Lenheim v. Smith

Opinion by

Head, J.,

The power of a court of equity to reform a deed or other instrument on the ground that by mutual mistake it failed to evidence the actual agreement of the parties is undoubted. It is a delicate power, however, to be cautiously exercised. To successfully invoke it, a plaintiff must be prepared to show by evidence that is clear and satisfactory not only that the instrument, as it exists, does not represent the agreement actually entered into but also that the particular reformation sought will bring it into harmony with what was intended to be done by the contracting parties. And it must be apparent that in such case a plaintiff may not with safety sleep on his rights and that such relief will always be denied where the rights of innocent third parties have intervened. In such a case the equity of the plaintiff, however strong against the original contracting party, is but a secrét equity as against all others without notice, and will never be enforced against an innocent subsequent purchaser for value. These principles are so elementary they need no citation of authorities to support them.

In October, 1905, the present plaintiffs sold and conveyed to one Smith a considerable tract of land of which they were then the owners. The deed was preceded by a written agreement. From both of these instruments and from all of the testimony as well it clearly appears that the plaintiffs did not intend to sell nor their grantee to buy all of the tract then owned by the former. A small portion thereof was to be reserved and the title to it was to remain in the grantors. In the preliminary agreement but two lines of the proposed reservation were mentioned. The agreement in this respect was not self-explanatory. The southern and western boundaries of the portion to be reserved and the length of each of these two lines were stated in the agreement. But whether the reservation was to be triangular, quadrilateral, or of irregular shape, could not be determined from an inspection of the agreement alone.s

When the parties shortly thereafter came to make their deed, this apparent defect was cured and the description of the reservation was completed by adding two additional lines necessary to make a quadrilateral, the south and east lines of which were parallel and of equal length with the two mentioned in the preliminary agreement. In July, 1906, the plaintiffs undertook to convey to Finney & Edson the small piece reserved in their previous conveyance to Smith of the larger tract. Whether or not in making this conveyance they compared the description with that of the actual reservation in the former deed does not appear, but it is clear that they embraced in it a small wedge-shaped piece of ground not within the described lines of the original reservation, and that the record title to that small piece had consequently passed by the former deed to Smith. Thus the situation remained until in May, 1910, Smith sold and conveyed to one Friedah and his wife all of the land that had been conveyed by the plaintiffs to Smith, including the small piece, the subject of this dispute.

In July, 1911, the present bill was filed by the plaintiffs praying for a reformation of the deed from themselves to Smith and from the latter to Friedah, on the ground that a mistake had been made in the description of the reservation in the original deed, and that it did not therefore truly set forth the description that had been agreed on by the parties and thus failed to effectuate their mutual intent and purpose. The bill necessarily averred that Friedah, the subsequent purchaser and then owner, had notice before he bought of the mutual mistake referred to. The answer was fully responsive in denial of this averment.

Upon the hearing it appeared that when Friedah took title from Smith he gave a purchase money mortgage to secure a portion of the price of the land, which mortgage was still unpaid. It further appeared that Friedah had executed and delivered a second mortgage to one Benner, a committee of another person, to secure the repayment of money borrowed. It may here be stated that this committee filed no answer, and as to him a degree was entered pro confesso. The plaintiffs were unable to aver in their bill that this committee, when he took his mortgage, had any notice of the mistake referred to, and we are not advised what proof, if any, on that subject- preceded the entry of the decree pro confesso against him. As no appeal, however, was taken by him from that decree. we are not required to express any opinion as to the effect of such decree upon his cestui que trust.

The learned court below further declares, in his opinion, “We may briefly consider the question of notice of this mistaken description to the defendants Friedah prior to their purchase of said land. We think the evidence fails to show that they or either of them had notice prior to the filing of this bill, that the Lenheims or their grantees of the part reserved or intended to be reserved, were claiming that the deed of Lenheims to Smith did not correctly describe the land conveyed and the land reserved out of said conveyance.” We are satisfied from an examination of the evidence that this conclusion of the learned court below was fully warranted. At first blush it would seem as if such conclusion were in contradiction of the tenth finding of fact made by the learned judge, but when that finding is interpreted in the light of the opinion following the portion just quoted„it is clear that what was meant in the finding was that the defendants Friedah had learned that the grantees in the second deed from the plaintiffs were setting up the claim that their deed, as made, carried the lines of the reservation to points that would include the disputed strip of ground. This was quite a different thing from proof of notice to the later purchasers that there was a mistake in the description of the reservation and that as a consequence if they bought from Smith they would not secure title to the disputed tract.

Notwithstanding the conclusion of the learned judge below that the defendants Friedah, at the time of their purchase, were not visited with notice of the alleged mistake, he entered a decree against them because they had not paid all of their purchase money and their mortgage was still in the hands of their vendor Smith, as against whom it was found the deed should be reformed. This conclusion of the learned judge was a non sequitur from the facts on which it was predicated. There was no evidence to show how much the value of the whple tract purchased by Friedah would be affected by the loss of the title to the portion in dispute. If the decree as made were permitted to stand, the title to this portion of ground would be taken away from Friedah although he was an innocent purchaser for value. He would then be subjected to the expense, delay and uncertainty either of an action on the covenant of warranty contained in the deed of Smith to him, or to a defense pro tanto in an action by his mortgagee. The plaintiffs have shown no equity to justify them in seeking a decree against him which would be followed by such results. And if the plaintiffs may not have a decree against Friedahs, there is no reason why they should have one against Smith. His deed, as it was made and recorded, is in the line of the title of the innocent purchasers. To undertake to reform it now would accomplish nothing more than to put a cloud upon the title of the latter even when they have a decree in their favor.

For these reasons we think the learned court below fell into error.

Decree reversed and bill dismissed at the cost of the appellees.