100 Wis. 596 | Wis. | 1898
In the decision on the first appeal in this case, Wis. M. & F. Ins. Co. Bank v. Wilkin, reported in 95 Wis. 111, well-established principles of law there clearly stated led to a construction of the contract of guaranty as then contended for by the present appellant, without determining precisely the intention of the parties in making it. Applying the jirinciple that contracts are to be construed so as to bring them as near the actual meaning of the parties as the words they saw fit to employ, when properly construed, and rules of law will permit, we held the principal clause of the agreement to contain a joint and several, unlimited obligation, and the added clause, in regard to liability in proportion to the holdings of stock owned by the several signers, as merely prescribing a rule of contribution between such owners. Uo other result could have been reached. The added clause was plainly repugnant to the principal clause which preceded it; so, under the rule that a stipulation restricting what is previously distinctly stated in a contract, and which forms the principal inducement to it, when the whole instrument is so prepared that the latter clause cannot be reasonably construed as incorporated in the first, must be rejected, we were compelled to treat the contract, as between plaintiff and defendants, the same as if the limitation clause had not been added at all. If the intention were otherwise, the parties misunderstood the legal effect of the limitation clause under the circumstances, and that could not be corrected by judicial construction. The lower court, on the second trial, found that the limitation clause was added with the intention, as to all parties, to create a several, limited obligation, and that the failure to do so was such a mistake as equity could relieve the injured
It is first contended on the part of appellant, that the trial court had no right to grant a new trial and permit the amendment; that the power to grant new trials in cases appealed to this court is lodged here and cannot be delegated to the lower court. Such contention is made through a misapprehension of the effect of the judgment pronounced in the mandate. That, in effect, granted a new trial, conditionally, on the equitable issue as to whether there was a mistake of the parties in reducing their agreement to writing. The condition was that the trial court should, in its discretion, permit an amendment to the answer interposed by Mann and Munkwitz, so as to properly present the equitable issue to the trial court for determination. That this court had that right, of course is not questioned. Moreover, it is not open for discussion now. It is res adgudicata, leaving nothing open which occurred in the case prior to the second trial, except as to whether the discretion of the trial court was properly exercised. In answer to that, respondents contend that the appellant waived all objections to the amendment and the new trial which followed, by reason of having accepted the terms imposed, the $10 costs, and retained the same, relying on the doctrine announced in Cogswell v. Colley, 22 Wis. 399, and many other cases in this court, to the effect that the acceptance of costs imposed as a condition of granting an order is a bar to the right of appeal. Appellant answers that costs were not imposed as a condition, hence that the rule does not apply, as held in Fiedler v. Howard, 99 Wis. 388, following many previous cases; therefore, if the order granted leave to amend unconditionally, and appellant was as unconditionally granted costs as terms of the favor, the acceptance of the costs in no way prejudiced the right to challenge the action of the trial
The main contention of appellant, in support of the proposition that the allowance of the amendment was error, is that defendants, having elected to make their defense at law and proceeded to a final determination of the case in the trial court, could not then change their position and insist upon a defense in equity for a reformation of the contract. The question of power was necessarily involved in the determination of this court to permit the trial court to allow the amendment. If it was error, and we feel well satisfied that it was not, it was an error of this court and cannot now be called in question. It is the unchangeable law of this case.
