Court Opinion

ID: 6581823
Source: CourtListenerOpinion
Date Created: 2022-07-20 19:38:54.817952+00
Date Added: 2024-06-11T15:57:18.896387
License: Public Domain

Carpenter, J.
(dissenting.) In reforming written instruments the defective instrument and the real contract between the parties must be alleged in the complaint. Thompsonville Scale Manufacturing Company v. Osgood, 26 Conn., 16. It is not claimed that any contract was ever made with the defendant except that contained in the bond. If that was all—that is, if it was conceded that no other contract existed between these parties, it would be a pretty *501bold claim that a court of equity had power to change that contract. Let us then examine the transaction critically and see what evidence there is of any other contract with the defendant or with those in privity with him.
In January, 1870, preliminary steps were taken by the plaintiff to issue bonds. Bonds of a certain description were authorized in April. Prior to January, 1871, bonds were prepared and placed upon the market by the agents of the town. The town voted that the bonds should be payable at the option of the town in ten years and that they should be due in twenty years. By mistake the option clause was omitted.
About the first of January, 1871, one Tiffany commenced negotiations for the purchase of the bonds in question. At that time the bonds were printed and signed, bearing date April 1st, 1870. Both parties knew or had ample means of knowing just what they contained. Whatever mistake was made was made before that time, and, obviously, was the mistake of the town alone; for Tiffany was in no sense a party to the transaction. There was then existing no parol contract with him.
The town had prepared certain bonds and proposed to sell them, and he was willing to buy. The agent of the town informed him that the town had the right to redeem the bonds before the expiration of the twenty years; that the bonds were ten-twenty bonds, and at the option of the town could be called in and paid at the expiration of ten years from their date; and that such was the vote of the town issuing the bonds. Tiffany took no pains to inform himself what the vote of the town was, because he did not care whether the bonds were redeemable in five, ten or twenty years. He bought the bonds. That is all the finding on that subject.
Now it will be observed that the negotiations related to existing bonds, and not to bonds to be subsequently prepared pursuant to any agreement they might make. There was no contract that the bonds should be of a certain description. Tiffany made no agreement whatever in relation to *502that matter.' As to that he was totally indifferent. The town simply represented that an article which it had to sell was of a certain description. ’ Tiffany neither assented to it nor denied it, as it was of no consequence to him. It was simply a sale of the bonds as they were, without warranty or other agreement. The contract was fully executed when he received the bonds and paid for them. The legal result was that the town then became obligated to pay the amount of the bonds according to .the terms and conditions named in them. No other .executory contract existed between the parties. To torture that transaction into an agreement by Tiffany that the bonds should be as represented by the town, is an unprecedented stretch of judicial power.
But the plaintiff must not only show that there was such a contract, but also that Swan, a subsequent owner of the bonds, and the defendant, had notice of it when they purchased.
In respect to Swan. The first finding is that “ at the time Swan bought them he knew that the town claimed the right to call them .in at the expiration of ten years from date, and that they intended to do so.” And the supplemental finding is as follows: “ Before Swan bought the bonds of Tiffany he called upon the then town treasurer in relation to them, and to know what the action of the town would be,.and the said treasurer told him what the vote of the town was in authorizing the issue of the bonds, and that the town would call them in at the expiration of ten years from their date, and pay them up; that the town had already called them in, but by mistake they had been called a year too soon.”
Here is no verbal agreement between Swan and the 'town, and there is no’t the slightest intimation that Swan had ■an)'' knowledge whatever of any agreement with Tiffany.
How is it with the defendant? In respect to him the finding is as follows : “ Swan sold these bonds to the defendant April 20th, 1880, at a premium of not over two per cent. The defendant at the time of his purchase had full knowledge of the vote of the town in relation to the issue *503of the bonds, and that the town had called them for payment.”
