September Term, 1863
James B. Olney, for the respondents.
A.J. Parker, for the appellant.
Rider and wife conveyed the farm to the defendant, and he took possession of it and also of the personal property he purchased with it. He paid Rider $1100 in cash, and gave him an indorsed note for $500 in part payment of the purchase money. The oral contract therefore was so far performed as to relieve it from the operation of the statute of frauds; and the defendant could not retain the farm and personal property without giving Rider such a bond and mortgage as their oral contract called for, unless the fact that there was no fraud or mistake on the part of the defendant, as to the terms of the bond and mortgage he gave to Rider, justified him in so doing.
Parsons says: "The question has often come before our courts, whether oral evidence can be received to show the mistake, (in a written contract,) and thereby make it in fact a new contract, when an oral contract would be void or not enforceable by the statute of frauds. The course of adjudication is not uniform on this point. But while it can not be denied that numerous authorities support a disregard of the statute in such cases, others maintain its authority." (1 Par. on Con., 3d ed. 555.) Justice STORY puts the case, "where the party plaintiff seeks, not to set aside the agreement, but to enforce it, when it is reformed and varied by the parol evidence;" and then says: "A very strong inclination of opinion has been repeatedly expressed by the English courts, not to decree a specific performance in this latter class of cases; that is to say, not to admit parol evidence to establish a mistake in a written agreement, and then to enforce it, as varied and established by that evidence. On various occasions such relief has, under such circumstances, been denied. But it is extremely difficult to perceive the principle upon which such decisions can be supported, consistently with the acknowledged exercise of jurisdiction in the court to reform written contracts, and to decree relief thereon. In America, Chancellor Kent, after a most elaborate consideration of the subject, has not hesitated to reject the distinction as unfounded in justice, and has decreed relief to a plaintiff, standing in the precise predicament." (1 Story's Eq. J. 7th ed. § 161.) Archer J. in delivering the opinion of the court, in Moale v. Buchanan et al. (11 Gill and Johnson, 325,) said: "Had the agreement been entirely by parol, and a part performance, the complainant would have been entitled to relief. Shall he be in a worse situation by having attempted to reduce the whole agreement into the form of a conveyance, if he shall make an omission in the conveyance, by mistake of an essential part of the agreement?" He then answers this interrogatory in the negative, and refers to the opinions of Chancellor Kent, in Gillespie and wife v. Moon, (2 John. Ch. R. 585,) and Keisselbrack v. Livingston, (4 id. 144.)
A judgment was given by this court in De Peyster v. Hasbrouck, (1 Kernan, 582,) reforming a mortgage and enforcing it against premises not originally embraced therein.
The Supreme Court was therefore justified by authority as well as principle in reforming the bond and mortgage in this case, unless the fact that there was no fraud or mistake on the part of the defendant in fixing their terms, or respecting their terms, renders such decision erroneous. The decisions in Mathews v. Terwilliger, (3 Barb. 50,) and Quick v. Stuyvesant, (2 Paige's Ch. Rep. 84,) support this conclusion instead of militating against it.
I am not aware of any adjudged case, in which it has been held that there must be a mutual mistake of fact by the parties to a written contract or some fraud on the part of the party not mistaken, to entitle the party who made the mistake and who suffers by it, to have such contract reformed so that it will truly express the oral agreement of the parties which was to be carried into effect by the written contract; and such a doctrine would be contrary to good sense and sound principle. In Matthews v. Terwilliger, ( supra,) GRIDLEY J. said: "Now if by the actual agreement of the parties, Matthews was to pay interest on the purchase price of the farm, how did it happen that the written contract which should have truly expressed the agreement of the parties, wholly omitted all mention of interest? Was it by the fraudulent design of the complainant, or by the mistake and inadvertence of the defendant? If it was owing to either of these causes, then the complainant is not entitled to have the written contract, on which he has founded his bill, performed; but the defendant is entitled to have it reformed, and the mistake corrected." In that case the complainant endeavored to compel the defendant to specifically perform a contract for the sale of his farm, and the latter set up a mistake in the contract by the omission of an undertaking on the part of the complainant to pay interest on the portion of the purchase money which was not to be paid down; and there was no mistake on the part of the complainant as to the terms of the contract as written and signed by the parties, and it was framed precisely as he intended it should be. See Haire v. Baker, (1 Selden, 357. Also see 8 Cowen, 195; 1 Wend, 355.)
