Dulany v. Rogers

| Md. | Feb 26, 1879

Robinson, J.,

delivered the opinion of the Court.

In February, 1870, a written agreement was executed between H. W. Rogers, the complainant, and Olivia W. Dulany and Walter Dulany, whereby Mrs. Dulany was to convey to Rogers a tract of land containing 300 acres, valued at six thousand dollars, as an inducement to take her son Walter into partnership with him in the real estate brokerage business.

The following is the clause out of which this controversy has arisen:

“In case the said Walter Dulany shall elect to determine the said partnership, or in case by death of either party, the same should he dissolved, then the said Henry W. Rogers, is to pay to the said Olivia W. Dulany, the said agreed price of six thousand dollars, less expenses, or the amount which may have been realized in case of sale, less however the entire amount which may have been paid to or received by the said Walter Dulany from the said partnership, it being understood that no interest is to be charged.”

This agreement was executed in duplicate, Rogers retaining one copy and Mrs. Dulany the other.

In May, 1873, the partnership was dissolved by the election of Walter Dulany. The sum received by him on accoimt of his share' of the profits of the partnership, amounted to $3001.68, and suit was brought by the executors of Mrs. Dulany under the written agreement, to recover the difference between the amount thus received by Walter, and $6000 the sum agreed upon as the value of the 300 acres of land.

This bill is filed by Rogers to restrain the executors from prosecuting this suit, to reform the written agreement on the ground of mistake, and fo'r further relief.

The bill alleges that the partnership was formed under a verbal agreement between the complainant and Mrs. Dulany, some time prior to the execution of the written agreement of February, 1870 — that under this verbal agreement Mrs. Dulany was to give to the complainant the 300 acres of land as a bonus for taking her son Walter into partnership with him — that the clause in the written agreement upon which the suit at law was brought, and by which the complainant was to pay to Mrs. Dulany, upon the dissolution of the partnership at the election of Walter, the difference between the sum received by him from the partnership and $6000, the price agreed upon as the value of the 300 acres of land, was inserted by mistake, and constituted no part of the original agreement.

There can be no difficulty in regard to the well settled principles of law by which this case is to be governed.

If parties enter into an agreement, and through an error in the reduction of it to writing, the written agreement fails to express their real intentions or contains terms or stipulations contrary to their common intention, a Court of equity will correct and reform the instrument so as to make it conform to the intention of the parties. Wake vs. Harrop, 1 H. & C., 202 ; Beaumont vs. Bransley, T. & R., 41; Ashurst vs. Mill, 7 Ha.; Barrow vs. Barrow, 18 Beav.; Scholfield vs. Lockwood, 33 L. I. Ch., 106; Druiff vs. Parker, L. R., 5 Eq., 137; Reade vs. Armstrong, 7 Ir. Ch., 137.

It is incumbent, however, upon the party seeking to reform a written instrument to show by conclusive proof, that it does not embody the final intention of the parties ; Courts will not rectify it unless it was executed under a common mistake, — both parties having done that which neither of them intended. A mistake on one side may be ground for rescinding, but not for reforming a written agreement. Lord Townsend vs. Stanegroom, 6 Ves., 334; Mortimer vs. Shortall, 2 Dr. & War., 372; Fowler vs. Fowler, 2 D. & J., 265 ; Eaton vs. Bennett, 34 Beav., 196; Fallon vs. Robins, 16 Ir. Ch., 422.

In this case tbe burden was upon the complainant to show that the written agreement either did not express the common intention of the parties, or that it was executed by him by mistake, such as will justify a Court of equity in setting it aside.

That the partnership began under a verbal agreement between the complainant and Mrs. Dulany, fifteen months before the execution of the written agreement; and that by it Mrs. Dulany was to convey to him the 300 acres of land, as a bonus to take her son Walter into partnership with him, is we think satisfactorily established.

But for this verbal agreement, it was competent surely for the parties to substitute a written agreement, containing terms and stipulations, in regard to their rights respectively upon a dissolution of the partnership, and in regard to which, the verbal agreement was silent. And if such written agreement was executed, it is but fair to presume that it expresses the final intention of the parties.

