Case Name: Railroad Co. v. Steinfeld
Court: Supreme Court of Ohio
Jurisdiction: Ohio
Decision Date: 1884-01
Citations: 42 Ohio St. 449
Docket Number: 
Parties: Railroad Co. v. Steinfeld.
Judges: 
Reporter: Ohio State Reports, New Service
Volume: 42
Pages: 449–458

Head Matter:
Railroad Co. v. Steinfeld.
1. In an action to reform a contract and for relief thereunder, after the same is reformed, the court may specifically enforce the same when that may he done, or may give adequate compensation for its nonperformance.
2. On trial of an action to reform a written substituted contract for fraud or mistake, and to enforce the same when reformed, or if the same could not he reformed then to rescind the written contract, there may he given in evidence the original writing made by the same parties upon the subject matter in dispute, and also the subsequent acts done or procured to be done by tbe party charged with the fraud and which tend to prove the fraud or mistake.
3. On such a trial the court may find that the written contract in dispute does not contain the true agreement of the parties, but if the party complaining neither pays back nor offers to return the money received by him under the contract, it is error to order the contract to be set aside and held for naught.
ERROR to the District Court of Marion county.
Steinfeld is the'owner of about 170 acres of land which is divided by the Columbus & Toledo railroad into two parts, the one on the east side, where the house and buildings are situated, being about 75 acres, and the one on the west side being about 90 acres — the balance of the farm being taken by the right of way.
' These two parts of the farm are cut off from each other by an embankment from 15 to 23 feet high and a cut from 12 to 15 feet deep.
On the 9th day of April, 1874, Steinfield and wife made and handed to the railroad company a grant of right of way to the railroad company for $1,200, on certain conditions, among which were the following :
“ And provided, further, that the company guarantee us against loss or injury, owing to the construction of the road.
“And provided, further, that the company build and maintain two good crossings, also one passage under said road for stock, if the embankment of the road will admit.”
No money was paid, but the company retained the conveyance until September 29, 1875, when the agreement was changed and a new grant of right of way was made by Stein-field and wife. In this grant the consideration money to be paid was reduced to $850, and, in other respects was like the other grant, except, in lieu of the above provisions,, there was the following:
“And provided, further, that the said company build and maintain a good crossing; also one passage under said road for stock.”
Steinfeld claims that the last above provision did not truly state bis agreement with the company in this respect; but that the agreement was, that, in consideration of the rebate of $350, and in place of one of the crossings mentioned in the first grant, the company agreed to make .and construct for him under the railroad, at a point where the railroad runs on an embankment of about 23 feet in height, a passage way of the width of 16 feet and of the height of 15 feet, sufficient in all respects to allow and give full, free and safe access under the railroad to his lands on the west side thereof, so constructed that he might pass under the railroad through said passage way with team and wagon with loads of grain and hay, and to be of such magnitude that a ton of hay upon a wagon could be drawn through the passage way.
That one Graham, who acted for the company, prepared the conveyance, and, before the same was signed, read the same to Steinfeld and wife as though the above agreement was therein ; and, believing the grant to be as he understood it, he took the $850 and permitted the company to take possession of the land.
The company claims there is no mistake or fraud, and refuse to make such a' passage way as Steinfeld demands, but after the suit was brought it made a small passage way for cattle up on the side of the hill.
Steinfeld prayed that the contract might be corrected so as to conform to the agreement as he stated it, and that the court would decree the specific performance of the contract so corrected ; or that the court would rescind the written contract, and for other relief. On the trial the company objected to the original writing being received in evidence. Also to testimony showing what the company did in building the passage way as Steinfeld claimed the company agreed to do; but objections were overruled.
' Steinfeld obtained judgment in the court of common pleas, and the case was appealed to the district court; and, on trial there, the court found the following facts and rendered judgment as follows:
“ This day came the parties and this cause came on to be heard upon the pleadings and testimony and was argued by counsel; and the court being fully advised in the premises, do find that the agreement in writing attached to the ammended petition of the plaintiff is not the valid agreement of the parties; that the same was executed and delivered by the said plaintiff to the said defendant, in ignorance of its contents and by mistake, and the court do further find that through ignorance of the contents of said contract and by mistake, the plaintiff surrendered to said defendant the possession of the real estate now used and occupied by said defendant as and for the right of way for its railroad, through and over the farm of the plaintiff in the said amended petition described ; and that the plaintiff through ignorance of the contents of said contract and by mistake received of said defendant and receipted for the said sum of eight hundred and fifty dollars.
Wherefore it is considered by the court that no contract exists nor has existed between said plaintiff and defendant concerning said right of way, the compensation therefor and the damages which may have resulted to the plaintiff by reason of the construction and use of said defendant’s railroad through and over said plaintiff’s said land. .
