Hertzler v. Stephens

• Decision Date: 29 October 1898
• Citation: 24 So. 521,119 Ala. 333
• Parties: HERTZLER v. STEPHENS.
• Court: Alabama Supreme Court

24 So. 521

119 Ala. 333

HERTZLER v. STEPHENS.

Supreme Court of Alabama

October 29, 1898

Appeal from chancery court, Madison county; William H. Simpson Chancellor.

Bill by John Hertzler, Jr., against James R. Stephens to enjoin the collection of a judgment and to reform a contract. Decree for plaintiff, and defendant appeals. Reversed.

R. W Walker and Tancred Betts, for appellant.

Humes Sheffey & Speake and Francis G. Caffey, for appellee.

HARALSON J.

On the 8th January, 1894, Henry P. Turner, James R. Stephens, Jr. William Burritt, H. & C. L. Toney, a partnership, and John Hertzler, Jr., the appellant, each owning 49 shares of the stock of the Hagey Hospital Association of Texas, a corporation organized under the laws of that state, agreed with, and obligated themselves to James R. Stephens, that they would, at any time within three months from that date, sell, transfer and deliver to him, their respective shares of stock in said association, at and for the sum of $25.92 per share, stipulating, that in the event the said James R. Stephens should not avail himself of the option within the time specified, then the contract was to void, and all parties to it discharged from any liability on account thereof.

This contract was plain and unambiguous. It was a mere option in said James R. Stephens to buy said stock, from each of the said shareholders, at the price named, at any time within three months from its date. He was under no obligation to give notice within the time, whether he would exercise the option or not. If he failed to do so, the contract by its own terms was abrogated. If he exercised the option, and paid the stipulated price, the stock became his. If he made money by purchasing, it belonged to him, and he was at liberty to exercise the option, as to any one or all the stockholders, at any time he chose to do so, within the three-months limitation for its exercise.

On the 16th of January, 1894, said Stephens executed the following receipt to the appellant: "Huntsville, Ala., January 16th, 1894. Received of John Hertzler, Jr., (49) forty-nine shares of the capital stock of the Hagey Hospital Association of Texas, to be paid for as per terms of a contract duly signed by said Hertzler, Jr., dated January the 8th, 1894, or the said forty-nine shares of stock to be returned by me to said Hertzler, within the time specified in said contract. J. R. Stephens. Witness: Erskine Mastin."

This writing was plainly an exercise of said option by said Stephens to purchase appellant's said stock on the terms therein specified, viz., that he should pay for it or return it to said Hertzler, Jr., within three months from the 8th day of January, 1894, the date of the contract of option. The option contract was thereby changed between said parties, and by the terms of the last agreement, Stephens was to do an affirmative act within the time specified,-either pay the specified amount for the stock, or return it to Hertzler. He failed to do either. Hertzler sued him at law, and recovered a judgment. He appealed to this court, and the judgment was affirmed. Stevens v. Hertzler, 109 Ala. 423, 19 So. 838.

Thereupon, Stephens filed the present bill, to enjoin the collection of said judgment, and to reform said contract of the 16th January, 1894, alleging in substance, that at the solicitation and request of said parties signing said option contract, including Hertzler, the complainant, without consideration, agreed to try and effect a sale of their stock for them on a visit he was contemplating making to Texas for the purpose; that he took said option contract as an accommodation to said parties, and in the interest of his son, J. R.

Stephens, Jr., who owned a block of the stock, and with no view of making money out of it himself; that it was with this purpose he consented to try to effect a sale of said stock in Texas and accepted said option with this understanding; that in pursuance of this suggestion made by the said parties who signed the option, he received said stock, agreeing that he would take it with him to Texas, and if he was enabled to make sale of it, he would account to them for the proceeds of the sale, and if he failed to make sale of it, he would return the stock to them; that to carry out this intention and understanding, and as an evidence of the receipt of it by him, he gave the defendant, Hertzler, the receipt for the stock copied above, with the understanding between him and Hertzler, that he was to be liable for the stock only in the event of his making a sale of it during his visit to Texas, but that through a mistake the paper he executed did not express the agreement and understanding between them, etc.

The bill was demurred to on various grounds, and a motion was made to dismiss for want of equity. The court sustained the demurrer, and granted the motion to dismiss. On appeal, we reversed that decree, and rendered one, overruling the demurrer and motion to dismiss, and allowed defendant 30 days in which to answer. Stevens v. Hertzler, 114 Ala. 563, 22 So. 121.

Hertzler answered, making positive denial of the material allegations of the bill. He denied that there was any contract other than that evidenced by the writings.

The chancellor on final hearing, granted the relief prayed for, and this decree is assigned as error. It is altogether a question of fact, therefore, as governed by the rules of law in such cases, whether the decree of the court shall be affirmed or not.

It is important for the proper determination of the cause, to make reference to the well-established principles governing the reformation of contracts on account of alleged mistakes in their execution.

In Campbell v. Hatchett, 55 Ala. 551, it was said: "The court in the exercise of its jurisdiction (to reform written instruments on account of mistake or fraud in their execution) proceeds with the utmost caution, as it involves the invasion of a salutary rule of evidence prevailing at law and in equity. In all cases, unless the mistake is admitted, it must be proved by clear, exact, and satisfactory evidence, that the mistake exists,-that the writing deviates from the intention and understanding of both parties at the time of its execution,-or the court will decline to interfere." Ohlander v. Dexter, 97 Ala. 476, 12 So. 51.

In Guilmartin v. Urquhart, 82 Ala. 571, 1 So. 897, the court said: "To authorize the reformation of a contract which has been reduced to writing and signed, the proof must be clear, exact and satisfactory,-First, that the writing does not express the intention of the parties-that on which their two minds had agreed;...