Snelling v. Merritt , 85 Conn. 83 ( 1911 )

The demurrer to the answer was properly overruled. It was not argued or decided until after the bond, which is made a part of the complaint, had been reformed, although both the answer and the demurrer to it were filed prior to the filing of the cross-complaint. The reformation of the bond related back to the institution of the action and made the bond such as the defendants claimed it to be at the time the answer was filed. This change in the bond obviated the objections raised to the answer. As the pleadings stood prior to the reformation of the bond, the demurrer was sustainable upon several of the grounds stated in it.

The demurrer to the counterclaim was also properly overruled. The counterclaim sufficiently alleges that the parties made an agreement for the release of the attachment upon the giving of a bond conditioned for the payment of the penalty upon the plaintiffs obtaining a judgment whereby the attached property, had it remained subject to the attachment, would have been held to respond to the judgment, and the delivery and acceptance, through the mutual mistake of the attorneys of the parties, of a different bond. The "basis of the counterclaim" does not rest solely upon the unexpressed belief and understanding of the attorneys for the defendants, as the plaintiffs contend, but it rests also upon the agreement alleged to have been made prior to the execution and delivery of the bond. The defendants were bound to show the prior agreement that the bond delivered was not in accordance with the agreement, and that by the mutual mistake of the parties or their attorneys the bond was delivered and accepted as conforming to the agreement. The allegations as to the belief and understanding of the attorneys are in support of the latter proposition only.

As to the other grounds of demurrer to the counterclaim it is sufficient to say: (1) That as a cause of action upon the ground of mutual mistake is sufficiently alleged, an allegation of fraud was unnecessary. (2) That as it appears that the plaintiffs were prosecuting an action upon the bond, it was unnecessary, in a cross-complaint filed in such action asking for a reformation of the bond, to allege that a demand for its reformation had been made. The parties were in court. The cross-complaint was merely a defensive proceeding. The equity which required that before a party is brought into court in an action to reform a contract, demand for such reformation shall be made, does not exist where such party is already in court seeking to take advantage of the mistake. Where demand is made upon him before suit is brought, his refusal to correct the mistake is evidence of his intention to take advantage of it. Suit actually brought to enforce the unreformed contract is also evidence of such intention. (3) It appears in the cross-complaint that the defendants had no apprehension of the alleged mistake in the bond until the ruling of the Superior Court on the motion to expunge. This was on January 14th, 1910. The cross-complaint was filed on March 22d 1910. It cannot be said as matter of law that this shows laches as claimed in one ground of demurrer. "Courts of equity do not impute laches by an iron rule." Waterman v. SpragueMfg. Co., 55 Conn. 554, 574, 12 A. 240. By the overruling of this ground of demurrer the plaintiffs were not precluded from raising the question of laches upon the trial, when all the facts could be brought before the court.

The remaining grounds of demurrer to the cross-complaint need not be noticed, as they were not pressed in the brief or argument of counsel. They were properly overruled, as was also the motion to expunge portions of the cross-complaint, which was based largely upon the same grounds as the demurrer.

It was not error to deny the plaintiffs' motion to expunge a portion of the answer. The portion objected to was an argumentative denial of the portion of the complaint to which it referred, and was therefore improper in form. The court was not bound to expunge it, but upon its own motion, or upon the plaintiffs', it might have done so and ordered a formal denial. The plaintiffs would have been entitled to such a change upon a proper motion.

The evidence of the defendants' attorney as to his intention when drawing the bond should have been excluded. He had already testified that he had previously, without consultation with the plaintiffs or their attorneys, drawn up a bond which he requested them to accept, and which they had refused to accept unless certain changes were made in it to which he had agreed. The bond in suit is the same as the original bond with those changes incorporated. The evidence did not tend to show that he used different language than he then intended, but that, apart from the language used, he had a certain intent in drawing the bond. His intention to make the obligors in the bond liable the same as the land was liable, could not affect the agreement which he had already made with the plaintiffs, and it was not admissible to show a modification of that agreement unless it appeared that the plaintiffs knew of the intention and agreed to the modification, and accepted it as embodying the agreement as so modified. There is no evidence that the plaintiffs had any notice of the intention, or that it was sought to modify the agreement, the terms of which were fixed.

