Court Opinion

ID: 8196710
Source: CourtListenerOpinion
Date Created: 2022-09-09 23:20:06.588469+00
Date Added: 2024-06-11T16:40:47.301744
License: Public Domain

Fowler, J.
On motion for rehearing reargument was ordered. On reconsideration we are of opinion that the rule under the Wisconsin cases, and very generally in other jurisdictions, is contrary to the views expressed in the original opinion of the court. A dissenting opinion was filed by the writer, in which Mr. Justice Stevens concurred. No statement of facts in addition to the statements of the opinions first filed is deemed necessary for the purposes of this opinion. But it is considered that further elucidation of the position of the court should be made in view of the very inadequate treatment of the subject in the dissenting opinion.
An exhaustive note on the jurisdiction of equity to rescind instruments for .unilateral mistakes is given in 59 A. L. R. 809. It is there said:
“Equitable relief from a mutual mistake is frequently given by a reformation of the contract. But a contract will *549not be reformed for an unilateral mistake. Equitable relief may, however, be given from an unilateral mistake by a rescission of the contract. Essential conditions to such relief are: (1) The mistake must be of so grave a consequence that to enforce the contract as actually made would be unconscionable. (2) The matter as to which the mistake was made must relate to a material feature of the contract. (3) Generally the mistake must have occurred notwithstanding the exercise of ordinary diligence by the party making the mistake. (4) It must be possible to give relief by way of rescission without serious prejudice to the other party except the loss of his bargain. In other words, it must be possible to put him in statu quo.”
Cases in support of the text are there cited and stated from eighteen states, including Wisconsin, and England. It is not considered necessary to refer more particularly to cases in other jurisdictions, but it is deemed that the Wisconsin cases should be gone into somewhat in detail as in our view they settle the question involved for this jurisdiction.
The Wisconsin case cited in support of the text in the A. L. R. note ábove cited is Chicago, St. P., M. & O. R. Co. v. Washburn Land Co. 165 Wis. 125, 161 N. W. 358. The action was for rescission of a quitclaim deed given under the mistaken idea of the company that it did not own land covered by a tax deed involved in a suit to quiet title in which the company was defendant. It is said in the opinion (p. 133):
. “It is well settled that equity, in a proper case, will relieve against mistake. The instant case is not one of settlement or compromise of a disputed right or claim. It is a clear case of mistake, and a mistake on the part of the plaintiff here which is excusable. It is not necessary that fraud be shown. Nor is it necessary that the mistake be mutual in all cases. In order to reform a contract on the ground of mistake the general rule is that the mistake must be mutual, or mistake on one side and fraud on the other. *550But where one deeds his property to another without consideration through mistake, equity will, in a proper case, grant relief by rescission. 9 Cyc. 394; Clemens v. Clemens, 28 Wis. 637; Hurd v. Hall, 12 Wis. 112; Johnson v. Parker, 34 Wis. 596; Rider v. Powell, 28 N. Y. 510; Smith v. Mackin, 4 Lans. (N. Y.) 41; 1 Story, Eq. Jur. (12th ed.) § 138i.”
Woldenberg v. Riphan, 166 Wis. 433, 166 N. W. 21, was an action for specific performance. The defendant counterclaimed for cancellation on ground of his (unilateral) mistake in thinking the instrument signed gave him five days in which to accept or reject it, whereas it was an absolute agreement operative at its date. The trial court denied cancellation and granted specific performance. The judgment was reversed. The opinion by Mr. Justice Rosen-berry closes as follows:
“The trial court has found that the proposition was signed under a mistake of fact and that defendant acted within the time in which he supposed he was to act. The rights of third parties not having intervened, we are of the opinion that within established principles specific performance of the contract in question should be denied and the purported agreement canceled.”
Stimpson v. Stimpson, 168 Wis. 146, 169 N. W. 295, was an action brought to cancel a stipulation for probate of a will on allegations that the signature of plaintiffs was induced by misrepresentation of the facts, which were charged as fraudulent. The misrepresentation was not made intentionally, nor was it made by the party adverse to plaintiffs, although it was made by an attorney representing the proponent, the executor named in the will, who took it upon himself to procure the signatures with the approval, if not the direction, pf the attorney of the party adverse to plaintiffs. This court treated the case as one for cancellation on the ground of unilateral mistake. The opinion states:
“An application for cancellation of a contract is addressed to the sound discretion of a court of equity. Intentional *551fraud is not an essential. Substantial mistake on the part of the party seeking relief may be sufficient if such course is in accordance with established, rules of equity and seems reasonable and just to the court in view of all the circumstances of the case. Woldenberg v. Riphan, 166 Wis. 433, 166 N. W. 21.”
In De Voin v. De Voin, 76 Wis. 66, 44 N. W. 839, one partner bought out another and their contract was reduced to a writing which recited that the purchaser was to assume the partnership debts, the amount of which was not stated, and pay the seller a specified amount. The purchaser had himself made an inventory, in absence of the seller, and in footing up the debts had made a mistake by which the debts were footed $1,000 less than they were, and as the purchase price was based on the excess of assets over liabilities, the mistake made the purchaser’s payment $500 too much. On discovering the mistake he brought action- for money had and received for recovery of the $500. This court reversed the case for determination whether defendant had promised to repay the $500. In so doing the opinion states (p. 70):
“We strongly incline to the opinion that, whether the mistake was or was not mutual, the only remedy of plaintiff was promptly to rescind the contract, or institute appropriate proceedings to that end. If the mistake was not mutual— that is, if the plaintiff entered into the contract on the basis of actual indebtedness of the firm and the defendant entered into it without any reference thereto — the minds of the parties did not meet as respects that important element in their contract. This also is a valid ground for the cancellation of the contract in equity. 2 Pom. Eq. Jur. § 870, and cases cited; 1 Story, Eq. Jur. § 144.
“The rule on the subject is thus stated by Mr. Pomeroy: ‘Cancellation is appropriate when there is an apparently valid written agreement or transaction embodied in writing, while in fact, by reason of a mistake of both or one of the parties, either no agreement at all has really been made, since the minds of both parties have failed to meet upon the same matters, or else the agreement or transaction is different, *552with respect to its subject matter or terms, from that which was intended.’ ”
In Clemens v. Clemens, 28 Wis. 637, eighty acres of land had been conveyed by a father to his son with intent to defraud creditors. In it was included the father’s homestead forty. The father broüght action against the son tO' compel a reconveyance on the grounds that the son included the homestead in fraud of the father and that the father conveyed the homestead under the mistaken belief that the deed conveyed only the other forty. The court says (p. 644) : “That there was, so far as the plaintiff was concerned, at least a mistake on his part, is very clearly shown in proof. He did not intend to convey the east forty. ...”
In the next paragraph is the question: “Is the plaintiff, then, precluded from claiming the assistance of equity to correct the mistake, considering it as such on his part?” The court answered the question by compelling reconveyance of the homestead.
The judgment of the circuit court should be modified and judgment of cancellation entered upon condition that the plaintiff execute and file with the clerk of the court for the defendant a lease in form and terms of the lease he intended to sign and deliver. This will restore the status quo and place the parties in the precise situation, they would have been had the mistake not been made.
The appellant should recover his costs.
By the Court. — The original mandate is vacated and the cause remanded with directions to modify the judgment as indicated in this opinion.
Fritz, J., dissents.