the subject-matter.37 In other words, to authorize a court of equity to decree rescission or cancellation on the ground of mistake, based on a mistaken belief of one of the parties, that belief must be a fair and reasonable one and justified by facts adequate to inspire it.88 Or, to put it differently, a party is guilty of inexcusable carelessness where he has within his own hands every means to enable him to avoid a material mistake into which he nevertheless falls.39 And a person cannot be said to have entered into a contract by mistake, in such sense as to justify his repudiation of it, though he has failed to notice a material fact which would have influenced his decision, where such fact was plainly discoverable as a mere matter of inference or of computation from the facts freely furnished to him by the opposite party.40

Thus, for instance, where a judgment creditor, having the judgment debt secured by mortgage, purchases the equity of redemption subject to incumbrances between his mortgage and judgment, through ignorance of the existence of his own mortgage, he can have no relief in equity. So the mere want of knowledge of the value of an estate will not justify the setting aside of an inequitable agreement for the division of it among the heirs, in the absence of a showing that the complaining parties did not have ample opportunity to inform themselves of the value and condition of the estate. 42 And a party to a written contract, who thereby assumes obligations created by other contracts reduced to writing, is chargeable with knowledge of the terms of such contracts, having them before him at the time of executing the contract, unless it is shown that he was in some way misled." 43 So, in a case in Ohio, the terms and conditions of a sale of chattels at public auction were materially

37 Botsford v. Wilson, 75 Ill. 132; Wier v. Johns, 14 Colo. 493, 24 Pac. 262; Crowder v. Langdon, 38 N. C. 476; Eastman v. St. Anthony Falls Water-Power Co., 24 Minn. 437.

38 Atkinson v. Plum, 50 W. Va. 104, 40 S. E. 587, 58 L. R. A. 788. 39 Felin v. Futcher, 51 Pa. Super. Ct. 233.

40 Daly v. Busk Tunnel Ry. Co., 129 Fed. 513, 64 C. C. A. 87.

41 Deare v. Carr, 3 N. J. Eq. 513.

42 Sackman v. Campbell, 15 Wash. 57, 45 Pac. 895.

48 Blake v. Black Bear Coal Co., 145 Ky. 788, 141 S. W. 403.

BLACK RESC.-24

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modified by an oral statement made by the vendor at the commencement of the sale, but the purchaser claimed that he had not heard this statement, or that, if he heard it, he understood it imperfectly. But this was held no defense to an action against him. The court said: "It would be difficult to maintain that a purchaser at a public sale, who so far complies with its terms as to take the property and pay for it, asking no express warranty, could be permitted to show that he did not inform himself of what were the actual terms of the sale, and derive advantage from the want of full and accurate information." Again, a municipal council, after allowing claims against the city with no effort to investigate them, cannot order an investigation and rescind their action and recover back the money paid, because of facts which they did not know, but which they might have ascertained by the exercise of reasonable diligence. It has also sometimes been ruled that a person cannot complain of his mistake, consisting in a want of knowledge of important circumstances, where he is shown to have had knowledge of facts arousing suspicion and suggesting an inquiry, which inquiry, if followed up, would have prevented the mistake.40 Thus, knowledge on the part of the vendee of land that a third person is in possession of the land purchased is sufficient to lead the vendee to a knowledge of the nature of the title and claim of such third person, and equity will deem that he has such knowledge. And a purchaser of land subject to an incumbrance, having notice of the existence of the incumbrance and of its general nature, is chargeable with knowledge of the contents, terms, and conditions thereof, and cannot avoid his purchase, no deceit having been practised, because he did not acquaint himself with the particulars. 48 Further, it is said that the rule that

44 Hadley v. Clinton County Importing Co., 13 Ohio St. 502, 82 Am. Dec. 454.

45 Advertiser & Tribune Co. v. Detroit, 43 Mich. 116, 5 N. W. 72. And see Wayne County v. Randall, 43 Mich. 137, 5 N. W. 75; McArthur v. Luce, 43 Mich. 435, 5 N. W. 451, 38 Am. Rep. 204.

46 Lovingston v. Short, 77 Ill. 587; Schimmelpfenning v. Brunk, 153 Iowa, 177, 132 N. W. 838. But see Daly v. Bernstein, 6 N. M. 380, 28 Pac. 764.

47 McRae v. McMinn, 17 Fla. 876.

48 Feltenstein v. Ernst, 49 Misc. Rep. 262, 97 N. Y. Supp. 376.

contracting parties must exercise ordinary prudence in conducting negotiations and executing instruments is not confined to cases where the rights of third persons have intervened, but prevails where the controversy is between the immediate parties." And the rule applies with special force where the complaining party had previously admitted that he had carefully examined the written contract and found it correct in all particulars.50

But in view of the necessary limitations of human intelligence, and of the fact that the most prudent and careful of men do at times make mistakes, some courts have thought that the rule above set forth was inequitably severe. Thus, the Supreme Court of Wisconsin has said: "Ignorance of facts must be excusable, that is, it must not arise from the intentional neglect of the party to investigate them. The rule which formerly prevailed, that if a party might, by the exercise of reasonable diligence, have ascertained the facts, he would not, on the ground of ignorance or mistake, be relieved from his contract, has of late been very much relaxed. The later cases establish the doctrine that, whenever there is a clear, bona fide mistake, ignorance, or forgetfulness of facts, the contract may on that account be avoided." 51 And the court in Florida declares that a mistake of fact in the execution of a deed is ground for cancellation, though unilateral and negligent, where the negligence is not a breach of legal duty, and the mistake is material and made under circumstances rendering it inequitable for the grantee to have the benefit thereof, though the parties were dealing at arms' length and on an equal footing and the grantee did not contribute to the mistake.52 And of course the rule is to be relaxed, or altogether set aside, where, al though one party was careless or negligent, the other prac tised fraud or misrepresentations upon him, or took ad

