Reggio v. Warren

207 Mass. 525 | Mass. | 1911

Sheldon, J.

We assume, under the language of the reservation, that these remaindermen who at their request have been admitted as parties defendant, did not waive their demurrer by going to a hearing on the merits.

They contend that the bill upon its face shows negligence in the plaintiff, on the grounds that he did nothing to ascertain by his own investigation the facts upon which his right depended, or to determine what his rights were; that he relied merely on the assurances of his co-trustees, believing in their judgment and wisdom, and now resting upon an allegation that he and “ all of the trustees believed that under said will, and under the circumstances which then existed, said trustees had full power and authority, the complainant assenting, to retain, in the manner aforesaid, the sum to which the complainant was entitled, upon the death of Pamelia J. Eeggio, and, instead of distributing the same in cash to the complainant, to give said complainant a promissory note as aforesaid, which note should be in all respects valid and binding upon the trust estate.” These defendants insist that there is no allegation in the bill that he had a right to rely on or to believe his co-trustees, nothing to show upon what the belief of the trustees or his own belief was based, or to indicate that it was a reasonable belief or one that should have been relied on.

The bill does not proceed upon any allegation of deceit or fraud; and the decisions in which it has been held that there are fraudulent representations of such a character that one cannot be justified in believing them or in acting upon them are not. applicable. Even in such cases the strictness of the old rule has been somewhat relaxed, in order that parties guilty of actual fraud may not too easily escape from liability for their wrong doing by setting up the undue guilelessness of their victim. Way v. Ryther, 165 Mass. 226, 229. Kilgore v. Bruce, 166 Mass. 136,138. Mcbardy v. McHugh, 202 Mass. 148,149, 150, and cases cited.

This bill proceeds purely on the ground of a mutual mistake on the part of persons who were in confidential relations with each other, who were not undertaking to deal with each other at arm’s length, and who desired to give to the plaintiff and his sister their legal rights in such a manner as to avoid causing thereby any loss to the body of the trust estate by forcing its property and securities upon a depressed and reluctant market. There was here no violation of any legal duty owed by the plaintiff to the other parties, his co-trustees, with whom he was dealing; there was nothing to indicate that his acting upon their common belief and refraining from requiring them to pay to him in cash the money to which he was entitled could result, or that it has resulted, in any loss or injury to the trust estate or to these remaindermen. He is not to be charged with any such loches or acquiescence as was found in Stone v. Godfrey, 5 De G., M. & G. 76. Under more stringent circumstances it could not be said that the bill showed such negligence on his part as to preclude him from obtaining relief. See the cases collected in 2 Pom. Eq. Jur. § 856. The demurrer cannot be sustained on this ground.

These defendants also contend that the mistake set forth in the bill was a pure mistake of law, for which no redress can be given. It is a general doctrine that, as it is the duty of every one to conform his conduct to the requirements of the law, so all men must be treated alike in courts of civil and of criminal jurisdiction, as being aware of the duties and obligations which are imposed- upon them by the law, and that ordinarily one cannot successfully ask for affirmative relief or defend himself against an otherwise well founded claim, on the bare ground that he was either ignorant of the law or mistaken as to what it prescribed. Powell v. Smith, L. R. 14 Eq. 85. Rogers v. Ingham, 3 Ch. D. 351. Freeman v. Curtis, 51 Maine, 140. Rice v. Dwight Manuf. Co. 2 Cush. 80. Taylor v. Buttrick, 165 Mass. 547. Wheaton Building & Lumber Co. v. Boston, 204 Mass. 218, 226.

