In Weed v. Whitehead, 1 A.D. 195, it was said: "The authorities all require that parol evidence of a mistake in a written contract must be most clear and convincing.Summary of this case from Dougherty v. Lion Fire Ins. Co.
February Term, 1896.
James E. Chandler, for the appellant.
Charles T. Terry, for the respondents.
This action was brought to foreclose a mortgage upon real estate, made by one Osborne to the respondents Richard H. Mullineaux and Alonzo Guest, and by said Mullineax and Guest assigned to the plaintiff.
The assignment contained the following covenant: "It is further covenanted and agreed, as part of this assignment, that the parties of the first part, their legal representatives and assigns, will pay to the said party of the second part, her legal representatives and assigns, any deficiency which may arise on a foreclosure sale of said mortgage, provided, however, such deficiency shall not exceed the principal sum of said mortgage and one hundred dollars in addition, and provided, further, that such foreclosure proceedings shall be begun within sixty days after said mortgage may be become due and payable by any of the covenants therein or by its terms."
The respondents were made defendants in the action, and part of the prayer for judgment was that they should be adjudged to pay any deficiency arising upon the sale of the mortgaged premises not exceeding $2,100.
The respondents appeared in the action by attorneys, but did not answer the complaint, and the property having been sold a judgment for $439.19 deficiency was duly entered against the respondents on July 13, 1895. This judgment was thereafter assigned by the plaintiff to William I. Ticknor, he paying the full amount therefor.
The order appealed from has vacated said judgment and granted leave to the respondents to serve an answer in the action, and interpose as a defense that the covenant of guaranty in the assignment does not express the true agreement between the parties, and to ask to have the same reformed.
It is the contention of the respondents that the true agreement was that they should pay the difference between $2,100 and the proceeds of the sale of the mortgaged property.
We are of the opinion that the order should be reversed and the motion denied.
It appears from the affidavits that the respondents solicited the plaintiff to take an assignment of the mortgage. This the plaintiff agreed to do provided a guaranty thereof was given by the respondents. The terms of the guaranty were a subject of negotiation between the attorneys for the parties, and were finally agreed upon at a meeting held at the office of the respondents' attorneys at New Rochelle, at which there was present Mr. Guest, Mr. James E. Chandler, representing the plaintiff, and Mr. J. Addison Young, representing the respondents. The affidavits of Mr. Young and Mr. Guest differ as to the form of the agreement made at that meeting. Mr. Young swears that respondents agreed "to pay the difference between the principal sum of said mortgage and one hundred dollars in addition thereto and the proceeds of the sale of said mortgaged property upon a foreclosure." Mr. Guest swears that they agreed "to guarantee the principal of said bond and mortgage and one hundred dollars in addition." Probably the legal effect of the contract, whichever way it is stated, is the same. But some facts appear in the affidavit of Mr. Chandler, which are not denied, and which are most material in determining the question before us. He admits that the terms of the guaranty were agreed upon at Mr. Young's office as stated in the affidavits of Messrs. Young and Guest, but he states that it was agreed that Mr. Young should prepare the assignment and insert therein the covenant regarding the deficiency which had been agreed upon, and that after the assignment was executed Mr. Young was to cause it to be recorded in the register's office at White Plains, and that he, Mr. Chandler, was not to see the assignment until after it was recorded. This course was taken for the reason that, at the time of the meeting aforesaid, the bond and mortgage were held by the Bank of New Rochelle, and it was necessary that they should be reassigned by said bank to the respondents before the assignment could be executed to the plaintiff. He further swears that, after the form of the guaranty had been agreed upon, he paid to Mr. Young the amount of the mortgage, and that the deed of assignment to the plaintiff was subsequently drawn by Mr. Young after he, Mr. Chandler, had returned to New York, and that the covenant of guaranty contained therein is in Mr. Young's handwriting.
In the face of these undisputed facts the charge in the moving papers, that the covenant, as it appears in the assignment, was inserted therein through fraud or mistake on the part of Mr. Chandler, is wholly without support. It appears without contradiction that it was written into the assignment by Mr. Young, the respondents' attorney, and while he may have been mistaken as to the purport of the agreement, if there was any mistake in the form in which it was inserted in the written paper, it was his mistake alone. Mr. Chandler swears positively that the covenant was agreed upon in the precise form in which it appears in the assignment. He is corroborated by the instrument itself, and this corroborative evidence has great force from the fact that the writing was the act of Mr. Young. It is difficult for us to believe that Mr. Young or Mr. Guest could have understood the agreement to have been what they now claim it was, and yet immediately after it was agreed upon could have made so serious a mistake in the preparation and execution of the written instrument. The deliberate character of that act, performed entirely apart from and without interference from the other party to the agreement, and when the transaction was fresh in their minds, is strong evidence that Mr. Chandler's version of the transaction is the correct one.
The authorities all require that parol evidence of a mistake in a written contract must be most clear and convincing. The language of some of the cases is "the strongest possible."
Courts of equity do not grant the remedy of reformation upon a probability, nor even upon a mere preponderance of evidence, but only upon a certainty of error. (2 Pom. Eq. Juris. § 859; 1 Story's Eq. Juris. § 157; Southard v. Curley, 134 N.Y. 148, and cases cited in the opinion.)
The utmost that can be determined from the testimony before us is that the matter is left in doubt. But a court of equity would not be justified, upon such evidence, in granting the relief which the respondents seek.
But, assuming that the assignment did not express the agreement as it was understood by the respondents, there is no proof in the moving papers of a fraud or of a mutual mistake. The plaintiff parted with her money in reliance upon the covenant of guaranty, and refrained from bidding at the sale in further reliance thereon. The property has been sold, and a third party has become the owner thereof. The sale cannot be set aside, and it is impossible for the parties to be restored to their original positions. This condition of affairs is solely the result of the respondents' neglect.
There has been no concealment on the part of the plaintiff of her claim. The covenant is set out in full in the complaint, and it is there alleged that the respondents are liable for any deficiency that may arise on the sale of the mortgaged premises up to the amount of $2,100, and judgment is demanded against them for that amount.
The respondents have not been misled, but they have been negligent, and as a result of their neglect it is now beyond the power of the plaintiff to protect herself by bidding upon or purchasing the mortgaged property.
The right to so protect herself is a very substantial one. It cannot be restored to her, and the order appealed from does not afford any substitute for it.
For these reasons the order should be reversed, with ten dollars costs and disbursements, and the motion denied, with ten dollars costs.
All concurred, except BARTLETT, J., not sitting.
Order reversed, with ten dollars costs and disbursements, and motion denied, with ten dollars costs.