Alliance Trust Co., Limited v. Armstrong

• Decision Date: 20 February 1939
• Docket Number: 33497
• Citation: 186 So. 633,185 Miss. 148
• Court: Mississippi Supreme Court
• Parties: ALLIANCE TRUST CO., LIMITED, et al. v. ARMSTRONG

186 So. 633

185 Miss. 148

ALLIANCE TRUST CO., LIMITED, et al. v. ARMSTRONG

No. 33497

Supreme Court of Mississippi, Division A

February 20, 1939

Suggestion Of Error Overruled May 29, 1939.

APPEAL from the chancery court of Adams county HON. R. W. CUTRER Chancellor.

Suit by George W. Armstrong against the Alliance Trust Company Limited, and others, for cancellation of deed of trust for relief under moratorium statute. From a judgment for plaintiff, defendant named appeals. Reversed and bill dismissed.

Reversed and bill dismissed.

Percy &amp Farish, of Greenville, for appellants.

The decree of the United States Circuit Court of Appeals, Fifth Circuit, in Cause No. 8223, styled Geo. W. Armstrong v. The Alliance Trust Company, Ltd., 88 F.2d 449, is a final adjudication of all questions of usury in the case at bar, and is binding upon this court.

The familiar rule of res adjudicata, long settled everywhere, as this court knows, is that the rendition of a decree, or judgment, by a court of competent jurisdiction over the parties and the subject matter of the suit is forever conclusive upon the same parties and their privies, as to all matters determined or which might have been determined.

Gaines v. Kennedy, 53 Miss. 103; Hardy v. O'Pry, 102 Miss. 197; Dean v. DeSoto County, 135 Miss. 268; Bates v. Stricklin, 139 Miss. 636; Love v. Yazoo City, 162 Miss. 65; National Life Ace. Ins. Co. v. Prather, 172 Miss. 567.

This doctrine, always vigorously applied by this court, has been extended to the point that a former judgment on the merits of a case is determinative of any and all issues presented, however erroneously decided, and is binding in a different cause of action between the same parties where such issues are essential to the latter suit.

Fair v. Dickerson, 164 Miss. 432; Watkins v. State Board of Pharmacy, 170 Miss. 26.

Where a federal court, deriving its jurisdiction from the citizenship of the parties, and by administering the law of the state in which it sits, renders a judgment, such is entitled to the same sanctity and effect as would be due to the judgment of the state court in a like case and under similar circumstances.

Dupasseur v. Rochereau, 21 Wall. 130, 22 L.Ed. 588; Pendleton v. Russell, 144 U.S. 640; Embry v. Palmer, 107 U.S. 3; Crescent City, etc., Co. v. Butchers' Union, etc., Co., 120 U.S. 141; Shields v. Taylor, 13 S. & M. 127; National Surety Co. v. Lee, 125 Miss. 517; G. M. & N. R. R. Co. v. Hill Mfg. Co., 127 Miss. 644; New York Life Ins Co. v. Dumler, 149 Miss. 361; Thornton v. Natchez, 88 Miss. 1.

The holding of the lower court that the decree was not binding upon it rests upon grounds that are plainly and palpably violative of the rule of res adjudicata.

Deposit Bank v. Board of Councilmen of Frankfort, 191 U.S. 499, 48 L.Ed. 276.

Without at this time inquiring into the validity vel non of the extension agreement, the question arises whether appellee might raise and litigate such an issue in the courts of Mississippi. If appellee could have, with propriety, raised the bar of the statute of limitations in the suit filed in the United States District Court, and he failed to do so, is he now at liberty to do so in the courts of this state?

The transcript of the record in the federal courts shows that appellee filed his bill of complaint in the district court on January 14, 1936. At that time what were the circumstances facing the parties with reference to the statute of limitations? What facts bearing upon the extension agreement were then in appellee's possession? Did he then know he had grounds for its rescission and avoidance? Could the plea of the statute of limitations have been properly made in the federal litigation? If these questions are answered in the affirmative, under the sound and salutary rule adopted by this court, appellee is estopped from questioning the extension agreement and pleading limitations in the courts of this state.

Stewart v. Stebbins, 30 Miss. 66; Buford v. Kersey, 48 Miss. 642.

It is familiar learning to this court that, in order for a mistake of fact to be relievable in equity by way of reformation, there must appear a mistake of both parties as to a material fact bearing upon the transaction. Moreover, a mutual mistake has reference to an intention, bilaterally shared, which is not properly expressed by the deliberate act of the parties. Unless there can be ascertained a mutual intent of the parties--a meeting ground of the minds of both sides--equity is powerless to reform an instrument objectionable to one party into another instrument equally objectionable to the other party.

