Where there was a contract for the sale of land for the purchase
of which endorsed notes were given, but before the time arrived for
the making of a deed, the purchaser failed, and the liability to
pay the note became fixed upon the endorser, and a new contract was
made between the vendor and the endorser, that, in order to protect
the endorser, he should be substituted in place of the original
purchaser, fresh notes being given and the time of payment
extended, evidence was admissible to show that the latter contract
was a substitute for the former.
A part of the land having been sold for taxes whilst the first
set of notes was running to maturity, the vendee having been put
into possession, and the vendor being ignorant of that fact when
the contract of substitution was made, all that the endorser can
claim of the vendor, is a deed for the land subject to the
encumbrances arising from the tax sales. The notes given for the
substituted contract must be paid.
The endorser having filed a bill for a specific performance upon
the title bond, which he had received from the vendor, this Court
will not content itself with dismissing his bill without prejudice,
and thus give rise to further litigation, but proceed to pass a
final decree, founded on the above principles.
The facts are sufficiently stated in the opinion of the
Court.
Page 54 U. S. 61
MR. JUSTICE NELSON delivered the opinion of the Court.
Page 54 U. S. 62
The complainants in the court below, the appellants here, filed
their bill for the specific performance of an agreement with the
defendants for the conveyance of two sections of land in the
Chickasaw Cession.
The land was to be conveyed for the consideration of the sum of
$3,741, payable in installments, the last payment to be made on 12
of October, 1847, at which time the deed was to be delivered.
The bill states that at the time of the purchase, the defendants
had no title to the land, as both sections with the exception of
the quarter of one of them, had been previously sold for taxes, and
the time for redemption expired. That since then the defendants
have redeemed one of the sections; but it is alleged that the
purchase of the two sections was one entire contract, and that the
main inducement was to obtain a title to the whole tract, and that
the purchase would not have been made of either section separately
on account of the situation, and state of the improvements. That it
was the duty of the defendants to have paid the taxes, and to have
prevented the sale therefor.
The bill further states that a judgment had been recorded
against the complainants for the amount of the purchase money, and
that the defendants were endeavoring to enforce the collection on
execution. That they have tendered the amount of the judgment and
interest, and have demanded a deed conveying a good and sufficient
title to the land, which demand has been refused. That they are
still willing to pay the judgment with interest and costs, and
tendered the same in court, and to accept a complete title from the
defendants if they can make one.
The bill prays for an injunction enjoining the defendants from
collecting the judgment, that they be compelled to exhibit their
title, and to execute the contract specifically, and to account for
the rents and profits. And that if the defendants are unable to
execute the contract specifically and entire, it may be delivered
up and cancelled, and the injunction made perpetual.
The defendants, in their answer, admit the execution of the
contract for the conveyance of the two sections as stated in the
bill; but deny that the transaction was intended as a purchase of
the land; on the contrary, they insist, it was intended as a
substitution of John D. Bradford, one of the complainants, to the
rights of one John L. Brown, who had previously purchased the same,
and to whom the defendants had agreed to convey the title.
The defendants allege that they entered into a contract with
Brown for the sale of the land on 20 October, 1841, that he
executed to them his four several notes for the purchase money,
payable in one, two, three, and four years, which notes
Page 54 U. S. 63
were endorsed by John D. Bradford, one of the complainants, as
surety, and that the contract was conditioned to make to Brown a
good and valid title on the payment of the purchase money.
That default was made in the payment, and a judgment recovered
against Bradford as endorser, an execution issued, and about to be
levied upon his property. And that thereupon an application was
made to them on behalf of Bradford, for an arrangement by which he
might have the benefit of the purchase of Brown, as he was
insolvent and there were old judgments standing against him, which
would bind the land if the title was made to him. That in
consequence of these representations, they assented to the
arrangement simply on the ground of favor and indulgence to
Bradford, not being disposed to coerce the payment of the money
from a surety, and at the same time withhold from him the means of
indemnifying himself.
