This is fully recognized so far as executed transactions are concerned irrespective of whether the relief sought is rescission or reformation, and also where the question concerns the rescission of executory contracts.64 The effect of the Statute of Frauds is not equally simple, for here equity, if it seeks to enforce an oral agreement by rectifying a contract or conveyance, is compelled to qualify a positive statutory enactment. Nevertheless, since equity has not shrunk from preventing the Statute of Frauds from working a fraud in cases where there has been part performance,65 there seems little reason where a conveyance has actually been made for hesitation in granting reformation; and, indeed, reformation of a conveyance in accordance with a prior oral agreement is almost universally allowed in England and in the United States, without regard to whether an increase or diminution of the terms of the conveyance is required.66 In Massachusetts 64 See as illustrating the free introduction of parol evidence in accordance with the statement in the text: Townshend v. Stangroom, 6 Ves. Jr. 328; Hunt v. Rousmanier, 8 Wheat. 174, 5 L. Ed. 589; Blackburn v. Randolph, 33 Ark. 119; Isenhoot v. Chamberlain, 59 Cal. 630; Pierson v. McCahill, 21 Cal. 122; Murray v. Dake, 46 Cal. 644; Arbaney v. Usel, 61 Colo. 311, 157 Pac. 204; Park Bros. v. Blodgett, etc., Co., 64 Conn. 28, 29 Atl. 133; Wall v. Arrington, 13 Ga. 88; Hunter v. Bilyeu, 30 Ill. 228; Schwass v. Hershey, 125 Ill. 653, 18 N. E. 272; Gray v. Woods, 4 Blackf. 432; Hausbrandt v. Hofler, 117 Iowa, 103, 90 N. W. 494, 94 Am. St. Rep. 289; Proctor v. Fife, 97 Kans. 431, 155 Pac. 931; Scott v. Spurr, 169 Ky. 575, 184 S. W. 866; Farley v. Bryant, 32 Me. 474; Ordeman v. Lawson, 49 Md. 135; Bush v. Merriman, 87 Mich. 260, 49 S. W. 567; Popplein v. Foley, 61 Md. 381; Gillespie v. Moon, 2 Johns. Ch. 585, 7 Am. Dec. 559; Forester v. VanAuken, 12 N. Dak. 175, 96 N. W. 301; Coates v. Smith, 81 Or. 556, 160 Pac. 517; Christ v. Diffenbach, 1 Serg. & R. 464, 7 Am. Dec. 624; Huss v. Morris, 63 Pa. 367; Tabor v. 65 See supra, § 494. 66 Johnson v. Bragge, [1901] 1 Ch. 28; Blackburn v. Randolph, 33 Ark. 119; Wall v. Arrington, 13 Ga. 88; Hunter v. Bilyeu, 30 Ill. 228; Schwass v. Hershey, 125 Ill. 653, 18 N. E. 272; McGinnis v. Boyd, 279 Ill. 283, 116 N. E. 672; Dutch v. Boyd, 81 Ind. 146; Louisville, etc., R. Co. v. Power, 119 Ind. 269, 21 N. E. 751; Gelpcke, etc., Co. v. Blake, 15 Iowa, 387, 83 Am. Dec. 418; Conaway v. Gore, 24 Kans. 389; Athey v. McHenry, 6 B. Mon. 50; Noel v. Gill, 84 Ky. 241, 1 S. W. 428; Levy v. Ward, 33 La. Ann. 1033; Bond v. Dorsey, 65 Md. 310, 4 Atl. 279; Glass v. Hulbert, 102 Mass. 24, 3 Am. Rep. 418; Goode v. Riley, 153 Mass. 585, 28 N. E. 228; Ruhling v. Hackett, 1 Nev. 360; Bellows v. Stone, 14 N. H. 175; Hitchins v. Pettingill, 58 N. H. 386; Wirtz v. Guthrie, 81 N. J. Eq. 271, 87 Atl. 134, 137; Gillespie v. Moon, 2 Johns. Ch. 585, 7 Am. Dec. 559, n.; Rider v. Powell, 28 N. Y. 310; Beards and South Carolina, however, a distinction is taken between a suit by the grantor to diminish the property conveyed to the grantee and a suit by the latter to secure more than the conveyance purports to grant. In the latter case if there is no written memorandum of the original contract, containing all of its terms, reformation is not allowed.67 In defence of the rule generally prevailing, it may be said (1) that a constructive trust on the part of the defendant arises when he has received a conveyance of a greater amount than the parties intended, or where he