What is the effect of such knowledge? It gave the defendant no notice of any contract with Tiffany, and there is no other evidence that he had such notice. Whatever therefore may be said of the transaction between the town and Tiffany, nothing occurred that will bind the defendant. If he is liable at all it is because of some implied agreement with him, or of circumstances equivalent to such an agreement. The only evidence of such circumstances or implied agreement is the extract from the finding just quoted. If found there it is because the defendant then knew of certain facts. Now it is true that mere knowledge will often subject a man to pre-existing equities; but how it can be regarded as sufficient evidence of a contract, or, in law, as the equivalent of a contract, is beyond my comprehension. Will it be seriously contended by any fair-minded man that the defendant’s knowledge of the vote of the town, of its action in calling the bonds, and if its claim in respect thereto, is equivalent to a contract that the bonds were and should be as the town claimed they ought to be? These bonds had been in existence ten years; he found them in the market; he knew the claims of the town in respect to them ; but he knew at the same time that they were not in fact as the town claimed them to be. Under these circumstances he had a perfectly legal, equitable and moral right to purchase them, relying upon the liability of the town as therein expressed. A judicial decree changing them to his prejudice is arbitrary and unwarranted, and a decree for which I am sure no precedent can be found.
But suppose that I am wrong as to the facts, and in my conclusions therefrom; even then I say the law will not justify such a decree. “There are two requisites essential to the exercise of the equitable jurisdiction in giving any relief, defensive or affirmative. The fact concerning which the mistake is, made must be material to the transaction, affecting its substance and not merely its incidents; and the mistake itself must be so important that it determines the *504conduct of the mistaken party or parties.” Pomeroy’s Eq. Jur., § 856.
“ Mistake in matter of law or matter of fact, to be a ground for equitable relief, must be of a material nature, and must be the determining ground of the transaction. A man who seeks relief against mistake, must be able to satisfy the court that his conduct has been determined by the mistake. Mistake in matters which are only incidental to, and are not of the essence of a transaction, and without or in the absence of which it is reasonable to infer that the transaction would nevertheless have taken place, goes for nothing. If the mistake has not been the only cause by which the conduct of a man has been induced, but another motive has intervened, the mistake cannot be set up as a ground of relief.” Kerr on Fraud and Mistake, 408. “ The rule as to ignorance or mistake of facts entitling the party to relief, has this important qualification, that the fact must be material to the act or contract, that is, it must be essential to its character, and an efficient cause of its concoction. For though there may be an accidental ignorance or mistake of a fact, yet if the act or contract is not materially affected by it, the party claiming relief will be denied it.” 1 Story Eq. Jur., § 141.
It cannot be said that the mistake concerned the substance of the transaction; it concerned a mere incident, and that an unimportant one. The object was to effect a loan; the time of its continuance, whether ten or twenty years, was then of trifling importance to the town; and the option clause was perhaps of still less importance. Time was not of the essence of the contract. In either event the town was reasonably accommodated. If the bonds were to run twenty years absolutely,' the rate of taxation could be adapted to it; if redeemable in ten years they could still run twenty years, or bonds at a lower rate of interest could be substituted for them at the pleasure of the town. But at that time it could not be known whether the option clause would be of any advantage. So in any event it was of little consequence and by no means an essential feature *505of the transaction. In the absence of any finding that it was material, this court cannot presume that it was.
And how and where does it appear that the mistake induced the loan? that it determined the action of the town? that the town, had it known that the option clause was omitted, would not have accepted the loan? On this point the record is silent. How then can the town have the relief asked for without disregarding or overriding an essential principle of equity of universal application in this class of cases ? This is a point the town must show affirmatively, and-it has wholly failed to do so.
But I go further, and insist that the probability is that the agents of the town did know of the omission before the bonds were sold, and that they sold them knowingly— in short, that there was no mistake.
There is no direct explicit finding that there was a mistake. It is found that a mistake occurred in printing the bond, but the essential thing is, and that is not found, that the mistake was unlrnown when the bonds were sold and the mone3 received.
At this point let us glance at what the law requires:— “Whether the contract contains more, or less, than the agreement of the parties, or something different, if the mistake is made out b}' proofs entirely satisfactory, equity will reform the contract so as to make it conform to the precise intent of the parties. But if'the proofs are doubtful and unsatisfactory, and the mistake is not made entirety plain, equity will withhold relief.” 1 Story’s Eq. Jur., § 152. This principle was recognized and enforced by this court in Bishop v. Clay Fire Ins. Co., 49 Conn., 167.