But it is now well settled that this rule is not invariably to be applied. In some cases where great injustice would be done by its enforcement, this has been avoided by declaring that a mistake as to the title to property or as to the existence of certain particular rights, though caused by an erroneous idea as to the legal effect of a deed or as to the duties or obligations created by an agreement, was really a mistake of fact and not strictly one of law, and so did not constitute an insuperable bar to relief. Wilcox v. Lucas, 121 Mass. 21, 25. Livingston v. Murphy, 187 Mass. 315. Busiere v. Reilly, 189 Mass. 518. Eustis Manuf. Co. v. Saco Brick Co. 198 Mass. 212. Blakeman v. Blakeman, 39 Conn. 320. McCarthy v. Decaix, 2 Russ. & M. 614, 621. In other cases, a distinction between ignorance or mistake as to a general rule of law prescribing conduct and establishing rights and duties, and one as to the private right or interests of a party under a written instrument, has been laid down; and it has been declared that, while relief could not be given by reason of a mistake of the former kind, one of the latter kind shared by both parties to an agreement and resulting in a loss of the rights of one of them, may be set aside at the suit of the injured party, though no fraud was practised upon him. The distinction taken is between the general law of the country, for ignorance of which no one is excused, and private rights which depend upon the existence of particular facts and the rules which the law declares as to those facts. Cooper v. Phibbs, L. R. 2 H. L. 149, 170. Beauchamp v. Winn, L. R. 6 H. L. 223. In re Oliver’s Settlement, [1905] 1 Ch. 191, 197, 198. State v. Paup, 13 Ark. 129. In other cases, sometimes as the ground of decision and sometimes merely in discussion or argument, it has been said that there is no established rule forbidding the giving of relief to one injured by reason of a mistake of law, but that whenever it is clearly shown that parties in their dealings with each other have acted under a common mistake of law and the party injured thereby can be relieved without doing injustice to others, equity will afford him redress. Freichnecht v. Meyer, 12 Stew. 551. Lawrence County Bank v. Arndt, 69 Ark. 406. Ryder v. Ryder, 19 R. I. 188. Hausbrandt v. Hofter, 117 Iowa, 103, quoting and following Stafford v. Fetters, 55 Iowa, 484, and Ring v. Ashworth, 3 Iowa, 452. Snell v. Insurance Co. 98 U. S. 85. To the same effect see Swedesboro Loan & Building Association v. Gians, 20 Dick. 132, in which the old rule as to ignorance of the law is said to be subject to so many exceptions that it is quite as often inapplicable as applicable; Williams v. Hamilton, 104 Iowa, 423, in which the court declares it to be well settled that a mistake as to law may under certain circumstances afford ground for relief in equity; and Allcard v. Walker, [1896] 2 Ch. 369, 381, in which the proposition that relief never can be given in respect to a mistake of law was called inaccurate. So it has been said that the important question was not whether the mistake was one of law or of fact, but whether the particular mistake was such as a court of equity will correct, and this depends upon whether the case falls within the fundamental principle of equity that no one shall be allowed to enrich himself unjustly at the expense of another by reason of an innocent mistake of law or of fact entertained by both parties. Park Brothers & Co. v. Blodgett & Clapp Co. 64 Conn. 28. Blakemore v. Blakemore, 19 Ky. Law Rep. 1619, 1620. Dinwiddle v. Self, 145 Ill. 290, 305. Benson v. Bunting, 127 Cal. 532. United Commercial Travellers of America v. McAdam, 125 Fed. Rep. 358, 368. Stone v. Godfrey, 5 DeG., M. & G. 76, 90. Naylor v. Winch, 1 Sim. & Stu. 555, 564. Re Saxon Life Assurance Society, 2 Johns. & Hem. 408, 412. This doctrine frequently has been applied to cases of the reformation of contracts; a fortiori, it is to be applied to cases in which justice can be obtained only by a complete rescission. Canedy v. Marcy, 13 Gray, 373. Stockbridge Iron Co. v. Hudson Iron Co. 107 Mass. 290, 299. Griswold v. Hazard, 141 U. S. 260, and cases cited on p. 284. Carrell v. McMurray, 136 Fed. Rep. 661. Cases in which a release has been either avoided or restricted in its operation by a limitation of its general words rest really upon the same principle. Ramsden v. Hylton, 2 Ves. Sen. 305. Lyall v. Edwards, 6 H. &N, 337. Turner v. Turner, 14 Ch. D. 829. In re Garnett, 31 Ch. D. 1. So one who has made an election under a will may rescind it upon proof that he acted under a misapprehension of his legal rights or even in ignorance of the fact that he was bound to make an election. Watson v. Watson, 128 Mass. 152. Macknet v. Macknet, 2 Stew. 54. Pusey v. Desbouvrie, 3 P. Wms. 315, 316. Salkeld v. Vernon, 1 Eden, 64.

The correct doctrine both upon principle and authority was stated by the Supreme Court of Michigan in Renard v. Clink, 91 Mich. 1,3: “ While it is a general rule that equity will not relieve against a mistake of law, this rule is not universal. Where parties, with knowledge of the facts, and without any inequitable incidents, have made an agreement or other instrument as they intended it should be, and the writing expresses the transaction as it was understood and designed to be made, equity will not allow a defense, or grant a reformation or rescission, although one of the parties may have mistaken or misconceived its legal meaning, scope, or effect. . . . But where a person is ignorant or mistaken with respect to his own antecedent and existing private legal rights, interests, or estates, and enters into some transaction, the legal scope and operation of which he correctly apprehends and understands, for the purpose of affecting such assumed rights, interests, or estates, equity will grant its relief, defensive or affirmative, treating the mistake as analogous to, if not identical with, a mistake of fact.” And this statement by the court is amply supported by a full and apt citation of cases.

The approved text writers have taken the same view. Kerr (Fraud & Mistake, 4th ed., 467) thus sums up his treatment of the subject: “ When, therefore, a man, through misapprehension or mistake of the law, parts with or gives up a private right of property, or assumes obligations upon grounds upon which he would not have acted but for such misapprehension, a court of equity may grant relief if, under the general circumstances of the case, it is satisfied that the party benefited by the mistake cannot in conscience retain the benefit or advantage so acquired.” Pomeroy, in his treatise on Equity Jurisprudence, after an elaborate discussion of the question in the light of the decided cases, lays down substantially the same proposition in language which has been cited and approved in many of the decisions already referred to. 2 Pom. Eq. Jur. § 849. And see further the note to 1 Story Eq. Jur. § 111.

