Kornegay v. . Everett

Davis, J., (after stating the case). The deed executed by Smith, trustee, while purporting to convey an absolute estate in fee in the property to plaintiff, by reason of the reservation of the homestead in the deed of trust to Smith, in fact conveyed an estate subject to the homestead, the defendant Everett and wife not joining the trustee in the execution of the deed to plaintiff, by reason of the mistake of all the parties, in supposing that the deed of the trustee would convey an absolute title, as it was intended it should do. The plaintiff says that, having surrendered his claims and the mortgages by which they were secured, the defendant refuses to give effect to the agreement, but claims the homestead, and he asks that if the defendant will not comply, it be rescinded. The questions presented are: 1st. Will the Court correct such a mistake of .law? and, 2d. If so, was the evidence sufficient to establish the mistake? The evidence offered by the plaintiff to show the mistake was, upon objection by the defendant, ruled out by the referee as incompetent, but it was held by the Court below to be competent, but insufficient. There was no appeal by the defendant from so much of his Honor’s ruling as held that the evidence was competent, and it may be that the first ’ *34 question is not necessarily before us in the case on appeal, but as the sufficiency or insufficiency of the evidence would be of no consequence if the Court had not the power to correct the mistake, and as that was the chief question discussed by counsel, we think it proper that it should be considered. It is undoubtedly the general rule, as laid down by the Chief Justice in Thomas v. Lines, 83 N. C., 191, “ that a written instrument disposing of property or constituting a contract, cannot be altered, impaired or explained by parol proof of a different purpose or understanding from that contained in the writing.” And it is said by Adams (Equity, § 169): “The prima facie presumption of law is, that the written contract shows the ultimate intention, and that all previous proposals and arrangements, so far as they may be consistent with the contract, have been deliberately abandoned. It seems, however, that the instrument may be corrected, if it is admitted or proved to have been made in pursuance of a prior agreement, by the terms of which both parties meant to abide, but with which it is in fact inconsistent; or if it is admitted or proved that an instrument intended by both parties to be prepared in one form, has by reason of some undesigned insertion or omission, been prepared and executed in another,” &c. What was the document intended to be? If it is admitted, or, as was said in Jones v. Perkins, 1 Jones Eq., 337, established by clear and convincing proof, that by mistake of •the parties (and it must be the mistake of both parties if the equity rests upon mistake) the instrument fails to express the intention of the parties, it will be corrected, and this will be •done whether the mistake be one of fact or of law, as is clearly shown in McKay v. Simpson, 6 Ired. Eq., 452; Hart v. Roper , 6 Ired. Eq., 349; Womack v. Eacker, Phil. Eq., 161; Lynam v. Califer, 64 N. C., 572; Lutz v. Thompson, 87 N. C., 334. The question is discussed at length in Benson v. Markol, decided in the Supreme Court, of Minnesota in May, 1887, *35 published in vol. 36, page 44, of the Albany Law Journal, and after a review and citation of a great number of authorities, it is said: “A careful consideration of the authorities has led us to the conclusion that the power of Courts of Equity to afford relief from the consequences of the mutual mistake of parties to written instruments is not strictly limited to mistakes of fact, hut extends also to mistakes of law.” The defendant relied with confidence upon the decision of this Court in Sandlin v. Ward, 94 N. C., 490, in which it is said : “ A Court of Equity never corrects mistakes of law, save in exceptional cases, where the mistake is mixed up with other equitable elements,” &c. Of course a Court of Equity will only correct a mistake when equity requires it. Was there such an equitable element in this case? If the plaintiff held a security for his debt, which was discharged in pursuance of the agreement, and with the understanding and intention of both parties that it should be discharged upon the execution of the deed conveying the lots contained in the deed from Smith, trustee, to the plaintiff, free from all incumbrance, and it was intended and thought by all the parties that such a title was conveyed, then would it not be manifestly inequitable for the defendant to retain the benefit derived from the release of the debts and surrender of the mortgages by the plaintiff, without giving full effect to the agreement, by securing to the plaintiff the title in fee to the land conveyed to him by the trustee? Would not the plaintiff have a right to have the contract rescinded and to be relegated to his original security? Assuming the facts to be as alleged, the defendant cannot assert any claim to the property conveyed by the deed of his trustee, adversely to that deed, without restoring to the plaintiff the security lost by him in consequence of the acceptance of that deed. *36 If it be said that, peradventure, the wife of the defendant will not join in the execution of such an instrument as will carry the agreement into effect, the answer is to be found in Welborn v. Sechrist, 88 N. C., 287, and he must make reasonable effort to comply with the agreement. There was no error in ruling that the evidence was competent. As to the sufficiency of the evidence to correct the mistake, the proof must be full and clear and not merely preponderant, but such as would have satisfied a chancellor or Court of Equity under the old practice. Loftin v. Loftin, 96 N. C., 94, and cases cited. The only witnesses were the plaintiff and the defendant Smith, the trustee; there was no conflicting testimony, and if these witnesses are to be believed, the deed from Smith, trustee, to the plaintiff was intended to convey a title in fee unencumbered, and it was thought by all the parties at the time that it did convey such a title, so that, nothing else appearing, it was sufficient; but the referee having excluded this evidence, and thus rendering, it unnecessary for the defendant to offer any evidence controverting, as his answer does, the facts as testified to, he has a right to be heard in denial, and this case will be certified to the end that it may be further proceeded with in accordance with this opinion. Error.