#### Grant Marble Company, Respondent, vs. Abbot, Appellant.

*December*7, *1909*

April *5, 1910.*

*Contracts: Reformation: Mistake: Fraud: Burden of proof: Rescission: Negligence: Building contract: Promise by owner to pay loss sustained: Appeal: Reversal: Further proceedings: Equity.*

1. Where the minds of the parties met upon the terms of a contract executed by them, or where, in the absence of fraud, a mistake was that of one party only, the contract will not he reformed.

2. One asking reformation of a contract must show that the minds of the parties met upon the contract which he seeks to establish.

3. If by the fraud of one party the real contract is not expressed in the writing, and the other party by mistake receives such writing as the real contract, reformation may be had.

4. The fact that the price for which plaintiff, through its president, contracted to do certain marble work in six stories of defendant’s building was, by mistake of such president, based upon estimates which had been made by plaintiff’s architect for work in five stories only, did not entitle plaintiff to reformation of the contract, where both parties understood and agreed to the terms of the contract as made, and intended no other, and the mistake was not induced by defendant nor known to him at the time.

5. A court of equity will not rescind a contract upon which the . minds of the parties met, merely because one of them, without the knowledge of the other, was laboring under a mistake.

6. Where plaintiff seeks to reform or rescind a contract because of his own mistake, of which he claims defendant had knowledge, the burden is upon him to establish such knowledge by clear and satisfactory evidence.

7. One who seeks to rescind must act promptly upon discovery of the facts which he claims entitle him to rescission, and must take no steps in affirmance of the contract. Thus, a contract will not be rescinded for mistake where the party asking such relief completed the contract and afterwards brought an action to reform it.

8. One cannot rescind a contract for mistake due to his own want of ordinary care.

9. Where the owner of a building, upon being informed by a contractor for work therein that, through a mistake in basing his *280figures upon estimates for five instead of for six stories, tlie price for tlie work had been fixed too low, replied that he did not wish the contractor to suffer a loss on the contract, directed Mm to complete the work, and said that a fair settlement would be made, the contractor could not recover upon a *quantum, ■meruit,*but could recover the amount of any loss actually sustained by him on the contract, *i. e.*any sum in excess of the contract price necessarily expended in doing the work.

10. In an action to reform a building contract and to recover the reasonable value of work alleged to have been included in the contract by mistake, the supreme court, upon reversing a judgment for plaintiff upon the ground that he was not entitled to such relief, might properly direct that the action be dismissed upon the merits; but, a later promise by defendant to pay any loss sustained by plaintiff on the *contract*having been shown, the plaintiff, under the -liberal rules of practice in equity, is given the right to elect, upon payment of all costs down to the date of such election, to take further evidence as to whether there was a loss on the contract, for the purpose of ending the litigation.

Appeal from a judgment of tlie circuit court for Milwaukee county: Laweeuce W. Halsey, Circuit Judge.

*Reversed.*

The complaint in this action alleges the making of a contract between plaintiff and defendant by the terms of which plaintiff agreed to do certain marble work in the six stories of the defendant’s building known as the Colby & Abbot building in the city of Milwaukee, Wisconsin, for the sum of $24,150, and that through mistake on the part of one Grant, president of the plaintiff, he included in such contract work and material for only five stories of such building, while the contract covered the six stories. It is further alleged that the agent of defendant either fraudulently concealed the fact or did not know or appreciate that the additional work was included in the contract; that the original specifications for the job included only five stories, while the specifications upon which the contract was made included six stories, and that Grant, president of plaintiff, did not know that the *281original specifications, calculations, and bid based tbereon bad not included any work for tbe sixth story; tbat after plaintiff discovered the mistake it, through its agent, took the matter up with defendant’s manager, who ordered the work to be done on the sixth story and promised on behalf of defendant to make it right. The plaintiff finished the sixth story in marble the same as the story below, which was reasonably worth $2,882.05, which defendant refused to pay, claiming that the item was covered by the contract between the parties. The prayer is for reformation of the specifications and contract on which they are based so as to confine the marble work to five stories, and, further, that defendant pay for the work and material in the sixth story what the same was reasonably worth, and for general relief.

