Stockbridge Iron Co. v. Hudson Iron Co.

107 Mass. 290

• Court: Massachusetts Supreme Judicial Court
• Decided: September 15, 1871
• Status: Published

Opinion

Wells, J.

The verdict upon the first issue defeats the position of the plaintiff in the cross bill, so far as it rests upon the ground of an omission to insert in the deed any clause or provision agreed upon or intended to be inserted. The only question now before us, relating to that issue, is of the correctness of the instruction to the jury, “ that the ordinary rule of evidence in civil actions, that a fact must be proved by a preponderance of evidence, did not apply to such a case as this ; that the proof that both parties intended to have the precise agreement between them inserted in the deed, and omitted to do so by mistake, must be made beyond a reasonable doubt, and so as to overcome the strong presumption arising from their signatures and seals that the contrary was the fact; and that in this case proof beyond a reasonable doubt was such a degree of proof as the jury would act upon in the most important affairs of life,-and as would sat® isfy their judgments and consciences of the fact to be proved.”

This is in precise accordance with the rule as stated in the opinion of the court upon the former hearing of this case. 102 Mass. 45. That statement was not obiter dictum,, as it is now contended on the part of the plaintiff. It was involved in the question whether to submit the issue to a jury, which was a question of judicial discretion. In order to determine it, the court were necessarily led to consider whether, and in what mode, the verdict of a jury could be made an equivalent for that completeness of proof which is required in all such cases as the foundation of judicial interference in equity. It has always been held in courts of chancery, that, in order to reform a written contract, and make it conform to a variant oral agreement, the proofs must be full, clear, and decisive; free from doubt or uncertainty; such as entirely to satisfy the conscience of the chancellor. This well established and salutary principle constitutes the difficulty of submitting such cases to a jury; the office of whose verdict is to inform and satisfy the conscience of the court. A verdict rendered upon mere preponderance of evidence would not do this. In order that a verdict, in cases of this nature, may answer its legitimate purpose, we know no better or safer rule than that laid down at the trial.

At the trial, upon motion of the plaintiff in the cross bill, and against objection by the defendant, a .second issue was allowed to be submitted to the jury. This issue presented in substance the claim of the plaintiff that, at the time of the delivery of the deed, both parties alike understood that the legal effect of its terms, as written, was to restrict the mining rights of the grantor to the supply of its furnaces at Stockbridge; and that such was in fact the real agreement upon which the deed was given and accepted.

The jury failed to agree upon this issue ; and one question to be decided is, whether the court can proceed to a decree until a verdict has been reached upon this issue also. 'The question is twofold: 1st. Whether the fact involved in the issue is essential; 2d. Whether the court may determine the fact without a jury, upon the evidence as reported, together with that taken and reported by a special master appointed for the purpose upon the original bill.

The question may be somewhat modified by the verdict of the jury upon the third issue, namely, “ Was the deed of the land and ore-bed delivered by the Stockbridge Iron Company and accepted by the Hudson Iron Company, with the mutual intention and understanding that it should be and was in its present form, after the question had been raised and discussed between the parties whether the reservation to the Stockbridge Iron Company was limited, by the terms in which it was expressed in the deed, to ore to be used at its own furnaces ? ”

This issue was suggested by the course of the trial, and was submitted by the presiding justice in order to determine a question of fact, upon the proof of which the defendant insisted that the second issue became immaterial. We are unable to see that the plaintiff could have been prejudiced in any way by the direction of the court, before the closing arguments, that this additional question should be passed upon by the jury. It was incidental to, and in no respect diverse from the other issues tried. It was in a measure involved in the others. It grew out of, and would be determined upon the same evidence. The plaintiff did not, at the time, suggest that other or different evidence would be applicable, or that it existed. The second issue had been ordered upon the plaintiff’s motion, after the parties had come together, with their witnesses and proofs, for the trial of the first, and against'; the objection of the defendant. Upon that issue a question of law was raised, which, in the judgment of the presiding justice, rendered the third issue proper and expedient for its determination. The objection of the defendant does not appear to us to be well founded or reasonable. The whole matter was one of judicial discretion; and although, as such, it is open to revision in equity, we find no ground on which the propriety of the exercise of that discretion in this particular can be fairly impeached.

If the second issue was immaterial, or has become so by reason of the findings of the jury upon the other two; or if, for any reason, it ought not to have been submitted to the jury, it is competent for the court to disregard it in the further disposition of the case. It becomes necessary, therefore, to examine the precise position of the case, and the nature of the questions remaining undetermined.

As it now stands, after verdict upon the first and third issues, it is established that the deed is, in form and language, precisely what the parties intended it should be; that the plaintiff accepted it with full knowledge of the form in which its provisions were expressed, and that too after discussion of the very question whether it restricted the grantor in the manner in which it is now claimed that it should do. But it is contended that both parties then understood alike that the deed, in its present form, did so restrict the defendant; and that there was a previous oral agreement between them for the sale of the land, by the provisions of which the defendant was to be so restricted. These questions are presented by the second issue.