has failed to convey all that was intended; or (2) that to allow the transaction to stand would operate as a fraud.68 The English court has been influenced doubtless by the necessities of the situation. A transaction while purely executory may be rescinded if it cannot be reformed, and the Statute of Frauds would not stand in the way of this, but rescission might work more injustice than it would cure when a conveyance has actually been made. To allow reformation or give no relief is then the only choice. § 1553. Executory contracts in England. Where reformation has been sought of an executory contract, the English courts have felt insuperable difficulty due not only to the Statute of Frauds (which happened to be applicable in nearly all the cases where reformation was sought) but also to the parol evidence rule. If a complainant seeks to reform an executory contract and to get specific performance of it as reformed, it has been held that "It is perfectly clear, that if the answer refuses to admit that there was a mistake in the par ley v. Duntley, 69 N. Y. 577, 584; Davis v. Ely, 104 N. C. 16, 10 S. E. 138, 5 L. R. A. 810, 17 Am. St. Rep. 667; Davenport v. The Widow and Heirs of Sovil, 6 Oh. St. 459; Ormsby v. Longworth, 11 Oh. St. 653, 666; Stites v. Wiedner, 35 Ohio St. 555; Smith v. Butler, 11 Ore. 46, 4 Pac. 517; Schettiger v. Hopple, 3 Grant (Pa.), 54; Huss v. Morris, 63 Pa. St. 367; Johnson v. Johnson, 8 Baxt. 261; Bumpas v. Zachary (Tex. Civ. App.), 34 S. W. 672; Goodell v. Field, 15 Vt. 448; Petesch v. Hambach, 48 Wis. 443, 4 N. W. 565; Allen v. Kitchen, 16 Idaho, 133, 100 Pac. 1052. 67 Glass v. Hulbert, 102 Mass. 24, 3 Am. Rep. 418; Goode v. Riley, 153 Mass. 585, 587, 28 N. E. 228; Kennedy v. Poole, 213 Mass. 495, 498, 100 N. E. 635, L. R. A. 1917 A. 600; Westbrook v. Harbeson, 2 McC. Ch. 112. See also Andrews v. Youngstown Coke Co., 39 Fed. 353, 354. 68 See Wirtz v. Guthrie, 81 N. J. Eq. 271, 87 Atl. 134. ticular matter, and you do not put a new construction upon it, either the bill must be dismissed, or if the defendant suggests a new view which he is willing to submit to, then the Court has in some cases executed the contract with the variation as ad mitted or suggested by the answer." 69 The defendant may, however, set up the mistake as a reason why a court of equity should refuse to enforce a contract against him according to its terms, and in this case also the English court will give only limited relief.70 The illogical character of any objection to the reformation of an executory contract has been observed in England," and in one case, at least, reformation of such a contract has been allowed, where the Statute of Frauds had been satisfied.72 But generally without much distinguishing between 69 Lord St. Leonards in Wilson v. Wilson, 5 H. L. C. 40, 65. 07 "Our opinion is, that where persons sign a written agreement upon a subject, obnoxious to the statute that has been so particularly referred to, and there has been no circumvention, no fraud, nor (in the sense in which the term 'mistake' must be considered as used for this purpose) mistake, the written agreement binds at law and in equity, according to its terms, although verbally a provision was agreed to, which has not been inserted in the document; subject to this, that either of the parties, sued in equity upon it, may perhaps be entitled in general, to ask the Court to be neutral, unless the plaintiff will consent to the performance of the omitted term." Knight Bruce, L. J., in Martin v. Pycroft, 2 De G. Mc. N. & G. 785, 795. See, however, Jervis v. Berridge, L. R. 8 Ch. 351. 