Fife v. Cate

• Decision Date: 31 January 1911
• Citation: 82 A. 741,85 Vt. 418
• Court: Vermont Supreme Court
• Parties: FIFE et al. v. CATE et al.

82 A. 741

85 Vt. 418

FIFE et al.

v. CATE et al.

Supreme Court of Vermont.

January Term, 1911.

On Motion for Rehearing, Feb. 9, 1912.

[Copyrighted material omitted.]

Appeal In Chancery, Lamoille County; Zed. S. Stanton, Chancellor.

Bill in equity by S. A. Fife and another against W. W. Cate and others. From the decree, defendants appeal. Reversed and remanded with mandate.

Argued before ROWELL, C. J., and MUNSON, WATSON, and HASELTON, JJ.

B. E. Bullard and Harry C. Shurtleff, for appellants.

R. M. Harvey and J. W. Redmond, for appellees.

ROWELL, C. J. This case has been here before, as shown by 84 Vt. 46, 77 Atl. 947. It is a bill in chancery to reform a written contract of settlement of a long course of dealing between the orators and the defendant Cate in a lumber business involving several hundred thousand dollars, and for an injunction against the further prosecution of certain actions at law. The case was sent back then because the parol agreement to which the writing is sought to be conformed was not found beyond a reasonable doubt.

It is now found beyond a reasonable doubt that said parol agreement was, and was mutually intended by the parties thereto to be, a complete settlement of all the matters and differences then pending between the orators on one side and Cate and wife on the other side, who are the only parties to the written contract, in which the part sought to be reformed is this: "And the parties of the first part further agree, jointly and severally, to relinquish any claim, right, or interest by way of mortgage or otherwise, that they or either of them have in or to any property, real or personal, or the proceeds thereof, that may have been sold or disposed of by the parties of the second part or either of them previous to the date" of the contract. It is found that it was the intention of the parties to said written contract that said quoted clause should be Inserted therein, and that it was inserted therein, for the sole purpose of carrying out the parol stipulation to relieve Cate from any liability for having wrongfully disposed of certain property, as the orators claimed he had.

Though it is found that Mrs. Cate was not present when the parol agreement was made, yet the chancellor makes her a party thereto because, he says, she was there represented by her husband and her solicitor, both of whom agreed, acted, and did in her behalf as theretofore found by him. But he says that he had nothing before him on which to make a finding as to her actual knowledge of the terms of that agreement, except the fact that she signed the written contract; and nothing on which to base a finding as to what authority, if any, she actually gave her husband or her solicitor to settle the foreclosure case to which she was a party, in which alone, of all the matters and things included in said agreement, she had an interest, and that interest, it appears, was a homestead interest in premises covered by one of the mortgages then being foreclosed.

But the fact that Mrs. Cate signed the written contract is no evidence that she had actual knowledge of the terms of the parol agreement that were different from the written contract; and as the chancellor says that he had nothing before him on which to base a finding as to her actual knowledge except such signing, it must be held that she had no such knowledge, nor any other knowledge, unless it be said, as claimed by the orators, that the knowledge of her solicitor is her knowledge in law, or that the circumstances are such as to warrant the inference that he communicated to her his knowledge, which was full and complete. But it cannot be said as matter of law that his knowledge is her knowledge, because, for one thing, it appears by the former report that he did not participate in the making of that agreement, and was not present when it was made, and knew of it only by being told after it was made. And even if he had represented her in its making, as it is claimed he did, virtually, he would have been acting beyond the scope of his authority, for no special authority to do that is found, without which he had none at all, for his general authority as solicitor gave his none.

Nor can the inference be indulged from the circumstances that either he or her husband communicated their knowledge to her, for it was for the chancellor to draw that inference if it could be drawn, which he has not done, but has, instead, precluded the idea of such an inference by saying that he had nothing before him on which to base a finding as to her actual knowledge except the fact that she signed the written contract, which, as we have said, is no evidence of actual knowledge of the terms of that agreement that differed from the written contract. It must be held, therefore, that she had no knowledge of those terms, neither in law nor in fact. This being so, it follows that her mind never met the minds of the orators as to those terms, and that the mistake in the written contract in respect thereof is not mutual between them, which is essential to reformation.