The other evidence which is objected to was properly received. It supported the allegation that the parties believed when they signed the bond that its legal effect conformed with the agreement previously made. The allegation being that the real agreement between the parties was for a different bond than that which is in suit, it was competent to show that at the time the bond was executed and delivered the signers understood and believed that it expressed the agreement which they claimed was in fact made, for the purpose of showing that through mistake they had signed a different bond than they intended.

The Superior Court ruled that the bond in suit, as originally executed and delivered, bound the defendants to pay the amount of any judgment which might be rendered against the Merritts or either of them in the attachment suit, to the value of their interest, or the interest of either of them, as the case might be, in the attached property. This was the proper construction of the language of the bond. Upon the facts alleged in the complaint and admitted or found true, the defendants under the bond as written were bound to pay the amount demanded of them on the execution against William J. Merritt, to the extent of the value of the attached property, although it belonged to Lucius R. Merritt.

Under the bond as reformed they were not so liable. We are asked to correct the finding with respect to the agreement between the parties as to the bond which was to be given as the consideration for the release of the attachment, and as to the fact that the bond in suit was executed and delivered, through a mutual mistake of the parties, in the belief and understanding that it was in accord with such agreement.

There was no real conflict of testimony as to what occurred prior to the execution and delivery of the bond. It came from the attorneys of the parties and they substantially agree. The Merritts had sold the attached property, and to give a clear title desired to have the attachment released. One of their attorneys, without previous conference or negotiation with the plaintiffs or their attorneys, prepared and caused to be signed by the same parties who signed the bond in suit, a bond which, to distinguish it, we may call a proposed bond, and also a release of the attachment. The proposed bond was in all respects precisely like the bond in suit, except that it did not contain in the condition the four words "or either of them," which are italicized in the condition as printed in the statement, and did contain the word "the" in place of the italicized word "any." He took the proposed bond and the proposed release of the attachment from his own office in Stamford to the office of the plaintiffs' attorneys in Norwalk, and told them that he wished to give that bond on the release of the attachment. The attorney having special charge of the plaintiffs' case not being present, and his partner not wishing to decide the matter, the papers were left with the latter to be submitted to the attorney in charge of the case upon his return. The latter two days later took the proposed bond back to the defendants' attorney in Stamford, and refused to accept it unless certain changes were made, calling his attention to the fact that it had not been drawn pursuant to the statute, in that the word "the" above referred to was used in place of the word "any" in the statutory form in the Practice Book. He insisted that "any" should be there substituted for "the", and that the words "or either of them" should be inserted where they appear italicized in the copy as printed. This was agreed to by the defendants' attorney, and another bond, the one now in suit, was prepared by him in which the proposed changes were made, and it was signed by the same persons who signed the other. The plaintiffs' attorneys then caused the release of attachment to be properly signed, and by letter notified the defendants' attorney of that fact and that they would be glad to make the exchange at a time and place named, adding that their clients had made objection to releasing the attachment, but that the attorneys had explained to them that the sureties were good and that the bond was such as in all probability the court would order. At the time and place named the release of the attachment was exchanged for the bond. This was the entire transaction as testified by the attorney who drew the papers and who is one of the defendants in the case. He is corroborated as to these facts by the attorneys for the plaintiffs.