Defendant moved to make the complaint more definite and certain by separately stating the two causes of action and by electing whether plaintiff stands on its action to reform the contract referred to in the complaint and recover upon the contract as reformed for the work and material alleged not covered thereby, or upon the cause of action attempted to be Stated upon alleged promise by defendant to pay in addition to the contract price, and that part of the complaint be stricken out, which motion was denied.

The defendant answered, and the court found substantially: That in October, 1905, defendant, through his architect, called upon plaintiff to make estimates and a bid upon marble wainscoting in the corridors of said building, and at said time there were corridors partitioned off in the first to the fifth stories, inclusive; that the outer walls of the sixth story were in course of construction, but the interior had no existence; that plaintiff sent one Martin, an employee, to said architect for the purpose of receiving instructions and making measurements, and that the architect pointed out to Martin the character of the wainscoting required in each of the five stories and asked him to make measurements of the *282same and that the plaintiff submit a bid therefor, at the same-time informing him that the manner of finishing the sixth story, then in course of construction, and the work required therein had not been determined; that said architect also submitted to said Martin certain written specifications for such wainscoting, calling for the same for the first, second, third, fourth, and fifth stories only; that said Martin thereupon made measurements of all of said corridors in which said work was to be done and submitted same to the plaintiff; that plaintiff thereupon, on October 27, 1905, submitted to said architect, through J. E. Heimerl, its agent charged with making estimates and bids in its behalf, a bid offering to do said marble work for $20,050; that thereafter, and prior to the 11th day of November, 1905, said plaintiff was informed by said architect that additional marble work was required for said building of which items were given plaintiff ; that said plaintiff was also asked to submit a bid for putting marble floors in parts of the first story of said building and in the corridors of the second, third, fourth, and fifth stories thereof; that plaintiff prepared a bid thereon in writing, dated November 11, 1905, and caused the same to be sent to the office of said architect, but the evidence does not convince the court that said'architect received it; that prior to the 29th day of October, 1905, said architect had prepared specifications calling for marble wainscoting, also specifications for the floors, calling for tile flooring, and had received bids on behalf of said specifications, said floor specifications being confined to the first, second, third, fourth, and fifth stories of said building; that on the 29th day of October, 1905, it was concluded at a conference between defendant, his secretary at Milwaukee, and said architect to finish all corridors in said building, including corridors thereafter to be laid out in the sixth story, with marble floors and marble wainscoting; that no notice of such change of plan or enlargement of the work was ever given to plaintiff or any agent of *283plaintiff nor to any other contractor; that the specifications theretofore made by said architect .remained on exhibit in his office and were not changed or amended, nor was any specification calling for marble floors or marble wainscoting in the sixth story ever prepared by said architect, bnt long after said date, and on or shortly before the 14th of November, 1905, a copy of the aforesaid specifications was delivered to said Heimerl, representing the *Grant Marble Company;*that said *Grant Marble Company,*through said Heimerl, made its estimate of the cost and value of doing said work according to the information and the specifications so furnished by said architect; that the final instructions of said architect included some other items of work and said Heimerl figured up the total cost and value thereof at $27,821; that on the 14th of November, 1905, said architect called up W. J. Grant, president of plaintiff, who was then in Chicago, by telephone, asking him to come to his office with the view of a contract on the building of said defendant; that said Grant, in pursuance of such message, came to Milwaukee on said day and proceeded directly to the office of said architect; that said Grant had taken no personal part in examining the specifications or the extent of work required thereby or by instructions of said architect, but the same had been wholly attended to by said Heimerl; that said Grant met said Heimerl at the office of said architect and was informed by him that the total of said work amounted to the aforesaid sum of $27,821, and that a reduction from said figures was desired; that said Grant, said Heimerl, and said architect thereupon proceeded to the office of Miss Bright, secretary of said defendant, in the same building, and said Grant then and there informed said architect and Miss Bright in the presence of said Heimerl that the bid of the *Grant Marble Company*for the work in question would be said sum of $27,821; that said architect and said secretary asked for a reduction of the amount, and said Grant thereupon suggested the change of *284material wbicb would somewhat cheapen 'the cost, and also made concessions of price, reducing said bid to $24,150, which was acceptable to said secretary and architect, subject to the approval of the defendant, which was afterwards given; that in making said final bid said Grant was not informed of any work required in any way adding to or extending the work which had theretofore been exhibited to said Heimerl by said specifications and the instructions of said architect; that said Grant thereupon offered to put the specifications for the contract in proper shape; that he drew the same, and, knowing that said building was being enlarged to six stories and supposing that the floors and wainscoting in the corridors of each of such stories was embraced in the work submitted to and estimated by said Heimerl, he drew the same covering such work in six stories of said building; that said Grant was at that time in a state of mental distress by reason of the critical illness, which shortly afterwards terminated in death, of his son, by reason whereof he was less careful in examining the premises than he otherwise would have been; that when he submitted said specifications to said architect and Miss Bright no information was given to him of the extent of the work which had been submitted to said Heimerl as aforesaid; that in the month of January, 1906, and before any work had been done on said sixth floor, said Heimerl discovered that said specifications called for marble floors and marble wainscoting in the sixth story of said building and he at •once called the attention of said Grant to the mistake, and said Grant thereupon called upon the secretary of said defendant and showed her the specifications and the schedules of the *Grant Marble Company*giving the itemized figures of the bid, and that the same related to five stories only in accordance with said specifications; that said secretary said ■she would write to the defendant about it, and a few days later read to said Grant a portion of a letter received by her from *285defendant dated January 22, 1906, of wbicb the following is a copy:

