146 N.E. 381 | NY | 1925
Plaintiff's assignor chartered the steamship Lydia to one Crotois for a term of about six months, beginning September 28, 1919, at a monthly hire of $59,380 payable in advance. This action is brought upon a contract made or alleged to have been made by the defendant and the owner of the steamship whereby *288 defendant in consideration of an assignment of the charter party promised, as an original obligor, to make payment of the hire. A balance of $167,446.10 due at the commencement of the action was reduced by allowances and setoffs to $11,000, for which amount with costs a judgment has been recovered.
The contract between the owner and the defendant is embodied in two letters.
On September 12, 1919, defendant wrote to the Lydia Steamship Company, plaintiff's assignor, as follows:
"Referring to charter party for the steamer `Lydia,' between yourselves as owners and J.E. Crotois, as charterers, and in consideration of your assigning the hire on the same to us, we hereby agree to pay to you on account of said hire on Thursday, the 18th of September, 1919 ($50,000) Fifty Thousand Dollars, and the balance of the two first months hire on arrival of steamer in Newport News in condition to load coal. Further hire monthly in advance at rate mentioned charter party.
"It is understood that in case the amount advanced by us should exceed money due by charterers, you will refund same.
Yours very truly, "A.O. ANDERSEN CO., INC. "V. REINMANN, "Vice Pres. Gen'l Manager.
"P.S. It is further agreed that we will pay the balance of the first two months hire on delivery in New York, instead of arrival of steamer in Newport News, if required by you. V.R."
The following was the reply:
"Sept. 12, 1919.
"A.O. ANDERSEN Co., INC., "50 Broad St., "New York City:
"GENTLEMEN. — Referring to your today's letter, we hereby agree to the condition mentioned in same, and assign the hire as due under charter party, between *289 ourselves and Mr. J.E. Crotois, to yourselves, and compensation of the payment as mentioned in your letter, subject to refund if not due under charter party.
"Yours very truly, "LYDIA STEAMSHIP CORP., "VR:LR Sec'y Treas."
The defendant insists that this contract is misinterpreted when it is read as an assumption by the defendant of the obligations of the charterer. In the defendant's view, it is simply a promise to accommodate the owner by advancing the monthly hire, subject to a promise by the owner to refund the deficiency if, upon recourse by the defendant to the charterer, collection and reimbursement shall be found to be impossible. We agree with the courts below that if this was the meaning, there is no expression of it in the writing. The owner's promise is to refund if the advances are in excess of what the charterer shall owe. The defendant would have us transform this into a promise to refund if the advances are in excess of what the charterer can pay. That would be to remake the contract rather than construe it. The words are not without an office and a value when their natural meaning is ascribed to them. Wind and weather made it impossible to know in advance just when the charter party would end. The vessel might return before the end of the month, or she might be delayed; there might be "overlap" or "underlap." If the return was earlier than expected, the payment in advance would be in excess of what was due. Under the contract as written this excess would be refunded.
The question remains whether error was committed in excluding evidence of mistake. The defendant alleges in its answer "for a sixth separate defense" that by the true agreement between the parties it was to be reimbursed by the owner for any advances not collected from *290 the charterer; that "the letter as signed as aforesaid fails by mutual mistake of the parties, or by mistake on the part of the defendant and fraud on the part of the Lydia Steamship Company, Inc., to state the true agreement of the parties as alleged in the foregoing paragraph, if its legal effect is, as claimed in the amended complaint, to impose on this defendant an absolute obligation to pay the plaintiff the said Crotois charter hire;" and that "by reason of the premises, the defendant is entitled, if the legal effect of said letter of September 12, 1919, is as alleged by the plaintiff, to have the said letter corrected so that it will express the true agreement of the parties as aforesaid." Judgment is demanded dismissing the complaint and for "such other and further relief in the premises as to the court may seem just." On the trial the defendant attempted to prove the conversations preceding and accompanying the signing of the contract. The trial judge excluded the evidence upon the ground that antecedent conversations were merged in the writings. Defendant's counsel then reminded the court that there was "a claim here for reformation," and that the evidence was "admissible under that defense if under no other." The ruling was not changed. Some point having been made that there should have been "a counterclaim in equity," defendant's counsel asked that if there was any objection to the form of the plea of reformation, the plaintiff be directed to state it to the end that the defendant might have an opportunity to amend. The direction was not given.
