Betz v. Swanson
| Decision Date | 27 October 1925 |
| Docket Number | 37045 |
| Citation | 205 N.W. 507,200 Iowa 824 |
| Parties | R. E. BETZ, Appellee, v. NELS P. SWANSON et al., Appellants |
| Court | Iowa Supreme Court |
Appeal from Woodbury District Court.--R. H. MUNGER, Judge.
ACTION in equity to reform a deed. Decree as prayed. The opinion states the case.
Affirmed.
Edwin J. Stason and C. M. Corbett, for appellants.
Jepson Struble, Anderson & Sifford, for appellee.
STEVENS J. FAVILLE, C. J., and DE GRAFF and VERMILION, JJ., concur.
I.
The transaction out of which this controversy arose involved the exchange of a farm in Nobles County, Minnesota, owned by appellant, for an apartment house located in Sioux City, owned by appellee. Both properties were incumbered by mortgages for large amounts. The deed executed by appellant conveying the Minnesota land contained a clause by which the grantee assumed and agreed to pay the incumbrances thereon. Appellee prays that the deed be reformed so as to provide that the conveyance is subject to incumbrances only, upon the ground that the clause was inserted in the deed by accident, fraud, or mistake.
Both parties reside in Sioux City, and had as their common agent for the sale of their respective properties one S. M. Jaffe. This is shown by the fact that each paid him a commission. The negotiations for the exchange were begun by appellant with Jaffe at his office in Sioux City in the early part of 1921. The proposition which was on the same day accepted by appellee was submitted to him by Jaffe for appellant. Appellant, throughout his written and oral arguments, strenuously contends that all that transpired prior to the execution and delivery of the deeds amounted to nothing more than mere preliminary negotiations, and that the contract finally agreed upon was effected by the exchange of deeds. This contention is shown to be unsound, both by the testimony offered on behalf of appellee and the admissions of appellant upon cross-examination. At the time of the first conversation between appellant and Jaffe at the latter's office, a memorandum was made by the latter of certain matters pertaining to the trade. The original could not be produced upon the trial, and there is conflict in the evidence as to its nature and contents. Appellee, the attorney who prepared the deed to the apartment house, and Jaffe, all testified that the original memorandum was signed by the full name or initials of the parties. An instrument purporting to be an exact copy thereof was introduced in evidence. Appellee and Jaffe both testified that this copy was made from the original by Jaffe within an hour after it was written, and that it is a true copy thereof. This memorandum does not purport to contain the full agreement of the parties. It does, however, recite that the Minnesota land is subject to incumbrances of $ 54,000, the amount of cash to be paid, the amount of the incumbrances upon the apartment and of a second mortgage to be executed thereon by appellant. No reference is made to taxes, abstracts of title, or the time of performance. Appellant denies that he signed the memorandum, either by his initials or otherwise, but admits that Jaffe made a memorandum in his presence which he read. A cash payment of $ 2,500 was, by the terms of the memorandum, to accompany the offer. Appellant gave Jaffe his check for this amount, and the same was taken with the memorandum to appellee and turned over to him. Except the clause in dispute, the deeds subsequently exchanged were in conformity to the terms of the memorandum and the full oral understanding and agreement of the parties. The one dissent of appellant from the terms of the agreement, as shown by the testimony of the other witnesses, relates to the assumption of existing incumbrances upon the respective properties. In both direct and cross-examination he testified to the conclusion that it was always understood between the parties that each was to assume and agree to pay the incumbrances upon the property of the other, and that, but for such agreement and understanding, the exchange would not have been made. He also testified that the parties understood that they were trading equities only, and that no value was placed upon the different properties. The evidence clearly, satisfactorily, and conclusively sustains the claim of appellee as to the terms of the contract. The whole course of dealing was in conformity thereto.
II. Appellant's next contention is that the mistake, if any, was unilateral, and therefore presents grounds for rescission only. It has too often been held by this, as well as the courts of practically all other jurisdictions, that equity will reform a written instrument upon the ground of mistake occurring at the time the instrument was prepared, only when such mistake is mutual, to require the citation of authorities to that effect. The necessity of mutuality of mistake arises out of the inability of the court to make a contract for the parties. If the mistake is all on one side, then clearly there was no meeting of minds, and therefore no contract. In such case, rescission, and not reformation, is the proper remedy. This is elementary. 2 Pomeroy's Equitable Remedies, Section 676. The terms of the contract in question were clear, certain, and definite, and contemplated that each would convey his property, subject only to the existing incumbrances thereon. The insertion by appellant in the deed executed by him of the assumption clause was in violation of the mutual understanding and agreement between himself and appellee. Appellee does not ask the court to make a new contract, but to reform the deed, that effect may be given to the intention of the parties as disclosed by the contract which they in fact made. If the clause was inserted in the deed by mistake on the part of appellant or of the scrivener who drew it, then the mistake was mutual, because it was contrary to the real intention and agreement of the parties. If it was inserted by design, it was without consideration and fraudulent. It is a well established rule in equity that a unilateral mistake, accompanied by fraud or inequitable conduct, will also afford ground for the reformation of a contract. 2 Pomeroy's Equitable Remedies, Section 676.
Appellant does not contend that, if the assumption clause was fraudulently inserted in the deed in violation of the mutual intention and understanding of the parties, equity will not grant relief; but it is insisted in his behalf that there is neither plea nor proof of fraud in this case. The petition, however, does charge that:
"The defendant inserted said clause with reference to the assumption of said mortgages above referred to...
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