And that, at the suggestion on behalf of Bradford, and as the
simplest mode of effecting the object of the arrangement, they took
up the title bond previously given to Brown, and gave a new one to
him, agreeing, at the same time, to a request for further
indulgence in the payment of the purchase money by extending it for
the period of one, two, and three years. That it was under these
circumstances, the contract in question was entered into by the
defendants, on 9 January, 1845, to convey the title to the two
sections to Bradford instead of to Brown, the original
purchaser.
The defendants admit they have been informed, and believe that
both sections, with the exception stated, have been sold for taxes,
prior to the date of this last arrangement, but aver that they had
no knowledge of the fact at the time. They admit that they had not
paid any taxes accruing after the purchase by Brown, 12 October,
1841, nor had they paid any attention to the same, as they
considered it the duty of Brown.
They admit that they have redeemed one of the sections, and
would have redeemed the greater part of the other, had it not been
for the interference of the complainants to prevent the purchaser
from assenting to it.
They also admit that they cannot make an unencumbered title to
the east half and southwest quarter of section No. 12, if the tax
sale is a valid one, but if the same is not, they can make a good
valid title to the whole of both sections.
These are the material allegations as set forth in the
pleadings. The proofs in the record sustain substantially the view
of the case as stated in the answer.
The original purchase of the two sections by Brown from the
defendants, of 12 October, 1841, extended the payment
Page 54 U. S. 64
of the purchase money, running through a period of four years,
and although it contains no provision for possession in the
meantime, it is conceded that the vendee was entitled to it, and
that actual possession was taken accordingly.
Indeed, the courts of Mississippi regard the vendor in contracts
of this description as standing, in most respects, upon the footing
of one who has already conveyed the title, and taken back a
mortgage as security for the purchase money; and the vendee as
mortgagor in possession. 4 Sm. & Marsh. 300; 6
id.
149; 10
id. 184.
Brown therefore, during the running of the contract, was at
least the owner of the equitable title, accompanied with the
possession, and as such was under obligation to take care of and
pay the taxes assessed accruing after his purchase. And the loss of
the title to the whole or any portion of the tract in consequence
of neglect in this respect is attributable to his own fault, for
which the defendants are not responsible. No doubt with a view to
the better security of the purchase money, they might have paid the
taxes in case of the neglect of the vendee, and charged the amount
to him. But this was a question they had a right to determine for
themselves, and with which Brown had no concern.
It is quite clear, therefore, if the case stood on the original
contract of purchase, the defendants, on the tender of the purchase
money, would have been bound only to convey to the vendee a good
and valid title to the land at the time, subject to any outstanding
title or titles that existed under tax sales, where the payment of
the taxes had accrued subsequent to the purchase. For these titles
they would not have been responsible, as they arose from the
neglect of Brown.
The question in the case is whether or not the complainants
stand in any different or better situation.
John D. Bradford, one of them, was surety for Brown for the
purchase money, and against whom a judgment had been recovered for
the amount, execution issued, and about to be enforced, and, for
aught that appears in the record, he was abundantly able to meet
the demand. If payment had been enforced he would have been left to
look to Brown, the principal, for indemnity, who, it is admitted,
was insolvent. In this state of the proceedings, he applied to the
defendants through his brother, the other complainant, for relief:
first, to obtain from them the interest in the land which Brown was
entitled to, he consenting that it might be thus transferred, and
second, for further indulgence in the time of payment of the money,
the brother offering to join in the security. To induce the
defendants to make this change, it was urged that if the deed was
made to
Page 54 U. S. 65
Brown, judgments against him would bind the land, and Bradford
be deprived of the means of security for his advance, and that he
was sure, from his knowledge of the defendants, it was not their
intention to distress him for an act of friendship to Brown,
although he had made himself liable for the debt: that for this
purpose he wished, with the concurrence of Brown, the title bond to
be changed by the defendants from Brown to him; that this could
work no detriment to them, and would afford him security for his
liability, and also that the payment might be extended to one, two,
and three years.
