Case ID: va_43/html/0361-01.html
Source: Caselaw Access Project
Author: {"author": "CABELE, P.,", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

*Alexander & Co. v. Newton & als.
    July Term, 1845,
    Lewisburg-.
    (Absent Brooke and Baldwin, J.)
    Equity Jurisdiction-Deeds — Mistake of Scrivener — A mistake of the scrivener in drawing a deed, whether of law, or fact, will be corrected by a Court of Equity, even against bona fide creditors of the grantor.
    In the year 1834, Robert Steele was a partner in the mercantile firms of Steele & Davis of Augusta, of Hugh P. Young & Co. of Pocahontas, and of Steele, Marshall & Co. of Bath; and William C. Davis was also a partner in these firms. On the 8th of August 1834, Steele and Davis entered into a written agreement, whereby Steele purchased of Davis his interest in these firms; and hound himself to pay all the debts of the said partnerships, so as to exonerate Davis entirely from any liability on account thereof.
    In 1837, Steele had become very much involved, and many of the debts for which Davis was liable as a partner in the said mercantile firms, remained unpaid. Among these was a debt due to Alexander & Co. amounting to 6401 dollars 37 cents, for which Steele & Davis had executed their bond, after the agreement of August 1834, had been made. Early in the year 1837, Alexander & Co. forwarded this bond to Nicholas C. Kinney, with instructions that if Steele & Davis would pay one half in a short time, to receive it; but if they did not, to bring suit on it in whatever Court judgment could be first obtained.
    After various propositions had been suggested between Steele & Davis and Kinney, it was at length agreed between them that Steele should execute a deed conveying his property to John Newton in trust for the payment of his debts; and it was expressly agreed that in ^consideration that Alexander & Co. would not bring suit for their debt, the deed should provide for the payment thereof in preference to all others.
    The general scheme of the deed was, that the debts for which Davis was the sole security of Steele should be first paid; that those debts for which Davis was security jointly with others, should be next satisfied; and that all other debts of Steele, with a special exception, should be then provided for.
    In pursuance of the agreement between Steele & Davis and Kinney, the parties went together to the counsel who was to prepare the deed, and gave him instructions in accordance with that agreement; but it being believed at that time, that the property of Steele & Davis, was ample to pay all their liabilities, the counsel considered Davis the only party interested in the deed; and believing- that under its provisions Davis might direct the application of the trust fund, and would of course feel bound to give the preference of the first payment to Alexander & Co., drew the deed, placing Alexander & Co. in the same class with all other creditors for whose debts Davis was alone responsible.
    When the deed was executed, Kinney was not present; and did not see it until after it was admitted to record. When he did see it, he informed the counsel that it was not drawn in conformity with the understanding between him and Steele & Davis; and he was then advised to obtain from Davis an order to the trustee to pay the debt of ■Alexander & Co. out of the first proceeds of the trust fund. He accordingly applied to Davis for such an order, and obtained it; but the trustee, not thinking that the trust deed gave Davis the right to give preferences among the creditors of the same class, refused to be guided by it.
    In a short time after the execution of the trust deed by Steele, the trustee ascertained that there were various questions of controversy among the creditors; and that he would be subjected to great danger of loss if he undertook *to decide them; and he therefore filed his bill in the Circuit Superior Court of Daw and Chancery for the county of Augusta, in which he stated the difficulties in the way of his administration of the trust; and convening all the creditors before the Court, he asked that their various conflicting pretensions might be settled, and the trust fund distributed according to their respective rights.
    A number of -the creditors answered the bill, and among others Alexander & Có., who insisted that by the agreement made between their agent Kinney- and Steele & Davis, they were entitled to preference over all other creditors; that the deed was intended to be drawn so as to give them that preference, and was only not so drawn by the mistake of the scrivener. They, therefore, insisted that this mistake should be corrected, and that they should have the preference to which by the agreement they were entitled.
    In the progress of the cause various accounts of the trust fund were taken; and the cause coming on to be heard, the Court was of opinion, that the mistake in drawing the deed was a mistake of law, against which the Court could not relieve; and that, therefore, neither under the deed or the order of Davis on the trustee, were Alexander & Co. entitled to have preference over the other creditors of the first class in the deed; and the decree, was accordingly... Prom this decree Alexander & Co. obtained an appeal to this Court.
    The cause was argued in writing by C. & G. N. Johnson, for Alexander & Co. ; and by Stuart, and J. B. Baldwin, for the other creditors of the first class. And it was argued by Hugh W. Sheffey, Fultz and .Harrison, for other creditors claiming specific portions of the trust fund.
    C. & G. N. Johnson.
    We insist that the mistake or omission in the deed to express the true agreement of *the parties is one which the Court ought to correct or supply.
    There can be no doubt that the agreement made upon adequate consideration to convey certain property to secure a particular debt, is a valid contract, and one which may be specifically enforced. And if the debtor makes a deed which does not fulfil this object, whether the failure be from the wilful or accidental omission of the scrivener, or any other cause, the other party has still a right to demand performance of the actual agreement. And no one has a right to gainsay this but subsequent purchasers for valuable consideration without notice.