“And it is adjudged and "decreed that the written instrument purporting to be the contract of the plaintiff, a copy of which is attached to said amended petition, be, and the same hereby is, set aside and held for naught.”
A motion for a new trial was overruled, and there was filed a bill of exceptions containing all the evidence.
The railroad company now seek to reverse the judgment of the district court.
James A. Wilcox and McNeal & Wolford, for plaintiff in error:
As to fraud: The rule of law is that the fraud must be clearly and distinctly, proved. Kerr on Fraud, 382, 383; 15 Ohio, 600, 604, 605; 6 Ohio St. 459, 464. And, the agreement being executed, actual fraud on the part of the company must be established. Kerr on Fraud, 55; 2 Disney, 302; Syl. 2,304; 28 Ohio St. 10, 18. Therefore, the only question is, does the evidence clearly and distinctly establish such fraud, so as to justify the decree? The paper introduced by Steinfeld which he called the first contract, was incompetent. It had never been acted upon, had nothing whatever to do with the agreement, and even if it had, would undoubtedly come within the principle of the rule as to contemporaneous declarations and negotiations,, which are never admitted to contradict a written contract. 1 Greenleaf on Ev. §§ 275, 277; 16 Ohio St. 472, 477; 21 Id. 596, 605 ; 26 Id. 33.
Again, it is the rule of law that when a party intends to-rescind a contract, he must give notice thereof and exercise the right within a reasonable time. 8 Ohio, 198, 202; 16 Ohio. St. 321, 328; 28 Id. 10, 18; 2 Handy O. S. C. Rep. 283, 287, 2S8; Oooley on Tort, 503, 504; 7 Ohio (pt. 2), 97, 99, 101, 102. The agreement was concluded in 1875, when the company took possession and constructed extensive and costly works upon the premises, and had continued in the use thereof for the operation of the road until the commencement of this action in 1879, four years, without any intimation from Stein-feld of an intention to rescind the contract. And, in case of rescission, the parties must be substantially re-instated in their original situation. 2 Story on Cont. §§ 1086, 1337; Cooley on Tort, 504; 28 Ohio St. 10, 18; and see 7 Ohio St. (pt. 2) 102; 30 Ohio St. 647, 661.
IF. Z. Dmis, for defendant in error:
We are not seeking, in this proceeding, either to reclaim, tbe land or to enjoin the company from using it. We are only asking the enforcement of the agreement, as we understood it, or that it be set aside. This is not a case of rescission, nor attempt at rescission of contract by one party, and therefore the authorities cited by counsel upon that point are inapplicable. So far from rescinding, we ask the court to correct and enforce the contract; and if, as the court find, there never was a contract, the minds of the parties never having met, there is nothing to rescind. I refer the court to the following: Pollock on Contracts (Wald.) 448-450; Ibid. 399, et seg_.
C. H. JVorris, also for defendant in error.

Opinion:
Follett, J.
I. There was no error in admitting testimony.
The first writing was taken and retained by the company until the second took its place. On payment of the $1,200, the company could take possession and build the road across the farm.
Steinfeld attacked the truthfulness of the statement of one of the changed conditions, and in trying that issue, the court should look to all that had been done by the parties in that respect, and that would throw light upon the issue.
" What the parties mean is to be carried into effect, no matter what are the words they use." Whar. Cont. § 202.
For this purpose the original writing is competent evidence. And the acts of the company in making the passage way, as Steinfeld claimed it should be, may be pertinent — at least they may excuse him from sooner acting to rescind the contract.
"A construction, adopted and acted on by both parties, will be regarded as worked into the contract." Whar. Cont. § 206; Stone v. Clark, 1 Met. 378; Caley v. P. & C. C. R. R. Co., 80 Pa. St. 363; West R. R. v. Smith, 75 Ill. 496.
II. Did the court err in finding that the writing did not contain the agreement of the parties ?
There is no dispute as to the right of way the railroad company was to have through Steinfeld's farm. The parties-agree as to one crossing, and as to the money that was paid. They differ as to the size and use of the passage way under the track.
In the first grant, Steinfeld was to receive $1,200, and to have 'built and maintained by the company, "two good crossings, also one passage under said road, for stock, if the embankment of the road will admit."
In the second grant, Steinfeld was to receive but $850, and to have built and maintained, a good crossing, also (as expressed in the writing) "one passage under said road, for stock."
As the writing was made, Steinfeld gave up to the company $350, and released it from building and maintaining one good crossing. The company say he did this without compensation. This Steinfeld denies, and the 'company show no reason why lie should not have compensation. In arriving att the agreement of the parties, the court is aided by the language of the first grant. The company was to mate " one passage under said road for stock, if the embanltmeni of the road will admit P Roes that mean as high as the embankment will admit ? Any railroad embankment " will admit " of " one passage under said road for stock."
