This section is from the book "The Law Of Contracts", by William Herbert Page. Also available from Amazon: Commercial Contracts: A Practical Guide to Deals, Contracts, Agreements and Promises.
Some courts lay it down as a broad principle that one who enters into a contract under mistake of fact due to his own negligence, concerning which he could with reasonable diligence have learned the truth, can not have relief.1 This rule has been applied to mistakes as to area2 or boundary3 of land; as to the amount of assets in a firm where one partner is buying out another,4 and to the amount due on a note in the possession of the party alleging mistake.5 It is frequently applied to cases where a contract is entered into under a mistake in computation, quantities provided for in estimates, and the like.6 If a purchaser requests prices on list of tools and machinery and the seller quotes a lump sum for the entire lot, such quotation being stated to be "approximate," which on explanation was said to refer to a difference of about five dollars, depending upon the size of certain pulleys, the seller can not recover a greater price than that named in such offer, even though the person who made the offer did so by reason of a mistake in computing the prices of the different articles included in the list.7 If one who owns timber agrees to sell "all our right, title and interest in and to" such timber, the fact that both parties believed that the interest is greater than in fact it is, is not ground for avoiding the contract if the purchaser had deeds in his possession from which he could have ascertained the true facts.8
17 Donohue v. Woodbury, 60 Mass. (6 Cash.) 148; Aradalou v. New York, N. H. & H. R. R., 225 Mass. 235, 114 N. E. 297; Carnegie Steel Co. v. Connelly, 89 N. J. L. 1, 97 Atl. 774.
18Carnegie Steel Co. v. Connelly, 89 N. J. L. 1, 97 Atl. 774.
19 Aradalou v. New York, N. H. & H. R. R., 225 Mass. 235, 114 N. E. 297.
20 Donohue v. Woodbury, 60 Mass. (6 Cuah.) 148.
21 Radovsky v. Fall River Sayings Bank, 196 Mass. 557, 82 N. E. 693.
22 Radovsky v. Fall River Savings Bank, 196 Mass. 557, 82 N. E. 693.
23 Noyes v. Cuehnoc Paper Co., 113 Me. 565, 93 Atl. 291; Clark v. Stetson, 115 Me. 72, 97 Atl. 273; Copeland v. Brockton St. Ry., 177 Mass. 186, 83 Am. St. Rep. 274, 58 N. E. 639; Swain v. Cheney, 41 N. H. 232.
1 United States. Grymes v.'Sanders, 93 U. S. 55, 23 L. ed. 798; Barker v. Ry., 65 Fed. 460; Pope v. Hoopes, 90 Fed. 451, 33 C. C. A. 595.
Georgia. Ivereon v. Wilburn, 65 Ga. 103; Woodside v. Lippold, 113 Ga. 877, 84 Am. St. Rep. 267, 39 S. E. 400.
Idaho. Tatum v. Coast Lumber Co., 16 Ida. 471, 23 L. R. A. (N.S.) 1109, 101 Ac. 957.
Illinois. Bonney v. Stoughton, 122 111. 536, 13 N. E. 833; Steinmeyer v. 6chroeppel, 226 111. 9, 117 Am. St. Rep. 224, 10 L. R. A. (N.S.) 114, 80 N. E. 564.
Indiana. Miller v. Powers, 119 Ind. 79, 4 L. R. A. 483, 21 N. E. 455.
Minnesota. C. H. Young Co. v. Springer, 113 Minn. 382, 129 N. W. 773.
New Jersey. Atkinson v. Farrington Co. (N. J. Eq.), 28 Atl. 315; Haggerty v. McCanna, 25 N. J. Eq. 48; Voorhis v. Murphy, 26 N. J. Eq. 435.
Oregon. Foster v. Schmeer, 15 Or. 363, 15 Ac. 626.
South Carolina. Coates v. Early, 46 S. Car. 220, 24 S. E. 305.
Tennessee. Pearce v. Suggs, 85 Tenn. 724, 4 S. W. 526.
Vermont. McDaniels v. Bank, 29 Vt. 230, 70 Am. Dec. 406.
Virginia. Persinger v. Chapman, 93 Va. 349, 25 S. E. 5.
Wisconsin. Grant Marble Co. v. Abbot, 142 Wis. 279, 124 N. W. 264. "If the law were otherwise, contracts, instead of being binding, would be as unstable as water and not worth the paper on which they are written." Bridges v. Robinson, 2 Tenn. Ch. 720, 724 [quoted in Pearce v. Suggs, 85 Tenn. 724, 4 S. W. 526].
