Hyde v. Kirkpatrick

153 P. 41 | Or. | 1915

Lead Opinion

Mr. Justice Burnett

delivered the opinion of the court.

1. In Hughey v. Smith, 65 Or. 323 (133 Pac. 68), the rule about the correction of a mistake in a written instrument is thus declared by Mr. Justice Moore :

“The right of a court of chancery to reform or annul a written contract, the execution of which was induced by the fraud of the defendant, or resulted from the mutual mistake of both parties, is a well-recognized principle of equitable jurisprudence. Such being the case, the only question to be considered is whether or not the complaint herein states facts sufficient to constitute a cause of suit. The rule is settled in this state that, in a suit to reform a written instrument on the ground of misapprehension of the facts involved, the complaint must distinctly allege what the original agreement of the parties was, or point out with clearness and precision wherein there was a misunderstanding, and that such mistake was mutual and did not arise from the gross negligence of the plaintiff, or that his misconception originated in the fraud of the defendant: Evarts v. Steger, 5 Or. 147; Lewis v. Lewis, 5 Or. 169; Stephens v. Murton, 6 Or. 193; McCoy v. Bayley, 8 Or. 196; Foster v. Schmeer, 15 Or. 363 (15 Pac. 626); Hyland v. Hyland, 19 Or. 51 (23 Pac. 811); Meier v. Kelly, 20 Or. 86 (25 Pac. 73); Epstein v. State Ins. Co., 21 Or. 179 (27 Pac. 1045); Kleinsorge v. Rohse, 25 Or. 51 (34 Pac. 874); Osborn v. Ketchum, 25 Or. 352 (35 Pac. 972); Thornton v. Krimbel, 28 Or. 271 (42 Pac. 995); Mitchell v. Holman, 30 Or. 280 (47 Pac. 616); Sellwood v. Henneman, 36 Or. 575 (60 Pac. 12); Stein v. Phillips, 47 Or. 545 (84 Pac. 793); Bower v. Bowser, 49 Or. 182 (88 Pac. 1104); Smith v. Interior Warehouse Co., 51 Or. 578 (94 Pac. 508 (95 Pac. 499); Howard v. Tettelbaum, 61 Or. 144 (120 Pac. 373).”

The plaintiff does not assert that he himself was mistaken about any of the terms to be included within the contract. It is true that he pleads that he was ignorant of whether the defendant had paid any of the accounts at the time the instrument was executed, but, as avowed in his brief, the object of the negotiation in March was to prepare a written memorial of the stipulation orally made in January, and not to make any new contract. In that view of the matter the representations of the defendant about his payments of accounts would have nothing to do with the case. They would not affect the plaintiff’s knowledge of the transaction that occurred in March. In brief, while the complaint imputes mistake to the defendant in the alternative with an intent to defraud, it does not aver any mistake on the part of the plaintiff. It is only a mutual mistake of the parties that will authorize a correction of a written instrument within the rule of Hughey v. Smith, 65 Or. 323 (133 Pac. 68).

2. Moreover, there is nothing to show the court that the action of the plaintiff in signing the bill of sale did not arise from his pure heedlessness and inattention to his own interests, and this is condemned by the precedent last cited. Besides all this, as a matter of evidence, it is without dispute that at the time of the Jan-nary transaction both parties made an inventory of the stock of goods and of the fixtures involved, together with a schedule of the accounts due the plaintiff which the defendant took over, and a list of the wholesale accounts "against the plaintiff which the defendant was to assume. All these were preserved by each party, and at the time of the execution of the instrument in question the plaintiff had his set of those papers in his possession. Possessed of written evidence of the data that should have been used to make up the written agreement he utterly neglected to avail himself of it so that the conclusion of his negligence is inevitable.

3, 4. Neither is the complaint sufficient to reform the instrument on the ground of fraud perpetrated by the defendant.' In Anderson v. Adams, 43 Or. 621 (74 Pac. 215, 217), Mr. Chief Justice Moore stated the principle thus:

“To constitute a fraud by false representations, so as to entitle the plaintiff to relief, three things must occur: (1) There must be a knowingly false representation; (2) the plaintiff must have believed it to be true, relied thereon, and have been deceived thereby; and (3) that such representation was of matter relating to the contract about which the representation was made, which, if true, would have been to plaintiff’s advantage, but, being false, caused him damage and injury.”