It will be seen that there is a question thus presented by both branches of the issue, when taken together, which is not merely of a mutual mistake of law as to the construction and effect of the deed; but whether, by reasbn of such mutual mistake, the deed, contrary to the real intention of both parties, failed to be a full and complete execution of the previous contract of purchase and sale. Such a mistake, if there are no legal objections to the enforcement of the oral agreement, will furnish sufficient ground for the interference of a court of equity to require a rectification of the deed. Canedy v. Marcy, 13 Gray, 373. Hunt v. Rousmaniere, 1 Pet. 1, 13. 2 Lead. Cas. in Eq., notes to Woollam v. Hearn, 680. Story Eq. § 115. Kerr on Fraud & Mistake (1st Am. ed.) 418-421.

The foregoing proposition excludes the case of an instrument adopted by the parties as a modification of or substitute for a provious agreement, or where it was not intended fully or exactly to conform to the agreement. It also excludes the case of a deed given and accepted as the result of previous negotiations, where the precise terms of the sale and proposed conveyance had not been settled and agreed upon previously, or otherwise than by the written instrument itself.

Upon the ground of mistake, it embraces only the tase of a completed oral or other precedent agreement; a deed invended to conform to it and carry it into effect according to its precise provisions ; delivery and acceptance of the deed with the mutual supposition that it did so conform to the agreement. This ground of relief assumes that the deed is in form as it was intended and understood to be when accepted; the mistake consisting in the erroneous supposition that in fact and legal effect it corresponded with the oral agreement.

The third issue is not inconsistent with this position of the plaintiff; and the verdict upon it does not render the question presented by the second issue immaterial.

The objection that the second issue couples together two distinct questions is not tenable. The issue,, in its legal aspect, is single; though it depends upon two propositions of fact, namely, a previously subsisting oral agreement, and a deed, intended to carry the agreement into effect, but, by mistake and misunderstanding of the legal construction of its terms, failing to do so.

Upon examining the plaintiff’s bill, we do not find any distinct or sufficient allegation of such an agreement, independently of the deed itself. Without it, the fact that both parties understood that the legal construction and operation of the deed would be otherwise than what it is now held to be, would not warrant its rectification to make it conform to that supposed meaning. Mistake of law alone is not sufficient. There must be some agreement of the parties, distinct from the written instrument, to which the instrument may be made to conform. It may be otherwise when the alleged error is not in respect of the subject matter of the contract, but in some incidental clause of restriction or condition. But in the present case it affects the subject matter of the grant.

Nevertheless, as the defect of pleading has not been taken advantage of by demurrer, nor presented as a special objection to the issues, and the trial and argument have proceeded as if there were sufficient allegations in the bill in this particular, we are disposed to treat the case accordingly. The defect is amendablej and an amendment, under such circumstances, would be allowed, even at this stage of the proceedings.

Against the bill, so amended, we have to consider the defence of the statute of frauds. This defence indeed goes to the whole scope and purpose of the bill, and if maintained, renders all the issues of no avail.

The position of the defendant is, that the clause in controversy is one of exception, and not of reservation, in a technical or legal sense. The question turns upon this distinction. If the defendant’s mining rights are regarded as new rights, derived from its grantee under a reservation in the deed, then the operation of the clause, by which those rights were acquired, may be restricted in equity, without violation of the statute of frauds. A title or right acquired by the grantor, by reservation in a deed poll, stands in this respect upon the same footing as that which is acquired by direct grant or conveyance. But whatever is excluded from the grant by exception ’■emains in the grantor as of his former title or right; and to modify the deed so as to limit and reduce that, either in extent or duration of the estate or right retained, is in effect to enlarge the operation of the deed and make if convey estate, title or rights which the written instrument will not operate to convey. This is contrary to the statute of frauds. Glass v. Hulbert, 102 Mass. 24.

The court are of opinion that the clause in the deed from the defendant to the plaintiff corporation, “ reserving to the Stock-bridge Iron Company the right of mining on the above granted premises, for the use of said company, an amount of ore not exceeding seven thousand five hundred tons annually, at a duty of thirty-seven and a half cents per ton, including all the facilities needful for doing the same,” must be construed as a reservation of new rights to the grantor, out of the granted premises ; or else as the creation of such new rights by force of words of reserve tian, taking effect either by way of estoppel, or as a grant from the grantee by implication of law from the acceptance of the deed. Cruise Dig. tit. 32, c. 21, § 65; 2 Greenl. ed. 347, note upon Thompson v. Gregory, 4 Johns. 81. Washburn on Easements, c. 1, § 2, pl 5, referring to Durham & Sunderland Railway Co. v. Walker, 2 Q. B. 940, and Wickham v. Hawker, 7 M. & W. 63, Doe v. Lock, 2 Ad. & El. 705 ; S. C. 4 N. & M. 807. Dyer v. Sanford, 9 Met. 395. Simonds v. Wellington, 10 Cush. 313. Vickerie v. Buswell, 13 Maine, 289.

