Barataria Canning Co. v. Ott

AVhiteield, C. J., delivered the opinion of the court. The amended cross bill substantially makes this case in brief: That both parties, appellant and appellees, mutually intended by their deed and agreement that appellant should convey to appellees “all the oysters, oyster beds, and all other rights and privileges then held by said appellant in the waters of the said bay northward and eastward of the line indicated in said instrument, and forever conveyed, abandoned and released to the appellees all the property rights and privileges then held by them in that portion of said waters of said bay to the northward and eastward of said line indicated in said instrument,” and — 778 — that in consideration of said agreement, and its execution on the part of appellant, the appellees agreed to convey to the appellant, in fee simple, certain land on which its canning factory stood, to which it then held a lease originally for twenty-five years, and that appellant agreed, in consideration of this conveyance, to pay appellees $6,000, and “surrender forever to appellees the right to oysters and oyster beds held by it in the waters of the bay of Biloxi, to the northward and eastward of said line indicated in the said agreement,” and that but for this understanding as to the contract actually made between the parties the appellees would never have consented to have parted with what they did part with for the sum of $6,000. The appellees in the cross bill expressly allege that the following paragraph in the agreement below set out, together with the other recitals and stipulations of the said instrument, had the effect to convey “to them all the oysters, oyster beds, property rights, and privileges then held by said appellant in the waters of the said bay of Biloxi to the northward and eastward of said line indicated in said instrument,” and that appellees accepted the said $6,000 and executed said instrument under that belief. The said paragraph is as follows: “And it is expressly understood that the said Barataría Canning Company, by its acceptance of the grant evidenced by this instrument, shall for itself, its legal representatives, and its successors in interest, disclaim any right of claim to the exercise of any littoral and aquatic rights and privileges, appurtenant and attached to said land, or vested in the grantors as the owners of said land, to the northward and eastward of said line so established, no matter what the actual conformation of the shore line may or shall be, or become or be made, and the respective concessions and disclaimer here made by the parties hereto, each in favor of the other, shall be held and understood as reciprocal, and as furnishing mutual consideration each for the other.” — 779 — This court held iu the former opinion that “littoral and aquatic rights” are simply those rights which, “in default of special statutory provisions to the contrary, pertain to the lands abutting upon tide waters to which the common-law doctrine of riparian ownership does not apply.” And in another part of the opinion they were defined to be “the privilege of landing his boats, hauling his nets, gathering of seaweeds and shells, and taking sand from the beach between the high and low water marks, and in some jurisdictions the right to erect wharfs and piers and bath houses in the water in front of his property.” It is obvious that, if this is all that was meant by “littoral and aquatic rights,” the appellees fail wholly to get what they intended to get as to the right to oyster plantations, etc., in the waters northward and eastward of the line indicated in the agreement, if the allegations of the cross bill are true. In fact, it is obvious that “littoral and aquatic rights,” within this definition, amounted to nothing; were absolutely valueless so far as the right to set out and use oysters in the part of the waters of the bay indicated was concerned. The prayer of the cross bill was in the alternative: First, that the instrument of writing, marked “Exhibit No. 2” to the amended answer and cross bill, may be reformed so -as to embrace and set forth, in proper and apt language, the real intent and purpose of the agreement between the appellant and appellees, etc., and for an accounting to be taken of all oysters removed, etc., and for a decree for their value, and for an injunction against the appellant restraining it from removing any oysters, and interfering with appellees, etc., or, if the court on final hearing should hold the said agreement void'for -want of mutuality, then that the court should decree the ajipellant entitled to receive back the, $6,000 so paid by appellant to appellees as aforesaid, and which $6,000 the appellees had tendered to appellant, and that said instrument, Exhibit No. 2, should be concelled and held for naught, etc., ■and that the rents under the original lease from said Mary Ott — 780 — to appellant should be decreed to be paid appellees as though such instrument had never been executed, and that the injunction heretofore granted against appellees should be dissolved, etc. There was a demurrer to this amended answer and cross bill, which was by the court overruled, and this cause is here on appeal from .that action of the chancellor. The contention of appellant that the former decision of this court is res adjudicata of the present contention presented by this amended answer and cross bill is a clear misconception of. the case made by said answer and cross bill. All that was done by this court, in its former opinion, was to declare the rights of the respective parties to the instrument according to the terms of the instrument as interpreted by the court. The object of appellees in the present pleading is in no way to assail the correctness of that decision; but, accepting it — accepting the interpretation put upon the terms of said agreement, especially the phrase “littoral and aquatic rights” — the said cross-bill avers that the instrument did not correctly set out, so interpreted, the contract actually made between the parties; that one contract was actually entered into between the parties' — the one insisted on by appellee — but that through the use of inapt words that contract so actually made was not contained in or expressed by said instrument, and prays simply the reformation of the instrument to make it speak the contract actually entered into by said parties,.or alternatively as stated. It was perfectly competent for the court below to permit the amendment of the answer and cross bill. City of Winona v. Minnesota, 29 Minn., 68 (11 N. W. Rep., 1128). This case falls clearly within the principles set out in the following authorities:- “If an agreement is what it was intended to be, equity would not interfere with it because the parties had mistaken its legal import and effect. If, on the other hand, after making an agreement, in the process of reducing it to a written form, the instrument, by means of a mistake of law, fails to express the contract — 781 — which the parties actually entered into, equity will interfere with the appropriate relief, either by way of defense to its enforcement, or by cancellation, or by reformation, to the same extent as.if the failure of the writing to express the real contract was caused by a mistake of fact. In this instance there is no mistake as to the legal import of the contract actually made, but the mistake of law prevents the real contract from being embodied in the written instrument. In short, if a written instrument fails to express the intention which the parties had in making the contract which it purports to contain, equity will grant its relief, affirmative or defensive, although the failure may have resulted from a mistake as to the legal meaning and operation of the terms or language employed in the writing.” 