Same - Effect - Remedies

132. EFFECT. Mistake, where it has any effect, renders a contract void.

133. REMEDIES AT LAW. At common law the contract may be repudiated if it is executory, or, if executed in whole or in part, what has been paid or delivered under it may be recovered back.

134. REMEDIES IN EQUITY. In equity a suit for specific performance may be resisted; or suit may be brought to declare the contract void; or, if the mistake is merely in drawing up the contract, suit may be brought to reform the instrument.

As we shall presently see, fraud renders a contract voidable only. The effect of mistake, however, where it has any operation tain words, such as 'ownership,' 'marriage,' 'settlement,' etc., import both a conclusion of law and facts justifying it, so that, when asserted without explanation of what the facts relied on are, they assert the existence of facts sufficient to justify the conclusion, and a mistake induced by such an assertion is a mistake of fact." Alton v. Bank, 157 Mass. 341, 32 N. E. 228, 18 L. R. A. 144, 34 Am. St. Rep. 285, per Holmes, J. See "Contracts" Dec. Dig. (Key-No.) § 98; Cent. Dig. §§ 415-419.

45 2 Bl. Comm. 450; Trigg v. Read, 5 Humph. (Tenn.) 529, 42 Am. Dec. 447; Bingham v. Bingham, 1 Ves. Sr. 326; Martin v. McCormick, 8 N. Y. 331; Cutts v. Guild, 57 N. Y. 229. Contra, Birkhauser v. Schmitt, 45 Wis. 316, 30 Am. Rep. 740. Ante, p. 252. See "Contracts," Dec. Dig. (Key-No.) § 93; Cent. Dig. §§ 415-419.

46 Haven v. Foster, 9 Pick. (Mass.) 112, 19 Am. Dec. 353; Vinal v. Improvement Co., 53 Hun, 247, 6 N. Y. Supp. 595; Bank of Chillicothe v. Dodge, 8 Barb. (N. Y.) 233; Wood v. Boeder, 50 Neb. 47G, 70 N. W. 27; Rosenbaum v. Credit System Co., 64 N. J. Law, 34, 44 Atl. 966. See "Contracts," Dec. Dig. (Key-No.) § 93; Cent. Dig. §§ 415-419.

47 Canedy v. Marcy, 13 Gray (Mass.) 373; Snell v. Insurance Co., 98 U. S. 85, 25 L. Ed. 52; Griswold v. Hazard, 141 U. S. 260, 11 Sup. Ct 972, 999, 35 L. Ed. 678; Benson v. Markoe, 37 Minn. SO, 33 N. W. 88, 5 Am. St. Rep. 816; Kyner v. Boll, 1S2 I11. 171, 54 N. E. 925; Pinkham v. Pinkham, 60 Neb. 600,

Clark Cont.(3d Ed.) - 17

at all, is to render the contract void.*8 The common law, therefore, offers two remedies to a person who has entered into an agreement which is void on the ground of mistake. If it be still executory, he may repudiate it, and successfully defend an action brought upon it. If-he has paid money under it, he may recover it back upon the general principle that "where money is paid to another under the influence of a mistake - that is, upon the supposition that a specific fact is true, which would entitle the other to the money, but which fact is untrue - an action will lie to recover it back." 49

In equity the victim of the mistake may resist specific performance of the contract, and may sometimes do so successfully when he might not be able to successfully defend an action at law for damages arising from its breach.50 He may also sue to have the contract declared void, and to be freed from his liabilities in respect of it. If the mistake was in drawing up the contract, a suit in equity may be brought to correct the mistake, and reform the instrument so it will express the real intention of the parties.51

A party who is entitled to avoid a contract on the ground of mistake must rescind at law, or seek his relief in equity, within a reasonable time after knowledge of the mistake.52

83 N. W. 837. See "Contracts," Dec. Dig. (Key-No.) § 93; Cent. Dig. §§ 415-419.

48 FOSTER v. MACKINNON, L. R. 4 C. P. 704, 38 L. J. C. P. N. S. 310, 20 L. T. N. S. 887, 17 Wkly. Rep. 1105, Throckmorton Cas. Contracts. 166; CUNDY v. LINDSAY, 3 App. Cas. 459, 47 L. J. Q. B. 481, 38 L. T. Rep. N. S. 573, 26 Wkly. Rep. 406, Throckmorton Cas. Contracts, 169. See "Contracts," Dec. Dig. (Key-No.) § 94; Cent. Dig. §§ 420-430.

49 Kelly v. Solari, 9 Mees. & W. 54; Wheadon v. Olds, 20 Wend. (N. Y.) 174; post, pp. 630, 637. See "Payment," Dec. Dig. (Key-No.) § 85; Cent. Dig. §§ 272-281.

50 Webster v. Cecil, 30 Beav. 62; Frisby v. Ballance, 4 Scam. (I11.) 287, 39 Am. Dec. 409; Trigg v. Read, 5 Humph. (Tenn.) 529, 42 Am. Dec 447. See "Contracts," Dec. Dig. (Key-No.) § 259; Cent. Dig. §§ 1156-1159; "Specific Performance," Dec. Dig. (Key-No.) § 52; Cent. Dig. §§ 155-159.

51 Elliott v. Sackett, 108 U. S. 132, 2 Sup. Ct 375, 27 L. Ed. 678; Beardsley v. Knight, 10 Vt. 185, 33 Am. Dec. 193; Newcomer v. Kline, 11 Gill & J. (Md.) 457, 37 Am. Dec. 74; Kilmer v. Smith, 77 N. Y. 226, 33 Am. Rep. 613; Jenks v. Fritz, 7 Watts & S. (Pa.) 201, 42 Am. Dec, 227; Fowler v. Woodward, 26 Minn. 347, 4 N. W. 231; Paine v. Upton, 87 N. Y. 327, 41 Am. Rep. 371. See "Reformation of Instruments," Dec. Dig. (Key-No.) § 17; Cent. Dig. §§ 69-71.

52 Grymes v. Sanders, 93 U. S. 55, 23 L. Ed. 798; Thomas v. Bartow, 48 N. Y. 193; Sable v. Maloney, 48 Wis. 331, 4 N. W. 479; Dodge v. Insurance Co., 12 Gray (Mass.) 71; Diman v. Railroad Co., 5 R. I. 130. See "Reformation of Instruments," Dec. Dig. (Key-No.) § 32; Cent. Dig. §§ 119-121,