the written contract by making it conform to the original understanding of the parties. To do this, in his complaint the plaintiff seeks to interpolate a limitation in the written contract, claiming that it was mutually intended and understood, and also to substitute a word therein having an entirely different meaning from that in the written contract, on the ground that the phrase and word used did not express the understanding and agreement of the parties.
The defendant urges that the plaintiff pleads a mistake at law, and that such a mistake is not ground for relief. It is often very difficult to determine whether a mistake occurring in a contract is of law, or fact, or both. As pleaded in this action, it may be a mistake of law; but, according to my view, if properly pleaded, it was a mistake of fact. Whether a mistake of law, or of fact, it makes little difference; there are exceptions to the general rule that there is no ground for relief of a mistake of law. See Pomeroy on Specific Performance of Contracts (2d Ed.) § 234, which, after stating the general rule, thus lays down the almost universally accepted doctrine in these words:
"* * * But if, after making an agreement, in the process of reducing such agreement to a written form, the writing, by means of a mistake of the law, fails to express the contract which the parties actually entered into, equity will interfere to reform it, or to prevent its enforcement, to the same extent as if the failure of the writing to express the real contract was caused by a mistake of fact. In this instance, there is no mistake as to the legal import of the contract actually made; but the mistake of law prevents the real contract from being embodied in the written instrument. This limitation must, however, be kept within the principle on which it rests, which is, simply, that the intention of the parties should be carried into effect. The intention of the parties is the criterion."
The plaintiff alleges, in effect, that it was mutually understood that the compensation allowed the plaintiff, if settled out of court without trial, should be one-third of what it would be, had judgment been rendered against defendant in the amount settled for, and that the word "judgment," used in the paragraph of the contract relative to plaintiff's compensation, should be "recovery" by plaintiff from defendant.
It appears that it was the purpose of the pleader to declare a mutual mistake of the parties to the original contract, but that, in reducing the agreement to writing, the written instrument did not, through the mistake, express the intention of the parties. It is a doctrine of equity in such cases that the writing may be reformed to correctly represent the true agreement between the parties, and that the contract as reformed may be enforced in the same action. 2 Pomeroy on Equity Jurisprudence, par. 870, declares the principle as follows:
"Reformation is appropriate in cases of mutual mistake; that is, when an agreement has been made or a transaction has been entered into or determined upon, as intended by all the parties interested, but in reducing such agreement or transaction to writing, [either] through a mistake common to both parties, * * * the written instrument fails to express the real agreement or transaction. In such case, the instrument may be corrected, so that it shall truly represent the agreement or transaction actually made or determined upon, according to the real purpose and intention of the parties."
It must be observed that the mistake which is ground for this relief must be in reducing the contract to writing. In every case it must clearly and satisfactorily appear that the precise terms of the contract had been orally agreed upon, and that the writing afterwards signed fails to be, as it was intended, an execution of such previous agreement, but, on the contrary, expresses a different contract.
The first cause of action in the case at bar seems to seek to avoid the terms of the written contract by stating that it did not express the intention of the parties thereto. It does not seek relief by reformation of the written contract, so as to express the terms of the original oral agreement, nor does it state, except by inference, what the terms of the original oral agreement were. The only statement is that the written agreement did not express the true intent and meaning of the parties as mutually understood by them. It is therefore insufficient, as not stating grounds for reformation of the written contract, because of mutual mistake in reducing the original oral contract to writing. See Pierson v. McCahill, 21 Cal. 122; Drake v. First Nat. Bank, 33 Kan. 634, 7 P. 219; Carr v. King, 24 Cal.App. 713, 142 P. 131; Auerbach v. Healy, 174 Cal. 60, 161 P. 1157.
Had the plaintiff stated that an agreement was entered into between the parties orally, giving its terms, and that it was reduced to writing in the form set forth in the complaint, but that in reducing the contract to writing a mutual mistake was made, showing wherein the same lay, and that the same should be conformed to comply with the mutual understanding of the parties, and then follow with allegations for the enforcement of the contract as reformed, there would be a good cause of action under the reformed procedure, where the distinction in form between law and equity is abolished. See citations, Pomeroy, Code Remedies (4th Ed.) par. 17; Pringle v. Hall, 6 Ariz. 284, 56 P. 740; Cutting Co. v. Peterson, 164 Cal. 44, 127 P. 163; Hornick v. Union Pac. R. Co., 85 Kan. 568, 118 P. 60, 38 L.R.A. (N.S.) 826, Ann. Cas. 1913A, 208.
As the first cause of action stands, I am of the opinion that the demurrer should be sustained; and it is so ordered.
As to the second cause of action, I am of the opinion that the demurrer should be overruled. Although in the first cause of action the plaintiff declares on a written contract providing for a total fee of $1,000 for a successful defense of the action he was employed to defend, and does not, in his first cause of action, impugn the contract in that regard, but insists that it is the basis of his claim for defendant admitting payment of $500 according to its terms. Yet, standing by itself, the second cause of action is a good pleading for the reasonable value of the services rendered, as against a general demurrer.
The ground of defendant's demurrer to the second cause of action is its inconsistency with the first cause of action. There is nothing in the Code system or rules of pleading which forbids the pleader from taking inconsistent positions in stating separate causes of action. Therefore a pleader may declare on an express contract as for services performed, and, in the same complaint, declare in a different count for the reasonable value of the services, and, if he fails in proof of the express contract, rely on his proof under the quantum meruit. This is an established rule of pleading, and until it is determined from the pleadings whether there was an express contract entered into as alleged, the count on quantum meruit would stand.
If the express contract is admitted, the complainant would be bound by it, and a motion to strike would lie. If denied, a motion to elect, in certain contingencies, would lie. See Murphy v. Russell, 8 Idaho, 133, 67 P. 421, 426; Darknell v. Coeur d'Alene St. Joe Transportation Co., 18 Idaho, 61, 108 P. 537; Olmstead v. Dauphiny, 104 Cal. 635, 38 P. 505; Cowan v. Abbott, 92 Cal. 100, 28 P. 213; Bliss on Code Pleadings, § 120; 5 Ency. Pleading Practice, 324.
The demurrer to the second cause of action will therefore be overruled.