CHAPTER IV

MISTAKE, INADVERTENCE, ACCIDENT, AND SURPRISE.

§ 127. Mistake as Ground for Rescission.

128. Mutual and Unilateral Mistakes.

129. Mistake of One Party Induced by Fraud or Artifice of Other. 130. Unilateral Mistake Known to and Taken Advantage of by Other Party.

131. Mistake Attributable to Party's Own Negligence or Inatten

139.

140.

Mistake as to Existence of Subject-Matter.
Mistake as to Identity of Subject-Matter.

141. Mistake as to Price or Value of Subject-Matter.

142.

143.

144.

145.

146.

147.

148.

Errors in Computations or Estimates.

Mistakes as to Title.

Mistake as to Quantity of Land Conveyed.
Inadvertence.

Mistaken Expectation as to Future Events.
Mistake in Matter of Law.

Same; Mistake or Ignorance as to Party's Legal Rights.
149. Same; Mistake as to Legal Effect of Instrument.
150. Same; Mistake of Law Induced by Other Party.
151. Same; Mistake of Law as Element of Fraud.
152. Same; Mutual Mistake of Law.

153.

Same; Laws of Foreign State or Country. 154. Loss or Injury Resulting from Mistake.

155.

Evidence to Prove Mistake.

156. Accident or Surprise as Ground for Relief.

§ 127. Mistake as Ground for Rescission.-It is within. the jurisdiction of a court of equity to give relief by enforcing the rescission of a contract or the cancellation of a conveyance or other written instrument on the ground of mistake, where the mistake is one of fact, material to the substance of the transaction, and mutual (or, if existing on one side only, known to the other party or induced by his fraud), and where it is not attributable to the negligence of the mistaken party nor resulting from his own violation of

some legal duty. It is even said that the award of relief against mutual mistake is a favorite subject of equity jurisdiction, and that it is not precluded by the fact that the injured party has a concurrent legal remedy for the same wrong. But in this, as in all other cases, the remedy of rescission cannot be had without restoration of the status quo or restitution. As declared in the statutes of some of the states, "rescission cannot be adjudged for mere mistake, unless the party against whom it is adjudged can be restored to substantially the same position as if the contract had not been made," or in cases where he has not materially changed his position relative to the subject-matter." Thus, where one holding the senior lien on a piece of property and who executed a release of a deed of trust thereon, had no intention of surrendering his lien in favor of a junior lien in the hands of one S., but gave the release in the belief that S. had no lien, it was held that he was entitled to a cancellation of the release, since it would not operate prejudicially to any one but S., and would place him in the same position he occupied before it was executed."

Within these rules, a "mistake" is an erroneous conviction arising in the mind of a party through ignorance, inadvertence, or forgetfulness, or as the result of an error in

1 Daniel v. Mitchell, 1 Story, 172, Fed. Cas. No. 3,562; Reddick v. Long, 124 Ala. 260, 27 South. 402; Boney v. Hollingsworth, 23 Ala. 690; Humphrey v. Gerard, 83 Conn. 346, 77 Atl. 65; Barker v. Fitzgerald, 105 Ill. App. 536; Norton Iron Works v. Moreland (Ky.) 113 S. W. 481; Selleck v. Macon Compress & Warehouse Co., 72 Miss. 1019, 17 South. 603; Whelen's Appeal, 70 Pa. 410; Lies v. Stub, 6 Watts (Pa.) 48; Murray Co. v. Putman (Tex. Civ. App.) 130 S. W. 631; Ferrell v. Delano (Tex. Civ. App.) 144 S. W. 1039; Hurd v. Hall, 12 Wis. 112. See Biehl v. Glick, 17 Ill. 35. "In all cases of a mistake of fact material to the contract, or other matter affected by it, if the party complaining applies within a reasonable time, equity will relieve." Civ. Code Ga. 1910, § 4580. And see Williams v. Butler, 58 Ind. App. 47, 105 N. E. 387, 107 N. E. 300.

2 Tazewell Coal & Iron Co. v. Gillespie, 113 Va. 134, 75 S. E. 757. But compare Williams v. Butler, 58 Ind. App. 47, 105 N. E. 387, 107 N. E. 300.

3 Wilson v. McConnell, 72 W. Va. 81, 77 S. E. 540.

4 Civ. Code Cal., § 3407; Rev. Civ. Code Mont., § 6113; Rev. Civ.

Code N. Dak., § 6624; Rev. Civ. Code S. Dak., § 2354.