“Replying to yours of tbe 20th about Mr. Grant, I appreciate what you say and I do not want him to make a loss on his contract. You can tell him that I will personally take up the matter with him when the work is all finished and see what is really fair. I do not propose to have him make a loss for a mistake, especially under the circumstances; but we cannot adjust the matter now. You are quite right in saying that he can rely on a 'thoroughly fair settlement, when it is all over and we can see just where he stands. Meantime, let him go ahead, and do everything just as well as he can, and I do not think he will be sorry for it.”

That, relying upon the promises contained in said letter,, said *Grant Marble Company*completed all the marble work desired for said building, including the laying of marble floors and putting in marble wainscoting in the sixth story thereof; that there was no fraudulent intent on the part of defendant or his agents, but that said mistake on the part of said Grant was induced by the acts and omissions of the defendant’s agents hereinbefore stated; that it appears by testimony given on behalf of plaintiff that the total work done and material furnished amounted to and was reasonably worth $28,493.73, including the floors and wainscoting in the sixth story, which at the contract rates amounts to and is reasonably worth the sum of $2,882.05 ; that the defendant has paid on account thereof $25,612.18, leaving a balance of $2,881.55; that all of said work was completed in 1906; that on or about the 23d day of February, 1907, the plaintiff rendered a bill to defendant for said sixth-story work, amounting to said balance of $2,881.55, which defendant refused to pay, and insisted that all of said work was covered by said contract and that he was under no obligation to pay therefor.

The court concluded that said plaintiff is entitled to judgment rescinding the contract and for judgment against the *286defendant far tbe reasonable value of tbe entire work done, not exceeding, however, tbe rates of said contract less tbe amount of payments made; and, if tbe defendant so desires, the court will receive further evidence upon tbe subject of reasonable value of said work and material not exceeding the rates of said contract, or, if defendant desires, will cause said question to be determined by a jury. Tbe defendant is required to serve and file written notice to this effect, if be so desires, within five days after service of a copy of these findings, and, unless defendant files such notice within such time, judgment will be rendered for plaintiff rescinding tbe contract and for the sum of $2,881.55, with interest from February 23, 1907, and tbe costs of this action.