49 Robinson v. Glass, 94 Ind. 211.

50 Shrimpton Mfg. Co. v. Brin, 59 Tex. Civ. App. 352, 125 S. W. 942.

51 Hurd v. Hall, 12 Wis. 112.

52 Crosby v. Andrews, 61 Fla. 554, 55 South. 57, Ann. Cas. 1913A, 420.

53 Story v. Gammell, 68 Neb. 709, 94 N. W. 982; Beland v. An heuser-Busch Brewing Ass'n, 157 Mo. 593, 58 S. W. 1.

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vantage of his confidential relationship to him, or of his advanced age, weakness, or inexperience.55

56

§ 132. Mistake of Both Parties.-Where both the parties to a contract or conveyance have the same belief or understanding in regard to a material matter of fact affecting it, but both are mistaken in such belief or understanding, it is a case of "mutual" or "common" mistake; and where such a mutual mistake exists, no fraud being imputable to either party, it is good ground in equity for rescinding the agreement, even after it has been fully executed by both parties. Thus, if both the parties to a conveyance or a written contract suppose at the time of its execution that it fully expresses the agreement which they actually intended to make, but it is afterwards discovered that an important and material provision has been omitted, or, if inserted, expresses a different provision than that contemplated by the parties, there is a mutual mistake giving ground for rescission. So, where a valuable piece of personal property is placed in a storage warehouse, the warehouseman agreeing to return it on demand or else to pay the fixed value thereof, and it cannot be found when called for, and the warehouseman, believing it to have been stolen, gives a check in payment for it, but finds it the day after the check

54 Wood v. Wack, 31 Ind. App. 252, 67 N. E. 562.

55 Hutchinson v. Bambas, 249 Ill. 624, 94 N. E. 987.

56 Kansas City & M. Ry. Co. v. Smithson, 113 Ark. 305, 168 S. W. 555; Durflinger v. Baker, 149 Ind. 375, 49 N. E. 276; Bryan v. Masterson, 4 J. J. Marsh. (Ky.) 225; Wheaton Building & Lumber Co. v. City of Boston, 204 Mass. 218, 90 N. E. 598; Harrison v. Stowers, 1 Miss. (Walk.) 165; Castleman v. Castleman, 184 Mo. 432, 83 S. W. 757; Knapp v. Fowler, 30 Hun (N. Y.) 512; L. D. Garrett Co. v. Halsey, 38 Misc. Rep. 438, 77 N. Y. Supp. 989; Marmet Co. v. City of Cincinnati, 32 Ohio Cir. Ct. R. 555; Boehm v. Yanquell, 15 Ohio Cir. Ct. R. 454; Kinney v. Eckenberger, 74 Or. 442, 145 Pac. 665; Glassell v. Thomas, 3 Leigh (Va.) 113; Crislip v. Cain, 19 W. Va. 438; Jenkins v. Bradley, 104 Wis. 540, 80 N. W. 1025.

57 Home Sav. Ass'n v. Noblesville Monthly Meeting of Friends Church (Ind. App.) 64 N. E. 478; Beach v. Bellwood, 104 Va. 170, 51 S. E. 184. But see Root v. Snyder, 161 Mich. 200, 126 N. W. 206, holding that if deeds delivered by a grantor are not effective to carry out an oral agreement between the parties, which they supposed they were making effective, the deeds should be corrected, instead of being declared void.

is given, the settlement will be deemed to have been made under a mutual mistake of fact, and payment of the check may be stopped by the warehouseman.58 So a court of equity will grant relief against a mortgage executed to secure a debt for which the mortgagor's ancestor had been bound as surety, where both parties acted under the mistaken belief that the property was already under a lien for the debt, whereas in fact the debt was barred by limitation. So again, in an instructive case in the federal courts, complainant entered into a contract with the receiver for a railroad company, through the manager, to supply coal for the use of the company at stated prices for one year, with the option to the complainant to renew the contract for two years more. Within a few months, the railroad was sold to defendant, which continued its operation under the same manager without visible change, and during the remainder of the year complainant continued to deliver coal, which was received and settled for by defendant at the contract price, although coal had largely increased in price in consequence of widespread strikes. Herein both the parties acted under a mutual mistake of fact in supposing that such deliveries were made under the contract. At the end of the year, complainant elected to extend the contract for two years, but defendant refused. It was held that complainant was entitled to relief in equity on the ground of mistake, to have the settlements set aside, and to recover the difference between the contract price and the market price of the coal so delivered and received.60

§ 133. Mutual Ignorance of Material Facts.-Where both the parties to a contract entered into it in ignorance of a material fact, which would have prevented the making of the contract if the fact had been known, it is a case of mutual mistake justifying rescission. Thus, for instance, a

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58 State Sav. Bank v. Buhl, 129 Mich. 193, 88 N. W. 471, 56 L. R. A. 944.

59 Blakemore v. Blakemore, 19 Ky. Law Rep. 1619, 44 S. W. 96. 60 Sloss Iron & Steel Co. v. South Carolina & G. R. Co. (C. C.) 162 Fed. 542.

61 See the cases cited, infra, in this section. But note that in some states this rule is rejected by statute, as in Georgia, where it is pro