Hesson v. Hesson

⁶²⁸ Boyd, C. J., delivered the opinion of the Court. The appellant filed a bill of complaint against the appellee by which he sought to have a deed made by the appellee to him reformed, by striking out a reservation in favor of the appellee and his wife which appellant contends was improperly inserted in the deed. The appellee conveyed to the appellant the leasehold interest in the property known as 1724 W. Lafayette Ave., in the Oity of Baltimore, by deed dated May 20th, 1909. The consideration named in the copy of the deed filed with the bill is $2,500.00, but it is admitted that the actual consideration was $5,500.00 — $3,500.00 having been paid in cash, and a promissory note given for $2,000.00, which was subsequently paid.

The description of the property was followed by this reservation: “reserving, however, unto the said James L. Hesson and Leah A. Hesson, his wife, for and during the term of their natural lives and no longer the right to use the stable erected on the rear portion of said lot hereinbefore described,” and the habendum clause is made “subject to the aforesaid reservation”. The appellant is the son of the appellee, and had been employed by him in his grocery store. In December, 1906, the appellee purchased this property, paying for it $2,300.00, according to the appellant, and $2,500.00, as testified by the appellee. The appellee rented the property to the appellant, who opened a grocery store for himself in the first story in the early part of 1907, and, having been married in June, 1909, which was the month after he purchased the property from the appellee, he repaired it and occupied the upper stories as a residence.

While the father owned the property he erected in the rear of the lot the stable in question at a cost of $1,000 or less — the father and son differing as to the precise amount. After the appellant paid the $3,500.00 in cash, the appellee had the deed drawn by an attorney. He and his wife executed it, and the same day he left it at the clerk’s office for record without showing it to his son, but gave the “ticket” (the receipt of the clerk) to him that evening. The deed was left in the clerk’s office until June, 1911.

The son ⁶²⁹ claims that he asked his father several times to get it, hut he always replied that it was safer in the office, and the son said that as his father attended to outside business for him he relied on him getting it. The father did finally get it and delivered it to the son, who testified that upon reading it over he was surprised to find the reservation in it — that being the first time he had seen the deed or knew of the reservation. The next day he read it over more carefully and the following evening he spoke to his father about it, as he did several times afterwards. The general principles applicable to proceedings for the rescission or reformation of contracts have been frequently amiounced by this Court.

It cannot be doubted that a Court of Equity, has ample powers to correct and reform an instrument and make it conform to the intention of the parties, if by mutual mistake it fails to express “their real intentions or contains terms or stipulations contrary to their common in-, tention,” provided the evidence be of a character to justify such action of the Court. It was said in Dulany v. Rogers, 50 Md. 533 , that “It is incumbent however, upon the party seeking to reform a written instrument to show by conclusive proof that it does not embody the final intention of the parties; Courts will not rectify it unless it was executed under a common mistake, — both parties having done that which neither of them intended. A mistake on one side may be ground for rescinding, but not for reforming a written agreement.” A number of other decisions of this Court, including the late one of Gaver v. Gaver, 119 Md. 634 , have announced the same principle, although using somewhat different expressions as to the character of proof required. It is well settled, however, that 1he fact that there was a mistake, and what the contract was intended to be, must be established by clear and satisfactory proof; and it was said in Second National Bank v. Wrightson, 63 Md. 81 , that the Court must be satisfied beyond a reasonable doubt.

In Coggins v. Carey, 106 Md. 217 , we quoted from Coale v. Merryman, 35 Md. 382 , that “The only difficulty is, in questions of this char ⁶³⁰ acter, the certainty and extent of the proof required to establish the mistakes. While there is to be found much conflict in the cases upon this point outside of our own State, the rule there is that only such full and strict evidence is required as will he sufficient to satisfy the mind of the Oourt.” The statement of the general principle announced in Dulany v. Rogers, supra, and in other cases in this State of a similar kind must be limited to such facts as were before the Court in those cases, for of course the Court did not mean to say that an instrument could not he reformed if the defendant was guilty of fraud or improper conduct, although he was not mistaken as to the terms in the instrument sought to be corrected. If there was no agreement or understanding between these parties by which the right to use the stable was to be reserved, and the defendant had it inserted in the deed without the knowledge or consent of the plaintiff, and then filed the deed for record without showing or explaining it to the plaintiff, there can be no doubt that the’ plaintiff would not be refused a reformation of the deed merely because the defendant was not mistaken as to what was in it. It is scarcely necessary to cite authorities to sustain that proposition, but they are by no means lacking.