When the second grant was made, the company must have known, that at the place this passage-way was to be made, the embankment would be over 20 feet high. Steinfeld testified, it was to be " as high as could be given, big enough for a ton of hay on wagon to pass through. The engineer " (who was the railroad company in making this contract), " said it would be 16 feet high and that was as high as he could give; I said that was enough," &c. Others testify about the same.
Graham, the engineer and contracting agent, testified, "I told him it was the intention to build a culvert in his bank which would answer all the ^purposes of an underground passage."
We think the evidence justifies the court in its finding, " that the agreement in writing attached to the amended petition of the plaintiff.is not the valid agreement of the parties; that the same was executed and delivered by the said plaintiff to the said defendant, in ignorance of its contents and by mistake," and that in like ignorance Steinfeld gave the company possession and received the $850; and in so finding, there was no error.
III. The court also say: " And it is adjudged and decreed that the written instrument purporting to be the contract of the plaintiff, a copy of which is attached to said amended petition, be, and the same hereby is, set aside and held for naught." There is no proof of unreasonable delay, but Stein-feld has not returned, or offered to return, the $850 paid him, and gives no reason why he has not.
A contract induced by fraud is not void, but it is voidable at the election of the one defrauded. Ry the Roman law, the party defrauded in a contract could hold on to the contract and recover damages, or rescind the contract and recover his full damages. And now such Í3 our law. Oakes v. Turquant, L. R. 2 H. L. 346; Clough v. R. R., 7 Ex. 26; Foreman v. Bigelow, 4 Cliff. C. C. 508; Lindsley v. Ferguson, 45 N. Y. 625. That the party seeking equity must do equity, as far as he can, is well settled. If Steinfeld seeks a rescission of the contract on the ground of non-performance by the company of a part of the contract, he must, as far as possible, put the company into the position it would be had the contract not been made.
He must at least return, or offer to return, the $850.
In rendering judgment that the contract be set aside and held for naught, without the return of the money paid, the court erred.
IN. The court say: " Wherefore it is considered by the court that no contract exists nor has existed between said plaintiff and defendant concerning said right of way." In this the court erred. The matter in dispute was, as to " one passage under said road," its location, and its size, and use. The fact that the writing does not contain the agreement of the parties in this respect, and that Steinfeld acted in ignorance of that fact, and by mistake on account thereof, do not warrant the court in considering " that no contract exists." There was a contract, as the evidence shows ; and what the contract, is, the court should find. The court finds that the agreement in the writing is not the agreement of the parties, then the court should find what the agreement is, and reform the contract to be as the parties made it. If the mistake was not bilateral, but was unilateral and fraudulent as to the other, the contract may be reformed.
"The ease for rectification is strengthened when it is made to appear that the party against whom the relief is asked, after agreeing to the omitted terms, was cognizant of their subsequent omission from the document as engrossed, and was also cognizant of the fact that the other party was ignorant of the omission." Whar. Cont. § 206. " But mistake on the one side and fraud on the other will authorize a reformation." Willis v. Yates, 44 N. Y. 525.
We think the evidence tends to show that both parties agreed to the contract as claimed by Steinfeld, and that it would justify the court in ordering the contract to be so reformed. When the contract is reformed, the court should grant a specific enforcement of it, if that can be done ; but if it cannot be so enforced there should be given adequate compensation for damages for its non-performance.
In the same action a written instrument may be reformed and relief granted on the contract as reformed. White v. Denman, 1 Ohio St. 110; Davenport v. Sovil, 6 Ohio St. 459; Insurance Co. v. Williams, 39 Ohio St. 584.
" A party may prove, by parol, a mistake in a written agreement, and have it rectified and then specifically enforced." Wat. Sp. Per. of C. § 254.
Therefore, 1. In an action to reform a contract and for relief thereunder, after the same is reformed the court may specifically enforce the same when that may be done, or may give adequate compensation for its non-performance.
2. On trial of an action to reform a written substituted contract for fraud or mistake, and to enforce the same when reformed, or if the same could not be reformed then to rescind the written contract, there may be given in evidence the original writing made by the same parties upon the subject matter in dispute, and also the subsequent acts done or procured to be done by the party charged with the fraud and which tend to prove the fraud or mistake.
3. On such a trial the court may find that the written contract in dispute does not contain the true agreement of the parties, but if the party complaining neither pays back nor offers to return the money received by him under the contract, it is error to order the contract to be set aside and held for naught.
4. On such a trial, where the court finds the written contract is not the true contract, and that the complainant holds the money he obtained under the contract without offering to return it, it is error to hold " that no contract exists nor has existed between the parties," but the court should reform the contract as it was made, and if possible enforce the true contract, and if not possible then it should give adequate compensation in damages.
Judgm-ent reversed a/nd ease remanded for further proceedings.