5 Dunn v. City of Superior, 148 Wis. 636, 135 N. W. 145.

• Troll v. Sauerbrun, 114 Mo. App. 323, 89 S. W. 364.

computation, or a genuine but unfounded belief as to the existence or non-existence of a particular fact. According to certain statutory definitions, "mistake of fact is a mistake, not caused by the neglect of a legal duty on the part of the person making the mistake, and consisting in (1) an unconscious ignorance or forgetfulness of a fact past or present, or (2) belief in the present existence of a thing material to the contract, which does not exist, or in the past existence of such a thing, which has not existed." But a person cannot obtain the cancellation of a deed as having been executed by mistake, where the evidence shows that he fully understood its purpose and intention at the time of execution, but has since changed his mind as to the propriety or expediency of his act. It sometimes happens that a written contract will itself contain a stipulation that it shall not be revocable for mistakes or errors. But in several states it is provided by law that "a stipulation that errors of description shall not avoid a contract, or shall be the subject of compensation, or both, does not take away the right of rescission for fraud, nor for mistake, where such mistake is in a matter essential to the inducement of the contract, and is not capable of exact and entire compensation." 10

§ 128. Mutual and Unilateral Mistakes.-A "mutual" mistake (more properly called "common") exists where both or all the parties to a transaction are laboring under the same misapprehension or erroneous belief in regard to a particular fact or circumstance; that is, it is a mistake shared by all the parties alike.11 A "unilateral" mistake

7 See Cummins v. Bulgin, 37 N. J. Eq. 476; Chicago & E. I. R. Co. v. Hay, 119 Ill. 493, 10 N. E. 29; Allen v. Elder, 76 Ga. 674, 2 Am. St. Rep. 63; Davis v. Steuben School Tp., 19 Ind. App. 694, 50 N. E. 1. It appears that mistakes of judgment are not to be included in the definition. See Brown Bros. Mfg. Co. v. S. H. Harris Co., 185 Ill. App. 568. See, infra, § 142.

8 Civ. Code Cal., § 1577; Rev. Civ. Code Mont., § 4983; Rev. Civ. Code N. Dak., § 5298; Rev. Civ. Code S. Dak., § 1206; Rev. Laws Okl. 1910, § 908. And see Peasley v. McFadden, 68 Cal. 611, 10 Pac. 179; Calhoun v. Teal, 106 La. 47, 30 South. 288.

Raab v. Raab, 23 Ky. Law Rep. 971, 64 S. W. 624.

10 Civ. Code Cal., § 1690; Rev. Civ. Code Mont., § 5064; Rev. Civ. Code N. Dak., § 5379; Rev. Civ. Code S. Dak., § 1284; Rev. Laws Okl. 1910, § 985.

11 Botsford v. McLean, 45 Barb. (N. Y.) 478; Wilson v. Wilson, 23

exists where one of the parties is laboring under such a misapprehension or erroneous belief, but the other has a clear comprehension of the subject-matter; that is, it is a mistake of one party not shared by the other.12 Now it is a settled principle of equity that a contract or deed cannot be reformed for mistake unless the mistake was mutual, in the sense above defined. But many courts have thought that a distinction should be recognized between the reformation and the rescission of a contract, and that the latter remedy might be granted even in a case where the former could not be claimed for want of mutuality in the mistake, in other words, that rescission may be granted in the case of a purely unilateral mistake, provided it did not result from the party's own negligence.13 And this rule has been enacted into law in at least one of the states.1 It is subject, however, to the qualification that the mistake must be one which would defeat the real agreement of the parties,15 and that rescission can be effected without positive injustice to the adverse party.10

But at present it must be said that this doctrine is opposed by the great preponderance of the authorities. The generally accepted rule is that rescission cannot be enforced or

Nev. 267, 45 Pac. 1009; Page v. Higgins, 150 Mass. 27, 22 N. E. 63, 5 L. R. A. 152; Tarbox v. Tarbox, 111 Me. 374, 89 Atl. 194.

12 For example, where an offer was made by one partner to enter into a contract with another person to remove earth at a stipulated price per cubic yard from a line of railroad in process of construction, the fact that, before the offer was made, the other partner had already let a contract for a small portion of the offered work, which was unknown to the partner making the offer, does not constitute a mutual mistake between the parties to the contract. Lamoreaux v. Phelan, 89 Neb. 47, 130 N. W. 988.

