Ruhling v. Hackett

Opinion by Lewis, C. J., full Bench concurring. The bill in this case is brought to reform a mortgage, foreclose the same, and also to foreclose a vendor’s lien. — 364 — Tbe plaintiffs allege that on the 30th day of June, A. D. 1863, the defendant McKey made and delivered to one Zart-man his promissory note in writing, whereby for value received he promised to pay to Henry Zartman, or order, the sum of three thousand dollars, in United States gold coin, with interest at the rate of five per cent, per month; that, to secure the payment thereof, McKey made, executed and delivered to Zart-man his indenture of mortgage, whereby he granted, bargained and sold to Zartman lot number nine in block number seventeen, in Carson City, which conveyance was intended as a mortgage. It is further alleged that on the 4th day of August, A. D. 1863, the said Zartman, for value received, transferred and delivered the said note, and assigned and delivered the said mortgage to the said plaintiffs. It is also alleged that at the time of the execution of the note and mortgage above referred to, McKey was the owner of lot number six in block number seventeen, in Carson City; that it was the intention of McKey and Zartman, and was understood and agreed by and between them, that lot six, instead of lot nine, should be embraced in and covered by said mortgage; that it was not intended to mortgage lot nine at all, but only lot six; that both parties supposed that lot six was the one described in the mortgage at the time of its execution, but that, by the mistake of Zartman or the draughtsman of the instrument, lot number nine was described and embraced in said mortgage, instead of lot number six; that at the time of the making and delivery of the note and mortgage, the defendant McKey had no interest whatever, in. lot number nine; that in March, A. D. 1864, Mrs. "Williamson, who owned lot number nine, conveyed the same to the defendant Clayton, and at the same time McKey, by Mrs. "Williamson, acting as his attorney in fact, also conveyed all his right, title and interest in lot number six to defendant Clayton; that, for and in consideration of the sale to Clayton of the lots above mentioned, he agreed to pay to the plaintiff the sum of four thousand four hundred and fifty dollars— the amount then due on the note and mortgage held by them, and which was a part of the consideration for the conveyance of the lots to him. It is also alleged that at the time, and before the conveyance of the lots to him, Clayton was informed — 365 — of and bad full knowledge of tbe mistake in tbe mortgage, and of tbe intention of tbe plaintiffs to have tbe same reformed, so as to make it embrace and coyer lot six instead of lot nine-. Plaintiffs allege further that though often requested, Clayton refuses to pay to them tbe four thousand four hundred and fifty dollars which be agreed and promised to pay. Por the purpose of securing a lien upon lot nine, it is alleged in tbe complaint that tbe three thousand dollars -loaned by Zartman, though borrowed by McKey, was in fact for the benefit of Mrs. Williamson, and that the entire sum so loaned, was by her expended in placing improvements on that lot, and that such improvements now constitutes its chief value. Upon these facts the plaintiffs pray that the mortgage assigned to them may be reformed so as to make it embrace lot number six; that that lot may be sold to satisfy their claim, and that they have a lien upon lot number nine. To this complaint the defendant Clayton interposes a general demurrer. The only inquiry which can be presented upon this demurrer is, whether tbe complaint states facts sufficient to constitute a cause of action. Misjoinder of actions cannot be raised upon a general demurrer, and, therefore, if it were admitted that plaintiffs have united assumpsit with a bill in equity to reform a mortgage deed, it cannot be taken advantage of under the demurrer. It is claimed by respondents’ counsel that the mortgage, in this case, cannot be reformed so as to make it include land npt described in it at the time of its execution, though it be admitted that it was written by fraud or mistake; that an instrument for the conveyance of land may be reformed so as to diminish the quantity conveyed, or agreed to be conveyed, but not to extend it to land not described in the deed or agreement, because it is said to order the conveyance of land which, by mistake or fraud, is omitted from the deed, is in violation of the statute of frauds which declares that no estate or interest in land shall be created, granted or assigned, unless by deed or conveyance in writing, signed by the party granting the same; but that ordering a reconveyance of land which is conveyed by fraud or mistake, is not in violation of this statute. — 366 — For this distinction we find no authority but the dictum of Weston, J., in the case of Elder v. Elder, 10 Maine R. 80, who whilst acknowledging the authority of the case of Gillispie v. Moon (2 John. C. R. 585), yet endeavors to draw the distinction above stated between the two cases. That distinction may have been clear and entirely satisfactory to the learned Judge who delivered the opinion in Elder v. Elder, but we must acknowledge it to be utterly beyond our comprehension. In the case of Gillispie v. Moon (2 John. Ch. 585), it appears the defendant had agreed to purchase, two hundred acres of land from the plaintiff, but by mistake the deed embraced fifty acres more than was intended to be conveyed. The defendant, though acknowledging his mistake, insisted upon holding the entire two hundred and fifty acres.' The Court admitted parol testimony to establish the mistake, and upon its being established, ordered the defendant to reconvey the fifty acres not intended to be conveyed to the plaintiff. The deed from Mrs. Mann in that case unquestionably conveyed the legal title to the entire two hundred and fifty acres to the defendant, and left the grantor a mere equitable estate in the fifty acres not intended to be conveyed. A deed of conveyance, executed and delivered, carries the absolute legal title to the grantee, and if more land is by mistake conveyed than was intended by the grantor, it carries the legal title to the portion not intended to be conveyed as well as to that which it was the intention to convey, leaving, however, an equitable interest to that conveyed by mistake in the grantor. If the defendant Moon had conveyed the entire two hundred and fifty acres described in his deed to a bona fide purchaser without notice of the mistake, such purchaser would undoubtedly have gotten a. good title to the entire tract, which even the proof of the mistake would not defeat. Is it not as much a violation of the statute of frauds to admit parol proof of the mistake in such a case, and to decree a reconveyance as to decree a conveyance of land omitted from the deed ? Where more land is conveyed than was intended, a reconveyance is decreed, and upon what authority ? Merely — 367 — the parol proof that it was not intended to be conveyed, that the grantee in whom the legal title is vested by mistake, ought not to be allowed to retain it. There is no agreement, either verbal or in writing, to reconvey, and yet it is admitted that in such a case the Court may correct the mistake and order a reconveyance. The case of Gillespie v. Moon is therefore as much within the statutes of fraud as any case for the correction of a mistake can be, as it decreed the conveyance of fifty acres of land by defendant to plaintiff whilst there was no agreement or memorandum in writing to do so. It cannot be said that the conveyance by mistake of more land than is intended by the parties vitiates the deed as to that portion, and that no title to the portion so conveyed passes to the grantee. Such a rule might prevail as to simple contracts, but not to deeds conveying real estate. But the rule that Courts of equity have the power to correct mistakes in deeds and other instruments, so as to make them conform to the intention of the parties, is so universally recognized and acted upon, that it would seem scarcely necessary to do more than refer to a few cases which directly sustain our views upon this question. It would be a reproach indeed to the equity jurisprudence of otu- country if it could be justly said of it that it is so trammeled in the meshes of inflexible rules that it cannot correct a mistake, or grant relief from the hardships of fraud and imposition, when, as in this case, the rights of innocent parties do not intervene, and the mistake or fraud is admitted by the defendant. Can it be seriously claimed that if it be the intention of the grantor to convey, and the grantee to purchase, a valuable piece of land, and the consideration is paid, but by mistake a piece utterly worthless is described in the instrument of conveyance, that a Court of equity may not reform such instrument so as to make it conform to the admitted intention of the parties ? It is the peculiar province of equity to relieve from the consequences of fraud, surprise and mistake; but it would illy merit our commendation if it gave no adequate remedy in cases of such manifest injustice, and of such frequent occurrence. — 368 — The question, however, is no longer res integra, and the power of a Court of Chancery to correct such mistakes is thoroughly established. (3 Starkie on Evidence, 1018, 1019; Willis v. Henderson, 4 Scammon, 13; DePrimer v. Cantillon, 4 John. Ch. R. 85; Wiswall v. Hall, 3 Paige, 313; Coleman v. Wooley, 3 Dana, 486; White v. Wilson, 6 Blackford, 448; Blodgett v. Hobart, 18 Vermont (3 Washb.), 414; Alexander v. Newton, 2 Grattan, 266; Parkham v. Parkham, 6 Humph. 