Judgment was entered for plaintiff in accordance with tbe conclusions of law, from which this appeal was taken.

Eor tbe appellant there were briefs signed by *Edwin H. Abbot, Jr.,*of counsel *(Howard Moms*and *Charles M. Morris,*attorneys), and oral argument by *Mr. Abbot.*

Eor tbe respondent there was a bz*ief by *WmJcler, Flanders, Bottwn & Fawsett,*and oral argument by *F. C. Winkler.*

Tbe following opinion was filed January 11, 1910:

KeewiN, J.

While there axe allegations in tbe complaint pertinent to an action for rescission, from tbe whole complaint it is manifest that tbe idea of tbe pleader was to state a cause of action for reformation. But tbe complaint also alleges a promise, either express or implied, on tbe part of defendant to pay for work in tbe sixth story what tbe same was reasonably worth. If it were necessary to pass upon tbe action of tbe court below in overruling tbe motion of defendant to make tbe complaint more definite and certain, we might find it difficult to sustain such ruling. But we do not pass upon tbe question, since it appears plain that tbe judgment below must be reversed upon the merits, and therefore technical errors need not be treated. It is entirely clear *287from the findings and the evidence that no case for reformation was made. The contract attacked either by way of reformation or rescission is that made for the work on the ■sis stories for the agreed price of $24,150. The minds of the parties met upon this contract, hence there is no ground for reformation. There was no mutual mistake. The parties to the contract made the contract they intended to make. Even if a mistake were made, it is established that it was the mistake of Mr. Grant, president of plaintiff; hence was not mutual. To allow reformation in this case would be to justify the court in making a contract for the parties which they themselves did not make. This the court cannot do. The plaintiff must show that the minds of the parties met upon the contract which it seeks to establish. *Lake v. Meacham, 13*Wis. 355; *Ledyard v. Hartford F. Ins. Co.*24 Wis. 496; *Petesch v. Hambach,*48 Wis. 443, 4 N. W. 565; *Braun v. Wis. R. Co.*92 Wis. 245, 66 N. W. 196; *Kruse v. Koelzer,*124 Wis. 536, 102 N. W. 1072; *Auer v.*Mathews, 129 Wis. 143, 108 N. W. 45. The court below, however, did not reform the contract, but awarded judgment to the plaintiff for the reasonable value of the work done not exceeding contract rates, less payments. Counsel for respondent argues that a contract may be reformed where there is mistake on one part and fraud on the other, and cites on this point *James v. Cut*ler, 54 Wis. 172, 10 N. W. 147. But the doctrine of that case is not out of harmony with other cases on the subject in this court It recognizes the universal rule that there must be a contract upon which the minds of the contracting parties met, which is not expressed in the writing sought to be reformed, the purpose of the reformation action being to conform the written contract to the real contract made by the parties. And in case a fraud is practiced by one party by which the real contract is not reduced to writing and the other party by mistake receives such writing as the real contract, equity will lend its aid to the party thus defrauded. *288In *James v. Cutler,*supra, there was an agreement to convey land, and it appeared that by mistake of both parties, or by the fraud of the grantor and mistake of the grantee, all the' land agreed to be conveyed was not included in the deed, and it was held that equity would reform. But here no case was made for reformation for two reasons: Eirst, no contract was made except that reduced to writing; and second, there was no fraud on the part of the defendant The court below found that there was no fraudulent intent on the part of defendant, and could not have found otherwise on the evidence. But the court further found that the mistake on the part of Grant, president of the plaintiff, was induced by the acts and omissions of the defendant’s agents, and it is upon this finding that the plaintiff predicates fraud. Just what acts and omissions of defendant’s agents induced the contract is not specified in the finding. Erom the argument it is obvious that the contention is that because the agents of defendant knew that the architect of plaintiff first made a bid on five stories and that the plaintiff adopted five-story figures on a six-story contract, there was a mistake of fact sufficient tO' avoid the contract, or mistake on the part of plaintiff and fraud on the part of defendant entitling plaintiff to reformation. The proof shows clearly that Grant, president of plaintiff, made the contract with full knowledge that it covered six stories of the building, and signed it with such knowledge. The defendant also signed it so understanding it. No other or different contract was intended to be made by the parties. But counsel for plaintiff claims that Grant made a mistake in applying five-story figures to a six-story contract. If so, such mistake cannot be charged to defendant, but must rest upon the party whose negligence caused it. All the facts were within reach of Grant, and he had but to open his eyes and see them. His own architect, Heimerl,. who had full knowledge of the facts, was within call, and could have been consulted upon the subject if Grant had de*289sired. But be took it upon bimself to figure tbe six-story contract and make tbe figures, and tbe contract so made was signed and agreed to by both parties. There is no merit whatever in tbe claim that tbe acts and omissions of the agents of defendant were of such a character as to mislead Grant. There is no evidence that tbe agents of defendant were conscious of Grant’s alleged mistake, and no reason why they should have been. They knew that tbe architect of plaintiff, with whom Grant was in communication, bad full knowledge of tbe facts, and bad a right to assume that Grant was fully informed. We deem further discussion of the point unnecessary. It is very clear that no case for reformation of tbe contract was made. *Kruse v. Koelzer,*124 Wis. 536, 102 N. W. 1072.

