Court Opinion

ID: 5183536
Source: CourtListenerOpinion
Date Created: 2022-01-06 04:45:21.737817+00
Date Added: 2024-06-11T08:26:39.518049
License: Public Domain

Adams, J.:
It is an elementary principle that a court of equity will grant such relief, either affirmative or defensive, as the circumstances of the case may require, when it is made to appear that a contract has been entered into upon the mistaken assumption of a material fact. Such an assumption arises when some fact really exists which is unknown, or some fact is supposed to exist which really does not exist (Mowatt v. Wright, 1 Wend. 355, 360) ; and all forms of error *412which fall under either of these conditions are mistakes of fact which furnish an occasion for equitable relief. (Pom. Eq. Juris. §§ 852-854.)
We do not suppose that the law of the case, as thus stated, will be controverted; and, if the contract in question were simply an undertaking upon the part of the defendant to pay a sum of money, it probably would not be contended that the plaintiff could maintain his action, inasmuch, as upon the trial thereof, it was conceded in open court, and the learned trial justice thereafter found, in accordance with such concession, that the contract between the plaintiffs assignor and the defendant was the result of a mutual mistake of fact, it having been entered into upon the assumption by each of them that Charles R. Baumgras was dead, whereas, in fact, he was alive.
It is insisted, however, .that the case is not to be governed by the principles to which we have adverted, for the reason that the agreement upon which it is founded is one of compromise and settlement ; that the defense to the claim which was thereby settled was a questionable or a doubtful one; that such settlement was based upon uncertain and contingent events, and that, in short, it was speculative in its character, and was entered into after a calculation of the chances and upon the assumption of all the risks incurred. It becomes necessary, therefore, to consider it from the point of view just indicated; and, in doing so, the fact may as well be recognized that the agreement in question does represent the settlement of a disputed claim. For that reason it is one which the courts would naturally be inclined to favor and sustain as far as possible; but, nevertheless, if it is one which resulted from the misapprehension of a material fact, we see no reason why it should not be governed by precisely the same principles of law and equity as would be applicable if it were a simple contract for the payment of money; for it must be borne in mind that there was no compromise between the parties as to the effect of Baumgras’ death. They both supposed and acted upon the assumption that he was dead, and it now appears that in this respect they were both in error.
If, in these circumstances, the defendant had paid over the $2,000, or any portion of that sum, without being sued, unquestionably it could have recovered the same back upon discovering the mistake, *413because, in good conscience, the plaintiff would not be entitled to the money. (Kingston Bank v. Eltinge, 40 N. Y. 391; Masonic Life Assn. v. Crandall, 9 App. Div. 400.) And, for the same reason, the fact that the money was paid, or agreed to be paid, in settlement of a litigation, should give her no better title to the same, where the settlement was induced by erroneous assumptions.
In a case which came before the Privy Council of England, as recently as 1863, the question which we - are considering was most elaborately discussed by Lord Kingsdown, who thus stated the rule applicable to compromises founded upon mistakes of fact: “ If the error relied on be in a matter of fact, and the fact be one not included in the compromise, and of such a character that it must be considered the determining motive of either of the parties entering into the agreement, its existence is regarded as a condition implied, though not expressed; and then, if the fact fail, the foundation of the agreement fails. This seems to be the meaning of the language used by Toullier, B. III, tit. 3, sec. 1, art. 42, and following articles. The instances which he puts are: If a compromise be found in the genuineness of instruments which turn out to be forged, or if a suit, which it is the object of a compromise to determine, turns out to have been already decided in favour of one of the parties, or if a compromise be founded upon a will which turns out to have been revoked by another will, of which the parties are ignorant,” the foundation of the agreement fails. (Trigge v. Lavallée, 15 Moore’s P. C. Cas. 270-298")
This case, it is fair to state, arose in Lower Canada. The questions which it involved were consequently determined by the French law, but in the concluding paragraph of the judgment delivered by Lord Kingsdown, and from which the above quotation is taken, he observes that, while the case had been decided by the French law, the principles which had been applied to its determination had, doubtless, been adopted into the law of England. That the same may be said as respects the law of this State is, we think, not to be doubted.
A similar question to the one here presented arose in a case where a person charged with the paternity of an unborn bastard, after having been arrested on proceedings under the statute, entered into' a settlement with a superintendent of the poor, upon the mistaken *414assumption that he was the father of the child. It was held by the Court of Appeals of this State that he could recover back the moneys paid in satisfaction of the compromise, upon it appearing that the supposed mother was not in fact pregnant. (Rheel v. Hicks, 25 N. Y. 289.)
This, together with the other authorities which have been cited, is ample, we think, to sustain the proposition that, generally speaking, a compromise which is founded upon a mutual mistake of fact will not be upheld unless it is made to appear that it was speculative in its character, and that the mistake was one of the chances assumed.
It is insisted that such was clearly the intention of the parties to the contract in question; and in support of this position we are asked to consider and give effect to the provision thereof which contains these words, viz.: “ It being agreed that said $666.00 is not to be returned in any event.”
It is not to be denied that there is some reason for claiming that, taken in connection with its context, the language quoted does indicate the existence of some doubt in the minds of the parties as to whether Baumgras was dead or alive, as well as an intention upon the part of the defendant that, whatever developed on further investigation, the sum named was to be paid absolutely and unqualifiedly to the plaintiff’s assignor. But the fact must not be overlooked that it was established upon the trial, by express concession of the parties, that the entire agreement was entered into upon the belief that Charles R. Baumgras was dead; and this concession, in our opinion, characterizes the agreement in such a manner as to relieve it of all ambiguity.
In this view of the case the clause above referred to may be .regarded as the fruit of a mistaken belief with as much propriety as any other portion of the contract, and we, therefore, have the right to conclude that the obligation with reference to the $666 would not have been assumed had not this erroneous belief been •entertained. In other words, the foundation of whatever risk was assumed by the defendant was the same mistake that was responsible for the contract in its entirety; and “ the same principle which corrects the one mistake will correct the other.” (Calkins v. Griswold, 11 Hun, 208; Wheadon v. Olds, 20 Wend. 174; Roberts v. Ellwood, 2 Silv. Ct. App. 410.)
*415We conclude, therefore, that the judgment appealed from was unwarranted by the facts of the case, and that it should consequently be reversed and a new trial granted.
All concurred, except Ward. J., dissenting.