Barth v. Deuel, 11 Colo. 494

Barth v. Deuel

11 Colo. 494 | Colo. | 1888

Lead Opinion

Rising, C.

The defendant demurred to the complaint on the grounds —First, that it did not state facts sufficient to constitute a cause of action; second, for defect of parties defendant; and third, that it was ambiguous, unintelligible and uncertain. Upon the overruling of the demurrer defendant filed his answer and went to trial on the merits. By filing an answer and going to trial upon the merits defendant waived the second and third grounds of demurrer, and the first ground is not relied upon in the argument of counsel. All the other assignments of error may be considered under the general assignment that the judgment or decree of the court is contrary to law and the evidence. The question presented for determination is whether the mutual mistake of the parties with reference to the locátion of the building occupied by the plaintiff at the time of the making of the deed by defendant to her is, under the circumstances of this case, a ground for relief in equity. One of the circumstances to be considered is that the mistake related to a material fact, which constituted the only basis for the payment by plaintiff to defendant of the money sought to be recovered back. The premises conveyed to plaintiff by defendant were materially different from the premises the plaintiff intended to purchase and from the premises defendant supposed he was selling to her. In Daniel v. Mitchell, 1 Story, 172-190: “Nothing is more clear in equity than the doctrine that a bargain founded in a mutual mistake of the facts, constituting the very basis or essence of the contract, or founded upon the representations of the sellers, material *499to the bargain, and constituting the essence thereof, although made by innocent mistake, will avoid it.” In Marvin v. Bennett, 8 Paige, 312-321, it is held that equity will give relief in cases of mutual mistake, “ where the subject-matter of the sale and purchase is so materially variant from what the parties supposed it to be that the substantial object of the sale and purchase entirely fails. ” By reason of the failure of the defendant to convey, not only almost the entire building intended to be conveyed, but also a failure to convey anything of material value to the plaintiff, there is a failure of the basis of the contract between the parties, without their assent, and to enforce such an agreement is inequitable. Miles v. Stevens, 3 Pa. St. 21-37. Equitable relief will be granted in cases of mistake when the fact concerning which the mistake is made is material to the transaction, affecting its substance and not merely its incidents, and the mistake itself is so important that it determines the conduct of the mistaken parties. 2 Pom. Eq. Jur. § 856. Counsel for appellant contend that under the evidence in this case the plaintiff is not entitled to the relief she demands, by reason of the application of the following claimed legal principles, as stated in the argument for appellant: First. Where the means of information are alike open to both parties, and when each is presumed to exercise his own judgment in regard to extrinsic matters, equity will not relieve. Second. When the facts are unknown to both parties, or when each has equal and adequate means of information, in such cases, if the party has acted with good faith, equity will not interfere. Third. When each party is equally innocent, and there is no concealment of facts, mistake or ignorance is no foundation for equitable interference. The case of Crowder v. Langdon, 3 Ired. Eq. 476, is cited in support of the foregoing propositions. An examination of that case will show that but little weight should be given to the case as an authority in support of the propositions contained in the head-notes. *500It appears that one of three partners in the mercantile business negotiated with another partner for the purchase of that partner’s interest in the partnership; that during said negotiation the partner having the interest for sale produced the books of the firm, and also a paper called the “blue paper,” purporting to be a statement of the assets and liabilities of the firm, the figures of which statement were taken from the firm books, and that after adding the sum of $1,500 to.the amount of the liabilities, as they appeared from said statement, and deducting the sum of $600 from the assets on account of bad debts, which addition and deduction were made at the instance of the disinterested partner, the statement, as so changed, was taken as the basis of the contract of sale and purchase made by the parties. It turned out that the liabilities of the firm were underestimated in nearly the sum of $2,500, and the purchaser brought an action to rescind the contract and recover back the purchase money paid. The foregoing statement contains all the facts relating to a mistake in the case, and shows that there was no question of mistake to which the principles announced could be applied. Mistake is not ground for relief, unless the mistake is acted upon and forms the basis of the contract, and when it is not acted upon the principles announced have no application, as is shown by the case cited, from which we quote: “If, however, we were satisfied that the plaintiff acted upon the statement contained in the blue paper as the known and declared basis on which he contracted, we should be inclined to grant him relief.” The case of Grymes v. Sanders, 93 U. S. 55, cited by counsel, turned upon the fact that the mistake with reference to the location of the shaft had not animated and controlled the conduct of the party complaining, as appears from the following statement in the opinion: “The subsequent conduct of the appellees shows that the mistake had no effect upon their minds for a considerable period after its discovery, and then it seems to have been *501rather a pretext than a cause.” This fact, so stated, brings the case within the principle that, to warrant relief in equity, ‘ the court must be satisfied that but for the mistake the complainant would not have assumed the obligation from which he seeks to be relieved,” announced by the court in that case. The case of Webster v. Stark, 10 Lea, 406, cited by counsel for appellant, was determined upon a question of fact relating to the intention of the parties. It was found by the court that the contract of sale made by the defendant to the plaintiff expressed the intention of the parties, and this finding clearly appears from the review of the evidence by the court on pages 412 and 413 of the opinion, which review also shows that there was no mistake as to the lots plaintiff intended to buy, but a mistake made by him as to an extrinsic fact. The case of White v. Williams, 48 Barb. 222, was also determined upon a question of fact as to the intention of the parties. The mistake in this case was not in relation to ground intended to be purchased and sold, but in relation to an extrinsic fact relating to ¿aid ground.