Tbe court below did not find that the plaintiff was entitled to reformation, but rescinded tbe contract. It is also clear that tbe court was in error in rescinding tbe contract. Even if steps bad been seasonably taken to rescind, there is no evidence in tbe record which would warrant rescission. We have seen that there was no mutual mistake and that tbe minds of tbe parties met upon tbe contract, and it does not appear that any agent of tbe defendant knew that Grant or any agent of tbe plaintiff was laboring under a mistake. Under such circumstances a court of equity will not rescind. *Johnson v. Parker,*34 Wis. 596; *J. A. Coates & Sons v. Buck,*93 Wis. 128, 67 N. W. 23; *Brillion L. Co. v. Barnard,*131 Wis. 284, 111 N. W. 483. Tbe burden of proof was upon tbe plaintiff to prove by ■ clear and satisfactory evidence that tbe defendant or bis agents knew of Mr. Grant’s mistake. *Bowe v. Gage,*127 Wis. 245, 106 N. W. 1074; *Lavassar v. Washburne,*50 Wis. 200, 6 N. W. 516; *Shaw v. Gilbert,*111 Wis. 165, 86 N. W. 188; *Deering v. Hoeft,*111 Wis. 339, 87 N. W. 298; *Russell v. Scofield,*134 Wis. 21, 113 N. W. 1094; *Parker v. Hull,*71 Wis. 368, 37 N. W. 351; *Glocke v. Glocke,*113 Wis. 303, 89 N. W. 118; *Braun**290*v. Wis. R. Co.*92 Wis. 245, 66 N. W. 196; *Blake O. H. Co. v. Home Ins. Co.*73 Wis. 667, 41 N. W. 968; *Seeman v. Biemann,*108 Wis. 365, 84 N. W. 490. Nor is there any finding of knowledge on the part of defendant of Grant’s alleged mistake, and there is a finding that there was no fraudulent intent on the part of defendant. Moreover, if the plaintiff ever had a right to rescind, it failed to seasonably exercise such right, but proceeded to complete the contract and brought an action to reform. One who seeks to rescind must act promptly upon discovery of the facts which he claims entitle him to rescission and take no steps in affirmance of the contract. *Booth v. Ryan,*31 Wis. 45; *Bostwick v. Mut. L. Ins. Co.*116 Wis. 392, 89 N. W. 538, 92 N. W. 246; *Pfeiffer v. Marshall,*136 Wis. 51, 116 N. W. 871. And where a mistake occurs through a party’s own want of ordinary care by reason of which he sustains loss, he cannot rescind. *Standard Mfg. Co. v. Slot,*121 Wis. 14, 98 N. W. 923; *Warner v. Benjamin,*89 Wis. 290, 62 N. W. 179; *Kaiser v. Nummerdor,*120 Wis. 234, 97 N. W. 932; *Mamlock v. Fairbanks,*46 Wis. 415, 1 N. W. 167; *Farr v. Peterson,*91 Wis. 182, 64 N. W. 863; *Van Beck v. Milbrath,*118 Wis. 42, 94 N. W. 657; *Metcalf v. Mut. F. Ins. Co.*132 Wis. 67, 112 N. W. 22. It follows under the repeated decisions of this court upon the established facts that the plaintiff was not entitled to a rescission.

