Failure of who knows with whom he is dealing, and the nature of considera- the contract which he desires to effect, has only himself tion is not mistake. Cases of operative mistake. [*129] to blame, if the terms of the contract do not bind the We are bound to assume that the terms of the contract correspond to the intention of the parties. If performance does not correspond to the terms of the contract, or if the subject-matter of the contract, or the conditions under which it has to be performed are not such as the parties contemplated, still we cannot say that the rights of the parties are affected by mistake. Every honest man, making a contract, expects that he and the other party will be able to perform and will perform his undertaking. If the disappointment of such expectations were called mistake, then mistake would underlie every breach of contract which had not been deliberately intended by the parties before the contract was made.1 The cases in which mistake affects contract are exceptions to an almost universal rule that a man is bound by an agreement to which he has expressed a clear assent, uninfluenced by falsehood, violence, or oppression. If he exhibits all the outward signs of agreement the law will hold that he has agreed. Thus it will appear that operative mistake is very rare, and that the cases of genuine mutual mistake are rarer still. The circumstances under which it is permitted to invalidate a contract arise in one of three ways. 1 Rice v. Grange, 131 N. Y. 149; Anderson v. May, 50 Minn. 280, II. & W. 639. third party. Two parties are brought into contractual relations Act of by the fraud or negligence of a third, inducing one to enter into a transaction which he did not contemplate, or deal with a party unknown or unacceptable to him. one party. Or again, one of two parties allows the other to agree Diswith him in terms, knowing that the other thinks him honesty of to be a different person from what he is, or knowing well that he attaches one meaning to the terms while [*130] the other party attaches to them another and different meaning. Or lastly, there are cases of genuine mutual mistake where parties contract for a thing which has ceased to exist, or are in error as to the identity of the subject of contract or of one another. These three forms of mistake may be illustrated, though not amply, from the reports. Beyond these the law will not assist people whose judgment leads them astray, unless their judgment was influenced by the fraud or misrepresentation of the other party to the contract. It will be found that the cases which follow fall under one or other of these three heads. Mistake as to the nature, or as to the existence of the contract. Mistake of identity or existence of subject. (i) Mistake induced by fraud of Hunter v. It is hard to suppose that this can arise, except from third party. the falsehood or carelessness of a third party. The courts would not permit one who had entered into a contract to avoid its operation on the ground that he did not attend to the terms which were used by himself or the other party, or that he did not read the document containing the contract, or was misinformed as to its con- 7 Ch. 84. tents, or that he supposed it to be a mere form. In like manner one may suppose, though the case has never arisen, that a man who posts a letter of acceptance, which he had written and addressed, would not be excused from Walters, Act of third party fraudulent. his contract on the ground that he had changed his mind after writing the letter, and had posted it from inad vertence. The only cases furnished in the reports are cases in which by the fraud of a third party the promisor had been mistaken as to the nature of the contract into which he was entering, and the promisee has in consequence been led to believe in the intention of the other party to contract when he did not so intend. In Thoroughgood's 2 Co. Rep. 9. Case, an illiterate man executed a deed, which was described to him as a release of arrears of rent: in fact it was a release of all claims. The deed was not read to him, but when told that it related to arrears of rent, *he said, ‘If it be no otherwise, I am content,' and executed the deed. It was held that the deed was void. Illustra tion. [*131] In Foster v. Mackinnon, Mackinnon who was a very old man was induced to endorse a bill of exchange for £3000, being told that it was a guarantee. The bill was subsequently endorsed for value to Foster, who sued Mackinnon on the bill; the jury found that there was no negligence on the part of Mackinnon, and though Foster was innocent of the fraud, it was held that he could not recover. Foster v. 'It seems plain on principle and on authority that if a blind man, or a man who cannot read, or who for some reason (not implying negligence) forbears to read, has a written contract falsely read over to him, the reader misreading to such a degree that the written contract is of a nature altogether different from the contract pretended to be read from the paper, which the blind or illiterate man afterwards signs; then, at least if there be no negligence, the signature so obtained is of no force. And it is invalid, not merely on the ground of fraud, where fraud exists, but on the ground that the mind of the signer did not accompany the signature; in other words, that he never intended to sign, and therefore in contemplation of law never L. R. 4. C. P. did sign, the contract to which his name is appended.' 