From this review' of the cases cited it will be seen that they have no application to the case at bar. In the case under consideration there is no question but that it was the intention of the plaintiff to purchase the identical twenty-two feet of ground on which the building she occupied stood. The defendant so understood the intention of the plaintiff, and he supposed that the conveyance made by him covered the premises the plaintiff intended to buy. The mutual mistake made by the plaintiff and defendant was in relation to a material fact, and but for the fact of the mistake the plaintiff, certainly, would not have entered into the contract from which she seeks to be relieved, and it is but just to the defendant to presume that he would not have taken the plaintiff’s money without intending to give her value therefor. It does not appear that there are intervening rights to prevent the parties from being placed in the same position they *502were before the contract was made. In 1 Story, Eq. Jur. § 3 38, it is said to be the clearly defined and well established rule, both in England and America, that under such facts as are established by the evidence in this case equity will interfere, in its discretion, in order to prevent intolerable injustice. In illustration of the doctrine that equity will relieve in such cases, the learned author states the following supposed case: “ If one person should sell a messuage to another, which was at the time swept away by a flood, or destroyed by an earthquake, without any knowledge of the fact by either party, a court of equity would relieve the purchaser, upon the ground that both parties intended the purchase and sale of a subsisting thing, and implied its existence as the basis of their contract. It constituted, therefore, the very essence and condition of the obligation of their contract.” 1 Story, Eq. Jur. § 142. Under the facts in this case we do not conceive that the question of negligence arises; but, if it is in the case, the evidence does not show such a state of facts as should prevent the plaintiff from obtaining the relief demanded. At the time of making the contract the plaintiff was paying rent to the defendant for the premises she desired to purchase, and the defendant was receiving such rent as the owner of the premises. The plaintiff had the right to assume that defendant was the owner of the premises, and to act upon such assumption. 1 Story, Eq. Jur. § 140; 2 Pom. Eq. Jur. § 856; Quick v. Stuyvesant, 2 Paige, 84-92. We therefore conclude that the plaintiff made a case which entitled her to the relief demanded.

This brings us to the consideration of the decree rendered, and we do not think it can be sustained. In so far as the decree attempts to cancel and annul the trust deed, the court, not having the trustee before it as a party to the suit, had no power to adjudicate directly in relation to that instrument; and in so far as the decree attempts to. do equal and exact justice between the parties, by mak*503ing a new contract for them and decreeing its specific performance, it is erroneous. The fact that the trustee in the trust-deed was not made a party to the suit is not of itself a sufficient cause for denying to the plaintiff the relief demanded. A deed of trust to secure an indebtedness of the grantor is, in its legal sense, a mortgage, and statutes relating to the recording and satisfaction of mortgages are held to be applicable to such deeds of trust. 2 Pom. Eq. Jur. § 995. As an incident to this character of a trust-deed, it is held that a payment or release of the indebtedness which it was given to secure operates as an extinguishment of the power of sale, and in states where a mortgage is considered but as a mere hen, a deed of trust is generally considered as nothing more than alien. The court is authorized to cancel the indebtedness secured by the trust-deed, and such cancellation must operate as an extinguishment of the interest of the beneficiary in the premises conveyed, as well as of the power of sale in the trustee; and, as the decree of the court may be made a matter of record, it may thus be made a notice to all the world, with the same effect as notice by a recorded conveyance, that by the extinguishment of the interest of the beneficiary under the trust-deed such deed was rendered wholly inoperative as a conveyance. It is the policy of the legislation in this state to make record evidence of the payment of the debt equivalent to a release of the security executed under the formalities prescribed by the law regulating conveyances. Gen. St. § '234. A decree of a court of competent jurisdiction canceling an indebtedness secured by a trust-deed presents a means of making record evidence of the fact of such cancellation, and the legal effect of such cancellation is to release the pi’emises from the incumbrance placed thereon. McNair v. Picotte, 33 Mo. 57. Such decree must be held to operate as a release of the trust-deed. While the judgment cannot be sustained, we do not think it necessary that a new trial should be had. The judgment should be- reversed *504and the cause remanded, with directions that, upon satisfactory proof being made that the deed from the plaintiff to the defendant reconveying to him the premises conveyed to her by defendant conveys the same without incumbrance placed thereon by her, other than said trust-deed, a decree be entered for the plaintiff in accordance with the prayer of her complaint.

Stallcup, 0., concurs.

Concurrence Opinion

De France, C.

I concur in all respects, except as to the propriety and effect of the decree directed. I regard the trustee as a necessary party, in order that the decree may do full justice to all the parties,— place them in statu quo.

Per Curiam.

For the reasons assigned in the foregoing opinion the judgment is reversed, with directions to enter a decree in accordance with the foregoing opinion.

Reversed.

Rehearing

ON REHEARING.

Where the record in a suit for rescission of a conveyance of realty does not warrant a recognition of a claim for rents, the parties will be left to a separate action, notwithstanding the rule of equity practice to adjudicate all questions fairly presented.

Per Curiam.

The record presented does not warrant us in recognizing the claim made for rents by ordering an accounting. As at present advised, we have concluded to deny the rehearing, and leave the parties to a separate action in connection with any rights they may claim to have that are not fully adjudicated. Nor do we consider that, under the peculiar facts of this case, such con cl n sion in any way conflicts with the recognized practice in equity of fully adjudicating all questions fairly involved and presented. The rehearing is denied.

Rehearing denied.