    Here there can be no doubt of the sufficiency of the consideration of the agreement made by Steele to execute a deed of trust upon the property in question, which should give preference to Alexander & Co. over all other creditors. Alexaner • & Co. were pressing for a judgment, and would have obtained one against both Steele and Davis, but for this agreement. The delay of suit at that critical time, and under the peculiar circumstances which existed, was a most valuable consideration. The agreement then to execute such'a deed as was promised was a valid one, and made upon sufficient consideration. That agreement itself gave therefore an equitable lien upon the property, before the deed of trust was actually executed.
    And then the deed which .was executed was drawn under instructions-to make such a deed as would give preference to the debt of the. appellants, over all other debts. It is submitted that the scrivener had no right to disobey that instruction. If he did so, it is a plain mistake which ought to be corrected.
    Under these circumstances, how can there be a doubt that the equity of the appellants to have the real agreement carried out is superior to all other claims? That agreement was the parent of this deed, under which all the creditors claim. And if by a mere mistake, or unauthorized *omission, the other creditors would get more than they were intended to have, what equity have they to retain such an advantage? On the contrary, it seems to us iniquitous to insist upon it.
    Stuart, and J. B. Baldwin.
    A claim amongst creditors to an unperfected priority can never be a proper subject for relief either at law or in equity, especially the latter; for in the absence of fraud or agreement, amongst., themselves, none can have any equity over the rest, and those who have the legal advantage must prevail.
    If any mistake in the preparation of the instrument could entitle Alexander & Co. to the relief which they seek, the mistake, if any, disclosed by the evidence, is not of that character. It was not a mistake of fact, but of law. The counsel who drew the instrument advised that it was unnecessary to insert any provision in the deed in favour of their priority, inasmuch as Davis, whose indemnity was the principal object, would have the power to give it himself. This was distinctly understood at the time of the execution of the instrument, though it is obvious if that opinion had been correct, that the priority of Alexander & Co. would then have depended uoon the good will or good faith of Davis. Thus the intention, so far from being to give them priority by a stipulation to that effect in the deed, was directly the reverse. The priority was merely expected as the legal result of the instrument, if Davis should will to exercise his supposed power. Now, it is well settled that relief cannot be granted on the ground of a mistake in law. 2 Rob. Prac. 34-5-6; Hunt v. Rousmanier’s adm’r, 1 Peters’ R. 1; 1 Story’s Eq. 124-127-8, &c. And in no case can relief be given when there is a purchaser for a valuable consideration without notice. Warner v. Watkins, 2 Atk. R. 4; 1 Story’s Eq. 154, 178. It is in principle wholly immaterial whether the mistake ^consists in adopting the wrong kind of instrument, as in Hunt v. Rousmanier’s adm’r, or in selecting or relying upon the wrong kind of stipulation. There are, it is true, cases of mistake in law on the part of the draftsman, undiscovered by the parties, and even of the parties themselves, which a Court of Equity will correct. But we take it they are cases of mistake, not in legal deduction or inference, but, if we may so express it, as to legal existence. Where there is a plain and palpable blunder as to a matter of law, about which there can be no possible doubt or controversy, for example the actual existence of a statute or canon of descent, it is a mistake of fact as to what the law is, not as to legal conclusions or consequences: and re-lievable upon the same principle as mistakes in regard to matters in pais.
    There is no pretence of a mistake as to a matter of fact, unless it be as to the sufficiency of the fund to pay off all the creditors of the first class. But that was a mistake not in the deed itself, not in the reduction of the contract to writing, not in what was intended, but in the expectations of those concerned in framing the deed from its actual provisions as we find them. Those provisions were known and intended at the consummation of the deed, and no speculations or evidence in relation to the motives for the insertion of those provisions or the omission of others can have any influence upon the question.
    It is true that the intention of a debtor to give priority is the source from which it springs; and if Alexander & Co. had been the only creditors contemplated by the deed, there would have been some force in the idea that the intention ought not to be defeated in the attempt to carry it out. But even in that case, upon the authority of Hunt v. Rousmanier’s adm’r, no relief would be granted even against the grantor or his representatives, because the intention of the grantor to give priority was restricted to specific means well understood *and clearly indicated, but which failed from
    a misapprehension of the legal or financial effect, or both. In this case, however, Alexander & Co. were not the only creditors contemplated. The specific lien granted embraced all the creditors of the debtor, with very few exceptions; and the strongest possible equity of Alexander & Co. against the grantor, ¿whether founded on accident, mistake or fraud, could not affect the other creditors provided for by the instrument. This would be perfectly obvious, if they claimed under a subsequent incumbrance, (the first being from any cause defective,) though with full notice of the accident, mistake or fraud; and the principle is equally applicable where they claim under the same instrument, which is defective as to some of the creditors, but perfect as to the rest; and it is wholly immaterial whether the defect be intrinsic or extrinsic. In neither case would equity disturb any of them in the advantage of equality obtained from the grantor; unless an equity could be shewn arising out of fraud or agreement amongst the creditors themselves. The unity of the trust is nothing in the absence of equality and concert amongst the cestuis que trust.
    We conclude, therefore, with entire confidence, that equality amongst creditors is not relievable in equity against those to whom no misconduct is imputable; and, whether this proposition should be thought too broad or not, that no mistake has been shewn in this case, such as would justify the interposition of the Court.
    
