Olmstead v. Michels

Brewer, J. Defendant commenced an action .at law to recover damages for the breach of a written contract.1 Complainant filed this bill to enjoin the prosecution of that action, and compel the cancellation of such contract. A brief statement of the grounds of decision is here given. The written contract is perfect in form, and signed by the parties. One ground upon which the complainant rests his bill is this: That this writing signed by the parties, and apparently a contract between them, [456] was not intended as a contract,' and was understood by neither of them to be binding. That parol testimony is competent to show that that which appears as a perfect written contract was hot signed by the parties with ■th¿ intention of making a contract, and that no binding obligation was 'assumed by either, is we think unquestioned.- A familiar illustration is ■this: -Suppose a gathering of young people in which a moot court is proposed for the amusement of those present, and a suit for breach of promise of marriage is the case to be tried in such moot court, and a young man and a young woman, for the purposes.of such trial, sign what upon its face appears to be a contract to marry. Would it for a moment be doubted if, after the evening’s amusement was ended, she should bring suit for damages for breach of such marriage contract, that parol testimony was competent to show the purposes for which the paper was signed, and that no real 'or binding obligations were assumed by either party in signing it. This, which is an extreme case, illustrates the principle upon which complainant rests, and we think the testimony shows that this,case falls within that principle. The facts, in a general way, were these: One Harris came from Detroit as a representative of defendant and two partners, to work up a com- , pány here for the manufacture of glucose by the dry process. After some negotiations, several gentlemen, complainant among the number, became interested, and talked of organizing a corporation for the purpose of put- ’ ting up a building and engaging in such manufacture. Before any definite plans were matured, it was agreed that complainant should go to Detroit, and see the process. In pursuance thereof, he went with Mr. Harris, and there met the defendant and his partners. The talk here among the parties proposing to enter into the organization was the build■ing of a T, 000-bushel house. After complainafit reached Detroit, he was 'tl¿ere three days without an opportunity to see the process. Talk was going on during these days between the parties, they suggesting the expediency of a 2,000-bushel house. Finally he expressed a desire to see the process before returning home. Then this written contract was produced by one of the three partners, and it was stated that they had . agreed upon, a rule that no one should see the process unless a contract was first executed. He declined to sign it; in substance saying that the parties who he represented never talked of a 2,000-bushel house, and that he had no authority to sign for them. He was told that he -was not to be bound personally by it, but that the signature was necessary to comply with their rules; and probably, from the talk, this contract, thus signed by him, was understood to be the basis of a contract to be thereafter entered into between the three partners and the company to be . formed in this- place. With that understanding he signed the paper, saw the process, and came home and reported. Thereafter this defetidant • came on for the' purpose of assisting in the organization of the proposed • company, but the scheme fell through, and that not through any fault of the complainant. ■ Of the four parties who were .present at the time this paper was signed, complainant and defendant being among the number, all agree that the contract as it stands was not to be binding upon [457] the complainant. The defendant, and perhaps one witness, insist that complainant stated his ability to build a 1,000-bushel house, even if his associates failed to enter into the scheme, and insist that complainant was to bo bound by this contract for a 1,000-bushel house. Inasmuch as all who were present, the complainant and the defendant ampng the number, agree that this contract, as it stands, was not to be binding, it is very obvious that the defendant ought not to be permitted to enforce it.. It was not signed as and for a contract, but signed simply as an excuse, and to comply with the rule of defendant and .his partners in respect to the disclosure of the process, and probably also as the basis of a contract to be thereafter entered into between the defendant and the proposed company. > Neither can there be, as defendant suggests, á reformation of the contract. Both parties knew what they were signing, — knew what the language of the instrument was. There was no mistake or misunderstanding in this respect; and whatever may be the truth as to the parol understanding in reference to the building of a 1,000-bushel house, it is not true that this contract by mistake was written for a 2,000-bushei house, instead of a 1,000-bushel house. Hence there is no excuse for the reformation of this contract. It must stand or fall as it is written; and, as all the parties agree that as written it was not to be binding as a personal contract, we think the complainant is entitled to a decree cancelling the instrument, and enjoining the action at law; and it is so ordered. Philips, J., concurs. Footnotes [1] Michels v. Olmstead, 14 Fed. Rep. 319.