Mills v. Lewis — 55 Barb. 179

Majority

p. 179

George N. Mills vs. Diana C. Lewis.

Headnote

It is well settled that the mistake of one of the parties to a contract is not enough to authorize the court to reform it. There must be a mutual mistake—a mistake of Both parties.

The agent of the plaintiff negotiated with the defendant for the sale of a horse by the plaintiff to the defendant, in exchange for a mortgage held by the latter, under instructions not to make the exchange unless the defendant would guaranty tha payment of the mortgage. This the defendant refused to do, but agreed to make the exchange and guaranty the collection of the mortgage. The scrivener employed to draw the assignment of the mortgage, and guaranty, by mistake drew a guaranty of payment, instead of a guaranty of collection of the mortgage, and the defendant supposing the assignment to contain a guaranty of collection merely, executed the same, and delivered it, with the mortgage. The plaintiff received the mortgage and assignment without any knowledge of the mistake, and thereupon delivered the horse to the defendant. In an action by the plaintiff upon the guaranty:

Held, 1. That it was not a case of mutual mistake, the plaintiff getting only what he required to be given; and that although the defendant had executed an obligation that she did not intend to execute, yet it was through the mistake of her agent, the scrivener, that the wrong was done, the plaintiff being free from any imputation of fraud.

2. That the result was that there never was a meeting of the minds of the parties, as to the sale, and it was competent for the defendant to return the horse and rescind the contract; and this was the only relief to which she was entitled.

3. That there being no ground laid by the proofs for reforming the instrument, and the defendant not having done that which alone could entitle her to rescind the contract, the plaintiff was entitled to judgment for the amount remaining due upon the mortgage, and interest.

A SEL SPICER and wife executed and delivered a mortgage to the defendant, to secure the payment of a portion of the purchase money of certain premises. A bond, executed by Spicer alone, accompanied the mortgage. One Baldwin, the agent of the plaintiff, negotiated the sale of a horse to the defendant, in exchange for the mortgage, under instructions from the plaintiff not to make the exchange unless the defendant would guaranty the payment of the mortgage. The defendant refused to do this, but finally agreed to make the exchange and guaranty

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the collection of the mortgage. One Rundel! was thereupon employed to draw the assignment and guaranty of collection, hut hy mistake he drew the following instrument, being a guaranty of payment, instead of a guaranty of collection, and the defendant executed the same and delivered it, with the mortgage, to Baldwin:

“ For and in consideration of the sum of sixty dollars to me in hand paid, I hereby sell and transfer the within mortgage to George E". Mills, of Hounsfield, and guaranty the payment of the same, with interest.”

The mistake was known to Baldwin, at the time of the delivery of the assignment and mortgage, but the defendant never knew of the error until after the mortgage had become due, and this suit had been commenced. She supposed the guaranty to be one of collection, instead of payment, as was her agreement with Baldwin.

This action was brought upon the guaranty contained in the assignment. The defendant, in her answer, alleged the mistake, and prayed for the reformation of the guaranty.

There was no assignment or delivery to the plaintiff of the bond accompanying the mortgage, nor proof given, on the trial, of its loss.

L. J. Dorwin, for the plaintiff.

Anson B. Moore and John C. McCartin, for the defendant.

The objection by the defendant’s counsel, that as the bond to which the mortgage was collateral was not assigned, the mortgage is of no validity, and the defendant cannot be made liable on a guaranty thereof, was not taken on the trial, and cannot be insisted on now. The plaintiff might, perhaps, have shown that the bond had been assigned, or there never in fact was one executed. It is enough .to know that he has had no opportunity to be heard, and the objection must be disregarded.

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There being no fraud on the part of the plaintiff, or of Baldwin, and there being no motive which could induce the scrivener who drew the assignment and guaranty to practise a fraud on the defendant, I think the only ground for relief, if there is any, is on the ground of mistake, inadvertence or surprise. I think, upon the proofs before me, it is satisfactorily established that the defendant did not intend to execute a guaranty of payment; nor did she know, at the time she executed the paper drawn by Mr. Rundell, that it was not a guaranty of collection. So far as the defendant is concerned, therefore, a clear case of mistake is made out.

But it is well settled .that the mistake of one of the parties to a contract is not enough to authorize the court to reform it; it must be the mutual mistake of both parties. (N evius v. Dunlap, 33 N. Y. Rep. 676 . Botsford v. McLean, 42 Barb. 455 .) A new trial was granted by the special term, in the case last cited, and on the second trial it was proved that the defendants perpetrated a gross fraud on the plaintiff, in reference to the notes sought to be reformed, and the notes were decreed to be reformed according to the prayer of the complaint. (Botsford v. McLean, 45 Barb. 478 . See Kent v. Manchester, 29 id. 595 ; Story’s Eq. §§ 155, 160.) The important question in this case then is, was there a mistake on the part of the plaintiff, in reference to the kind of guaranty which the defendant was to give ? Or did he know, when ■ he received the assignment and guaranty, that it was not the instrument that the defendant had agreed and intended to give ?

Personally, the plaintiff had no negotiation with the defendant concerning the trade. He had authorized his agent to exchange the colt for the mortgage, with the defendant’s guaranty of payment. It does not appear that Baldwin ever communicated to him the refusal of the defendant to give the guaranty required, or the offer to give a guaranty of collection only. When the guaranty of

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payment was handed him, by Baldwin, he did not know of any intention on the part of the defendant to give a guaranty of collection. There was therefore no knowledge on the part of the plaintiff, of any mistake; on the other hand, the defendant had sent to him the guaranty he required, and it was in conformity with the bargain as he understood it to be, and intended it should be made. Unless, therefore, the knowledge of Baldwin, that the defendant did not mean to give a guaranty of payment, binds the plaintiff, there was no such mistake as entitles the defendant to relief.

