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Ehnes v. Monroe Loan Society

Court of Errors and Appeals
Oct 2, 1936
187 A. 180 (N.J. 1936)

Opinion

Submitted May term, 1936.

Decided October 2d 1936.

Before equity will reform an instrument upon the ground that, through a mutual mistake it does not express the intention of the parties, the mistake must be shown to have been mutual by clear proof, amounting to a reasonable certainty.

On appeal from a decree in the court of chancery advised by Vice-Chancellor Stein, dismissing complainant's bill without prejudice to suit at law, pursuant to the following conclusions:

"Complainant brings his bill for specific performance, and in the alternative, for reformation of a written contract bearing date July 8th, 1935.

"The defendant is engaged in the small loan business and complainant desired to purchase from it certain of its accounts. In order to determine the amount of the bid which complainant desired to make for such accounts, a list was prepared. Subsequently on April 12th, 1935, complainant made a bid in writing predicated upon study of the list, and among the accounts listed some were barred, and others it appeared would soon be barred by the statute of limitations. Other accounts for various reasons were considered hopeless from the standpoint of collection. All the foregoing is pointed out by the complainant in its letter to the defendant. The accounts originally listed totaled $75,000, but for the reasons mentioned were considered not worth more than $1,250, and that figure was offered in the letter of April 12th, 1935. On this letter there appears an endorsement which reads:

"`4/20/35 — This offer is herewith amended to exclude 35 accounts (legal) discussed with Mr. Barba, and amounting to principal balances totaling $5,542.89. For the entire balance of P. L. accounts I agree to pay $1,750.00. The transfer date is hereby extended to April 22d 1935.'

"The transaction was not closed on April 22d 1935, and further negotiations were had. On June 14th, 1935, complainant wrote another letter in which he made a bid for various accounts grouped under headings, `A,' `B' and `C.' In that letter the offer is made `upon the condition of its acceptance by you before June 19th, 1935, at twelve noon.' And that bid was not accepted.

"On July 8th, 1935, a formal contract was entered into for the purchase of certain accounts for the sum of $4,250. Annexed to the agreement are schedules `A' and `B' setting forth the account number, name of the debtor and the balance due upon each account as of June 21st, 1935. Mr. Victor Samuel, a member of the bar of this state, represented the complainant before and at the time of the execution of the agreement of purchase, and the schedules of accounts annexed to the agreement were made up from filed cards in the possession of the defendant, which cards had been gone over from time to time during the various negotiations by Mr. Samuel and a representative of the defendant company. It was from these cards that the various lists and bids were made prior to the final execution of the agreement and the consideration mentioned in the agreement was finally paid.

"It is now alleged that a number of accounts were omitted in the schedules annexed to the agreement, and this suit is brought.

"Mr. Samuel says that the schedules annexed to the agreement omit certain accounts which were to be included, and that it was assumed by him that they were included, and that their omission was a mutual mistake. Inspection of the schedules annexed to the agreement in evidence bears silent witness to the fact that the same were gone over, for sixty of the accounts are erased in the schedules by a line of red ink drawn across them, and at least one account was added in black ink. The remainder of the accounts are typewritten. No explanation was offered by the complainant or the defendant as to these erasures and the one addition, but it is to me evidence of the fact that before execution the accounts were compared with the schedules annexed. There certainly does not exist in this case evidence from which it can be said that there was mutual mistake.

"Upon complainant is cast the burden of establishing his case by a fair preponderance of the evidence. That burden was not sustained. There were considerable negotiations between the parties and the various bids were predicated upon the inclusion and exclusion of various accounts, including those now in controversy. The evidence, to say the least, leaves the court in doubt. Equity will decline to interpose and compel specific performance of a contract when the evidence leaves the terms in doubt. The evidence establishes the fact that in the instant case the agreement in writing under date of July 8th, 1935, was the final agreement of the parties.

"The bill of complaint will be dismissed."

Mr. Leonard J. Emmerglick, for the appellant.

Mr. Guy G. Gabrielson, for the respondent.


We concur in the result reached by the learned vice-chancellor, and for the most part, in his reasoning.

In his conclusions the paper of July 8th, 1935, is called "a formal contract for the purchase of certain accounts," c. The language seems to indicate an executory contract, but in fact and law the instrument is an executed contract, just as a deed is an executed contract. It is in form a bill of sale, presently conveying, assigning, and transferring the accounts mentioned in the attached and incorporated schedules, with special covenants (a) of legal existence of defendant as a corporation; (b) ownership of the accounts free of encumbrance; (c) power to convey, and resolution of the board of directors; (d) power of attorney to vendee to collect, and (e) for further assurance. This paper was settled as to form by the counsel of both parties in conference, and after considerable negotiation and discussion of both terms and schedules. No fraud is claimed in the bill; the pith of the claim is that by mutual mistake of the parties, some twenty-two accounts (reduced to nineteen at the hearing) were omitted from the schedules. Hence, the suit is in essence for reformation of the bill of sale of July 8th, by including in the schedules these nineteen accounts as inadvertently omitted, and this after protracted negotiations between representatives of a loan company and an obviously shrewd and business-like speculative buyer, both parties aided by competent counsel.

To support reformation, a high order of proof is required. It must be "clear, cogent and convincing" or "clear and conclusive." The cases are numerous and uniform. It will suffice to cite Birch v. Baker, 81 N.J. Eq. 264; First National Bank v. Fessler, 84 N.J. Eq. 166; Higgins v. Linstra, 105 N.J. Eq. 246; affirming 104 N.J. Eq. 355, and the recent chancery case of Santamaria v. Shell, c., Inc., 116 N.J. Eq. 26, in which a number of other cases in this state are cited. We are clear that the proof in the present case does not measure up to the standard set in our decisions, and the decree under review is therefore affirmed.

For affirmance — THE CHIEF-JUSTICE, TRENCHARD, PARKER, LLOYD, CASE, BODINE, HEHER, PERSKIE, HETFIELD, DEAR, WELLS, WOLFSKEIL, RAFFERTY, COLE, JJ. 14.

For reversal — None.


Summaries of

Ehnes v. Monroe Loan Society

Court of Errors and Appeals
Oct 2, 1936
187 A. 180 (N.J. 1936)
Case details for

Ehnes v. Monroe Loan Society

Case Details

Full title:FRED C. EHNES, complainant-appellant, v. MONROE LOAN SOCIETY…

Court:Court of Errors and Appeals

Date published: Oct 2, 1936

Citations

187 A. 180 (N.J. 1936)
187 A. 180

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