Prince v. Friedman

• Decision Date: 17 April 1947
• Docket Number: 15699.
• Citation: 42 S.E.2d 434,202 Ga. 136
• Parties: PRINCE v. FRIEDMAN et al.
• Court: Georgia Supreme Court

42 S.E.2d 434

202 Ga. 136

PRINCE v. FRIEDMAN et al.

No. 15699.

Supreme Court of Georgia

April 17, 1947

Syllabus by the Court.

1. A court of equity will not reform a contract, except for mutual mistake, or mistake on one side and fraud or inequitable conduct on the other.

2. Ignorance of fact is no cause for rescinding a contract.

3. A written contract will neither be reformed nor cancelled because of a failure to attach an exhibit, unless it be alleged that the failure to do so has produced such a result as would authorize reformation or cancellation under the rules of law.

4. Where the right to recover a money judgment is dependent upon the reformation of a written contract, and the petition is insufficient to state a cause for reformation, necessarily it states no cause for the other relief prayed.

Prince brought a two-count suit in equity against A. A. Friedman Company. In the first count he prayed for reformation of a written contract (a bill of sale which he gave defendant October 5, 1945) and for the recovery of $3278.58 which he claimed would be due under the reformed contract. The second count prayed for rescission of the same contract and the appointment of an auditor to determine the amount he should restore if rescission was decreed. Substantially, the allegations contained in each count, as amended, were the same and showed that petitioner was the owner of a jewelry store operated under the trade name of Burt's Jewelry Company. A salesman in the store offered to buy or procure a purchaser for the entire business and petitioner agreed to sell it for the amount he had invested, plus the assumption by the purchaser of all outstanding obligations of the business. On September 24, 1945, he was approached by a named attorney, who asked if he wanted to sell the business. This attorney, with whom he had a close fiduciary relation as attorney and client, had represented him for the preceding ten years, and since legal services would be required in closing the sale, he thought the attorney represented him. On defendant's oral agreement to purchase the business on petitioner's terms, the attorney, in good faith and in a conscientious manner undertook to ascertain the true facts necessary to determine the amounts which the purchaser should pay, but methods employed by him were not proper ones. In his effort to determine the amount invested, and the obligations of the business, the attorney first contacted petitioner's bookkeeper who advised him he should examine the investment account because it reflected all information necessary to show the total amount invested. The attorney however, undertook to obtain the information from petitioner who had no knowledge of bookkeeping and was informed by him that he had invested in the business $30,000; that the cost of remodeling the store was $11,000; the architect's fee $400; cost of the fixtures $4200; rent paid, as calculated by the attorney, $3250, making a total of $48,850. The item for rent, however, should be reduced to $2875, since it was figured too high. The attorney also undertook to ascertain the obligations and to itemize them in an affidavit which he prepared and which petitioner later signed. The bookkeeper advised the attorney that such information could not be accurately determined until the 10th of the month. In addition to numerous other obligations, the nature and amount of which were still unknown to petitioner, the attorney overlooked $46.06 due on Social Security tax; $246.80 as withholding tax; and $566.42 as Federal Excise tax. He also failed to take into account $350 delivered to and retained by defendant as petty cash on hand. Within a week's time after a bill of sale had been executed, which was prepared upon information obtained by the attorney, it was discovered the amount invested was $2019.30 more than petitioner had represented it to be, and that the attorney had failed to correctly ascertain the indebtedness and to charge defendant with the petty cash item. The prayers to count one were that the bill of sale be reformed so as to include these items; that he have a money judgment for the balance due him under the reformed contract; and that a schedule of the goods, wares, and merchandise which had been sold, be attached to the bill of sale as provided for therein.

In addition to the foregoing allegations, count two alleged there had been such a change in the status of the business that it would be necessary to appoint an auditor, and have an equitable accounting to determine the amount which he should restore upon rescission of the contract, and contained a prayer for rescission and the appointment of an auditor.

A general demurrer, which was renewed to the petition as amended, was sustained, and the case is here for review on exceptions to that judgment.

Cumming, Nixon & Eve, of Augusta, for plaintiff in error.

Max Rubenstein, Curry & Curry and Maurice Steinberg, all of Augusta, for defendants in error.

CANDLER, Justice (after stating the foregoing facts).

1. We deal first with the prayer for reformation. We need not cite authority for the proposition that the courts do not make contracts for parties, but will aid in their enforcement. In Lewis v. Foy, 189 Ga. 596, 601, 6 S.E.2d 788, 791, this court very wisely said: 'It is essential to all business relationships that the validity and solemnity of written contracts, freely and voluntarily executed, be upheld. It would be tragic if all such contracts were jeopardized by a rule of law that would permit one of the parties thereto, because of dissatisfaction therewith, to go into court and by oral testimony establishing conduct short of fraud and reasonable diligence obtain nullification of a written contract.' A mistake, either of law or fact, is cognizable in equity and affords a remedy therein by reformation of the instrument so as to make it express the true intention of the parties on a proper cause being made, but such a jurisdiction will always be cautiously exercised, and to justify it the evidence must be clear, unequivocal, and decisive. Code, § 37-203; Wyche v. Greene, 11 Ga. 159; Ligon's Administrators v. Rogers, 12 Ga. 281; Wyche v. Greene, 16 Ga. 49; Green v. Johnson, 153 Ga. 738, 113 S.E. 402; White & Hamilton Lumber Co. v. Foster, 157 Ga. 493, 500, 122 S.E. 29; Deck v. Shields, 195 Ga. 697, 25 S.E.2d 514; Yablon v. Metropolitan Life Ins. Co., 200 Ga. 693, 704, 38 S.E.2d 534. A court of equity will reform a contract of sale when, from mutual mistake or mistake common to both parties, an instrument does not express the true agreement of the parties. Equity will also reform an instrument where there is mistake on one side, and fraud or inequitable conduct on the other. Reese v. Wyman, 9 Ga. 430; Wyche v. Greene, 26 Ga. 415; Venable v. Burton, 129 Ga. 537, 59 S.E. 253; White & Hamilton Lumber Co. v. Foster, supra; Gibson v. Alford, 161 Ga. 672, 682(2), Hunnicutt v. Archer,

163 Ga. 868(2) 137 S.E. 253; Lynch Enterprise Finance Corporation v. Realty Construction Co., 176 Ga. 700, 168 S.E. 782. In the very recent case of Yablon v. Metropolitan Insurance Co.,...