Whitney Central National Bank v. First National Bank of Hattiesburg, 158 Miss. 93; Mosby v. Wall, 23 Miss. 81; Rogers v. Clayton, 149 Miss. 47; Watson v. Owen, 142 Miss. 676; Lamar v. Lane, 170 Miss. 260; Wall v. Wall, 177 Miss. 743.

It is plainly upon the principle that a man cannot profit by his own conscious wrong that equity will reform at the instance of one taken advantage of while in error of a material fact.

12 Am. Jur., sec. 138; Columbia National Life Ins. Co. v. Black, 35 F.2d 571, 71 A. L. R. 128.

Generally it may be said that equitable relief by way of rescission will be given from a unilateral mistake relating to a material feature of the contract of such grave consequence that enforcement of the contract would be unconscionable, if the party making the mistake was in the exercise of ordinary diligence, and relief can be given without serious prejudice to the other party, aside from the loss of his bargain.

9 Am. Jur., sec. 33, page 378; 59 A. L. R. 809; Hurst v. National Bond & Investment Co., 117 So. 792, 59 A. L. R. 807.

We submit that the lower court erred in granting rescission because (1) The proof does not show that the enforcement of the contract as actually made would be unscionable. (2) The proof does not show that appellee acted under a mistake notwithstanding the exercise of ordinary diligence. (3) The decree destroyed all of appellant's rights, although it was possible to restore the statu quo ante.

Cresswell v. Cresswell, 164 Miss. 871.

Rescission of the extension agreement was improperly allowed because it sufficiently appears from the evidence that the error was the result of appellee's own negligence and lack of diligence.

1 Elliott on Contracts, sec. 110, page 189; 12 Am. Jur., sec. 137, page 629; 10 R. C. L. 297, sec. 40; Wall v. Wall, 177 Miss. 749.

It is the firmly established law of this state, in so far as the courts of law are concerned, that a person cannot avoid a written contract deliberately made, on the ground that he did not read it or have it read to him, and that he supposed its terms were different, unless he was induced not to read it or have it read to him by the fraudulent representations of the other party.

Continental Jewelry Co. v. Joseph, 140 Miss. 582; Gunter v. Molphus Co., 149 Miss. 603; Fornea v. Goodyear Yellow Pine Co., 178 So. 914.

The courts unanimously hold that if a party would preserve his right to rescind a contract, he must promptly notify the other party of his intent not to be bound thereby, and that he must not vacillate in his purpose but adhere to it, avoiding any conscious recognition of the contract as binding upon him.

Foster v. Swanson, 306 Ill. 518, 138 N.E. 119; Kennedy v. Bender, 140 S.W. 49; Gibson v. Alford, 161 Ga. 581, 132 S.E. 442; Cleaves v. Thompson, 122 Kan. 43, 251 P. 429; Columbus Hotel Corp. v. Hotel Management Co., 116 Fla. 464, 156 So. 893; Holman v. Gulf Refining Co., 76 F.2d 94; Gravenhorst v. Zimmerman, 236 N.Y. 22, 27 A. L. R. 1465; Ayres v. Mitchell, 3 S. & M. 683; Hansen v. Field, 41 Miss. 712.

We understand the basis upon which equity will act to relieve from mistakes to be that aid can be granted to one party without prejudice to the other party; that so long as the parties have not materially altered their position, the relief to the mistaken party is equitably balanced by giving back to the other party all of the rights surrendered in the relievable transaction. The premise for relief is the absence of hardship upon the parties. The only exception known to the courts appears to be that, if restoration is impossible, relief can be granted only where the clearest equity makes it imperative.

Martin v. Broadus, Freem. Ch. Rep. 35; White v. Trotter, 14 S. & M. 30; Hanson v. Field, 41 Miss. 712; Dean v. Robertson, 64 Miss. 195; Bonner v. Bynum, 72 Miss. 442; Webb v. Webb, 99 Miss. 234; Pound v. Clarke Hood & Co., 70 Miss. 263; Shipp v. Wheeless, 33 Miss. 646.

The only exception to the requiring of restoration, as recognized by all the courts, is that if it has become impossible to restore the former status, equity will nevertheless rescind if the clearest equities of the complainant make it imperative.

Such an exception cannot possibly apply to the case at bar. Appellee has not claimed that it does apply. Furthermore the status of both parties can be easily restored. Not the slightest prejudice will accrue to either side. Appellee cannot complain of any hardship being thereby worked upon him. Moreover, we submit that under any view of this case the equities of appellant are just as strong and just as deserving of protection as may be the equities of appellee.

Therefore under all the authorities that this court recognizes, if cancellation of the agreement extending the maturity of the debt is to be decreed, this court must preserve the equities of appellant by awarding a period of nineteen days in which to take action on the note. Our position on this appeal has been and still is, that, although we do not believe that the conditions necessary for rescinding a contract are present in this case, the decree of the lower court, in all equity...