13 Moore v. Copp, 119 Cal. 429, 51 Pac. 630; Crosby v. Andrews, 61 Fla. 554, 55 South. 57, Ann. Cas. 1913A, 420; Wirsching v. Grand Lodge, 67 N. J. Eq. 711, 56 Atl. 713, 63 Atl. 1119, 3 Ann. Cas. 442; Hayward v. Wemple, 152 App. Div. 195, 136 N. Y. Supp. 625; Manhattan Wrecking & Contracting Co. v. Eidlitz, 78 Misc. Rep. 396, 138 N. Y. Supp. 308; Harper v. City of Newburgh, 159 App. Div. 695, 145 N. Y. Supp. 59. See Stone v. Moody, 47 Wash. 158, 91 Pac. 644. 14 "Equity will not reform a written contract unless the mistake is shown to be the mistake of both parties; but it may rescind and cancel upon the ground of mistake of fact material to the contract of one party only." Civ. Code Ga. 1910, § 4579.

15 Engel v. Powell, 154 Mo. App. 233, 134 S. W. 74.

16 Morgan v. Owens, 228 Ill. 598, 81 N. E. 1135.

ordered on account of the mistake of one party only, which the other did not share, but for which he was not responsible, unless some special ground for the interference of a court of equity can be shown.17 That is, there can be no rescission on account of the mistake of one party only, where the other party was not guilty of any fraud, concealment, undue influence, or bad faith, did not induce or encourage the mistake, and will not derive any unconscionable advantage from the enforcement of the contract.18 "A court of equity," it has been said, "cannot undertake to make a contract for parties which they have not made themselves, and would equally transcend its just powers by compelling a party to relinquish the fruits of a contract which he has honestly made, and in which there is no taint of wrong to affect his conscience. The rescission or cancellation of a contract is certainly as drastic an interference with its provisions as a modification of it. The consequences may be equally or even more injurious to the party who is

17 Moffett, Hodgkins & Clarke Co. v. City of Rochester, 91 Fed. 28, 33 C. C. A. 319; Soper v. Tyler, 77 Conn. 104, 58 Atl. 699; De Grasse v. H. W. Gossard Co., 152 Ill. App. 58; Watson v. Brown, 113 Iowa, 308, 85 N. W. 28; Duff & Oney v. Rose, 149 Ky. 482, 149 S. W. 884; Harmon v. Thompson, 119 Ky. 528, 84 S. W. 569; Chute v. Quincy, 156 Mass. 189, 30 N. E. 550; Vallentyne v. Immigration Land Co., 95 Minn. 195, 103 N. W. 1028, 5 Ann. Cas. 212; Weissenfels v. Cable, 208 Mo. 515, 106 S. W. 1028; Hand v. Gas Engine & Power Co., 167 N. Y. 142, 60 N. E. 425; John Monks & Sons v. West Street Improvement Co., 149 App. Div. 504, 134 N. Y. Supp. 39; Cohen v. Haberman, 126 App. Div. 710, 111 N. Y. Supp. 67; Stewart v. Dunn, 77 App. Div. 631, 79 N. Y. Supp. 123; Lumber Exchange Bank v. Miller, 18 Misc. Rep. 127, 40 N. Y. Supp. 1073; Livingston v. New York Life Ins. & Trust Co., 59 Hun, 622, 13 N. Y. Supp. 105; Ebstein v. Philadelphia Knitting Mills Co., 48 Pa. Super. Ct. 349; Anthony v. Granger, 22 R. I. 359, 47 Atl. 1091; Sloan v. Courtenay, 54 S. C. 314, 32 S. E. 431; Houston & T. C. Ry. Co. v. Burns (Tex. Civ. App.) 63 S. W. 1035; Travelers' Ins. Co. v. Jones, 32 Tex. Civ. App. 146, 73 S. W. 978; White v. Snell, 35 Utah, 434, 100 Pac. 927; Briggs v. Watkins, 112 Va. 14, 70 S. E. 551.

18 Ellicott Mach. Co. v. United States, 44 Ct. Cl. 127; Tatum v. Coast Lumber Co., 16 Idaho, 471, 101 Pac. 957, 23 L. R. A. (N. S.) 1109; Schroeppel v. Steinmeyer, 128 Ill. App. 146; Hutchinson v. Bambas, 249 Ill. 624, 94 N. E. 987; Wilson v. Storm, 164 Ill. App. 13; Bibber v. Carville, 101 Me. 59, 63 Atl. 303, 115 Am. St. Rep. 303; Thompson v. E. I. Dupont Co., 100 Minn. 367, 111 N. W. 302; Benn v. Pritchett, 163 Mo. 560, 63 S. W. 1103. And see Outcalt Advertising Co. v. J. W. Hooten & Co., 11 Ala. App. 454, 66 South. 901.