The same witness was permitted to testify that in drafting the bond in suit he "intended to have the obligors liable the same as the land was liable, the same as the interests of the respective defendants, William J. Merritt and Lucius R. Merritt: that is, if the judgment was rendered against both, that the interest of both of them, in whosoever name it stood, should be paid by the obligors upon the execution; if the judgment was against William J. Merritt, that the obligors should be liable to pay whatever interest William J. Merritt had to the sheriff in the execution; if the judgment was against Lucius R. Merritt, they should be obliged to pay whatever interest Lucius R. Merritt had in the land to the sheriff." He and other signers of the bond also testified that at the time of signing the bond they believed and understood that it expressed the meaning which was thus testified to have been intended. All this evidence was objected to, and the question of its admissibility is elsewhere considered. It was admitted and is to be considered as in the case upon a motion to correct the finding. There was also evidence tending to show that the plaintiffs' attorneys understood and believed that the bond, after the additions insisted upon had been made, held the obligors to the extent of the interest of either of the defendants in the original action in the land attached for any judgment which should be rendered therein; and that the bond was the same in effect as the court would have ordered in case an application had been made to it to substitute a bond for the attachment.

There was no evidence showing that the plaintiffs or their attorneys prior to the bringing of this action knew or believed that the defendants or their attorneys understood or claimed that the effect of the bond was different than that which the law places upon it. It was in evidence that the plaintiffs' attorney at the time of the negotiations supposed that the defendants' attorney understood the legal effect of the bond.

Does this evidence support the finding of the court that before and at the time of the delivery of the bond there existed an agreement between the parties that a different bond should be delivered? The defendants sought the plaintiffs, and, in their own interest, desired them to release the attachment and accept the proposed bond, both of which the defendants had prepared without a previous conference with or suggestion from the plaintiffs. If that bond had been accepted, and had then contained the words which were afterward added to it, no serious claim could have been made that the bond had been given pursuant to any such agreement as the court has found. The agreement in that case would be that that bond should be exchanged for that release and the contract would have been executed. And this would be so although it should appear that the bond was prepared by the defendants' attorney with the intention that it should make the obligors "liable the same as the land was liable," and understood that to be its legal effect; and although the plaintiffs at the time of accepting it believed that it was such a bond as the Superior Court on application would order. The two mistakes would not make an agreement different from that expressed in the condition of the bond. At most, they would show only that there was no agreement between the parties, in which case, if the defendants were entitled to any relief, it would be the cancellation, not the reformation, of the bond.

What is there in what occurred later to change that situation and warrant a finding that there was such an agreement as the court has found? Instead of accepting the proposed bond, the plaintiffs refused to accept it unless certain changes were made in it. Here was a new proposition. It amounted to an offer to give the release upon the delivery of the bond in suit. This proposition was accepted, and that acceptance made an agreement. The new bond, being the same as the old, with the addition of the five words as agreed, was drawn and the exchange was made. It is not a case where the scrivener has made a mistake in the use of language, or has added or omitted words, and thus failed to express the agreement made. The language of the bond to be exchanged for the release was explicitly agreed upon. It was fully understood by the defendants' attorney, as he repeatedly testified, and it was followed by him in drafting the bond. He may have been mistaken as to the effect of it, but that does not change the agreement. The plaintiffs' pointing to the fact that the word "any" instead of "the" is found in the form of bond contained in the Practice Act as a model to be followed where the court orders a bond, was to support his claim that the same word should be used in the bond which the defendants were seeking to have accepted in place of the attachment. But at the same time he was insisting that words not found in the form in the Practice Book should be added, which made the obligors liable for any judgment which might be rendered to the extent of the interest of either or both the Merritts in the land attached. This was far more significant than the reference to the word "any".

What weight, if any, the court gave to the testimony of the defendants' attorney that he intended when drawing the bond in suit "that the obligors should be liable the same as the land was," does not appear. That it had no weight as proving an agreement for a different bond than that in suit is clear for several reasons. It is manifest from his own testimony that it cannot be true that he so intended, taking the word "intend" in its ordinary sense, i. e. "to have in mind a design or purpose." It may have been his purpose when he drew the original bond to so frame it that the obligors should be liable only as the land was liable. But his purpose in redrafting it, and making the change and addition insisted upon by the plaintiffs, could only have been to make it comply with those demands which he had assented to. He doubtless believed that its effect remained the same as before the change; he so testified. But he was not rewriting the bond with the end in view of making it limit the obligors' liability as stated. The proposed bond having been executed, the changes could not be made by interlineations without a re-execution of the bond, therefore a new bond embodying the changes was made and executed. Nor can his intention in drawing the instrument after its terms had been agreed upon, have any weight in determining what the agreement was (for both parties agree as to that), nor any weight as showing a modification of that agreement, unless knowledge of such intent or understanding was communicated to the other party before or at the time of the acceptance of the bond, and there is no evidence that it was so communicated. On the contrary, there was evidence that the plaintiffs believed that the defendants' attorneys understood the legal import of the bond.