The defendants consented, and the arrangement was made
accordingly, the new bond for the title corresponding with the old
one, except in the change of the name of Bradford for Brown and the
times of payment. The new bond thus given, 9 January, 1845, on its
face, bound them to make a valid title to the two sections on 9
January, 1848, when the last payment became due.
Under these circumstances, it is contended that the defendants
are under obligation to made a deed to Bradford, conveying a
complete title to the two sections, on his tender of the purchase
money, or, in default thereof, that the agreement between them
should be cancelled, on the ground: 1st. That it is not competent
for the court, upon settled principles of law, to admit parol
evidence to alter or vary the terms or legal effect of the written
agreement, and 2d, even if it is that the new bond for the title is
distinct from, and independent of, the one given to Brown, and
hence the conveyance to Bradford is not subject to the
qualifications as to the title to which the conveyance to Brown
might have been on account of the outstanding tax titles from his
own neglect.
It is by no means clear that Bradford is not chargeable with
notice of the condition of the title, at the time he made
application to the defendants to have the bond changed from Brown
to himself. These two sections seem to have been his only means of
indemnity as surety, which circumstance would naturally have led
him to have made an examination into it, and especially as his
liability had passed into a judgment, and which was about to be
enforced against him. It is fair also to presume that he would make
the inquiry with a view to the condition and value of the property
in connection with his application to obtain the change of the
bond, and get the title to himself. Besides, it is inferable from
the evidence in the record, that he resided at the time in the same
county in which the lands lie, and was in a situation to obtain
readily the necessary information. And assuming this conclusion to
be well founded, the concealment of the facts from the defendants
at the time
Page 54 U. S. 66
would be a fraud upon them, which at once removes all difficulty
in respect to the admissibility of the evidence as to the true
character of the transaction.
But we do not propose to put the case upon this ground, as we
are satisfied, independently of this view, the evidence is
admissible and proper to show the understanding and real intent of
the parties, although different from that which the written
contract imports on its face.
"One of the most common classes of cases," says judge Story in
his Commentaries on Equity Jurisprudence,
"in which relief is sought in equity on account of a mistake of
facts, is that of written agreements, either executory or executed.
Sometimes by mistake the written agreement contains less than the
parties intended; sometimes it contains more, and sometimes it
simply varies from their intent by expressing something different
in substance from the truth of that intent. In all such cases, if
the mistake is clearly made out by proofs entirely satisfactory,
equity will reform the contract, so as to make it conformable to
the precise intent of the parties."
1 Story's Eq. Jurisprudence 164. And Lord Hardwicke remarked in
Henkle v. Royal Exchange Assur. Co., 1 Ves.Sr. 317,
"No doubt but this Court has jurisdiction to relieve in respect
of a plain mistake in contracts in writing, as well as against
frauds in contracts, so that if reduced into writing contrary to
the intent of the parties, on proper proof that would be
rectified."
And this ground, it is agreed, is available to a defendant by
way of defense in the answer to a bill for a specific performance;
as he may thus insist upon any matter which shows it to be
inequitable to grant the relief prayed for. The court will not
interpose to compel a specific execution, when it would be against
conscience and justice to do so. 1 Story's Eq.Juris. 174; 2
id. 80.
These principles have become elementary, and it is needless to
refer to further authorities to sustain them.
Now we are perfectly satisfied, upon the proofs before us, that
it was the agreement and understanding of both parties in this
case, that Bradford should be substituted in the place of Brown in
the title bond, and should take such interest as he had in the two
sections in question under it, and nothing more; and this that he
might become entitled to the deed, when the purchase money was paid
which otherwise must have been made to Brown; in other words, an
agreement to put the surety in the place of the principal for the
sake of indemnity, as it was seen that he would be obliged to
advance the money. For this purpose, the defendants were appealed
to on the ground that there were judgments against Brown which
would bind the land
Page 54 U. S. 67
if the deed was made to him, and it was suggested that the
simplest way to effect the object would be to take up the old and
give a new title bond to Bradford. The suggestion was readily
acquiesced in by the defendants, as a mode of making the change
that would enable him to obtain the benefits of the security
desired, Brown first consenting to it. But the suggestion was
acquiesced in, and the new bond given for the title, in ignorance
of the fact that portions of the land had been previously sold for
taxes through the neglect of Brown, and the titles outstanding.