71 "To refuse rectification, therefore, on the ground that to grant it would offend against a rule of law, appears to me to strike at the root of equitable jurisdiction in the matter, while to grant relief where the error has crept into one document and refuse it where it is embodied in two is inconsistent with equitable principle, for equity regards the substance rather than the form of a transaction. It is to be observed that the rule in question, which excludes parol evidence to contradict a written agreement, applies with even greater force to a deed." Thompson v. Hickman, [1907] 1 Ch. 550, 562. 72 Olley v. Fisher, 34 Ch. D. 367. In this case the court rectified an executory agreement and in the same proceeding specifically enforced it as rectified, the Statute of Frauds being no bar because there had been part performance. The court followed a suggestion in Fry on Specific Performance that wherever the Statute of Frauds creates no bar there is no difficulty in entertaining an action for the reformation of an executory contract, and the specific performance thereof. This decision seems not to have been cited subsequently by the English court. It seems inconsistent with the language at least of other English cases. Fry's treatment of the subject has been thus commented upon by an English writer (Ashburner, Equity, 543): "The learned author appears to deny (s. 814) that there is any distinction as to rectification between executed and executory contracts; but the authorities are based on this distinction." the objection of the parol evidence rule and that of the Statute of Frauds, the English court has refused reformation where a conveyance has been made in exact conformity with a prior written contract, the error being in the executory contract." To allow reformation, it is said, would be in effect first to reform an executory contract and then enforce it as reformed; and doubtless this is true, but it is not so clear why it is objectionable. 73 § 1554. Executory contracts which are not within the Statute of Frauds in the United States. In the United States the parol evidence rule is no objection to reformation, and an executory contract may undoubtedly be reformed when this does not infringe on the Statute of Frauds. Thus where an insurance policy fails to conform to the application though supposed to do so, or to the intention of the parties, and the error is unnoticed when the policy is delivered, it will be reformed.74 So a bill of lading,75 a promissory note,76 or bond," or other contract,78 may be reformed. Therefore, a bond signed by one partner on behalf of the partnership under the mutual mistake of the partners and the obligee of the bond that one partner had authority to execute a bond in connection with the firm business on behalf of the others, will be reformed so as to charge the other partners.79 73 Woollam v. Hearn, 7 Ves. 211; May . Platt, [1900] 1 Ch. 616; Thompson v. Hickman, [1907] Ch. 550. In these cases it is not clear how far the objection is based on the Statute of Frauds, and how far on the parol evidence rule. 74 Snell v. Insurance Co., 98 U. S. 85, 25 L. Ed. 52; Woodbury Savings Bank v. Insurance Co., 31 Conn. 517; Palmer . Hartford Fire Ins. Co., 54 Conn. 488, 9 Atl. 248; Keith v. Globe Insurance Co., 52 Ill. 518, 4 Am. Rep. 624; Mercantile Insurance Co. ບ. Jaynes, 87 Ill. 199; Home Insurance Co. v. Myer, 93 Ill. 271; Longhurst v. Insurance Co., 19 Iowa, 364; Ben Franklin Insurance Co. v. Gillett, 54 Md. 212; Humboldt Fire Ins. Co. v. R. K. LeBlond, etc., Co., 96 Ohio St. 442, 118 N. E. 121. 