The court finds that there was a mutual understanding and belief between the parties at the time the bond was delivered that it was such in form and legal effect as ought to be ordered by a judge of the Superior Court, and that through their mutual mistake and misunderstanding as to its legal effect and meaning it was not such as such judge would have ordered. It appears clearly from the evidence how the mistake and misunderstanding came about. The mistake in the transaction was as to the different interpretations of the statute concerning the substitution of a bond for an attachment, and of the legal significance of the language of the bond. The defendants' interpretation of the language of the bond was that the actual interest of the defendant or defendants against whom judgment might be rendered would be the measure of liability of the obligors. This would be the measure of their liability under a statutory bond, had a proper one been taken upon a proper application to a judge. The defendants thus properly interpreted the purpose of the statute, but were mistaken as to the legal significance of the bond. The plaintiffs, in consenting to release the attachment relied upon the bond in form as given. It thus appears that the defendants' mistake was solely in their interpretation of the bond which they gave; they supposed its legal effect to be different than it was. The plaintiffs, on the contrary, insisted and relied upon the bond which was given. They interpreted it correctly, and believed that they were entitled to such a bond upon an application under the statute. But it does not follow from the fact that they supposed that they were entitled to such a bond under the statute, that they ever agreed to accept such a bond as a judge ought to order if applied to under the statute. Had they been informed of the defendants' belief and understanding as to the meaning of the statute and the significance of the bond, quite likely they would have refused to accept the bond, and required that an application should be made under the statute.

The court, it would seem, drew the inference from the fact that each supposed that the bond was such as a judge ought to order, that there was an agreement between the parties in those terms for such a bond. This was not warranted, especially in view of the clear and uncontradicted testimony as to the entire transaction.

Nor was the court warranted in holding, upon the facts found, that the mistake was mutual. The mistake of the defendants was not participated in by the plaintiffs. Their action in accepting the bond was in no way affected by it. Nor was their acceptance of the bond due so far as appears to any mistake of their own as to the requirements of the statutory bond, nor was the defendants' delivery of the bond in any way due to or caused by any such mistake of the plaintiffs. To warrant the reformation of a contract on the ground of mutual mistake, the mistake must have been common to both parties, and it must appear that by reason of it both have done what neither intended, and the evidence should be clear, substantial, and convincing as to both those facts. Hearne v. Marine Ins. Co., 20 Wall. (87 U.S.) 488, 490; Moffett, Hodgkins Clarke Co. v. Rochester, 178 U.S. 373, 385, 20 Sup. Ct. Rep. 957; Bishop v. Clay F. M. Ins. Co., 49 Conn. 167,171.

The mistake of one only of the parties inducing him to sign a contract which, but for the mistake, he would not have entered into, may be a ground in some cases for cancelling the contract, but it cannot be a ground for a reformation of it.

The finding should therefore be corrected by changing paragraphs fourteen and seventeen thereof in the manner requested, and by making paragraphs five, seven, eight, and nine, also nineteen, twenty, and twenty-two of the plaintiffs' draft-finding, a part thereof. So changed, it does not support the interlocutory judgment, and that judgment is reversed.

The final judgment was affected by the error in granting the interlocutory judgment, and that also is reversed, and a new trial is ordered upon the issues raised upon the answer and the demurrer thereto.

In this opinion HALL, C. J., PRENTICE and RORABACK, Js., concurred.