Long v. U.S. Fidelity & Guaranty Co.

• Decision Date: 12 November 1919
• Docket Number: 390.
• Citation: 101 S.E. 11,178 N.C. 503
• Parties: LONG v. UNITED STATES FIDELITY & GUARANTY CO. ET AL.
• Court: North Carolina Supreme Court

101 S.E. 11

178 N.C. 503

LONG v. UNITED STATES FIDELITY & GUARANTY CO. ET AL.

No. 390.

Supreme Court of North Carolina

November 12, 1919

Appeal from Superior Court, Guilford County; Lane, Judge.

Action by William Long against the United States Fidelity & Guaranty Company and another. Judgment for plaintiff, and the named defendant appeals. No error.

A person who seeks to rectify a deed on the ground of mistake must establish in the clearest and most satisfactory manner that the alleged intention to which he desires it to be made conformable continued concurrently in the minds of all parties down to the time of its execution, and must show exactly the form to which deed ought to have been brought and that the omission of some material thing was caused by their mistake.

The action was brought to recover the sum of $2,016.03, less $800, alleged to be due the plaintiff for work and labor done and materials furnished in the construction of a hotel building, at Spartanburg, S. C. the contractors Longest & Tessier having sublet a part of their contract, viz. the plastering, to the plaintiff. Longest & Tessier failed in business, and were adjudged bankrupts on May 25, 1917. They were to furnish all labor and materials required to perform the contract, as to furnishing labor and material, and, in order to secure their compliance therewith, they gave the usual bond, with the defendant as surety. The parties proposed to settle their controversy, and met for the purpose, and entered into a settlement, after which the $800 was paid.

The plaintiff further alleged:

1. That he was employed by the said Longest & Tessier Company to do the plastering in said hotel building and furnish labor and material therefor, and that, under said contract of employment, he did furnish material and labor and did plaster said hotel, to the amount of $13,555.53, upon which amount there has been paid $11,539.50, leaving a balance due upon said contract for labor done and material furnished prior to the next payment hereinafter referred to of $2,016.03.

2. On or about the 7th day of November, 1917, the defendant stated and represented to the plaintiff that the said sum of $2,016.03 due, as aforesaid, upon the Spartanburg contract was, as a matter of fact, due to the plaintiff upon a contract entered into between the plaintiff and Longest & Tessier Company to erect a building at Radford, Va., and the defendant, the United States Fidelity & Guaranty Co., having access to said books, which plaintiff did not have represented to the plaintiff that the books of Longest & Tessier Company showed that the statements made, as aforesaid, were true, and said defendant stated and represented to plaintiff that not more than $800 was due to him on the Spartanburg contract, and the balance was due on the Radford contract, and defendant offered to pay the plaintiff $800 if he would sign a receipt in full for all amounts due upon the Spartanburg contract, representing at the time that this was all that was due the plaintiff upon said contract; that the plaintiff thereupon, relying upon said representations, gave to the said defendant a receipt in full for all amounts due the plaintiff on account of the Spartanburg contract, and also assigned to the defendant all his claim for compensation for the work done under the Spartanburg contract.

3. That the said settlement was obtained from the plaintiff either by mutual mistake, or by false and fraudulent representations, and the plaintiff asks that the same be set aside and held for naught, but the plaintiff admits that the said defendant is entitled to an additional credit for the said sum of $800 received by him, as aforesaid, leaving, as the amount due under said contract from the defendants, $1,216.03.

The defendant denied the material allegations of the complaint, especially denying that $2,016.03 was due on the Spartanburg contract, and averred that, according to the books of Longest & Tessier, the sum of only $639.19 was due thereon. It admitted payment of the $800, and the execution of the receipt by plaintiff and the assignment of his claim to the defendant. Defendant, by separate allegations, goes much into detail as to the occurrences during the conference had for a settlement, which we need not set out here. The jury found that there was a settlement, which was brought about by mutual mistake.

Judgment for the plaintiff, and appeal by defendant.

Jno. L. Rendleman, of Salisbury, and Justice & Broadhurst, of Greensboro, for appellant.

S. B. Adams, R. C. Strudwick, and Allen Adams, all of Greensboro, for appellee.

WALKER, J., (after stating the facts as above).

The gist of the controversy is that, as plaintiff alleges and contends, the settlement, receipt, and assignment were obtained, if not by fraud, then by mutual mistake of the parties. The issue as to the fraud was withdrawn, leaving only the issues as to the settlement, the mutual mistake, and the damages. There was ample evidence to support the verdict, and the motion for a nonsuit was properly overruled.

Two questions remain for consideration, first, whether the judge should have given a different instruction in regard to the quantum or degree of proof, and, instead of charging that the burden was upon the plaintiff to satisfy the jury of the mutual mistake by a preponderance of the evidence, he should have told them that it must be done by clear, strong, and convincing proof. This is a misconception of the nature of the action and the issue. The plaintiff did not seek to reform or correct the settlement, but to set it aside entirely, so that the parties would be placed in statu quo and in the latter case only a preponderance of the evidence is required. The distinction is based upon a sound reason. There is a difference between cancellation or rescission and reformation of an instrument. A noted text-writer says that courts of equity do not grant the high remedy of reformation upon a probability, or even upon a mere preponderance of evidence, but only upon a certainty of error. Pomeroy on Eq. Jur. § 859. It is not so with us in regard to cancellation or rescission (Perry v. Insurance Co., 137 N.C. 402, 49 S.E. 889; Poe v. Smith, 172 N.C. 67, 89 S.E. 1003), though it seems to be so in some other jurisdictions not necessary to mention. A person who seeks to rectify a deed on the ground of mistake must establish, in the clearest and most satisfactory manner, that the alleged intention to which he desires it to be made conformable continued concurrently in the minds of all parties down to the time of its execution; and also must be able to show exactly and precisely the form to which the deed ought to have been brought, and that the omission of some material thing was caused by their mistake. To reform a contract, and then enforce it in its new shape, calls for a much greater exercise of the power of a chancellor than simply to set the transaction aside. Reformation is a much more delicate remedy than rescission. Hence, in order to justify a decree for reformation in cases of pure mistake, it is necessary that the mistake should have been mutual. 34 Cyc. 917, note; Coppes v. Keystone Paint, etc., Co., 36 Pa. Super. Ct. 38. This expresses the distinction between the two equities, and explains sufficiently why there should be a difference in the measure of proof. Where there is reformation, we not only correct the deed, contract, or settlement as written, but compel performance of it, or enforce it, in its amended form. In the other case, we put it out of the way and restore the parties to their former position. This distinction is fully discussed in Harding v. Long, 103 N.C. 1, 9 S.E. 445, 14 Am. St. Rep. 775; Avery v. Stewart, 136 N.C. 426, 48 S.E. 775, 68 L. R. A. 776; Glenn v. Glenn, 169 N.C. 729, 86 S.E. 622; Lehew v. Hewett, 138 N.C. 6, 50 S.E. 459; Lamb v. Perry, 169 N.C. 436, 86 S.E. 179; Ray v. Patterson, 170 N.C. 226, 87 S.E. 212; Perry v. Insurance Co., supra; Poe v. Smith, supra; Boone v. Lee, 175 N.C. 383, 95 S.E. 659. That a court administering equitable...