See, also, McFarland v. Carlsbad Sanatorium Co., 68 Or. 530 (137 Pac. 209, Ann. Cas. 19150, 555). It is quite as forcibly enunciated in Leavengood v. McGee, 50 Or. 233, 239 (91 Pac. 453):

‘ ‘ The rule is that the facts upon which fraud is predicated must be specifically pleaded. A mere general averment of fraud is nothing but the averment of a conclusion, and will not suffice. It presents no issue for trial, and is bad on demurrer. Such an averment not only renders the bill or complaint demurrable, but it will not even sustain a decree.”

Tested by these standard precedents the complaint does not sufficiently charge fraud upon the defendant. It is said in the pleading that the defendant “omitted to mention to the attorney the certain of said wholesale accounts (which he had not paid) which in said instrument and by the terms thereof he agreed to pay. ’ ’ It is impossible to understand how the defendant could omit from the instrument accounts which by the terms of the very paper itself he promised to pay. It was error to overrule the general demurrer.

5. As already stated, the court not only corrected the instrument by inserting an entirely different consideration and a list of 20 accounts stating that some of them had already been paid, but also gave judgment against the defendant for the amount of the Oregon Mill & Grain Company’s account of $535.62. Semble, if the defendant agreed with the plaintiff to pay the latter’s debt to the Mill & Grain Company and did not keep his promise, it would be a breach of the contract for which an action of damages would lie if the plaintiff in fact were damaged. But unless the plaintiff had paid the debt himself, either voluntarily or by compulsion, he could not be injured. The complaint is utterly silent on this subject, and it is believed that nothing is alleged authorizing the court to award the plaintiff judgment for "damages for a breach of the contract. The defect of the complaint as against a general demurrer obviates the necessity for a detailed analysis of the testimony of which it is enough to say it is confusing and unsatisfactory.

The decree of the Circuit Court is reversed and the suit is dismissed.

Reversed and Suit Dismissed.

Rehearing Denied.

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Rehearing

Denied December 28, 1915.

On Petition for Rehearing.

(153 Pac. 488.)

Mr. Justice Burnett

delivered the opinion of the court.

6. The plaintiff has filed a petition for rehearing in which he restates with ability and zeal the arguments pressed upon our attention when the case was heard on appeal. Its incongruity is made manifest when we remember that on March 10,1911, when the parties made the instrument drawn in question, they were endeavoring to reduce to writing the contract of sale orally made in the next preceding January, while the present litigation is an attempt to recast the agreement according to what had been paid and what remained unpaid by the defendant and compel him to perform the new contract. The utmost a chancellor can do in the way of correcting a mistake is to state the agreement in the terms stipulated as of the date when the original was made. He cannot make a new contract taking into consideration payments or other part performance.

7, 8. Another principle equally plain is that, while in a properly stated case equity will relieve a party from a convention into which he has been inveigled by fraud, it will never construct a new agreement upon such a basis. As pointed out in the former opinion, whether in the interim between January and March the defendant had or had not paid some or all of the accounts due from the plaintiff could not affect the terms of the original transaction in the former month which the parties subsequently attempted to reduce to writing. The plaintiff had in possession at all times all the original data upon which, the agreement was based for the transfer of the business, and it was his duty as an independent contracting party to see that the writing correctly stated the terms of the contract; for, under ■ such circumstances, courts cannot make or unmake agreements. The complaint fails to show mutuality of mistake so essential to the exercise of that branch of equity jurisprudence. It presents no allegation justifying a rescission of the sale on the ground of fraud. Finally, under the guise of correcting a mistake, it attempts to frame a new contract materially different in terms from even what the plaintiff says was the original agreement made in January. For all these reasons the plaintiff has not stated a case for equitable relief. Something is said in the petition about an error in the opinion in statement of an allegation of the complaint. Confessedly the opinion on that point' conformed to the printed abstract upon which we heard the cause and to which the plaintiff did not object. It must be admitted that, if the abstract had shown the complaint, as plaintiff’s counsel says it was amended, by interlineation, the comment referred to would not have appeared in the decision; but, as it was not necessary to the- result, it requires no further notice.

The petition for rehearing is denied.

Reversed. Suit Dismissed. Rehearing Denied.