But it is said the surprise of counsel at the result of the first appeal in this court, which is the only excuse offered for the failure to tender the equitable issue earlier, furnished no warrant for the discretionary action of the trial court. The rule is invoked that a judgment should not be set aside and a new trial granted for the surprise or mistake of counsel. But the trial court did not set the judgment aside and grant a new trial. As before stated, the judgment was vacated by this court for error, and a new trial granted conditionally. True, the judgment, as indicated by the mandate, did not in terms grant a new trial, but it granted power to the lower court to permit an amendment to the answer, setting up the equitable counterclaim for a reformation of the contract of guaranty, and the formation of an issue on that subject, which necessarily implied a new trial of such issue when formed. Again, the rule invoked, so far as we are aware, has never been applied to the mere granting of an amendment before judgment. On the contrary, in a large majority of cases where amendments have been allowed, especially after a reversal in this court, it was to relieve the
It is laid down by test writers as an elementary principle-that the courts have ample discretionary power to relieve a party before judgment from the mistakes of either court or counsel. 4 Wait, Prac. 646. The cases in this court where that has been done are too numerous to mention. Lombard v. Cowham, 34 Wis. 486, is a good illustration. The action was ejectment, the answer a general denial. Evidence was-permitted, against objection, to defeat plaintiff’s claim of title on the theory that he obtained his deed by fraudulent, representation. The defense on that ground prevailed. On-appeal the judgment was reversed, the court holding that the defense was of an equitable nature and could be taken advantage of only by setting it up as an equitable counterclaim. The mistake in drawing the answer was clearly that of defendant’s counsel, and this court, in deciding the case, said under the circumstances there should be a new trial, and, on such terms as the trial court shall deem just, defendant should be permitted to amend his answer so as to interpose the equitable defense and counterclaim. It will be noted that the judgment there went further than in this-case. It judicially declared that it was the duty of the trial court to permit the answer to be amended in furtherance of justice and on proper terms, while here it was left to the discretion of the trial court whether to permit the amendment or not. In Saveland v. Green, 36 Wis. 612, the court held that after reversal the trial court may grant leave to-amend a complaint so as to properly state a cause of action. For further examples, see Strong v. Hooe, 41 Wis. 659, Harris v. Harris, 10 Wis. 467, and Green Bay & M. Canal Co. v. Hewitt, 62 Wis. 316.
In each of the instances mentioned the amendment was allowed after reversal, to relieve a party from the mistakes, of counsel, — not mistakes attributable to mere negligence,.
The first important question on the merits of the appeal' is, Was the trial court warranted in saying, from the evidence, that there was a mutual mistake between the parties to the contract of guaranty in that they failed to reduce the verbal agreement made between them on the subject to writing ? In considering that we are aided very much by being able to start with the conceded fact that there was but one verbal agreement, and that it was made before Mr. Johnston, cashier of the plaintiff bank, drew the first agreement. He, representing the bank, met representatives of the Wilkin Manufacturing Company, of which the respondents-
The evidence from the mouths of witnesses as to just what was said between the representatives of the manufacturing company, Mann and Eink, and the representative of the bank, Mr. Johnston, when the verbal contract was made, is as satisfactory as could be expected after such a lapse of time. All the actors in the transactions were very busy men. They gave their testimony after some ten years had passed, which of itself would seem to render it quite impossible for them to remember definitely what was said, and the difficulty growing out of the lapse of time was intensified by the fact that they were acting under pressure of personal interest, which of itself tends, as experience shows, to make very conscientious and truthful men differ in their relation
Erom the foregoing, it is pretty conclusive to our minds that a person charged with the duty of placing the result of
Johnston, in due time after the verbal contract was concluded, pursuant to the understanding then had, intending to express in writing for submission to the respondents and their associates what had been verbally agreed upon, drafted a form for a contract of guaranty which is set out in the statement of facts. Its importance at this point will warrant its repetition. Omitting the recitals and statement of consideration, it is as follows: “We and each of us do severally promise and agree to and with said bank to pay said bank as the said sum may become due, such proportion of said indebtedness now owing or which may hereafter be owing by said company to said bank . . . as the amount of stock owned by us in the said company bears to the whole amount of capital paid up of said company.” There is no
Upon the objection being made, Johnston met it by promptly agreeing to insert a clause that would make the proposed paper conform to the first one, and the following language was agreed upon for that purpose: “It is understood that we are to pay any sums which may accrue hereunder in the proportion which the amounts of stock now held by each of us in said company bears in the whole amount of • capital paid in by said company.” The paper was then sent to the attorneys by Johnston, with directions to rewrite it with the added clause, which was done, and the completed instrument was then sent to the defendants for execution,, accompanied by a letter worded as follows: “ I have had a new agreement drawn up in a neat and business-like form,, which I inclose herein, and which you will please get your stockholders to sign, and return the same to me. The old one-was too much of a scrawl and was meant by me to be merely a copy. I will return the old one when this is signed.”
