Archer v. McClure
| Decision Date | 30 May 1914 |
| Docket Number | 640. |
| Citation | 81 S.E. 1081,166 N.C. 140 |
| Parties | ARCHER ET AL. v. MCCLURE ET AL. |
| Court | North Carolina Supreme Court |
Appeal from Superior Court, Cherokee County; Ferguson, Judge.
Action by Robert N. Archer and others against George W. McClure and others. Judgment for plaintiffs, and defendants appeal. Affirmed.
Whether the evidence of mistake, warranting reformation of an instrument, is of the necessary clear, strong, and convincing character is a question for the jury.
This action or proceeding was brought by the plaintiffs to reform and recover upon a bond given by the defendants in an action brought by Robert N. Archer and others against George W McClure. The original action of Archer and others against McClure was brought for the recovery of a certain tract of land described in the complaint, and a restraining order was issued therein against the said McClure, enjoining him from cutting timber from the lands in dispute and from removing certain sawed lumber. Thereafter the lumber claimed by McClure was sold by him to the Albert Haas Lumber Company, and, in order to remove the lumber, the Albert Haas Lumber Company, through one of its members, went to M. E Cozad, who had represented the plaintiffs, Archer and others as agent, and told him that they were making arrangements to purchase the lumber from McClure and did not care to trespass on the land, and Cozad told Haas that, if he would give a good bond of indemnity against all loss, they could remove the lumber. The original suit of Archer and others against McClure, as shown by the record, was instituted in the name of Archer and others, as trustees, by M. E. Cozad, agent for the plaintiffs, and Mr. Cozad was the active agent in prosecuting the same; Archer and others, trustees, being nonresidents of the state.
After the purchase of the lumber by the Albert Haas Lumber Company and the conversation with Mr. Cozad, in which he agreed to allow them to give bond and remove it, the Albert Haas Lumber Company undertook to give this bond, and applied to the defendant Fidelity & Deposit Company of Maryland to make it. A copy of the bond and of the power of attorney is set out in the record of the original case of Archer and others against McClure, as appears therefrom. The bond is signed by George W. McClure, the Albert Haas Lumber Company, and Fidelity & Deposit Company of Maryland, and its execution authorized by the latter, by the power of attorney attached; the only difference being that the name of M. E. Cozad, who was acting as agent, was inserted in the bond as obligee, without the names of his principals. It is this bond that gave rise to the controversy; the name of M. E. Cozad having, as the plaintiffs alleged, been written in the bond by mistake instead of Archer and others, trustees, the real plaintiffs in the action. This mistake was not discovered until some time after a judgment by default was taken against McClure adjudging that the plaintiffs were the owners of the land in dispute, and ordering an inquiry as to the damages, and at the succeeding term of court an issue of damages was submitted and were assessed by the jury at $805. Upon the judgment by default and the verdict assessing damages, a judgment was asked by the plaintiffs, M. E. Cozad having come in and made himself a party plaintiff, against the defendants, George W. McClure and the Albert Haas Lumber Company and Fidelity & Deposit Company of Maryland, which judgment was resisted by the latter company upon the ground that the bond given by it was to pay all such sums as might be recovered against the said McClure for the removal of the lumber described in the complaint on file in the suit of M. E. Cozad against George W. McClure. This proceeding was then instituted to correct the bond so as to conform to the alleged original intention and agreement, which was to indemnify the plaintiffs, Archer and others, from loss on account of removing the lumber.
The power of attorney signed by the defendant, which was filed in the original suit of Archer and others against McClure, shows that Aaron Haas or Edwin R. Haas was authorized to execute a bond which the Albert Haas Lumber Company was required to file in the superior court of Cherokee county, N. C., in the case of M. E. Cozad against G. W. McClure, and the bond was accordingly executed by Albert Haas, as attorney in fact of the Fidelity & Deposit Company.
The following verdict was returned by the jury:
"(1) Did the defendants, G. W. McClure, Albert Haas Lumber Company, and Fidelity & Deposit Company, execute the bond dated June 7, 1906? Answer: Yes.
(2) Was said bond given for the purpose of allowing the removal of the lumber mentioned in the complaint in the case of R. N. Archer et al. v. G. W. McClure, and was said bond intended to have been given in that case, and by mutual mistake and the mistake of the draftsman the name of M. E. Cozad inserted instead of R. N. Archer and others? Answer: Yes.
(3) Did the Fidelity & Deposit Company of Maryland know, when the bond was executed, that there was such a suit pending in favor of R. N. Archer, Louis Krohn, W. R. Hopkins, F. W. Bruch, E. I. Leighton, and George Reeves? Answer: Yes.
(4) Did the Fidelity & Deposit Company of Maryland authorize any one to execute any bond for or on its behalf in any action in favor of R. N. Archer? Answer: Yes.
(5) Have the defendants G. W. McClure and Albert Haas Lumber Company been discharged in bankruptcy? Answer: Yes."
E. B. Norvell, of Murphy, for appellants.
J. D. Mallonee, of Murphy, and Zebulon Weaver, of Asheville, for appellees.
WALKER, J. (after stating the facts as above).
The doctrine is elementary that parol evidence is not in general admissible between the parties to vary a written instrument, but it is equally well settled that mistake, fraud, surprise, and accident furnish exceptions to the universal principle, and parol evidence, in any case brought within one of the exceptions, is admitted to vary the writing so far as to make it accord with the true intention and agreement of the parties. These exceptions rest upon the highest motives of policy and expediency, or otherwise an injured party would generally be without remedy. Equity follows the law, it is true, but sometimes it will intervene and afford relief where the remedy at law is inadequate for the purpose. The doctrine we have stated has often been applied by this and other courts in the correction of written contracts, bonds, deeds, and other instruments, where the mistake was one of fact, mutual and common to all the parties, and the proof clear, strong, and convincing. 2 Pomeroy's Eq. Jur. (1st Ed.) § 858; 1 Beach, Mod. Eq. Jur. §§ 48 and 52; 1 Story's Eq.
Jur. (12th Ed.) § 138, and note; Dillard v. Jones, 229 Ill. 119, 82 N.E. 206, 11 Ann. Cas. 82. A mistake exists when a person under some erroneous conviction of law or fact, does, or omits to do, some act which, but for the erroneous conviction, he would not have done or omitted. It may arise either from unconsciousness ignorance, forgetfulness, imposition, or misplaced confidence. Where the mistake arises from imposition or misplaced confidence, relief may be had on the ground of fraud. Where it arises from unconsciousness, ignorance, or forgetfulness, no element of fraud exists, and redress must be obtained, if obtained at all, on the distinct equitable basis of mistake. Bispham on Equity (6th Ed.) § 185.
It is said in 34 Cyc. 908, to be settled by a host of authorities that where, because of mistake, an instrument does not express the real intention of the parties, equity will correct the mistake, unless the rights of third parties having prior and better equities, have intervened. This is done, not for the purpose of relieving against a hard or even oppressive bargain or to give either party a better one, but simply to enforce the agreement as it was made and to prevent the injustice which would ensue if this is not done. Nor will chancery make a new contract, under the pretext of correcting a mistake, for, where there is no meeting of the minds, there is no case or ground for reformation. Wherever an instrument is drawn with the intention of carrying into execution an agreement previously made, and, by mistake of the draftsman or scrivener, it fails to do so, the mistake will be corrected, and the original contract enforced according to the real intention of the parties. We have said the mistake must be mutual, but by this is not meant that both parties must agree at the hearing that the mistake was in...
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