Judge Phelps said in his work on Juridical Equity, section 221: “To warrant the remedy of reformation the mistake must have been mutual, or, if unilateral, the mistake must have been induced by some act or omission of the defendant.” In 34 Cyc. 920, after showing that a mistake to be reformable must be mutual, the author says: “The other ground which will warrant the reformation of an instrument is where there is ignorance or mistake on one side, and fraud or inequitable conduct on the other,” and many cases are cited in the notes. In Chelsea National Bank v. Smith, N. J., C. C. 69 At. 533 , the Oourt said: “The general rule of equity is that to warrant the reformation of a contract for mistake the mistake must be mutual; whereas, in the case of an unilateral mistake the remedy is rescisión. But a Court of Equity will reform a contract in the case of a mistake of one party, accompanied ⁶³¹ by fraud or other inequitable conduct of the other party. 4 Pomeroy’s Eq. Juris.

(3rd Ed.), sec. 1376.” See also Story on Eq. Juris, sec. 151, quoted by Judge Briscoe in Cohen v. Numsen, 104 Md. 679 . But it is too clear to require further citation of authorities that if it be sufficiently proven that the reservation complained of was not a part of the contract and was not authorized hy the appellant, it should be stricken out. There are some material facts which were clearly and fully established heyond auy reasonable doubt.

It is admitted that the appellee paid the appellant more than double what the appellant had paid for the property less than three years before he sold it to the appellee, and $1,500.00 more than the purchase price and improvements made to it cost the appellant. It is satisfactorily shown that he paid more than its market value and he has since improved it. While of course that is not conclusive, it was only assessed for $3,750.00 when the appellee purchased it, which included the value of the lot on which there was then and is still an irredeemable ground rent of $96.00 per annum, which capitalized even at six per cent, would be $1,600.00. Since the appellee purchased it $400.00 has been added to1 the assessment for improvements made by him, but Mr. Bernard, who has been a specialist in real estate for twenty-five years, and is one of the special assessors of the Appeal Tax Court and a real estate officer of one of the trust companies, testified that in his judgment the leasehold interest was now worth $3,664.00, and that there was but little difference between its value now and in 1909, except as affected by the improvements since put on it.

The answer alleges that the defendant told the plaintiff that he would have inserted in the deed the right to use the stable during the lifetime of the defendant and his wife which was thoroughly understood and agreed to hy the plaintiff before the execution of the deed and at the time the property was sold, but in the testimony of the defendant he said: “I told him if he wanted to buy the stable, the whole lot together, he could buy it for fifty-five hundred dollars and we ⁶³² would put a .clause in the deed that I was to have possession of the stable as long as I lived. That was our contract.” He made no claim that there was to be such a reservation as was inserted — reserving the right to himself and wife to use it. The reservation which was inserted was therefore not in accordance with what he testified had been agreed to, and he made no attempt to explain that fact. It is true that his wife was dead before this bill was filed, but she might have survived him, and he confessedly had inserted in the deed what according to his own testimony he was not justified in inserting.

He further testified: “I think I told him at the time we made the contract that if I held possession of the stable he could not sell the property without I signed off, but that I would sign off any time he wanted to sell the property,” but he did not so provide in the deed, although he had the reservation inserted, and hence did not include in the deed the part of the alleged agreement in reference to the stable which was in the plaintiff’s favor, even if his version of the contract be accepted. Although his son was living with him when he sold the property to him he had the deed prepared and -filed it for record without letting him see it, or telling him that the reservation was in it. He testified that he had offered the property to his son without the stable for $4,500.00, but his son said, “I don’t want it that way; I want the stable and all together,” and he further testified that he said to' his son, “I will take a thousand dollars off for the price of the stable, or you can have the stable if you want it, and I will hold my right in it as long as I live for the use of the stable as long as I lived. That was agreed upon right there.” The plaintiff in his testimony denied most positively that he had agreed to having any reservation put in. the deed, and did not know it was there until 1911, after his father got it from the record office.

As they thus contradicted each ether in reference to the terms of the agreement, the plaintiff must be denied relief under the general rule of evidence established by our decisions, in proceedings for reformation of ⁶³³ contracts, unless there he sufficient corroboration of ihe plaintiff or circumstances which modify that rule. The presumption is that a written instrument embodies the correct terms of the agreement between the parties, and it must be overcome or rebutted — the burden generally being on the party asking reformation. 24 Am. & Eng. Ency of Law, 650; 34 Cyc. 979, and our decisions say that it is incumbent on the plaintiff to prove the facts necessary to authorize a reformation. We will, therefore, ascertain whether the plaintiff has been sufficiently corroborated and how far the circumstances and facts of this case can modify the general rule.

The plaintiff is in part corroborated by the fact that the defendant’s own testimony, if true, shows that the reservation inserted in the deed was not the one agreed