Barker v. Fitzgerald

Mr. Presiding Justice Waterman

delivered the opinion of the court.

A court of equity will give appropriate aifirmative or defensive relief, as may be required by the circumstances, from the consequences of any mistake of fact which is a material element of the transaction concerning which relief is sought, and which mistake is not the result of the mistaken party’s own violation of some legal duty, provided that no adequate remedy can be had at law.

A mistake is always a mental condition or conception. This may be either active or passive. When active, the mental condition or belief may be that a certain matter or thing exists which really does not exist, or that a subject-matter or thing existed at some past time, which' did not really exist. Pomeroy’s Eq. Jurisprudence, Sec. 852-854-856; Grymes v. Sanders et al., 93 U. S. 55-60; Hurd v. Hall, 12 Wis. 125-138; Haven v. Foster, 9 Pickering, 112.

The mistake found by the master and the court in the present case was that a certain condition then existed which did not exist, namely, that the walls and foundations of the building were then sufficiently strong to admit of the placing of two stories thereon. A mistake, to entitle a party to relief on account thereof, 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 conduct of the mistaken party or parties. To warrant a rescission the evidence of this must be clear and positive. Ewing v. Sandoval Mining Co., 110 Ill. 290; Kerr on Fraud and Mistakes, 408; Grymes v. Sanders, supra; Carpmael v. Powis, 10 Beav. 36-44.

While reasonable diligence is required of all parties in the transaction of business, it is not enough to prevent relief, in case of a mutual mistake, that the party complainant might, had he done all within his power, have ascertained the truth. Kelly v. Solari, 9 Meeson & Welsby, 54; Bell v. Gardiner, 4 Manning & G. 11; 4 Scott’s New Reports, 621; Newton v. Tolles (N. H.), 9 L. R. A. 50.

In the present case it has been found by the master and the chancellor, and it clearly appears from the evidence, that the lease in question would not have been made had not all the parties thereto believed that the walls and foundations of the building were then strong enough to permit the placing thereon of two additional stories. By the placing of these stories Fitzgerald expected that the rentals of such building would be so increased that he could afford to pay $15,000 per annum rent, and there is evidence tending to show that both Barker and Fitzgerald expressed the opinion before the lease was made that without such additional stories, Fitzgerald could not pay $15,000 per annum rent. It was made a condition of the lease that such additional stories should be placed upon said building, all of which was at the expiration of the term to become the property of the lessors. Appellant forcibly asks, if Fitzgerald and Barker believed that the walls and foundations of the building were strong enough to support two additional stories, and if but for such mistaken belief the lease would not have been made, how it happened that such alleged vitally essential condition to the making of a valid and enforceable contract was not inserted in the lease. A similar question might be asked in every case wherein a rescission of a contract is sought upon the ground of a mutual mistake as to a material matter concerning the subject-matter of the contract. In the illustrations most frequently given in text books dealing with this question, that of the sale of a ship at sea not existing at the time of the making of the contract, in such case had the contract provided that it was to be null and void in case the ship was thereafter found not to have been existing when the contract was made, no suit would have arisen. It is perhaps the case that parties never, in the making of a contract, provide for everything then existing but which if first ascertained thereafter may materially affect the obligation of the parties. As before stated, it does not follow that every mutual misunderstanding or mistake as to the subject-matter of a contract will authorize its rescission. The vital question in this matter is : First, was there a mutual mistake as to the condition of the walls of the building; second, was such a mistake so material to the making of the contract, such an inducement to its execution, that but for it the contract would not have been made. A reading of the lease, the written evidence of what the parties agreed to, with the deduction to be drawn from this evidence, tends strongly to the conclusion that but for the mutual understanding of the parties that the walls of the building were strong enough to support two additional stories thereon, the lease would not have been entered into.

It is true that by the decree, the.building, in the condition in which it was at the time of the execution of the lease, is not and can not be restored to appellants. Hone of the tenants then occupying it were there at the entry of the decree; the rent roll is variant; the rental value of the building is not the same. Under a receiver appointed either by mutual agreement or without dissent, substantial changes and alterations have been made in the structure, nevertheless, it appears that by the restoration of the building, and a money decree in connection with rents heretofore received by appellants, they are placed in substantially the position they were when the lease was made. In the case of the rescission of a sale of improved premises, there can never be a perfect restoration, line for line and corner for corner. The premises when restored are altered; they have suffered the decay incident to time and exposure. There may have been decline or rise in value; the property may have become more or less desirable. The character of the occupation for renting purposes which its situation demands may have greatly changed. As to all these things, there can not be a complete restoration of the statu quo, nor does equity demand it. In such a case a court of equity having come to the conclusion that the party complainant is entitled to a rescission, endeavors to put the parties in the condition they would have been, had not, by reason of their mutual mistake, the contract been entered into; and as before stated, in order to entitle a party to such rescission the condition of affairs must be such that a substantial restoration, can be made. Neblett v. Macfarland, 92 U. S. 101-103.

That there was a mutual mistake as to the condition of the walls and foundations of the building, and that but for such mistake the lease would not have been made, as well as that this mistake was as to a material and important matter affecting the substance of that concerning which the contract was, and the contract itself, there was such evidence that we ought not to overturn the conclusions of the chancellor upon the facts in dispute. The evidence of mutual mistake is clear. A case of a mutual mistake of fact as to a material matter affecting the substance of a transaction affords grounds for an application by either party for a rescission. It may, therefore, be well to consider whether the lessors could have had a rescission had they so applied.

If the lease'had been for one hundred dollars per annum, and it appearing, as from the evidence it fairly does, that the placing of two more stories upon this structure, already seven stories high, would have greatly endangered the entire building and perhaps completely ruined it, appellants would probably have applied to have the contract rescinded, saying that the contract permitting, nay, requiring the placing of two additional stories thereon would never have been made had not- both parties been, when the contract was entered into, mistaken as to the strength of walls and foundations. To this, what reply, under the evidence and findings in this case, could Fitzgerald have made? Would a court of equity, having before it the record of this case, allowed him to go on and break down the building by the weight of the additional stories he had contracted to place thereon ? The record does not show such laches upon the part of appellee in calling for a rescission as forbids relief to him.

An objection is made to the allowance of fees to the master. The court allowed to the master the statutory fees for taking testimony. It appears that by agreement the parties employed a stenographer, and paid him fifty cents a page for reporting the testimony. Thus the master was saved the labor of writing out the testimony. Flo portion of the fifty cents per page was received in any way by the master. Notwithstanding that the master did not have to write down the testimony, he had to listen to it, examine and certify to the correctness of every word transcribed by the stenographer or change the same to correspond with the actual testimony. That done by the parties was not at the master’s request and was doubtless a great saving to the parties in the way of time and solicitor’s fees.

The instance is entirely unlike that commented upon in Schnadt v. Davis, 185 Ill. 476.

We see no reason for interfering with the order of the court as to costs. The decree of the Circuit Court is affirmed.

Mr. Justice Burke took no part in this case.