To recapitulate on this branch of the case, starting with the fact that the verbal guaranty made before the first paper was drawn was never changed, but was intended by the parties, from first to last, to be expressed in the written agreement, the drawing of the former paper containing an agreement for limited liability, the drawing and submission of the second containing a joint and several unlimited promise, the attempted modification of it in that regard when objected to by respondents, for the purpose of making it conform to the original agreement, the letter submitting the completed second paper to respondents and their associates, admitting the receipt and acceptance of the first paper as binding till exchanged for the second, and asserting in effect that there was no difference between the two except as to form, furnish clear, conclusive written evidence that the agreement which the parties intended was one for a limited liability as expressed in the first paper. The fact that all stockholders were not required to sign cannot be allowed to vary the plain language used by the parties, neither can the fact that one or more signed who were not the holders of paid-up stock. No name is mentioned in either paper. True, it contemplated signatures by stockholders only, but if those signed who were not such, though the circumstance might aid in its construction if there were any ambiguity in the language used, there is no ambiguity. The difficulty is not in that, but in the fact that the limitation clause was inserted, following a clause so repugnant to it, on appellant’s theory of its meaning, that it had to bo rejected so far as affecting the guarantee. Moreover, it fairly appears from
So, substantially all events leading up to the making of the paper, as well as those which followed, notably, in the last category, requests from time to time for information as to the stockholders, the final refusal, to loan money to the manufacturing company without the personal indorsement of Mann, the setting up in the complaint at the commencement of the action of the facts in regard to the respective holdings of stock by the defendants, seem to leave ho ground to stand on in support of plaintiff’s claim as to what the original agreement was. Some attempt was made to explain the circumstance of alleging the situation of defendants as regards being stockholders, which was as successful as could reasonably be expected, in view of the fact that the subject had no necessary place in the complaint on appellant’s theory of the contract, and that the high professional standing of counsel who drew it precludes even a suspicion that they stood in any need of instruction on that point. The complaint is consistent only with the theory that the understanding of the plaintiff’s officers and their counsel was that, the signers of the paper sued on intended to incur a limited
We now come to the subject of whether the mistake in drawing the qontract of guaranty was one from which a court of equity could relieve respondents. On that, appellant invokes the familiar principle that a mistake of law without fraud is without remedy in equity. That rule is subject to so many important exceptions that it needs restatement in order to be readily understood from the language used. The mistake of law which-is not the subject of relief in equity is mistake as to the legal result of known facts, by reason of some misapprehension of the legal meaning of the language used; not mistake in reducing to writing an agreement upon which the minds of the parties previously met in making a preliminary verbal agreement. The latter is a mistake of law in one sense, not a mistake of law as to what the parties wanted to do in drawing the-paper, but rather as to the appropriate language to accomplish their intention. If it were the former they would be-remediless in equity under the rule under discussion. But if the latter, it is not, and has not been, considered -within that rule, since the true scope of it was definitely worked out in the development of equity jurisprudence. In the one case there is a mistake in the making of the verbal contract growing out of misconception as to the legal scope or effect of known facts; in the other there is no mistake whatever as to the contract actually made, but a mistake in the legal import of the language used in reducing that contract to-writing. A mistake in the contract itself, springing from ignorance of law, is one thing, and mistake in the legal meaning attributable to words used to express a contract is-quite another. The rule may be properly stated thus: "Where there is a mutual mistake, either of fact in the making of a contract, or of law or fact in the reduction of the
This subject is by no means new in this court, as shown by numerous cases cited in respondents’ brief, but if it were •otherwise, the rule is too well settled to require any extensive discussion of it. In Green Bay & M. Canal Co. v. Hewitt, 62 Wis. 316, a deed intended as a conveyance of an undivided interest was erroneously drawn so as to convey the whole title. That occurred by placing the limitation clause after an unqualified granting clause conveying the whole title, so that the latter clause was necessarily rejected. The mistake was as to the legal effect of placing a limitation clause, clearly repugnant to the preceding granting clause, so expressed that the one could not be considered included in the other. The result was precisely the same as in this case, and grew out of an error of the same kind. The instrument failed to correctly express what was intended through a mistake of law, not in the making of the preliminary verbal contract, but in properly expressing it in legal language. This court said, in that situation, that the mistake was remediable in equity, and that it was singular that there should have been any conflict of decisions on that question. To the same effect are Silbar v. Ryder, 63 Wis. 106, and Whitmore v. Hay, 85 Wis. 240.