These principles are decisive of the present contention. As to this point the bill, reduced to its lowest terms, presents the question whether one who has innocently left in the hands of trustees money, being a part of the trust fund, to which he was legally entitled and the payment of which he could have enforced, and in consideration thereof has received from the trustees merely a void promise that it shall be paid to him from the trust estate in future, with interest at a fixed rate, which promise both he and the trustees believed to be valid and binding, and who thereupon has given to them a release and discharge, running both to them and to the trust estate, from all liability except upon the void promise, can upon discovering the invalidity of the promise avoid or rescind his release and obtain the money or the part of the trust fund which was his rightful due, it appearing that the trust estate has parted with nothing of value in or by reason of the transaction and that the only effect of refusing the relief asked for will be to deprive him of the money to which he had the lawful right, and which all parties supposed that they had secured to him by what they had done, and correspondingly to enrich the trust fund at his expense and to secure to the beneficiaries in remainder a large amount of money to which they had no claim and to which it never was intended or imagined by themselves or anybody else that they should acquire any claim. The bare statement of this question is enough. We are led irresistibly to the conclusion that the demurrer cannot be sustained upon this ground.

Nor can these remaindermen derive any benefit from such cases as Tuttle v. First National Bank of Greenfield, 187 Mass. 533, Loring v. Brodie, 134 Mass. 453, Dunham v. Blood, ante, 512, or the decisions in which one who has made an unauthorized loan to a city or town has been denied recovery either upon the invalid note which he has taken or upon the money counts by proof that the money had been applied to the use of the town. The case at bar differs from those cases in the fact that here there was not an unauthorized loan to the trustees which created no liability against the trust estate, but there was an antecedent liability of the trust estate to the plaintiff which he might have recovered from that estate by appropriate proceedings and which never has been paid. If he had given no release, the fact that he had accepted a void note for the amount that was due to him would not have prevented him from enforcing the original obligation. Leonard v. First Congregational Society, 2 Cush. 462, 464. Small v. Franklin Mining Co. 99 Mass. 277. Weddigen v. Boston Elastic Fabric Co. 100 Mass. 422. National Granite Bank v. Tyndale, 176 Mass. 547. Central National Bank v. Copp, 184 Mass. 328. Nothing now stands in his way but the release which it is the object of his bill to set aside. That differentiates the case from the decisions upon which the remaindermen rely. Of course, so far as the enforcement against the trustees of the note bearing a fixed rate of interest was concerned, the plaintiff did stand in a position similar to that of the plaintiffs in the actions referred to. That is the reason of the language used in the opinion of the court in Warren v. Pazolt, 203 Mass. 328, in speaking of the transaction as a loan of money upon the note. But that was said with reference merely to the note itself and its enforcement against the trust estate, and not with reference at all to the question now considered. Whether the trustees could be held personally liable upon the note need not be considered. See Dunham v. Blood, ante, 512.

We do not doubt that the bill presents a proper case for relief in equity. There needs no discussion or citation of authorities to show this. That there may have been a partial consideration for the giving of the release in the comparatively small amount paid in cash at the same time that the note for a much larger amount was delivered does not under the circumstances make it impossible to give relief. Johnson v. Johnson, 3 B. & P. 162. Nor does the bill show that it will be impossible upon rescission to put the parties in statu quo, as in Clarke v. Dickson, EL, Bl. & El. 148. It was not necessary to offer to return the money which the plaintiff has received. What was paid at and before the giving of the release was rightly paid upon his original demand; what has been paid upon the note should in equity be applied upon the same demand. He need not go through the vain ceremony of repaying or offering to repay these sums, when it at once would become the duty of the trustees to return to him the amount of these payments with a much larger additional sum. And see Beauchamp v. Winn, L. R. 6 H. L. 223, 232; Long v. Athol, 196 Mass. 497, 506; O’Shea v. Vaughn, 201 Mass. 412, 422 et seq.

There is no ground upon which the demurrer can be sustained.

What has been said upon the demurrer covers most of the points that have been raised upon the merits.

Upon careful examination of the evidence, we are of opinion that all the findings of fact made by the single justice must stand. In view of the relations between the parties and the existing circumstances, we doubt whether any contrary findings could have been supported.

There is nothing in the transactions relating to the Carney building to prevent giving to the plaintiff the relief for which he asks. That was an independent matter, which has been fully heard, and it has been found that the trustees are not liable to the cestuis que trust by reason thereof. Warren v. Pazolt, 203 Mass. 328. Certainly we cannot hold them indirectly for what it has been held does not impose upon them any liability. Nor can we make the plaintiff suffer as a beneficiary for the errors of judgment in which he has shared as a trustee, but for which neither he nor the other trustees are to be held liable as trustees.

We do not deem it desirable to discuss further the considerations which have been suggested by the ingenuity of counsel. We have weighed carefully all the arguments that have been addressed to us in behalf of these defendants and have examined all the decisions to which they have referred us, although all of these have not been cited. We have found nothing to lead our minds to a different conclusion from that which we have reached, or that can prevail against the manifest equities in favor of the plaintiff. A decree must be entered for the plaintiff as prayed for, with costs against the intervening defendants.

So ordered.