Kenyon v. Welty

Norton, J. delivered the opinion of the Court—Field, C. J. and Cope, J. concurring. The controlling facts in this case are these: The defendant Welty purchased a piece of land in the City of Sacramento at Sheriff’s sale, under an execution issued upon a judgment rendered by the Superior Court of the City of San Francisco against one C. L. Ross, who was owner of the land. Welty conveyed a portion of the land so purchased to one Morris Holán, who executed a mortgage upon it to the plaintiff Kenyon, as security for a loan of one' thousand dollars. Afterwards, Welty procured a conveyance from Boss of all his title to the premises so bought at the Sheriff’s sale, and including the portion sold to Holán, and by him mortgaged to Kenyon. Shortly after the purchase, the decision of the Supreme Court of this State was made, in the case of Meyer v. Kalkmann, that the Superior Court of the City of San Francisco had no jurisdiction to issue process to run outside the limits of the City of San Francisco. After this decision, an agreement was entered into between Kenyon and Welty, in pursuance of which Kenyon transferred to Welty the mortgage of Holán, in consideration of Welty’s procuring ,a deed from his brother, in whom the title from Ross had become vested, to Kenyon, of a portion of the premises covered by the mortgage, and which portion was to be discharged from the lien of the mortgage. Some time after this agreement was carried into effect, the Supreme Court, in the case of Hickman v. O'Neil, overruled the former decision in the case of Meyer v. Kalkmann. [641] This action is brought to have this agreement set aside, upon the ground that it was made under a mutual mistake of the parties. In the case of Goodenow v. Ewer (16 Cal. 461) this Court, speaking of mistakes of law, says: “ Indeed, the weight of authority in the United States is, that the mistake, unless accompanied with special circumstances, such as misrepresentation, undue influence, or misplaced confidence, constitutes no ground of relief.” The Court then quotes: “ It may be safely affirmed,” says Mr. Justice Story, “ upon the highest authority, as a well established doctrine, that a mere naked mistake of law, unattended with any such special circumstances as have been above suggested, will furnish no ground for the interposition of a Court of Equity; and the present disposition of Courts of Equity is to narrow, rather than to enlarge, the operation of exceptions.” The only mistake that existed in this case, if there was any mistake, was one of law. The parties supposed that the Nolan mortgage was invalid, and that the title derived through the conveyance from Ross was valid. But this supposition rested wholly upon their supposition as to the condition of the law. They knew what the law was before the decision in the case of Meyer v. Kalkmann, and they knew of that decision, and they exercised their judgment as to the effect of that decision. There was no mistake or want of knowledge as to any fact that now appears in the case. Under the rule laid down in the case of Goodman v. Ewer, this is therefore not a case in which relief can be granted, unless it be characterized by some special circumstance of the nature above suggested as constituting an exception. The plaintiff insists that such circumstances are found in the fact that the title on which the Nolan mortgage rests was derived from the defendant Welty, and that he informed Kenyon, through the latter’s agent, that the title was good when Kenyon was about to take the mortgage. We should have great difficulty in saying, from anything we find in the facts of this case, that Welty would be under any obligation, legal or equitable, to make good the Nolan mortgage, if even the title had not been good. But, in fact, the title on which the Nolan mortgage rests, it appears, was good then and is now. The loss' that the plaintiff has sustained is the result [642] of the mistake as to the condition of the law, and, as a consequence, as to the condition of the title at a subsequent period, and depending upon a matter which subsequently arose, to wit: the decision in the case of Meyer v. Kalkmann. The agreement which is now sought to be annulled was not induced by anything said or done by Welty; but on the contrary was, in some degree, extorted from him against his will. It was the result of a speculation upon, that is, the opinion of the parties as to the effect of a decision of this Court—in short, a pure mistake of law. To establish the doctrine that all contracts made under a condition of the law, as expounded by the Supreme Court of the State, can be set aside if the Court subsequently changes its opinions or corrects its error, would be attended with very serious evils. What amount of confusion and litigation would arise in the City of San Francisco alone, if all contracts and conveyances, and transfers of possession, which were made under the supposed effect of decisions of this Court as to titles in that city could now be repudiated and set aside, in consequence of those decisions having been overruled or modified! Upon this subject Chancellor Kent, in the case of Lyon v. Richmond, (2 John’s Ch. Rep. 59) says: “ Every man is to be charged at his peril with a knowledge of the law. There is no other principle which is safe and practicable in the common intercourse of mankind; and to permit a subsequent judicial decision in any one given case on a point of law to open or annul everything that has been done in other cases of the like kind for years before under a different understanding of the law, would lead to the most mischievous consequences.” It is insisted that the Court below has found as a fact that the contract in question was made under a mutual mistake of fact as to the title; and as there was no motion for a new trial, it must be taken that the mistake in this case was one of fact and not of law. But the meaning of a particular expression in a finding must be considered in reference to the whole finding; and in this case there is no doubt that the meaning here is that the mistake as to the title was not as to any fact affecting the title, but as to the law affecting the title. We have assumed, in the consideration of this case, that it was a [643] mistake to suppose the law to be as decided in the case of Meyer v. Kallmann, during the period that elapsed before that decision was overruled, because, for the purpose of this decision, it was not necessary to take a different view; but we do not intend to express any views upon the point. The judgment must be reversed, and the Court below directed to dismiss the complaint.