ROSEKRANS, J. protested against this doctrine.
It seems to me to be entirely clear, upon principle, that Rider was entitled to have the bond and mortgage reformed so that they would conform to the oral agreement of the parties for the sale of the farm, although the defendant may have known, at the time they were executed, that they varied from such oral agreement, and did not say or do anything to induce the scrivener to draw them differently from what they should have been drawn. And as there is no controlling authority to the contrary, I am of the opinion that this court should so hold, and affirm the judgment in the case, with costs.
DAVIES, ROSEKRANS and SELDEN, Js. were also for affirmance; the latter on the ground that there must have been fraud, or a mutual mistake.
The action was to have the defendant's bond and mortgage reformed so as to conform to a parol contract between the parties, in pursuance of which it was alleged they were given. The bond and mortgage were to secure the payment of $3000, (a part of the purchase money of the plaintiff's farm,) in ten annual installments of $300 each. As drawn, interest was to be paid annually on the different installments; but there was no provision for the payment of the interest on the whole principal remaining unpaid, at the time of the payment of such annual installments. In the latter particular the reformation or correction of the bond and mortgage were asked for. The pleadings admitted a parol contract between the plaintiff and defendant, for the sale of the farm of the plaintiff, for the price of $4600, of which sum $3000 was to be paid in ten annual installments of $300 each; the first payment to be made on the 1st of December, 1859, and the remaining payments on the 1st of December of each year thereafter; and which sum of $3000 was to be secured by the defendant's bond and mortgage on the premises. The complaint alleged the contract to have been, that the plaintiff was to have interest annually on the whole sum of $3000; whereas the defendant, in his answer, averred that that sum was made payable in ten annual payments of $300 each, with interest on such annual payments. The judge who tried the cause found only the single fact, viz. that there was a mistake on the part of the plaintiff as to the interest he was to receive by the bond and mortgage; and decided that as matter of law, he was entitled to have his mistake corrected, and the bond and mortgage amended or modified, so that he should recover annual interest on the whole sum unpaid, and directed a judgment accordingly.
We can only review the case upon the pleadings and facts found by the judge; and the question is, whether in a case where a contract between parties provides for the performance of a particular act by them, such contract is entitled to be reformed, in equity, because there has been a mistake on the part of one of the contracting parties, as to its terms, when such mistake is not occasioned by any fraud practiced by the other party.
I suppose the rule to be, that when there is a mistake on one side, (and not a mutual mistake,) it may be a ground for rescinding a contract, or for refusing to enforce its specific performance, but not a ground for altering its terms. (Adams' Equity, 171.) A mistake by the plaintiff when he made the contract, as to the interest he was to receive on the bond and mortgage, would not entitle him to have the contract so modified as to conform to his mistaken impression, though it might be a reason for rescinding the contract on the ground that the minds of the parties never met in making it. In Lyman v. United Insurance Co., (17 John. R. 375,) Chief Justice SPENCER lays down the true rule of law to govern the case, (whether the mistake found relates to the bargain or to the taking of the bond and mortgage,) that "before a written contract can be amended or altered on the pretense of mistake, the proof must be entirely clear that that mistake has occurred; and secondly, that the amendment sought would conform the contract to the intention of both parties."
If we were to look, however, in this case, beyond the findings of fact by the court, it is clear that the deed, bond and mortgage constituted the true contract, and that all previous negotiations were merged in them. It would be a violation of the plainest elementary principles to permit a party who has entered into a written contract, to have the written contract altered so as to conform to his understanding of a previous negotiation, when the opposite party understood it differently, and as it was set forth in the written contract. The parol bargain was void by the statute of frauds; neither possession being taken under it or consideration paid. It was after the deed, bond and mortgage were executed and delivered, and under them the money was paid and possession taken. The court was asked in the case not only to enforce an agreement void by the statute, but one that the parties did not understand alike.
The judgment of the Supreme Court should be reversed and a new trial ordered, with costs to abide the event.
DENIO, Chief Justice, and EMOTT, J. were also for reversal. MARVIN, J., while concurring with WRIGHT, J. in his dissenting opinion, as to the law, was for affirmance on the construction which he (Marvin) gave to the judge's finding of facts; and finally the rule for judgment in favor of the plaintiff was construed as a finding of the necessary facts, viz. fraud or a mistake of fact on the part of the defendant. And the judgment of affirmance went upon that theory.