The following rule is laid down by standard text writers, .substantially copying the language of Mr. Justice Washington in Hunt v. Rousmaniere's Adm'rs, 1 Pet. 1, and has been frequently approved by this court: Where an instrument is drawn or executed, which professes or is intended to carry into execution an agreement previously entered into, but which, by mistake of the draftsman either as to fact or law, does not fulfill that intention, or violates it, equity will correct that mistake so as to produce a conformity to the agree
Many cases may be cited to support the contention made by appellant’s counsel, that a mistake of law is not remediable in equity, but they do not fit this case. They refer to a mistake of law in the making of the verbal contract as distinguished from a mere mistake in reducing the contract to writing through some misapprehension of the legal meaning of the language used. The rule applies where the contract is written so as to express the agreement as understood, though the understanding were wrong through ignorance of law; it does not apply where the contract is fully understood but is incorrectly expressed in the writing
Counsel say that in Green Bay & M. Canal Co. v. Hewitt, 62 Wis. 316, the mistake was one of fact, but a reference to the opinion shows quite conclusively that it was treated as a mistake of law. It was a mistake in the legal effect of the language used in reducing the contract to writing. The court said it was sometimes called a mistake of fact and sometimes a mistake of law, but that it made no difference whether it was called the one or the other, it was a situation from which the parties could be relieved in equity, and that is true whether the parties themselves selected the language to express the contract in writing without the aid of a draftsman, or whether they selected a third party to do^ it for them.
Appellant’s counsel suggest that the rule does not apply except where a draftsman is selected and the mistake is made by the third party, but that is not supported by either reason or authority. The initial question is, What was the verbal agreement the parties actually made ? Not what they thought they made, or intended to make, but What did their minds meet upon ? That having been settled, if, by mutual mistake, they failed in reducing it to writing to use language
The sole remaining question is, Are the findings and judgment fatally defective for failure to state the exact change of language requisite to be made in the written contract in order to make it conform to the verbal contract ? Appellant’s counsel contend that they are, and invoke a rule, good in some cases, but not in one like this. "Where a failure to actually reform the instrument will work some injury, it is a proper subject for review on appeal. Cases cited by appellant where reformation of a conveyance of land was sought belong to that class. It is important to have mistakes in an instrument forming part of a chain of title actually reformed by having written into it the language necessary to make it conform to the intention of the parties. But here the contract has been executed, the effect of the instrument as reformed has passed into judgment, and there is no further use for it whatever. Nothing in which plaintiff is interested depends upon having the exact words requisite to a reformation of the contract determined and inserted in it. So, if the trial court erred in failing to actually reform the instrument before entering judgment, it is a mere irregularity, working no injury or prejudice whatever to appellant, therefore it is no ground for a reversal of the judgment. Scott v. Webster, 44 Wis. 185; Dousman v. Wis. & L. S. M. & S. Co. 40 Wis. 418; Pormann v. Frede, 72 Wis. 226; Bilgrien v. Dowe, 91 Wis. 393. Sec. 2829, R. S. 1878, applies: “ The court shall, in every stage of an action, disregard any error or defect in the pleadings or proceedings which shall not affect the substantial rights of the adverse party; and no judgment shall be reversed or affected by reason of such error or defect.” That has often been said to cover a multitude of harmless errors. It promotes quietude and peace between
The foregoing covers all questions that are considered of sufficient importance to require mention in this opinion. The facts forming the subject of controversy are established by the evidence beyond reasonable controversy. The legal conclusions drawn from such facts by the trial court were correctly drawn. Substantial justice has been done by the judgment that was pronounced and from which the appeal was taken. It must be affirmed.
By the Court.— So ordered.