287; Rogers v. Atkinson, 1 Kelly, 12; Klopton v. Martin, 11 Ala. 187; Bailey v. Bailey, 8 Humph. 230; Baynord v. Norris, 5 Gill, 468; McKay v. Simpson, Ird. Eq. R. 452; Trout v. Goodman, 7 Geo. 383; Moseby v. Wall, 23 Miss. 81; Tilton v. Tilton, 9 New Hampshire, 385.) In Willis v. Henderson, supra, by mistake a tract of land described in a mortgage was not the tract intended by the parties to be mortgaged; it was held, however, that the purchasers of the land intended to be mortgaged having notice of the mistake took it subject to the mortgage, and that a Court of equity may correct the mistake and enforce it against the land in the hands of such purchasers. So in the case of Blodgett v. Hobart, where it appeared that by mistake a part of the lands agreed to be mortgaged were not included in the mortgage deed, it was held that on a bill for that purpose a Court of Chancery would correct the mistake by ordering the mortgage to be so reformed as to include the land omitted. In Alexander v. Newton it was said that a mistake of a scrivener in drawing a deed, whether in law or in fact, will be corrected by a Court of equity even against bona fide creditors. So in Klopton v. Martin, the Court held that where a written instrument expresses more or less than the parties intended, the Court of equity will reform it. And Mr. Justice Storey, in Taylor v. Suther (2 Sumner, 228), uses the following language: “Nothing is better settled than that the true construction of the statute of frauds does not exclude the enforcement of parol agreements respecting the sale of lands in cases of fraud; for, as it has been emphatically said, that would be to make a statute purposely made to prevent fraud the veriest instrument of fraud; and the same rule governs in case of mistake — 369 — as of fraud.” Indeed, we are unable to find a single case which militates against tbe general rule that a Court of equity will reform a mistake in all executed contracts.. There are many cases in which it is held, and perhaps the weight of authority sustains the doctrine, that a Court of equity will not correct a mistake in an executory contract where the mistake is denied by answer, and enforce its specific performance as corrected. But if the contract be executed, money paid and land omitted by mistake from the instrument which it was the intention of the parties to include, it would be a deplorable defect in the equity powers of our Courts if relief eoidd not be granted. This is the distinction made in all the cases, and we think not a solitary case can be found where a Court of equity has refused to reform a material mistake in a deed or mortgage, unless there were some defense besides the statute of frauds, such, for instance, as unreasonable delay upon the part of plaintiff. All the authorities relied on by the respondents’ counsel where the reformation was refused are cases of executory contracts. But it is said that even if such a mistake can be corrected in favor of the original mortgagee, that it is a mere equitable right of action which is not assignable. The authorities, however, are directly opposed to this position. The assignment of the mortgage usually carries with it all the equitable rights of the mortgagee growing out of it. Indeed, the assignment of a mortgage is'itself but a transfer of an equitable right of action to the assignee. "With respect to the right of reforming the mortgage,.the assignee stands in the same position as the mortgagee. (Washburne v. Morrills, 1 Day’s Cases in Error, 139; Gillespie v. Moon, 2 John Ch. R. 585.) The complaint alleges that Clayton had notice of the mistake, and of the intention of the plaintiffs to have the same reformed, at and before the time of his purchase of lot number six. By demurring to the complaint, this fact is admitted, and he is therefore placed in the same position with respect to the reformation of the mortgage deed as his grantors were. (Blodgett v. Hobart, 13 Vermont, 414; Willis v. Henderson, — 370 — 4 Scammon, 13.) We are also of opinion that the plaintiffs may maintain an action against the defendant Clayton upon his promise to Mrs. Williamson to pay a certain proportion of the purchase money. Such a promise is not a collateral promise in the nature of a guarantee of the debt of a third party, but is an original promise upon which the beneficiary may maintain his action direct. (1 Parsons on Contracts, 390; Hind v. Holdeship, 2 Watts, 104; Arnold v. Lyman, 17 Mass. 400; Jackson v. Mayo, 11 Mass. 152.) This is the generally recognized rule in the American cases; the English cases, however, do not maintain the same rule. The judgment of the Court below reversed and cause remanded, and leave granted defendant to answer.