The circumstances under which the written agreement was prepared, and the reasons which led to its adoption, are fully explained by the testimony of Mr. Gill. He says, “In a conversation with Mrs. Dulany about the partnership between the complainant and her son Walter,” he found, “ that while she understood there was a general agreement, none of the particulars or details of the agreement were provided for, or at least understood by her, and I told her there ought to be some agreement about it in writing.; I saw Mr. Rogers and talked the matter over with him, and afterwards talked it over further with Mrs. Dulany, making myself a variety of suggestions to each of them, and after doing this, I prepared the paper. The defect in the original agreement, was that if either of the parties died immediately after its execution, or if any dissatisfaction arose between the parties, which should lead to the termination of the partnership, or in other words, if the partnership continued only a day, Mr. Rogers would be entitled to land valued by Mrs. Dulany at $6000; seeing this condition of things, and acting not as counsel but as friend of both parties, I suggested that defect and they both as I believed understood it, and I suggested also the proper mode of remedying that defect; and hence the written agreement was prepared and executed.”

It thus appears that the defects in the verbal agreement were fully discussed between Mr. Gill, the complainant, and Mrs. Dulany, and the suggestions of Mr. Gill for remedying these defects were fully explained. As thus prepared, the written agreement was read by the complainant, and then executed in duplicate, one copy being delivered to him, and it was not until the partnership was dissolved nearly three years from its execution, that objection to it was made by the complainant, on the ground that' it contained terms and stipulations contrary to the real intention of the parties.

Upon such testimony as this, and there is no proof in conflict with it, we are of opinion that the complainant has failed to show that the written agreement does not express the final intention of the parties; or that it was executed by mistake such as would justify us in setting it aside.

But then again, it is argued that the terms and stipulations of the agreement are so unjust and unreasonable as to bear upon its face intrinsic evidence of having been executed under a mistake. But it does not occur to us as being liable to this objection. By it, Mrs. Dulany agrees to convey to the complainant 300 acres of land valued at $6000, as a bonus, to take her son Walter into partnership with him. If the partnership is dissolved by the complainant, it provides, that he shall pay to Mrs. Dulany six thousand dollars for the land, less the amount received by Walter as bis share of the profits of the partnership, over and above five hundred dollars per year.

On the other hand, if the partnership was dissolved by Walter, the complainant was to pay to Mrs. Dulany, the sum agreed upon as the valuation of the land, less however the share of the profits of partnership received by Walter. In other words, by the dissolution of the partnership at the election of Walter, he was to forfeit the entire share of the profits received by him.

Now, if we assume the land was in fact worth six thousand dollars, and this we are obliged to do, if we are to look merely to the face of the agreement itself, there is certainly nothing unfair or unreasonable in its provisions, so far as the complainant is concerned, because upon a dissolution of the partnership by Walter, the complainant gets the entire profits, and pays to Mrs. Dulany only a sum equal to the value of the land as agreed upon by the parties.

There is evidence however, outside of the written agreement, which makes its enforcement work a great hardship on the complainant. It appears that the tract of 300 acres, which was valued at twenty dollars per acre, as forest land lying near the Maryland and Delaware line, not valuable as woodland, because the most valuable part of the timber had heen cat off; and being a cold stiff wet white oak soil, almost worthless for agricultural purposes. It may be difficult to say from the testimony, what this land was worth, certainly not over from five to ten dollars per acre. It is not pretended however, that there was any false representation by Mrs. Dulany in regard to its value; she held it at twenty dollars per acre, and had in fact sold a few lots of several acres each, at that price. And it may be said, that the complainant being a real estate broker, it is but fa'ir to presume, he knew something about its actual value. But the record shows that the partnership was considered a desirable one to Walter Dulany, and the complainant had good reason for supposing that it would not he dissolved by his, (Dulany’s) act, considering therefore the partnership a permanent one, the valuation fixed upon the tract of land in the written agreement, was a matter of hut little importance. The happening however of a contingency not considered probable at the time of the execution of the agreement, can in no manner affect the rights of the parties under it.

(Decided 26th February, 1879.)

But however much the circumstances surrounding this case may address themselves to the appellants, in behalf of a liberal settlement of this controversy, we are constrained to say, after a careful consideration of the testimony, that it is insufficient according to well settled principles of law, to justify us in granting the relief prayed.

The decree of the Court, therefore, setting aside the agreement of February, 1870, and enjoining the appellants from prosecuting their suit at law, and decreeing a re-conveyance of the land mentioned in' the proceedings to the parties entitled to the same through Olivia Dulany, he and the same is hereby reversed, and the hill of the complainant is also hereby dismissed.

Decree reversed, and bill dismissed.