This fact, as is apparent, affected most materially the character
of the transaction, as the mode in making the substitution has had
the effect of imposing upon the defendants responsibilities they
were not under to Brown -- namely, to make good the title to the
two sections, notwithstanding it had been lost by his neglect.
Now this they were not asked by Bradford to do, nor was such the
agreement or understanding of either of the parties, but directly
the contrary. The agreement was for a substitution of Bradford in
the place of Brown, in the previous sale.
The form of the bond for the title, therefore, given to
Bradford, and thus inadvertently adopted, and which imposes upon
the defendants this new obligation, grew out of a mistake, and
misapprehension of the facts as to the condition of the title at
the time. Had the condition of the title been known, it is obvious
the new bond would not have been given, or, if given, its terms
would have been qualified according to the true meaning of the
parties.
In its present form, it does not at all carry out their
understanding and agreement in making the arrangement desired, but
defeats them; for in consequence of this misapprehension as to the
state of the title, it is not a substitution of interest of Brown,
but in effect a resale to Bradford, by which he is entitled not to
such a deed as the defendants were under obligation to make to
Brown, but to one investing him with a complete title to the
land.
And as they are disabled from making this title by reason of the
tax sales, if it is not competent for the court to correct the
mistake and reform the contract according to the real understanding
of the parties, the result is they have lost their land, and
Bradford, the surety for the purchase money, is discharged from his
liability -- a result anything but within the contemplation of the
parties at the time of the arrangement.
We admit, if the defendants had agreed to resell this land to
Bradford and to give him a title, the fact that they were ignorant
of the tax sales would have afforded no ground of defense to a
specific execution. The title bond in that case would have
Page 54 U. S. 68
stood on the footing both parties intended, namely, that a good
title should be given when the purchase money was paid.
But here there was no agreement to sell on the one side or to
buy on the other. The agreement was to give Bradford the benefit of
the sale already made, and to make him such a title as the
defendants were under obligation to make to Brown. It was in truth
but an assent on their part to an agreement on the part of Bradford
with Brown that he should be substituted in his place in that sale
-- a sort of subrogation of the surety to the rights of the
principal. The mode adopted to carry out the arrangement would have
conformed to the intention of the parties had the facts been as the
defendants had every reason to believe -- namely that no change had
taken place in the condition of the title. The mistake as to this
fact has given an effect to the instrument far beyond the agreement
and real understanding of the parties, and which will operate most
unjustly and inequitably, if permitted to stand.
The hardship of the case, as well as the unconscientious
advantage sought to be obtained, will be more apparent when we
recur to the fact that the defendants had no interest whatever in
consenting to the change of the contract in favor of Bradford.
Their debt was secure and in a situation to be immediately
realized, as it was in judgment, and execution, and it is admitted
he was able to meet it. They were actuated altogether from a
disposition to assist him in obtaining some indemnity as surety for
this debt, which it belonged to Brown to pay. And as it was a
matter of indifference to them whether they made the deed to Brown
or to him, they readily assented to the proposed arrangement.
Indeed, it would have been hardly creditable, under the
circumstances in which the application was made, to have refused
it.
We are satisfied, therefore, that the case falls within the
established principles of equity, in granting relief against
contracts entered into upon a mistake, and misapprehension of the
facts, and where the enforcement of which would enable one of the
parties to obtain a most unconscientious advantage over the
other.
The next question is as to the disposition to be made of the
case.
The former course of proceeding in chancery, which was most
usually adopted, would be to dismiss the bill without prejudice,
and which in this case would lead us to affirm the decree of the
court below. The effect of this would probably be to open up a new
scene of litigation between the parties; as the complainant, John
D. Bradford, could resort to his remedy at law upon the title bond;
and the defendants would be obliged to file a cross-bill for the
purpose of staying his proceedings, and reforming
Page 54 U. S. 69
the contract so as to make it conform to the real understanding
of the parties.