Now look at the finding:—“ It did not appear in evidence that-any agent of the town noticed the form of the bond,' or noticed that it did not contain the option to redeem in ten years, but it was assumed to be correct.” “ None of the agents of the town appear to have had any knowledge that there had been a mistake in the issue of the bonds, until the town was informed, after February^ 25th, 1880, by the Chelsea Savings Bank, a holder of some of them, that *506the bonds on their face were twenty year bonds, and not redeemable before.”
That is all there is upon this vital point in the case, the mistake itself. That is found only in this vague and ambiguous language. “ It did not appear in evidence that any agent of the town noticed the form of the bond, &c.” But did it appear in evidence that they did not? That is the important inquiry; and the report gives us no answer, except by its silence. And such an answer must be regarded as a negative one.
But we are told that this must be regarded as equivalent to a finding that they did not know that there was a mistake. I think otherwise. The learned committee understood the use of language, and had he intended to find that fact he would have done so in terms not to be misunderstood, and would not have left it to inference, and a doubtful inference at that. And so of the other expression :— “None of the agents of the town appear to have had any knowledge, &c.” If b3 this he intended that they did not have knowledge, why did he not say so?
Suppose that the then agents of the town'had testified that they did not remember as to a transaction that took place ten 3ears before; that they had forgotten about it; that they had no recollection of noticing the mistake, &c.; in that state of the testimony a cautious trier might express himself in the language quoted:—“None of the agents appear, &c.” Can we not see in that careful and somewhat peculiar expression not only an unwillingness but a refusal to find the fact? To me it is perfectly clear that it is not such a finding as. the law requires.
Again, there is negative evidence of great significance that the view I take of this finding is the correct one. The quotations above are from the first report of the committee. The case was recommitted with directions to the committee “ to hear further evidence and make additional report of the facts found on such evidence.” In the second report we find this clause:—“At the time the town treasurer signed the bonds, he signed them supposing they were *507payable at the option of the town in ten years from their date. He signed them all without reading any of them. The bonds were left with the town treasurer for delivery to purchasers.”
That is an explicit and unequivocal statement as to the knowledge of one of the three men-who signed the bonds. We should expect to see, yea more, it is morally certain that we should have seen, an equally clear and explicit statement as to the knowledge of the other two men, if the evidence would justify it. The three signers were Giles Potter, first selectman, Edward W. Redfield, treasurer, and Carnot O. Spencer, agent. The treasurer does not appear to have had anything to do in preparing or causing to be prepared the bonds. It was made the duty of the selectmen by vote of the town to see that the bonds were “ properly numbered, dated and signed by competent authority.” The knowledge or want of knowledge of these men was the all-important inquiry. They knew about it if any one did, and they were doubtless called as witnesses. However that may be, the committee heard the evidence, had this matter in mind, knew its importance, and could only make this tame and inconclusive statement immediately following that quoted above :—“ The agents of the town did not intend to have the bonds printed as they were printed, but did intend that they should be printed so as to be payable at the option of the town in ten years from their date.” This part of the finding is silent as to their knowledge, and that silence is significant. To me the inference is necessary and conclusive that the evidence did not warrant the committee in finding that these men had no knowledge of the mistake at the time the bonds were issued. Unless that fact is clearly established by proof and found by the court the plaintiffs have no case. And I submit that the fact does not appear in this case.
But suppose that I am wrong in. this, and that the fact was clearly proved and expressly found, then another question arises. In 1 Story’s Equity Jurisprudence, § 146, this rule is laid down:—“It is not, however, sufficient in all *508cases to give the party relief that the fact is material; but it must be such as he could not by reasonable diligence get knowledge of, when he was put upon inquiry. For, if by such reasonable diligence he could have obtained knowledge of the fact, equity will not relieve him; since that would be to encourage culpable negligence.” These agents were put upon inquiry, for it was clearly their duty to know the character of the bonds they were signing, and to detect the mistake if there was one. A party will not be permitted to allege ignorance of the contents of his own deed. Hamilton v. Nut, 34 Conn., 501. Is the town an exception to this rule ?
The slightest diligence would have disclosed the fact. It was only necessary to read the bond to discover the omission. A want of slight diligence in such matters is culpable negligence. The plaintiff then is in this dilemma,—if its agents read the bond they had knowledge of the mistake and issued the bonds understanding!}'-, and that is fatal to the case; if they did not, they were guilty of culpable negligence, and that is equally fatal.