If a mistake of law is induced or encouraged by the misrepresentation of the other party or even if it is perceived by the other party and taken advantage of by him, it is in equity, at least, justification of rescission.64 And where one of the parties is in a position of authority which enables him to exert pressure upon the other who in ignorance of his legal rights makes a thing in order to avoid a greater evil, in order that is, to put an end to litigation. But James, L. J., laid it down in Ex parte James, L. R. 9 Ch. 609, that, although the court will not prevent a litigant party from acting in this way, it will not act so itself, and it will not allow its own officer to act so. It will direct its officer to do that which any high-minded man would do, viz., not to take advantage of the mistake of law. This rule is not confined to the Court of Bankruptcy. If money had by a mistake of law come into the hands of an officer of a Court of Common Law, the court would order him to repay it so soon as the mistake was discovered. Of course, as between litigant parties, even a Court of Equity would not prevent a litigant from doing a shabby thing. But I cannot help thinking that, if money had come into the hands of a receiver appointed by a Court of Equity through a mistake of law, the court would, when the mistake was discovered, order him to repay it. A trustee in bankruptcy has always been treated as an officer of the Court of Bankruptcy, and the court will order him to act in an honorable and high-minded way, and so it was laid down by James and Mellish, L. JJ., in Ex parte James, L. R. 9 Ch. 609. It is true that in that case the money in question had not been divided among the creditors, but was still in the hands of the trustee, and we are about to carry the principle of this decision somewhat further. But, though the money has been divided among the creditors, the court sees that other moneys, which would be applicable to the payment of dividends to the creditors, are about to come into the hands of the trustee, and it has not been shown that any injury will be done to any one by ordering the trustee to apply this money which is coming to him to replace the other money which was paid to him in error." 54In Haviland v. Willets, 141 N. Y. 35, 50, 35 N. £. 958, the court said: "Assuming, as counsel for the appellants contends, that Barclay's mistake was one of law, and that the general rule excludes equitable relief for such a mistake, when it is one of law pure and simple, and no other elements are present, it is still obvious that the doctrine does not cover the entire array of facts here disclosed. It is equally well settled that where there is a mistake of law on one side, and either positive fraud on the other, or inequitable, unfair and deceptive conduct, which tends to confirm the mistake and conceal the truth, it is the right and duty of equity to award relief." See also Hansford v. Freeman, 99 Ga. 376, 27 S. E. 706; Montgomery Ac. Co. v, Atlantic Lumber Co., 206 Mass. 144, 92 N. E. 71; Chelsea Nat. Bank v. Smith, 74 N. J. Eq. 275, 69 Atl. 533; Hellebust v. Bonde, (N. Dak. 1919), 172 N. W. 812; Tolley v. Potest, 62 W. Va. 231, 57 S. E. 811. Cf. supra, Sec. 1495, concerning a misrepresentation of law as the basis,for a claim of fraud.
Mistake of the law of a country foreign to that where the plaintiff was domiciled and foreign to that where he acted is regarded as a mistake of fact.56 This exception, available both at law and in equity, has been based on the familiar rule of evidence that foreign law must be proved as a fact. The law of one of the United States is foreign to that of another under this rule.57
Not only must the mistake relate to a matter on the basis of which the parties contracted, in order to justify rescission but the mistake must affect the complainant injuriously.58 Thus where parties contract on the assumption that property exists, or that it is in a certain condition, a destruction of a considerable portion of the property prior to the formation of the contract and unknown to the parties undoubtedly involves a mistake as to a matter which formed the basis of the contract, but if the buyer was content to perform the contract the seller would certainly not get relief.59