The property in the mines themselves, and in the ore they contained, must be held to have passed to the grantee by the deed. That which is reserved to the grantor is a license to enter upon the granted premises and exercise certain rights therein for the purpose of extracting from the mines a limited quantity of the ore, and revesting in the grantor the property in that which is thus separated from the mass. But until the ore is thus separated and become personal property, the title and legal possession of the whole rests in the grantee. The right of the Stockbridge Iron Company is an interest in land; but it does not constitute a title to any specific part of the mines, or of the ore contained in them, either as real or personal property. Neither is it such an interest as can be separated or made specific in any other mode than by the exercise of the privileges defined in the clause of reservation. Until then it is indefinite and inoperative. Thompson v. Gregory, 4 Johns. 81. Dygert v. Matthews, 11 Wend. 35.

The substance of the reservation or implied grant does not consist in the easements' secured to the grantor, but in the right to extract ore and thereby acquire title and possession thereof. The easements are merely incidents, as means to this end.

The reservation of an exclusive right of this nature might be held to retain in the grantor the property in the mines, operating as an exception from the grant. Cardigan v. Armitage, 2 B. & C. 197; S. G. 3 D. & R. 414. Farnum v. Platt, 8 Pick, 389. Munn v. Stone, 4 Cush. 146. Jamaica Pond Aqueduct Co. v. Chandler, 9 Allen, 159. But this right is not exclusive. There is nothing in the deed to restrict the grantee from working the mines at the same time, even to the entire exhaustion of the ara Bainbridge on Mines (1st Am. ed.) 269.

The stipulation for a rate of duty by the ton, to be paid by the grantor, for all ore that should be mined, favors the construction of the clause as a reservation, rather than as an exception; or at least as a right to be held and exercised by the Stockbridge Iron Company as one derived from the Hudson Iron Company, rather than one carved out of the former estate of the grantor, and withheld from the operation of the grant. The payment of such a duty is a recognition of the title of the party to whom it is to be paid, and indicates acquisition by the other.

In this view of the source of the defendant’s rights, it is immaterial to this inquiry whether they arise by force of a reservation strictly, or by estoppel, or by implied grant. In either case, they are equally open to be restricted by rectification of the clause upon which they depend.

Such being our conclusion upon this point, it follows, as already indicated, that a material issue remains to be tried. As to that issue, the order for trial of the case by jury is unexecuted.

We do not think the defence of loches ought to defeat the bill, in this aspect of the case. If the assertion and attempted exercise of rights of mining, by the defendant, after ceasing to carry on its business at Stockbridge and selling its furnaces, was notice to the plaintiff of the claim now made by the defendant, still, supposing this issue to be found for the plaintiff, it was notice of a claim inconsistent not only with the original agreement, but also with the terms and legal effect of the deed, as originally understood by both parties. That the plaintiff adhered to the understanding and construction which had been common to both, and relied upon that construction of the deed as a sufficient answer to the claims thus made, is not to be imputed as loches, by the defendant, without proof that the plaintiff had become aware of the mistake, or ought to have discovered it, and was guilty of neglect in not doing so and seeking the remedy sooner. It is a sufficient answer to any such position, that the true construction of the clause is a matter of serious controversy and learned argument by counsel in this case.

If this construction, now sought tc be established by the Hudson Iron Company, is the true one, the issues are all inappropriate, and the cross bill itself without foundation. The issues were framed, at the request of the Hudson Iron Company, upon the contrary assumption. But as the question was not then argued, and as it goes to the foundation of both suits, it should be now considered.

It is contended that the language, “ for the use of said company,” is a restriction upon the exercise of the rights reserved tc the grantor, limiting the purposes for which alone mining could be done; that, as the Stockbridge Iron Company at that time was authorized only to manufacture pig iron at Stockbridge, and to work mines only for its own use, these limits of its corporate powers are to be imported into the deed, and thus furnish the measure of those purposes. Upon this construction, the rights would not be assignable, and would have ceased or become suspended when the Stockbridge Iron Company ceased to carry on its business of manufacture at Stockbridge, and sold its furnaces.

But we cannot give so restricted a construction, even against a grantor, to language which is so commonly employed in conveyances, and thereby has acquired a well known significance. When so employed, the phrase is expressive of the right of appropriation or enjoyment, rathér than descriptive of the purposes or mode of the use. It does not call for any extrinsic aid for its interpretation.

The meaning contended for is not the natural and ordinary one; there is nothing in the context, or in the application of the language to the subject matter, which creates an ambiguity; and we think the facts in regard to the corporate powers of the grantor,- and the entertained purpose of discontinuing its business, are so far extrinsic as not to be competent to raise an ambiguity for the purpose of settling it against the more obvious sense of the terms used.

Until the remaining issue has been again submitted to a jury by itself, we do not deem it necessary or expedient to proceed further with the original bill, or to consider the several other questions that have been argued before us.

The case will therefore stand for trial by jury upon that issue in the cross bill when amended; and in that trial the facts established by the verdict upon the other two issues will be taken as conclusively settled between the parties.

Ordered accordingly.