75 Aradalou v. New York &c. R. Co., 225 Mass. 235, 244, 114 N. E. 297. 76 Hathaway v. Brady 23 Cal. 121. 77 Neininger v. State, 50 Ohio St. 394, 40 Am. St. Rep. 674. American 78 Upson Mut. Co. v. Shipbuilding Co., 251 Fed. 707. 79 Moore v. Stevens, 60 Miss. 809; Wharton v. Woodburn, 4 Dev. & Bat. 507; James v. Bostwick, Wright (Oh.), 142; Purviance v. Sutherland, 2 Oh. St. 478; McNaughten v. Partridge, 11 Oh. 223, 38 Am. Dec. 731; Sale v. Dishman's Ex'rs, 3 Leigh, 548, 555; Kyle v. Robert's Ex'r, 6 Leigh, 495; Galt's Ex'rs v. Calland's Ex'r, 7 1555. Executory contracts which are within the Statute in the United States. Even where an executory contract relates to land and is within the Statute of Frauds, many American authorities allow its reformation whether a deed has subsequently been executed in conformity with the written contract or not.80 In other decisions, however, American courts have declined to reform such an executory contract, especially if it is sought to enlarge the terms of the writing, unless there has been such part performance or other circumstances as will make a failure to reform work a fraud upon the complainant.81 The latter cases seem sound. Where the only effect of a refusal to reform a contract is the loss of an executory bargain which the parties intended to make, it seems impossible to give relief on any principle that would not justify the entire destruction of the Statute. There seems little reason to distinguish between enlarging the terms of the writing and diminishing them. In either case Leigh, 594; Parker v. Cousins, 2 Gratt. 372, 390, 44 Am. Dec. 388. In some cases without resort to a court of equity, relief has been granted to the other partners at law. Minor v. Willoughby, 3 Minn. 225; Dickerman v. Ashton, 21 Minn. 538; Thomas v. Joslin, 30 Minn. 388, 15 N. W. 675; Henry County v. Gates, 26 Mo. 315; Human v. Cuniffe, 32 Mo. 316; Fagely v. Bellas, 17 Pa. 67 (disapproved in Boston Co. v. Smith, 13 R. I. 27, 36, 43 Am. Rep. 3); Jones v. Horner, 60 Pa. 214; Alcorn's Ex'r v. Cook, 101 Pa. 209. So Murphy v.Rooney, 45 Cal. 78 (cf. Baume v. Morse, 13 Cal. App. 456, 110 Pac. 350); Trout v. Goodman, 7 Ga. 383; Hunter v. Bilyeu, 30 III. 228; Carson v. Davis, 171 Ill. 497, 500, 49 N. E. 701; Popplein v. Foley, 61 Md. 381; Olson v. Erickson, 42 Minn. 440, 44 N. W. 317; Mosby v. Wall, 23 Miss. 81, 55 Am. Dec. 71; Bellows v. Stone, 14 N. H. 175, 201; Keisselbrack v. Livingston, 4 Johns. Ch. 144; Workman v. Guthrie, 29 Pa. 495, 510, 72 Am. Dec. 654; Campbell v. Fetterman's Heirs, 20 W. Va. 398, 410. See also Durham v. Taylor, 29 Ga. 166 (con- 81 Osborn v. Phelps, 19 Conn. 63, 48 Am. Dec. 133; Allen v. Kitchen, 16 Idaho, 133, 100 Pac. 1052; Elder v. Elder, 10 Me. 80, 25 Am. Dec. 205; Climer v. Hovey, 15 Mich. 18; Wirtz v. Guthrie, 81 N. J. Eq. 271, 87 Atl. 134; Davis v. Ely, 104 N. C. 16, 10 S. E. 138, 5 L. R. A. 810, 17 Am. St. Rep. 667; Safe Deposit &c. Co. v. Diamond Coal &c. Co., 234 Pa. 100, 83 Alt. 54, L. R. A. 1917 A. 596; Macomber v. Peckham, 16 R. I. 485, 17 Atl. 910. And courts which have declined to reform executed deeds by the inclusion of a greater quantity of land than that conveyed (see supra, § 1552, ad fin.) would a fortiori hold the same in regard to an executory contract. In most of the cases in the note preceding this, the discussion was slight, and in some of them there may have been such equitable circumstances as to justify reformation on the ground that otherwise a fraud would be worked. |