The more modern course of proceeding is to dispense with the
cross-bill and make the same decree upon the answer to the original
bill that would be made, if a cross-bill had been filed, if the
defendant submits in his answer to a performance of the real
agreement between the parties. The answer is viewed in the light of
a cross-bill, and becomes the foundation for a proper decree by the
court. This practice has been adopted as most convenient and
expeditious in settling definitively the rights of the parties, and
for the sake of saving further litigation and expense.
In the case of
Staplyton v. Scott, 13 Ves. 425, the
Master of the Rolls dismissed the cross-bill with costs,
considering it unnecessary, as the court would upon the answer
decree a specific execution of what was the real agreement.
This practice was followed by Lord Eldon in
Fife v.
Clayton, 13
id. 546, on the ground that it was right
in principle, and would save expense. A specific performance was
also decreed upon the answer in
Gwyn v. Lethbridge, 14
Ves. 585, and it appears now to be a very common practice in
chancery proceedings. 1 Daniell Pr. 436 and note; 2
id.
101, 102 and note; Story's Eq.Pl. sec. 394.
These cases refer more particularly to the right of the
defendant to have a decree for a specific execution of the
agreement according to the answer so that he may be saved the
expense of a cross-bill, even against the claim of the complainant
to have his bill dismissed.
The same principle, however, seems to be equally applicable to
the complainant where he insists upon the decree for specific
performance of the contract as established by the proofs, although
different from that set up in the bill. Indeed, we perceive no
solid distinction between the two cases. In both, the contract, of
course, when ascertained and conformed to the real understanding of
the parties, must be such a one as the court deems fit and proper
to be enforced. 2 Daniell Pr. 1001, 1002;
London &
Birmingham Railway Co. v. Winters, Craig & Phil. 62.
We shall adopt this practice in the disposition of this case, as
it will save all further litigation and expense, and settle the
rights of the parties, as, in our judgment, the principles of
equity and justice demand.
The bill was dismissed by the court below without prejudice,
leaving the complainants at liberty to resort to any other remedy
in the case which they might deem expedient.
We shall therefore reverse the decree and remit the
proceedings
Page 54 U. S. 70
to the court below, with directions that the defendants execute
a deed of the two sections of land in question to John D. Bradford
with covenant of warranty, subject however to any outstanding title
or titles accruing from tax sales since the sale, and title bond to
John L. Brown, 12 Oct. 1841, and deposit the same with the clerk of
the court to be delivered to the said Bradford on his surrendering
and canceling the title bond made to him on 9 January, 1845, and
paying the judgment the defendants have against the complainants
for the purchase money, with interest; also that the injunction be
dissolved, and the defendants be at liberty to enforce the
execution of the judgment; that no costs shall be allowed to the
appellant in this Court, and that costs shall be decreed to the
defendants in the court below.
MR. JUSTICE DANIEL and MR. JUSTICE GRIER dissented.
Order
This cause came on to be heard on the transcript of the record
from the District Court of the United States for the Northern
District of Mississippi, and was argued by counsel. On
consideration whereof, it is now here ordered, adjudged, and
decreed by this Court that the decree of the said district court in
this cause be and the same is hereby reversed, and that this cause
be and the same is hereby remanded to the said district court with
directions, that a decree be entered that the defendants execute a
deed of the two sections of land in question to John D. Bradford,
with covenant of warranty, subject, however, to any outstanding
title or titles accruing from tax sales since the sale, and title
bond to John L. Brown of 12 October, 1841, and deposit the same
with the clerk of the said district court, to be delivered to the
said Bradford on his surrendering and canceling the title bond made
to him on 9 January, 1845, and upon his paying the judgment the
defendants have against the complainants for the purchase money
with interest; also that the injunction be dissolved, and the
defendants be at liberty to enforce the execution of their
judgment.
And it is further ordered and decreed that each party pay his
own costs in this Court, and that costs shall be decreed to the
defendants in the court below.