Gibson v. Alford

132 S.E. 442, 161 Ga. 672, 1926 Ga. LEXIS 321

• Court: Supreme Court of Georgia
• Decided: February 10, 1926
• Docket: No. 4716
• Status: Published

Opinion

Hines, J.

(After stating the foregoing facts.)

The contract between the plaintiff and defendant is one of bargain and sale. Hays v. Jordan, 85 Ga. 741, 749 (11 S. E. 833, 9 L. R. A. 373); Lytle v. Scottish-American Mortgage Co., 122 Ga. 458 (50 S. E. 402). It is not a lease with an option given therein to the defendant to purchase the land embraced therein. The rights and liabilities of the parties must be determined by this construction of the instrument.

Is the defendant entitled to reformation of this contract, under the facts alleged in his answer? He alleges that he was unfamiliar with the boundaries of the tract of land which is the subject-matter of the sale evidenced by this contract. He applied to the plaintiff to point out its boundaries, which she did by an agent. The boundaries so pointed out embraced 110 acres of land not embraced in the tract which he bought, and which did not belong to the plaintiff. The defendant seeks to have the contract so reformed as to contain the true agreement between him and the plaintiff, and to embrace all the lands within the boundaries pointed out by the plaintiff. Subject to a sufficient showing of mutual mistake, or mistake on one side and fraud or inequitable conduct on the other, where it is made to appear that an agreement was made with reference to a certain designated piece of land, reformation of the contract made to evidence the agreement will be decreed if the misrepresentation in the contract or deed includes more land than ought to be included, or contains less than the parties agreed upon. 34 Cyc. 938; Civil Code (1910), § 4567; Smith v. Barksdale, 110 Ga. 278 (34 S. E. 582); Green v. Johnson, 153 Ga. 738, 749 (113 S. E. 402); Butler v. Barnes, 60 Conn. 170 (21 Atl. 419, 12 L. R. A. 273). So where the vendor of a lot of land by mistake staked it out so as to include land of an adjoining owner, and later conveyed it by deed which described the lot as bounded by the land of the adjoining owner, which both parties believed to describe the staked lot, the deed was reformed to conform to the lot as pointed out. Butler v. Barnes, supra. 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 ignorance or 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, 157 Ga. 493 (122 S. E. 29). Where the vendor sues the purchaser on notes given by the latter to the former for the purchase-money of land, the purchaser can defend at law by alleging and proving tliat at the time of the contract, of purchase the vendor misrepresented to him the -location of one of the boundaries of the'tract purchased, whereby he failed to get a portion of the land which he contracted to buy, where such representation was made by the plaintiff to the defendant knowingly and wilfully, and for the purpose of deceiving the latter, and did deceive him to his damage. Brannen v. Brannen, 135 Ga. 590 (69 S. E. 1079). The rule would be the same if the misrepresentation was made innocently by the vendor, if the vendee relied upon such misrepresentation in making the purchase and was damaged. Fraud may exist from misrepresentation by one party which does actually deceive the other party, though the party making it was not aware that his statement was false. Civil Code (1910), § 4113. In the forum of conscience a misrepresentation of the former. kind is of deeper dye than one of the latter kind; but in the forum of law both constitute fraud, the former positive fraud, and the latter legal fraud. So while the defendant in such a case might at law set oil damages sustained by reason'of such misrepresentation against the purchase-money of the land bought, or against any other obligation growing out of the contract of purchase, it does not necessarily follow that the existence of such defense at law will prevent equity from granting relief to one who wishes to take advantage of the transaction in question, and who does not wish to avoid the contract in question. The party who has thus been deceived may wish to enforce the contract in accordance with the boundaries represented by the vendor to be true lines; and the fact that the vendee could thus set oil the value of the portion of the land embraced in these boundaries, to which the vendor did not have title, and which he lost, does not prevent him from obtaining reformation in equity, if the other elements which justify reformation are present. 4 Page on Contracts, § 2213. In such a case his remedy at law is not full, adequate, and complete; and reformation of the instrument will be granted in order to enable the vendee to avail himself of all his rights under the contract, when the writing is reformed and made to express the. true agreement between the parties. So we are of the opinion that the answer of the defendant makes a case which entitles him to a reformation of this contract.

The third headnote needs no elaboration.