711. In these two cases it has fallen to the court to say which of two innocent parties is to suffer for a mistake occasioned by the fraud of a third.1 or careless act. The same question arises where the act of the third officious, party is merely officious or careless. It has been held that a man is not bound by an offer wrongly transmitted by a telegraph clerk and accepted by the offeree.2 The post office had no authority to convey the message except in the form presented to it. But the question might assume a more difficult aspect. 1 "The party whose signature to such a paper is obtained by fraud as to the character of the paper itself, who is ignorant of such character, and has no intention of signing it, and who is guilty of no negligence in affixing his signature, or in not ascertaining the character of the instrument, is no more bound by it than if it were a total forgery, the signature included." Dixon, C.J., in Walker v. Ebert, 29 Wis. 194, H. & W. 238. See also De Camp v. Hamma, 29 Oh. St. 467; Gibbs v. Linabury, 22 Mich. 479. "When a purchaser of a negotiable promissory note takes it for value before maturity without notice of any fraud in its execution, unless at the time it was so purchased by him it was absolutely void, he will recover on such note against the maker, although the maker was induced by fraud to sign it, not intending to sign such a note, but a paper of an entirely different character, and in such case the question of negligence in the maker forms no legitimate subject of inquiry." Johnson, Pres., in Bank v. Johns, 22 W. Va. 520, 535. While the American cases do not generally follow the stringent rule last quoted, they are disposed to turn the equities against the defendant upon slight proof of negligence. Chapman v. Rose, 56 N. Y. 137; Baldwin v. Barrows, 86 Ind. 351; Ort v. Fowler, 31 Kans. 478. And also in cases of innocent purchasers who rely upon documents of title. Gavagan v. Bryant, 83 Ill. 376. Where A signs a note for $195 believing that he is signing one for $65, query as to whether he can set up any defence against an innocent purchaser for value. Fayette County Sav. Bk. v. Steffes, 54 Iowa, 214. As between the original parties fraud in procuring the contract may always be shown. Trambly v. Ricard, 130 Mass. 259. But mere ignorance or mistake on the part of the one signing will not invalidate the contract in the absence of fraud. Phillip v. Gallant, 62 N. Y. 256; Johnston v. Patterson, 114 Pa. St. 398. 2 Accord: Pepper v. Tel. Co., 87 Tenn. 554. Contra: Western Union Tel. Co. v. Shotter, 71 Ga. 760. A central' telephone operator is held to be the agent of both parties in repeating the conversation. Oskamp v. Gadsden, 35 Neb. 7. M Henkel v. 6 Exch. 7. Pape, L. R. A writes to X, a broker, an order to buy certain shares, that is, he makes an offer to buy shares importing a promise to pay their market price. After the letter is written and directed, he receives intelligence which causes him to change his mind, and he takes other letters to the post, leaving this on his table. A servant or a friend, seeing the letter, thinks it has been forgotten, and posts it. The shares are bought just before a commercial panic, which causes them to fall heavily in value. Is A or X to lose by the interference of A's friend or servant? [*132] Or suppose that A has given the letter with others to a friend, requesting him to post the others, but only to read the letter to the broker, and advise him upon it. The friend carelessly posts all the letters and the shares are bought at a loss. It may be said for A in both these cases that the mind of the offeror did not accompany the offer: just as in Foster v. Mackinnon the mind of the signer did not accompany the signature. It might be said on X's behalf that A was negligent in his dealings with an important letter, but unless he left it in a place where his letters were usually collected for the post, or dropped it in the street, I find a difficulty in supposing that the mere fact that it lay on his table could furnish an authority to any one to communicate it to X by the post.1 This much seems clear, that mistake as to the nature of the transaction entered into, or as to the intention of the other party to make a contract, must be mutual mis 1 Where A makes and signs a negotiable instrument, but without intending to deliver it, and it is taken from his possession and put into circulation, it has been held that he is liable upon it to a bonâ fide holder for value. Worcester County Bank v. Dorchester &c. Bank, 10 Cush. (Mass.) 488; Shipley v. Carroll, 45 Ill. 285. Contra: Burson v. Huntington, 21 Mich. 415; Salander v. Lockwood, 66 Ind. 285 (semble). |