Newell v. Hartman & Fehrenbach Brewing Co.

80 A. 672, 9 Del. Ch. 240, 1911 Del. Ch. LEXIS 31

• Court: Court of Chancery of Delaware
• Decided: July 19, 1911
• Status: Published

Opinion

The Chancellor:

The testimony is conflicting as to what occurred when the assignment was executed by Maria Newell, and whether it was read to her and the legal consequences of it explained to her. John M. Newell, vriio had seen the draft of the proposed assignment, in one part of his testimony said that at the private interview with his mother he then explained the whole matter to her; but also testified that in the private interview with his mother he explained to her that she was not liable, but was only turning over to the assignee the same security she had and no more, viz., the levy on the personal property. This representation was not made in the presence of the representatives of the assignee, or with their knowledge. It was urged by the complainant that John M. Newell was the agent of the assignee in securing the transfer, but this is not shown; but it appears rather that he was acting for himself, and trying to obtain some security on which he could obtain from the assignee a loan of money for himself. Security for the existing indebtedness from him to the assignee was only a secondary object in which he wa° not much interested, except as it was a means of obtaining a further and new loan for himself. The assignee is not responsible for the representation of John M. Newell. It is not clear, then, that the assignment was not read over to Mrs. Newell, in view of the conflict of testimony; but on the contrary the weight of evidence is that it was read to and explained to her before it was signed by her, though the character of the explanation made is not disclosed. The assignor could read and write and was not inexperienced in business, having been 'herself engaged in trade as a retail grocer. There is no allegation in the bill, or proof of any misrepresentation to Mrs. Newell by any agent or officer of the assignee. The theory of the bill was that the misrepresentations were made by John M. Newell as agent for the assignee, but as stated above, his agency is not shown, but is rather disproved. The theory of the bill fails.

But the question still remains as to an alleged mistake arising from the use of the technical words “with recourse” in the assignment; and absence of an opportunity to the assignor to reflect, or act with caution, so that she was surprised into an action injurious to herself. Upon the question of mistake, there is no satisfactory showing that the assignor did not in fact intend to make the assignment which she in fact signed, for it was that and no other instiument which she intended to execute when she in fact signed the transfer of the judgment. Such being the case she cannot now obtain such action of the Court of Chancery as will practically so reform the instrument as to give it a different legal effect. In Marshall v. Rench, 3 Del. Ch. 239, 259, Chancellor Bates thus states the principle:

“Where a party makes just such an instrument as he intends to make, without fraud, surprise or mistake in fact, an error as to the legal effect of the instrument cannot be corrected.”

This he fortifies with the following statement of Chancellor Kent in Lyon v. Richmond, 2 Johns. Ch. (N. Y.) 51, 60:

“Every man is to be charged at his peril with a knowledge of the law. There is no other principle which is safe and practicable in the common intercourse of mankind.” See also 1 Story’s Equity Jurisprudence, § 111.

The complainant having without fraud, or misrepresentation on the part of the assignee, or its agent, executed the assignment, cannot be granted a reformation of it because she did not understand the legal effect of the words of the assignment. The burden of showing the mistake is on the party to the instrument who asserts the error.

"In all such cases, if the mistake is clearly made out by proofs entirely satisfactory, equity will reform the contract, so as to make it conformable to the precise intent of the parties; but, if the proofs are doubtful and unsatisfactory, and the mistake is not made entirely plain, equity will withhold relief; upon the ground that the written paper ought to be treated as a safe and correct expression of the intent, until the contrary is established beyond reasonable controversy.” 1 Story’s Equity Jurisprudence, § 152.

The cases cited by the complainant’s solicitor are not helpful. In Evans v. Llewelyn, 1 Cox Ch. Cas. 333, a conveyance of property was set aside where the grantor was a person in low condition, not apprised of his rights and with no one to advise him. Lansdowne v. Lansdowne, 1 Moseley 364, has been much criticised and the facts are stated very meagerly. In Dunnage v. White, 1 Swanst. 137, there was a clear mistake of fact upon which was based a family agreement for the settlement of rights to family property. In the case under consideration there is no evidence of misrepresentation by the assignee of fact or of law; no facts tepding to show fraud, or fraudulent intent; no advantage taken of ignorance, extreme old age or inexperience; and no evidence of undue influence. The paper was unambiguous and had a clear legal meaning, though the language was technical. There was no request made by the assignor for delay for further consideration, information or advice. In this case the circumstances indicate that the assignor was made acquanited with the legal liability she was assuming by assigning the judgment “with recourse’’. Her agitation after the private interview with her son just prior to executing the instrument is inexplicable, unless she thought she was doing something more than assigning a judgment held by her against her son, the only security for the payment of which was, so far as appears of record, a levy made about a year before on certain personal property of small value and perishable in character, and of which judgment and levy she was ignorant when it was entered and made. Possibly she was agitated because of the liability she was assuming to the assignee of the judgment.

There was no surprise in any true sense, for in the absence of a request for delay, or for further consideration, or for an opportunity to take advice, other than that of her son, the celerity of action on her part to sign the transfer when presented does not, under the circumstances, constitute or show surprise. Assuming, however, that the assignment was not read over to Mrs. Newell before she signed it, still that fact does not give her a right to deny the legal effect of that which she did in fact sign.

“If the party that is to seal the deed can read himself and doth not, or being illiterate or blind, doth not require to hear the deed read, or the contents thereof declared, in these cases, albeit the deed is contrary to his mind, yet it is good and unavoidable.” Touchstone, 56. See, also, Greenfield,’s Estate, 14 Pa. St. 489.

The conclusion, then, is that the complainant has not shown such a case of fraud or mistake as will overcome the presumpt ons of regularity arising from the voluntary execution of a legal transfer of property rights.

The bill will be dismissed and the costs taxed against the complainant.