Davis v. . Ely , 104 N.C. 16 ( 1889 )

There is a hopeless conflict of authority upon the question, whether a court of equity will correct an executory contract on the ground of fraud or mistake, and enforce it with the variation.

In England, and several of the American States, such relief is denied, although, a defendant, for the purpose of resisting specific performance, may show that, by fraud or mistake, the written contract does not express the real terms of the agreement. In other States, this distinction is repudiated, and the contract will be corrected and enforced, in proper cases, at the instance of either party.

Where such executory contracts, within the statute of frauds, are corrected and enforced, there is a further diversity — some courts holding that they will only exercise the power where the object is torestrict the subject matter of the contract, while others hold that the contract will be corrected, although its subject is enlarged. Of this latter opinion is Mr. Pomeroy (2 Pomeroy's Eq. Juris., 367), and other writers of great respectability. Opposed to this view, we have the English authorities (Woollam v. Hearn, White Tudor's Leading Cases in Equity) and Bispham's Equity, Wharton's Evidence, sec. 1024, and many decisions in the United States, of which the leading case is Glass v.Hurlbert, 102 Mass. 24. In this case the Court says, "that when the proposed reformation of an instrument involves the specific enforcement of an oral agreement within the statute of frauds; or when the term sought to be added would modify the instrument so as to make it operate to convey an interest or secure a right, which can only be conveyed or secured through an instrument in writing, and for which no writing has ever existed, the statute of frauds is a sufficient answer to such proceeding, unless the plea of the statute can be met by some ground of estoppel to deprive the party of the right to set up that defense. Jordan v. Lawkins, 1 (21) Ves. Jr., 402; Osborn v. Phelps, 19 Conn. 63; Clinan v. Cooke, 1 Sch. Lef., 22. But the fact that the omission, or defect, in the writing, by reason of which it failed to convey the land, or express the obligation which it is sought to make it convey or express, was occasioned by mistake, or by deceit and fraud, will not alone constitute such an estoppel. . . . Rectification, by making the contract include obligations or subject matter to which its written terms will not apply, is a direct enforcement of the oral agreement, as much in conflict with the statute of frauds, as if there was no writing at all."

This decision, in so far as it holds that the subject matter of the contract may not be enlarged, is supported by abundant authority.

Story Equity Jurisprudence is often cited to sustain the other view; but the argument there seems to be directed against the distinction between parties seeking and parties resisting specific performance. It refers to the decisions of Chancellor Kent in Gillespie v. Moon, 2 Johns., chap. 585, and Kieselbrack v. Livingston, 4 Johns., chap. 144. In neither of these cases was the subject matter enlarged. In Gillespie's case (so often cited), the correction made was the striking out of fifty acres from a written agreement which included two hundred and fifty. Bispham Equity, 445, says, "that in cases which fall within the statute, it is obvious that to carry the rule in Gillespie's case to the extent of holding that an agreement (for example) to convey fifty acres may, for the sake of justice and equity, be construed to mean a contract to convey one hundred, would be to repeal the statute of frauds and to give effect to a simple verbal agreement to sell land. Where, however, the contention of the complainant is that something which is actually embraced in the writing was not intended to be included therein, to suffer (22) him to show this is not to enforce a parol contract in relation to land; it is simply to prove that a written contract did not embrace all that on its face it appeared to include. Such was the actual state of the case in Gillespie v. Moon."

It may be remarked that, in most of the States where such relief is granted, the doctrine of part performance is recognized, and the proof required is but little short of that which is necessary to enforce a contract upon that ground.

In North Carolina, so far from correcting such executory contracts, within the statute, so as to enlarge their terms, the tendency of our decisions is to confine such corrective relief to executed contracts alone. We have been able to find no decision in point, but the words of Hall, J., in Newsom v. Bufferlow, 16 N.C. 379, strongly show the disinclination of the Court to depart from the statute, except upon the most imperative demands of justice and equity.

The learned judge says: "It is altogether unnecessary to inquire in this case how far courts of equity have gone in carrying into effect written executory contracts, or varying them by parol evidence. Suffice it to say, that the reason why they have declined giving relief in many such cases, is that the plaintiff had a remedy at law. The reason is not applicable to executed contracts. In those cases the plaintiff has no remedy at law, and unless a court of equity will give relief, he can have no redress."

This distinction between executory and executed contracts is thus clearly put by Adams Eq., 171: "Where land is the subject of the erroneous instrument, the reformation of an executed conveyance is not precluded by the statute of frauds, for otherwise it would be impossible to give relief. But it does not appear that where the defendant has insisted on the benefit of the statute, the Court has ever reformed . . . an executory agreement on parol evidence, and specifically enforced it."

(23) Land is regarded as such a high species of property that exceptional safeguards have been devised for the preservation and security of its title, and these should not be departed from, unless such departure is absolutely necessary to subserve the ends of justice. Under the former system, the equitable relief we have mentioned was administered by the trained minds of learned judges, sitting as chancellors, who appreciated the grave evils which the statute was designed to prevent, and who gave full effect to the rule which required the clearest and most cogent testimony. Even then the relief in this State was confined, it seems, to executed contracts, and surely there is nothing in the new method of trying equitable issues which encourages us to leave the old moorings and venture upon a sea of trouble, confusion and insecurity.

On the ground of necessity, we correct conveyances by adding clauses of defeasance and words of inheritance. We also restrict, or enlarge, the subject matter, but we decline to do this in the case of executory contracts, where there can necessarily be no other object than, as in the case before us, to have it specifically enforced.

It is believed that no great hardship can result from such ruling, as the Court will, upon rescission, endeavor to place the parties in statuquo, and damages may be given for the fraud and deceit. The Court is liberal in the adjustment of equities arising in such cases; but even if occasional instances of hardship occur, it is far better that these should be endured than that every title in the State should be exposed to the assaults of false and fraudulent oral testimony.

What we have said has no reference to the correction of ordinary executory contracts in aid of actions for damages at law, such as the correction of the terms of a bond, and the like. Equity will always make the correction, and the party can sue upon the corrected contract at law. The two jurisdictions being now blended, such (24) relief will be granted in a single action. It may be that, in cases of personal property, where there is a pretium affectionis, the contract may be corrected and specifically enforced; but it is unnecessary to pass upon that question here.

The relief sought in this action is to correct the contract so as to include the "Hall tract." It seems, from the complaint, that the alleged fraud consisted in certain false representations as to the number of acres made to the plaintiff when the final agreement was made. False representations are also alleged to have been made to Mr. Griffin, the draughtsman, but these are not specified, and we must assume that they were the same as those made to his principal, Davis. However this may be, we have here a plain case, where it is proposed, upon parol testimony, to correct an executory contract for the sale of land, by making it include a larger quantity than is stated in the writing.

The plaintiff does not wish to rescind, and offers the parol testimony solely for the purpose of reformation.

We think that to admit the testimony in such cases would be, as has been said, virtually repealing the statute of frauds and opening the door to a flood of evils, the extent of which it would be impossible to estimate.

The plaintiff may enforce the contract in its present form, or he may rescind it, and ask for an adjustment of any equities which may have grown out of the transaction.

We think that the testimony was properly rejected, and that there is

No error.

Cited: Davis v. Terry, 114 N.C. 30;Dickey v. Cooper, 170 N.C. 490.

(25)