Mitchell Manufacturing Co. v. Kempner

• Decision Date: 18 November 1907
• Citation: 105 S.W. 880,84 Ark. 349
• Parties: MITCHELL MANUFACTURING COMPANY v. KEMPNER
• Court: Arkansas Supreme Court

105 S.W. 880

84 Ark. 349

MITCHELL MANUFACTURING COMPANY v. KEMPNER

Supreme Court of Arkansas

November 18, 1907

Appeal from Pulaski Chancery Court; Jesse C. Hart, Chan cellor reversed.

Decree reversed and remanded.

W. E Atkinson, for appellant.

1. Appelles not entitled to reformation because: (1), They signed without reading, when no fraud was practiced to prevent it, and are bound by it. 71 Ark. 185. (2) There was no mutual mistake of the parties, if any mistake existed. 71 Ark. 614. The contracts put them on notice that they took the risk, for it is so expressly provided. The misrepresentations of the agent were clearly an afterthought, and their letters disprove their defense.

2. Mere preponderance of evidence is not sufficient to avoid a contract for fraud. It must be clear and convincing. A higher degree of evidence is exacted. 4 Wigmore, Evidence, § 2498; 39 S.W. 881; 12 Heisk. 28; 8 Humph. 233; 1 Johns. Ch 590; 2 Id. 585; 121 U.S. 379; 128 Id. 673; 167 Id. 224; 37 Ark. 149; 55 Id. 152; 66 Id. 155; 72 Id. 72.

3. The Kempners nowhere in their correspondence intimated fraud or ignorance of contents of contract. They chose their grounds for relief, and must stand there. They are estopped from setting up different grounds. 96 U.S. 259; 61 Wis. 623; 37 Minn. 465; 9 Utah 105.

Morris M. Cohn, for appellees.

1. The contracts were not enforceable because of fraud and misrepresentation. 32 Ga. 704; 2 Head (Tenn.), 526, 531; 54 F. 87; 4 C. C. A. 199; 101 N.W. 447. Fraud vitiates everything it touches, and parol evidence is always admissible to show that the execution of an instrument was procured by fraud, or that by reason thereof it does not express the intention of parties. 17 Cyc. 695, note 14; 73 Ark. 470; 83 Ark. 15; 72 Ark. 343; 35 Id. 483. This is so where there is no warranty. 31 Ark. 170.

2. As to what amounts to fraud, see 7 Ark. 166; 14 Id. 21; 38 Id. 334; 30 Id. 362.

3. Where there is fraud, equity has jurisdiction. 33 Ark. 425; 14 Id. 345. And will rescind contract and restrain its enforcement. 11 Ark. 58; Pom. Eq. Jur. c. 3, § 3 par. 872 to 921, 910-921; 73 F. 574; 73 Cal. 452; 2 Am. St. 823; 15 P. 82.

4. When a merchant, in the hurry of business, known to vendor, does not read a contract, it makes the duty of dealing honestly that much the greater--he must not take advantage of it, for it would amount to a trick. 42 Ark. 362, 369-370; 38 Id. 334; 60 Id. 387; I Bigelow on Fraud, 526.

MCCULLOCH, J., HART, J., disqualified.

OPINION

MCCULLOCH, J.

The Mitchell Manufacturing Company, an Ohio corporation, is engaged in the business of manufacturing and leasing machines called "The Silent Shoe Lace Salesman," which are designed for use in selling shoe laces. Shoe laces are placed in these machines in pairs, and the machine is operated by dropping a nickel in a slot which causes a pair of laces to be released and passed out to the operator. They are set in public places, such as hotel lobbies, barber shops, railroad waiting rooms, etc., and in this way become, as the name implies, silent shoe lace salesmen. Appellant also manufactures for sale to the lessees of machines shoe laces, each pair being inclosed in a paper wrapper or tube with the name and business of the lessee printed thereon, so as to be an advertisement of his business and wares. The machines are usually leased to retail shoe dealers, and, as is explained in the testimony, they serve, not only to advertise the business of the dealer, but help to correct the unprofitable habit which retail shoe dealers are said to indulge in giving away laces too frequently.

On April 12, 1904, appellees, Ike Kempner & Bro., who are retail merchants in the city of Little Rock, contracted with appellant in writing for the lease of five of these machines for a term of years at the rental price of $ 40 for each machine and pedestal, and for the purchase of 10,000 pairs of shoe laces at an agreed price. A separate contract was executed for each machine, and a printed form prepared by appellant was used. The contracts contained numerous provisions with reference to the use and care of the machines and sale of laces, and also contained a stipulation in the following words, viz.: "This machine is not guarantied against slugs, spurious coin or the weather."

Appellees refused to accept the machines and laces, after being shipped to them Pursuant to the contract and instituted this suit in equity to have said contracts reformed by striking therefrom the stipulation quoted above with reference to guaranty against "slugs, spurious coin and the weather."

It is alleged in the complaint that the agent of appellant who procured the execution of said contracts by appellees falsely represented to them that the machines would operate successfully by allowing the laces therein placed to come out in single pairs upon depositing a nickel in the slot, and that the machines were so constructed that slugs, spurious coin and other substances could not be used successfully in operating them. Reformation of the contract is sought, and also cancellation of the same, on account of a breach of the implied warranty of the machines and on account of the falsity of the alleged representations.

Appellant filed its answer and cross-complaint, denying the allegations of the complaint with reference to false representations of its agent and praying judgment against appellees for the contract price of the machines and laces.

The court decreed a cancellation of the contracts, and the defendant and cross-complainant appealed to this court.

The pleadings and proof present no grounds for reformation of the contracts. It is neither alleged nor proved that any contract was agreed upon other than the ones signed by appellees; nor that appellant's agent misrepresented the contents of the writings presented to appellees for their signature. The written contracts contained an express stipulation that the machines were "not guarantied against slugs, spurious coin or the weather;" and, until it is established that this 'stipulation was inserted in the con tracts by fraud, accident or mutual mistake, it must be taken as a true expression of the agreement of the parties. The solemn written engagements of contracting parties cannot be reformed or amended except upon clear and satisfactory proof that the writing fails, by reason of fraud, accident or mutual mistake in the preparation or execution thereof, to express the agreement intended to be entered into. McGuigan v. Gaines, 71 Ark. 614, 77 S.W. 52; Goerke v. Rodgers, 75 Ark. 72, 86 S.W. 837; Marquette Timber Co. v. Chas. T. Abeles Co., 81 Ark. 420, 99 S.W. 685.

It is not claimed by appellees that appellant's agent represented to them that the written contract contained a warranty against the successful use of other substances than nickels in the operation of the machine; nor that it did not contain a stipulation against such warranty. They claim merely that he represented that the machines were more complete than those formerly in use, and would not respond to slugs and spurious coins. Dave Kempner, the party who executed the contracts for appellees, testified that he signed them hurriedly without having read them. This is denied by the agent, who testified that Mr. Kempner read the contracts. It is, however, unimportant whether he read them or not. He had ample opportunity to do so, and can not, when the contents were...