But it is said that this does not preclude reformation, because Mrs. Cate is only a nominal party, the interest of the whole subject-matter being in her husband; or, if that is not so, that he alone is interested in the part sought to be reformed. It cannot be said, however, that she is only a nominal party, for, as we have said, she had a homestead interest in the premises covered by one of the mortgages being foreclosed, and consequently was a necessary party to the foreclosure of that interest, and was in fact a party to that proceeding, and therefore the whole interest in the subject-matter of the contract was not in her husband, as claimed, but was partly in her, for that proceeding was being settled thereby. Nor is he alone interested in the part sought to be reformed, for that part runs to her as well as to him, and relinquishes any claim, right or interest by way of mortgage or otherwise that the orators or either of them have in or to any property, real or personal, that may have been sold or disposed of by them or either of them previous to the date of the contract. She is entitled to have this part of the contract stand for her protection for she may have sold or otherwise disposed of property, or participated therein, in a way to subject herself to claim by the orators if not to make herself liable to them.

This part of the contract cannot, therefore, be reformed as to her, and consequently cannot as to him, for reformation as to him would cut out what she is entitled to have remain.

This being so, the defendants claim that inasmuch as the mandate sent down before directed that the bill be dismissed unless it was found beyond a reasonable doubt that the verbal agreement was, and was mutually intended to be, a full and complete settlement of all matters and differences between the orators on one side and Cate and wife on the other, all questions outside of reformation have been disposed of. But this is hardly so, for a finding to that degree of certainty is essential to any relief against the written contract on the ground of mistake, for equity will not allow its legal effect to be changed by parol on a mere preponderant finding any more than it will allow its terms to be altered thereby, but the finding must be beyond a reasonable doubt. This is so held in Fairbanks v. Harvey, 83 Vt. 283, 75 Atl. 268, where it is said that whether the written instrument be corrected, or its enforcement restricted by injunction, to conform to the real agreement made by the parties, the effect is a reformation of the instrument, and that the evidence showing the essential elements of the mistake must be of the same conclusive character.

It stands for consideration, therefore, whether any and what relief can be granted other than reformation. But before taking up this question, we must consider objections made to the sufficiency of the bill and other questions raised below.

In addition to asking for reformation, the bill asks for an adjustment and a settlement of all matters and things between the parties that were connected with, grew out of, or were a part of, the business deal in the bill mentioned, and for a reformation of the written contract to that end.

The defendant Cate objects by demurrer that this makes the bill multifarious, because it joins two distinct and different causes of action, namely, reformation of the contract and settlement of said business relations. Now an essential element of multifariousness as to matter is that the causes, of action must have no connection nor common origin, but must be separate and distinct. But here the causes of action are not separate and distinct, but are so closely connected that reformation would accomplish the settlement asked, and it is prayed for to that special end. The bill, therefore, is not multifarious.

The defendant Cate in like manner objects that the orators have an adequate remedy at law as to the allegations and prayer of the bill for adjusting by decree the business relations of the parties, as to which, he says, he is entitled to a trial at law and by jury. But the orators have not an adequate remedy at law in respect of that matter if Cate can avail himself of the settlement contract as written, for that gives him rights against the orators that the bill shows he ought not to have, but which they could not prevent his having at law, for there they could neither vary the terms of the writing nor limit its legal effect. This is an answer to the cognate claim of a right to a trial by jury, and also makes it unnecessary to consider whether there is jurisdiction, as claimed by the orators, on the ground of multiplicity of suits.

The question of taking jurisdiction of the whole, when there is jurisdiction of only a part, is passed over for the present, to be taken up later if necessary.

The defendants contend that the evidence was not legally...