It is necessary, in order to determine this question, to ascertain precisely the relation which Baldwin occupied to the parties, in effecting the trade. The plaintiff and Baldwin are the only persons who speak as to the interview between them when the plaintiff informed Baldwin of the terms upon which he would sell the colt. We must look to their evidence for the powers, if any, given to Baldwin to act for the plaintiff. The plaintiff says: “ I told Baldwin I would trade the horse for $75, and I would take the mortgage, if he would make it $75, and Mrs. Lewis should guaranty payment instead of collection; that I would take it on no other condition; I would not be bothered collecting it; when it came due I would call on her. He (Bradley) said he thought he could make the trade.” On cross-examination he says: “ I told Bradley how I would trade; I did not direct him to carry the proposition to any one. He said he thought he could make the trade.” Baldwin testifies: “ I was acting for both parties, in making the trade. I made a trade for the mortgage. I bought the mortgage for Mills. Had a talk with the plaintiff before going to see the defendant about this trade; the plaintiff first suggested the trade to me; his proposition was for me to sell the colt to them, (meaning the defendant’s family;) as they had no horse, and he would take the mortgage if they would guaranty it. I told him I did not

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think the mortgage good for anything. He said he did not care; he would take it if she would guaranty it and pay the difference. I told him I would see her, and I did. Think the plaintiff talked of guaranty of payment or collection, but cannot tell which he said. Talked generally about guarantying. The plaintiff talked of guarantying the mortgage, sometimes the payment; sometimes the collection; the plaintiff wanted me to aid him in selling the horse.”

Baldwin’s recollection as to the kind of guaranty the plaintiff required, is not clear. The plaintiff swears positively, he told Baldwin he must have a guaranty of payment ; and if Baldwin’s opinion, that the mortgage was good for nothing, was correct, the probability is that the plaintiff required, as he swears he did, a guaranty of payment. It would be difficult to find a reason for his taking such a mortgage with a guaranty of collection. For these reasons I have found, as matter of fact, that the plaintiff instructed Baldwin that he would not take the mortgage unless payment was guarantied.

What, under these circumstances and upon this evidence, was the power conferred by the plaintiff on Baldwin ? The plaintiff had fixed the price of the colt at either $75 or $85; it is not certain which, nor is it material. He had agreed to accept the mortgage, and had designated the guaranty he must have. He made it a condition of the trade, that he should have the use of the horse for a while, after the completion of the trade.

Baldwin, if he is to be treated as the agent of the plaintiff was acting under special instructions—authorized to complete a sale upon terms specifically defined. All that he had to do was to carry the plaintiff’s proposition to the defendant, and if it was accepted, the sale was complete. If not accepted, then the power of Baldwin to sell the horse was terminated. There was no discretion whatever vested in him.

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When, therefore, the defendant refused to give the guaranty of payment, the power of the agent terminated. If the defendant proposed new and different terms, it was the duty of the agent to submit these terms to the plaintiff for acceptance or rejection, and until accepted there could be no bargain made that bound the plaintiff. It would seem from the evidence of the witnesses that Baldwin did not inform the defendant that she must give a guaranty of payment, or the plaintiff would not trade. On the contrary, it would seem to have been left discretionary with the defendant to give whichever form of guaranty she should deem proper, and she elected to give one of collection, and so informed the agent. He was present when the instructions were given for drawing the guaranty, and when it was drawn and signed he received it as, and supposed it to be, a guaranty of collection.

Baldwin was a special agent, acting under specific instructions, and it was the duty of the defendant to ascertain the nature and extent of the authority; and she dealt with him, therefore, at the peril of having the agent’s contract repudiated if it turned out that he had exceeded bis powers. (Story on Agency, §§ 126, 127, and notes. Paley on Agency, 202, and notes. Batty v. Carswell, 2 John. 48 . Nixon v. Palmer, 4 Seld. 398. Scott v. McGrath, 7 Barb. 53 .)

I do not think the plaintiff would have been bound by the acceptance by the agent (if Baldwin’s can be considered as such) of a guaranty of collection, if one had been given to him; unless the principal had accepted it, when offered to him. The guaranty offered was the one he required; he accepted it without notice of any mistake on the part of the defendant, and there clearly was none on his own part. This not being a case of mutual mistake, and the plaintiff being free from any imputation of fraud, the question is, is the defendant entitled to any relief,

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and if any, to what kind and measure of relief is she entitled.

[Jefferson Special Term,

March 1, 1869.

That she has executed an obligation that she did not intend to execute is established. But it was through the mistake of her agent, the scrivener, that the wrong was done her. The plaintiff got only what he required to be given, and Baldwin was not authorized to accept anything else. The result then is, that there never was a meeting of the minds of the parties, as to the sale, and it was com petent for the defendant to return the colt and rescind the contract; and this was, I apprehend, the only relief to which she is entitled.

There is no ground laid by the proofs for reforming the instrument, and the defendant has not done that which alone can entitle her to rescind the contract. She cannot retain the horse, and defeat a recovery on the ground of mistake, on an obligation made and delivered by herself m payment for the horse, and which is the identical obli gation that the plaintiff required to be delivered to him.

I therefore order judgment for the plaintiff for the amount remaining due on the mortgage, and interest, but not until the guaranty is properly stamped, which the plaintiff is permitted to do.

Mullin, Justice.]

Cases cited

Botsford v. McLean 45 Barb. 478 N.Y. Sup. Ct. 1866-03-05 p. 181
Scott v. McGrath 7 Barb. 53 N.Y. Sup. Ct. 1849-09-03 p. 184