      
      Ji:ix;k Baldwin had been counsel in the cause.
    
    
      
      Equity Jurisdiction — Deeds—Mistake of Scrivener.— A court of equity will correct mistakes of the scrivener in drawing a deed, where he has not drawn it in accordance with the clearly-established directions and intentions of the parties. For this proposition the principal case is cited in Pennybacker v. Laidely, 38 W. Va. 024, 11 S. E. Rep. 45; Deitz v. Ins. Co., 33 W. Va. 526, 11 S. E. Rep. 56; Lough v. Michael, 37 W. Va. 679,17 S. E. Rep. 182.
      In Troll v. Carter, 15 W. Va. 567, it is said: “A court of equity will correct the mistakes of a scrivener in drawing a deed.” See also, Henley v. Menefee, 10 W. Va. 771.
      In Peyton v. Harman, 22 Gratt. 643, the words “to be paid” having been accidentally omitted by the penman, were supplied by a court of law.
      Same — Same— Cancellation of — Erroneous Description. — In Baxter v. Tanner, 35 W. Va. 60,12 S. E. Rep. 1095, the principal case, and Allen v. Yeater, 17 W. Va. 128; Pennybacker v. Laidley, 33 W. Va. 624, 11 S. E. Rep. 39, are cited for the proposition that equity, on the ground of mistake, will cancel a deed which, by reason of an erroneous description incorporated therein by mistake, conveys a tract of land not intended to be conveyed. See also, the principal case cited in Pusey v. Gardner, 21 W. Va. 476.
      Parol Evidence — intention of Grantor. — In Mauzy v. Sellars, 26 Gratt. 648. it is said: “In Alexandria n. Newton, 2 Gratt. 266, it was held that parol evidence was admissible, to show that it was the intention of the grantor, in a deed of trust, that the deed should be so drawn as to secure a preference in the payment of the debts to particular creditors, and the omission to insert such a provision proceeded from the mere mistake of the draftsman. The mistake was accordingly corrected against bona fide creditors claiming an equal participation in the trust subject.” See also, foot-note to Mauzy v. Sellars, 26 Gratt. 641.
      The court, in Campbell v. Fetterman, 20 W. Va. 410, said: “It is not questioned that parol evidence, in the absence of fraud or mistake, will not be received to engraft upon or incorporate with a valid written contract an incident occurring contemporaneously therewith and inconsistent with its terms. Lockwood v. Holliday, 16 W. Va. 651. This rule applies in every case where the question is, what is the agreement. But collateral circumstances attending an agreement may be proved by parol evidence. Ratcliffe v. Allison, 3 Rand. 537; Alexander v. Newton, 2 Gratt. 266; Vance v. Snyder, 6 W. Va. 24.”
      Equitable Mortgages. — See principal case cited in Atkinson v. Miller, 34 W. Va. 115,11 S. E. Rep. 1008, and foot-note to Ott v. King, 8 Gratt. 224.
      It was said in Atkinson v. Miller, 34 W. Va. 115, 11 S. E. Rep. 1008, that the decision in Pratt v. Clemens, 4 W. Va. 443, was based on the opinion in the case of White v. Deman, 16 Ohio 59, holding that “an instrument, executed as a mortgage, with but one subscribing witness, cannot be so reformed in equity as to defeat a subsequent judgment lien.” It was said further by the court: “The case of Alexander v. Newton, 2 Gratt. 266, is contrary to this.”
    
   CABELE, P.,

delivered the opinion of the Court.

The Court is of opinion, that it is clearly proved that it was agreed between the appellants Alexander & Co. and the appellee Robert Steele, the grantor in the deed of trust to John Newton, of the 3d of July 1837, that the said deed should be so drawn as to secure to the appellants the payment of the debt due to them by the said Steele before and in preference to all other debts intended *to be secured by the said deed — that it was the intention of the said Steele that the said deed should be so drawn as to secure that preference, and that. the omission so to draw it, proceeded from the mere mistake of the draftsman thereof. The Court is therefore of opinion, that the decree'is erroneous in not directing the payment of the said debt to the appellants, before and in preference to all others. So much of the said decree as is thus declared to be erroneous is reversed with costs, to be paid out of the trust fund, and the residue thereof is affirmed; and the cause is remanded to be proceeded in to a final decree according to the principles of this opinion and decree.