2 Pomeroy on Equity Jurisprudence, sec. 845. “In entering into contracts, parties are deemed to know the principles established by law, and contracts are construed with reference to the law applicable to the subject-matter of the contract, and in that sense the law as it actually is enters into and forms part of the contract that the parties make. If, however, in a given case, the parties actually mistake or misunderstand the principle of law applicable to 1he subject-matter of the contract, and reach an agreement relying upon this mistake of the law, there is no ground upon which a court of equity can reform the contract. The court cannot know whether the parties, if they had correctly understood the law, would have entered into any contract on the subject, or what terms they might have reached touching the same. While the court might, therefore, be entirely satisfied that the parties, had they in fact correctly understood the principles of law applicable to the case, would not have made the contract they did make, the court cannot know what contract they would have made, if any, and therefore in such case the court cannot reform the contract, although it might be justified in setting it aside. When, however, the mistake lies, not in misunderstanding of the principles of the — 782 — law controlling the subject of the contract or the rights of the parties connected therewith, but merely in the terms proper to be used in defining the actual contract of the parties, such a mistake, though in one sense a mistake of law, is one that a court of equity will correct.” Abraham v. North German Ins. Co. (C. C.), 40 Fed. Rep., 717. “A husband and wife agreed to purchase land, each to pay one-half of the purchase money, and to hold the land as tenants in common. The husband drew the deed, but by misunderstanding as to the effect of the language employed, the deed.created an estate by entireties. Held, that the deed would be reformed. Brown v. Brown, 79 Hun., 44 (29 N. Y. Supp., 652) ; 42 Am. Dig. (Cent. ed.), col. 1093, par. p. Where the parties to a deed intend that a fee simple should be conveyed, but the word heirs was omitted, so .that only a life estate was conveyed, reformation will be decreed, though the omission arose from a mistake of law. Brock v. O’Dell, 44 S. C., 22 (21 S. E. Rep., 976) ; 42 Am. Dig. (Cent. ed.), col. 1093, par. 'r’ ” Clearly, here the averments of the cross-bill give a case in which there was not a mistake as to the legal import of the contract actually made, but the mistake was in using words which absolutely prevented the real contract from being made at all, or, as Pomeroy so clearly puts it, “the instrument as written fails to express the intention which the parties had in making the contract which it purports to contain,” and hence falls precisely within the class which equity will reform. No better statement of the principle has ever been made than that made by Judge Campbell, for this court, in Hall v. Lafayette, 69 Miss., 540 (13 South. Rep., 39), when he said: “If an agreement is just what the parties intended it should be, no matter what led to it, there can be no interference with it; but if in putting it into form it fails to express and stipulate for what the parties understood and intended it should, a case is made for a court of chancery.” But, besides this, this amended — 783 — answer and cross-bill alleged facts as to the action of appellant in inducing appellees to believe that their title to the oysters and oyster beds would not be questioned if they accepted and executed the deed as drawn, which, if true, make out a case of actual fraud, and it is expressly held that this would have entitled appellees to the relief sought by the cross-bill. Pomeroy perhaps the greatest of all equity writers, says: “Whatever be the effect of a mistake pure and simple, there is no doubt that equitable relief, affirmative or defensive, will be granted when the ignorance or misapprehension of a party concerning the legal effect of a transaction in which he engages, or concerning his own legal rights which are to be affected, is induced, produced, aided, or accompanied by inequitable conduct of the other parties. It is not necessary that such inequitable conduct should be intentionally misleading, much less that it should be actual fraud. It is enough that the misconception of the law was the result of, or even aided or accompanied by incorrect or misleading statements, or acts of the other party.” 2 Pomeroy on Equity, sec. 817. We are clearly of the opinion that the former judgment of this court constitutes no bar to the granting of the relief sought by the cross-bill in this cause, and that the demurrer was, therefore, properly overruled. What the court held before is the law of the case within the limits of that holding, and the court held nothing absolutely as to whether, granting this instrument to mean what the court construed it to mean, it might not, so construed, wholly fail to convey and contain the contract actually entered into by the parties. The cross-bill does not question the previous holding in any respect. Recognizing its full extent and force, it merely avers, accepting its construction of the contract, that no such contract was ever actually made, and asks the court to reform the instrument so as to make it speak the very contract mutually intended to be made, and, in fact, actually made, by the parties. If the appellees shall maintain — 784 — their contention, that both parties mutually intended to make and actually did make the contract they contend for, but that this instrument does not set it out, then clearly the instrument should be reformed as prayed for. But this is a matter to be developed on the testimony. The decree is affirmed, and the cause remanded, with leave to answer within thirty days from the filing of mandate in the court below.