We think the defendant's answer may fairly be construed as setting forth a counterclaim in addition to a defense, if a counterclaim be necessary. The statement that "the defendant is entitled to have the said letter corrected so that it will express the true agreement" is equivalent to a demand that it be corrected by the court accordingly. True, the description of a counterclaim as a defense has been held to dispense with the need of a *291
reply, since otherwise a pleader by his own misdescription might set a trap for his adversary (Acer v. Hotchkiss,
In the determination of the case before us, we rest our judgment upon a broader ground, since there is room for the contention that the defendant stood upon the defense and made no point that its answer was to be read as something else. The question is fairly here whether the facts establishing the need for reformation, even if not stated as a counterclaim, make out an equitable defense. The plaintiff produces a writing which in form is a contract and asks the judgment of the court that it be enforced according to its terms. The defendant answers that enforcement is inequitable because fraud or mutual mistake has brought about the result that the writing is not a true expression of the meaning of the parties. This is good as a bar, and does not cease to be good because the defendant, if it had so chosen, might have asked for something more. There is no dearth of subtle discussion as to the effect of mistake in advance of reformation (Cook, Equitable Defenses, 32 Yale Law Journal, 645; Pomeroy, Remedies and Remedial Rights, § 87 et seq.; Hinton, Equitable Defenses under Modern Codes, 18 Mich. L.R. 717). Much of it is an echo of precedents and distinctions formulated in an era when there was no such thing as an equitable defense in a trial at common law. Now, "a defendant may set forth in his answer as many defenses and counterclaims, or both, *292
as he has whether they are such as were formerly denominated legal or equitable" (Civ. Prac. Act, § 262; Code Civ. Pro. § 507; Code of Procedure, § 150). A discussion of equal subtlety has centred upon the distinction between equitable defenses and equitable counterclaims. We have no need at this time to retrace and follow its refinements. They have been made irrelevant or largely so for the courts of this State by a series of early decisions which placed our law of pleading, in this respect at least, upon a broad and simple basis. With us, the rule is that "under the head of equitable defenses are included all matters which would have before authorized an application to a Court of Chancery for relief against a legal liability, but which at law could not have been pleaded in bar" (Mandeville v. Reynolds,
There remains for consideration the manner of the trial. Our statute provides that in an action for money only, "an issue of fact must be tried by a jury unless a jury trial is waived or a reference is directed" (Civ. Prac. Act, § 425; Code Civ. Pro. § 968). An issue of *295
fact arises upon a denial in the answer, or upon "a material allegation of new matter," constituting a defense (Civ. Prac. Act, § 422; Code Civ. Pro. § 964; Code of Procedure, § 253 etseq.). There is no distinction in this respect between kinds of defenses, dependent upon their origin in equity or at law. The distinction is between all defenses on the one side and counterclaims on the other (Civ. Prac. Act, § 424; Code Civ. Pro. § 974). The rule is settled under these provisions that equitable defenses are triable in the same way as defenses that are legal (Southard v. Curley,
The plaintiff argues that the defense is foredoomed to failure, and that any error in excluding evidence to support it is too technical and unsubstantial to lead to a reversal. We cannot say that this is so. There is some suggestion that the defendant's letter as it stands is a departure from an earlier letter written by the defendant's representative, who is said to have been hampered by an imperfect knowledge of the language. Even if he should be shown, however, to have written it himself, the right to reformation would not be lost if the true agreement of the parties was imperfectly expressed (Pitcher v. Hennessey,supra, at p. 424). These matters are for the trial. We may assume that the defendant will have no easy task in making proof of its defense. We are not at liberty for that reason to bar it from its day in court.
There are other questions in the case, but they were properly disposed of in the courts below.
The judgment of the Appellate Division and that of the Trial Term should be reversed, and a new trial granted, with costs to abide the event.
POUND, CRANE and LEHMAN, JJ., concur; HISCOCK, Ch. J., McLAUGHLIN and ANDREWS, JJ., dissent.
Judgments reversed, etc. *298