In his answer the defendant further alleged that on April 7, 1920, he and F. L. Alford entered into a contract by which the plaintiff agreed to sell to them the lands embraced in the contract sued on in this case, and that at said time, not knowing the boundaries thereof, he called upon the plaintiff to point out the lines, which was done by her agent, and defendant took possession of the lands embraced in the boundaries so pointed out. He further asserts that he relied upon the assurance of the plaintiff and her agent for the true and correct lines of the property, which represented the lines referred to in said contract. Thereafter, on May 8, 1920, in pursuance of said contract of purchase, a bond for title was executed and delivered by the plaintiff to defendant and F. L. Alford, conditioned to convey the lands so designated upon the payment by them of the purchase-money thereof. F. L. Alford transferred said bond for title and his interest in said premises to defendant, he tailing possession thereof. Thereafter he agreed to cancel said bond for title, which was done, and the contract sued upon was executed and delivered in lieu thereof. The boundaries of this tract of land so pointed out to him embraced 110 acres to which the plaintiff had no title. He further alleges that said 110 acres, more or less, were omitted from the description in said bond or contract by reason of either the mutual mistake of himself and the plaintiff, or else by reason of a mistake on his part and fraud on the part of the plaintiff in pointing out to him said 110 acres as being a part of the lands embraced within said description and owned by her; and that by reason of these facts said contract does not speak the true intent of the parties, but omits said 110 acres which should be embraced therein, by reason of the fact that it was so actually bought by the defendant and pointed out to him through mistake. He further alleges that by reason of the facts aforesaid the entire transaction was but a single one, and that all of said writings represented merely different forms of the original purchase, and in each instance the lands originally pointed out were the lands which were to be sold. The plaintiff demurred specially to the allegations that she had pointed out the boundaries of this tract of land to defendant when she previously agreed to sell these lands to him and F. L. Alford, and that she again pointed out the boundaries of the tract when she executed and delivered to them her bond for title. These allegations are not open to this ground of special demurrer. The defendant alleges that in each instance she pointed out the boundaries of this tract, and that these boundaries embraced 110 acres, more or less, of land lot 325, to which the plaintiff had no title.

Was the defendant entitled to a rescission of this contract, under the facts alleged in his answer as amended? We do not think that the defendant made a case for rescission, under these facts. In her petition the plaintiff did not seek to rescind the contract. On the contrary, she undertook to enforce the contract, and to assert rights growing out of the breach of one of the provisions of the contract by the defendant. With knowledge of the alleged mutual mistake, and with knowledge of the fraud alleged to have been perpetrated upon him by the plaintiff, the defendant in his original answer did not seek to avoid or rescind this contract. On the contrary, he sought to enforce the contract against the plaintiff. In the first amendment to his answer he did not seek to rescind the contract on account of mistake or fraud. On the contrary he sought to reform the contract, and upon its reformation being had he prayed that he be given credit upon the purchase-money of these lands in a named sum, and that the plaintiff be decreed to specifically perform this contract by conveying the lands therein described, upon his payment to her of the sum of $15,000. In his last amendment to his answer he seeks rescission of the contract. In Hunt v. Hardwick, 68 Ga. 100, this court said: “It is a well-settled rule that a party who is entitled to rescind a contract on account of fraud or false representation, when he has full knowledge of all the material circumstances of the case, if he freely and advisedly does anything which amounts to the recognition of the transaction, or acts in a manner inconsistent with its repudiation, it amounts to acquiescence, and, though originally impeachable, the contract becomes unimpeachable even in equity.” In that case the court again held: “If a party to a contract seeks to avoid it on the ground of fraud or mistake, he must, upon the discovery of the facts, at once announce his purpose and adhere to it.” In Smith v. Estey Organ Co., 100 Ga. 628 (28 S. E. 392), it was held: “Where the purchaser of goods seeks to avoid the contract of purchase on the ground of fraud, he must, upon discovery of the facts constituting the fraud, at once announce his purpose to rescind, adhere to it, and make or offer to make restitution.” This principle was again announced in Pearce v. Borg Chewing-Gum Co., 111 Ga. 847 (36 S. E. 457). This is the doctrine of the Civil Code (1910), § 4305.

In Tuttle v. Stovall, 134 Ga. 325 (67 S. E. 806, 20 Ann. Cas. 168), this court made this ruling: “Where a- vendee is induced to enter into a contract for the sale of personalty by the fraud of the vendor, when the former discovers the fraud he has an election of remedies. One of such remedies is to rescind the contract, and another is to affirm the contract and sue for damages for the fraud.” In that case this court again said: “In order to exercise the right of rescission of a contract for fraud, the defrauded party must act promptly upon the discovery of the fraud, and must restore or offer to the other party whatever the former has received by virtue of the contract, if it is of any value.” This principle has been announced and followed in many decisions of this court. Strodder v. Southern Granite Co., 94 Ga. 626 (19 S. E. 1022); Ruff v. Copeland, 137 Ga. 56 (72 S. E. 506); Jordy v. Dunlevie, 139 Ga. 325 (77 S. E. 162); Couch v. Crane, 142 Ga. 22, 29 (82 S. E. 459); Garner v. Butler, 144 Ga. 441 (87 S. E. 471); Wimpee v. Burt, 148 Ga. 418, 420 (96 S. E. 993); Legg v. Hood, 154 Ga. 28 (113 S. E. 642). When the fraud is discovered, the party defrauded is put to his election to disaffirm the contract. Jordy v. Dunlevie, supra.

With knowledge of-the mistake and fraud, for which he sought in his last amendment to rescind this contract, the defendant in his original answer sought to recoup damages against the purchase-money due the plaintiff under this contract, and in the first amendment to his answer he sought reformation of the contract. The assertion of both of these alleged rights necessarily treated this contract as valid and enforceable. He based his right to recoup these damages on the existence of the contract. His effort to reform the contract treated it as existing. Thereafter he could not elect to void and rescind the contract for mistake or fraud. ■

The court having erred in overruling the demurrer to the portions of the answer seeking to rescind the contract sued upon, the subsequent trial was nugatory; and it becomes unnecessary to deal with the errors alleged to have been committed during the progress of the trial.

Judgment reversed.

All the Justices concur.