But it is further argued by counsel for respondent that by force of certain communications between Grant, president of plaintiff, and the agent of defendant, a new promise was made to pay for the sixth-story work. This contention is predicated upon the letter written by defendant to his agent set out in the statement of facts. Afterwards, in reply to a. communication by plaintiff asking if it could draw for money, defendant replied positively that it could not, and that he was under no obligation to pay anything above the contract price and that he owed nothing legally, and that whatever he *291might do was purely a gratuity. The letter above referred to was written by defendant in reply to a letter from Miss Bright, secretary of defendant, in which she stated that Grant claimed the alleged mistake, if not corrected, would cause the plaintiff a loss of $3,000. The case was tried on the theory of recovery on *quantum, meruit*and not for amount of loss sustained. In fact, it is claimed by appellant that the evidence shows a profit of $612, but it is manifest that the question of whether there was a loss was not tried; the theory of the plaintiff being that it was entitled to recover the reasonable value of the work in the sixth story, not exceeding contract rates. The defendant contends that he is not liable for any sum above the contract price on any theory, upon the ground that the correspondence did not amount to a promise and that his agent had no authority to bind him in that regard. We are inclined to the opinion, and so hold,, that the plaintiff is entitled to recover whatever loss it actually sustained upon the contract made in writing, but beyond that plaintiff has made no case entitling it to recover anything. Of course, plaintiff did not prosecute the case, as we have seen, upon the theory of recovery for the loss sustained, and therefore should pay the costs incurred. Upon the record and under the rules of pleading and procedure, this court would doubtless be justified in ordering dismissal of the action on the merits. But, under the liberal rules of practice in equity cases, we think the court is warranted in holding the case for the purpose of ascertaining the amount of loss, if any, that has been sustained by plaintiff on the contract and thus end the litigation in this suit. *Harrigan v. Gilchrist,*121 Wis. 127, 99 N. W. 909; *Fleming v. Ellison,*124 Wis. 36, 102 N. W. 398; *Franey v. Warner,*96 Wis. 222, 71 N. W. 8*1; Combs v. Scott,*76 Wis. 662, 45 N. W. 532; *Cole v. Getzinger,*96 Wis. 559, 71 N. W. 75; *Gates v. Paul,*117 Wis. 170, 94 N. W. 55; *Stevens v. Coates,*101 Wis. 569, 78 N. W. 180. We shall therefore order the case dismissed *292unless tbe plaintiff elects to take further evidence on th© question of whether it did in fact sustain a loss on the contract and the amount thereof, and pay all costs incurred up to the time of filing such election. By the word “loss,” as above used, is not meant loss of profits, but any sum in excess of the contract price necessarily expended in doing the job.

*By the Court.*— The judgment is reversed, and the cause remanded to the court below with directions to dismiss the complaint unless plaintiff shall, within twenty days from the filing of the *remittitur,*elect to take further evidence on the issue as to whether or not there was a loss on the contract,, and, if so, the amount thereof, and pay all costs up to the time of filing such election, and, in case .of failure so to do,, the action be dismissed upon the merits, with coste.

Upon a motion for a rehearing there was a brief for the respondent signed by *Winlder, Flanders, Bottwm &*Fawsett, attorneys, and *F. C. Winlder*and *Charles F. Fawsett, of*counsel; and for the appellant a brief by *Fronde M. Hoyt.*

The motion was denied April 5, 1910.