Wilson v. Morris

• Decision Date: 22 January 1894
• Parties: WILSON et al. v. MORRIS et ux. [1]
• Court: Colorado Court of Appeals

36 P. 248

4 Colo.App. 242

WILSON et al. v. MORRIS et ux. ^[1]

Court of Appeals of Colorado

January 22, 1894

Appeal from district court, Jefferson county.

Bill by Samuel L. Morris and wife against William J. Wilson and others. There was judgment for plaintiffs, and defendants appeal. Reversed.

Thomas Bryant & Lee, for appellants.

L.S Smith and A.H. De France, for appellees.

BISSELL P.J.

The object of the bill which Morris and his wife filed against the defendants was to procure the cancellation of a trust deed given on the 20th day of April, 1888, on certain lands in Jefferson county, and also the extinguishment of the note made concurrently with the deed, which that instrument secured. The note was for the sum of $5,500, payable one year after date at the City National Bank of Denver, and provided for interest at the rate of 10 per cent. per annum, and 5 per cent. attorney's fees if not paid at maturity. The bill is full of immaterial allegations which can have no purpose except to show the circumstances of the execution of the two papers. In this respect the plaintiffs charged many misrepresentations by Wilson concerning his financial condition and necessities, the reliance which Morris placed upon these various statements, and the friendly relations existing between the parties. These allegations are of little consequence; and, while the substance of them might be competently proved in support of the gravamen of the case as averments they may be totally disregarded, since there is a total lack of negation of the truth of most of them, and the case is in reality, by the pleading, left to stand upon its main statement that the note was without consideration. This condition is not varied by the evidence in the record, and the case must stand or fall, as the plaintiff may succeed or fail in showing himself entitled to the cancellation because, as he charges, Wilson gave no value for the note, and the transaction was one simply of a loan of Morris' credit to the extent of the negotiable instrument and the deed securing it. In examining this record, and reaching our conclusions concerning the evidence, we have not been unmindful of the rule, so often announced in appellate tribunals, that the decisions of trial courts upon questions of fact are ordinarily entitled to the same respect and weight as are accorded the verdicts of juries on similar controverted questions. But we regard the present case as one without the rule, because it is manifest from the record that the court erred in refusing to admit testimony which, if left unexplained, would be of great weight in determining the rights of the parties, and more particularly because it is plain to be seen that the court lost sight of a very controlling principle affecting the burden of proof resting on the plaintiff in a case of this description. The statement of this principle may very well precede the further recital of the facts, since it will serve to illumine both the narrative and the discussion, and render very apparent what has controlled the court in arriving at its conclusion.

It was settled very early in the history of courts of equity that, wherever they acquired jurisdiction of a controversy, they were possessed of ample powers to either reform or cancel instruments procured by mistake or fraud, or where it was manifest from the proof that it would be inequitable for the plaintiff to enjoy the fruits of deeds or other written instruments procured under these circumstances, or for a grossly inadequate consideration. The extent of the power or the character of the limitations put upon its exercise under the several circumstances may be safely left unexpressed, since we are concerned with neither. It will probably be conceded, without argument, that if the plaintiff succeeded in maintaining his bill by competent proof which showed the note and security to be absolutely without consideration, and to be simply and solely a loan of his credit which the defendant was not entitled to enforce against him, he was entitled to the relief which he prayed. This concession demonstrates the importance of keeping the rule and the principle in view in determining such cases, and the weighty consideration which courts should attach to it. By the common law, parties were always bound by written instruments to which they had affixed their signatures, and they were universally estopped to deny the validity and efficacy of deeds which they had solemnly signed and sealed, or to attack the consideration either expressed in the instrument or implied from the presence of the seal on the parchment. The importance of this rule in protecting the interests of parties has long been recognized, and may be deemed to be thoroughly established. Wherever there has been a departure from the application of this doctrine, it has resulted from the exercise of the power, now well established to exist in all courts of equity, to open a written contract, and let in equities which the complainant may be able to establish. At first the power seems to have been more generally exercised in those cases wherein the complainant alleged that the contract, as executed, did not express the real purpose and agreement of the parties, and he sought to modify what it contained, or insert what was essential to the expression of the true agreement according to his contention. At all events, the rule of evidence with which we are concerned seems to have been first expressed, and to be always more generally stated, in that class of cases, than in the one where cancellation pure and simple was the remedy sought. This rule has been variously enunciated, but it is essentially the same in all the cases. As expressed by one of the leading authors on equity jurisprudence: "The authorities all require that the parol evidence of the mistake and of the alleged modification must be most clear and convincing,--in the language of some judges, 'the strongest possible,'--or else the mistake must be admitted by the opposite party; the resulting proof must be established beyond a reasonable doubt. Courts of equity do not grant the high remedy of reformation upon a probability, nor even upon a mere preponderance of evidence, but only upon a certainty of the error." 2 Pom.Eq.Jur. § 859; 3 Greenl.Ev. § 363; Stockbridge Iron Co. v. Hudson Iron Co., 102 Mass. 45; Tucker v. Madden, 44 Me. 206; Henkle v. Assurance Co., 1 Ves.Sr. 317. From these authorities, as well as from the universal current of the cases, it is plain to be seen that, wherever a party undertakes to avoid the effect of an instrument which he has signed and sealed, he undertakes a task of exceeding difficulty. He can only discharge the burden which is cast upon him by the production of the clearest, most satisfactory, and indubitable proof that the defendant is without the right to enforce the contract which he holds. According to the authorities, there is no difference between the two classes of cases; that is, the one where a party seeks to reform a contract to express the actual intention of the parties, and the one where he seeks the cancellation of an instrument as an entirety because it is not an agreement which the defendant has the right to enforce.

Brainard v. Holsaple, 4 G. Greene, 485; Bray v. Comer, 82 Ala. 183, 1 So. 77; Gibbons v. Dunn, 46 Mich. 147, 9 N.W. 140; Jackson v. Wood, 88 Mo. 76; Roberts v. Derby, 68 Hun, 299, 23 N.Y.S. 34.

We shall examine the case under the strong light of this rule of evidence, which we believe the trial court lost sight of in reaching its conclusion. A very complete history and discussion of this controversy may prolong this opinion to an apparently unreasonable length, but it is unavoidable. For many years the parties had been intimate friends. For several years prior to 1886, Morris was a merchant, and afterwards a banker, at Kokomo. While banking at that time, and for the purposes of obtaining an exchange credit in Denver, he procured Wilson to become his security to the extent of $10,000. The exchange account was probably run with the First National Bank. Morris' Bank at Kokomo ceased business about 1886, at which time Morris erected a block or building on some lots which he had bought in Aspen. About the time the building was finished, the Denver bank pressed him to close up and settle his exchange account, and to this end he borrowed $6,000 from Wilson, and applied it to that purpose. To secure this loan, he executed to Wilson a trust deed on the building which he had put up in the city of Aspen. We are only concerned with this transaction because of the commingling of it with the later one which was the origin of the present suit, and as throwing some light upon the transaction. We now come to the matter out of which this suit grew. In stating the history of the leases about which the parties disagree, it will not be attempted to state them all nor to state accurately the respective dates of the original instruments or renewals, and only...