"There was a mistake of fact, on a collateral point,.and this fact was unknown to both parties, and the sources of information were open alike to both. It is well settled that this will not afford ground for the rescission of the contract": Sample v. Bridgeforth, 72 Miss. 293, 296, 16 So. 876 [citing Wise v. Brooks, 69 Miss. 891, 13 So. 836; Hall v. Thompson, 1 S. & M. 443; Ayers v. Mitchell, 3 S. & M. 683],
2Iverson v. Wilburn, 65 Ga. 103.
3Grymes v. Sanders, 93 U. S. 55, 23 L. ed. 798.
4 Bonney v. Stoughton, 122 III. 536, 13 N. E. 833; Pearce v. Suggs, 85 Tenn. 724, 4 S. W. 526.
5McDaniels v. Bank, 29 Vt. 230, 70 Am. Dec. 406.
6 See Sec. 269.
When this rule is invoked, the facts usually show that the party alleging mistake either knew the facts before entering into the contract,9 or that the mistake was really one of law,10 or as to a matter of inducement,11 or that the mistake was as to the contents of a written contract,12 or that he entered into the contract in conscious ignorance of the facts,13 or that the mistake was as to an immaterial matter,14 or that the evidence failed to prove mistake,15 and such cases do not, therefore, rest solely on the ground of negligence. Thus where A, the holder of the first mortgage, believes that B, the holder of the second mortgage, has abandoned his rights under his mortgage, and A accordingly takes security for his debt which is subsequent to B's mortgage and cancels his first mortgage, without making any inquiry as to B's having abandoned his second mortgage, he can not have the cancellation of his first mortgage set aside.16 On the other hand, many courts allow relief for mistake in an essential element, even if the party seeking relief might with diligence have discovered the" truth;17 as where the vendee settled for milk sold and delivered to him, on the erroneous assumption that the cans in which it was shipped each contained eight gallons.18 So where A, a warehouseman, was unable to find property stored with him by B, and after full opportunity for investigation, A came to the conclusion that the property had been stolen, and gave B his check therefor, it was held that he could stop payment of the check on finding the property soon after the check was given.19 The effect of negligence in omitting to learn the terms of a written contract has been discussed elsewhere.20 Since mistake in inducement is not a ground for relief,21 the question of the negligence of the party seeking relief is necessarily immaterial.
7 Tatum v. Coast Lumber Co., 16 Ida. 471, 23 L. R. A. (N.S.) 1109, 101 Ac. 957. (The mistake in- this case consisted in the failure to make a proper addition of the column of figures.)
8 Exchange Bank v. Williams, 120 La. 901, 45 So. 935.
9 Phipps v. The Nicanor, 44 Fed. 504; Pope v. Hoopes, 90 Fed. 451, 33 C. C. A. 595.
10 Bonney v. Stoughton, 122 111. 536, 13 N. E. 833; Haggerty v. McCanna, 25 N. J. Eq. 48; McDaniels v. Bank, 29 Vt. 230, TO Am. Dec. 406.
11 Sample v. Bridgforth, 72 Miss. 293, 16 So. 876.
12 Barker v. Ry., 65 Fed. 460; Miller v. Powers, 119 Tnd. 79, 4 L. R. A. 483, 21 N. E. 455; Voorhis v. Murphy, 26 N. J. Eq. 435.
13 Woodside v. Lippold, 113 Ga. 877, 84 Am. St. Rep. 267, 39 S. E. 400; McDaniels v. Bank, 29 Vt. 230, 70 Am. Dec. 406; Persinger v. Chapman, 93 Va. 349, 25 S. E. 5.
14 Grymes v. Sanders, 93 U. S. 55, 23 L. ed. 798.
15 Atkinson v. Farrington (N. J. Eq.), 28 Atl. 315.
16 Woodside v. Lippold, 113 Ga. 877, 84 Am. St. Rep. 267, 39 S. E. 400.
17 Devine v. Edwards, 101 111. 138.
18 Devine v. Edwards, 101 111. 138; same case, 87 111. 177.
In some jurisdictions in which relief is given, emphasis is laid upon the fact that the offeror has not been negligent in making the mistake for which he seeks relief; and also upon the fact that the adversary party has not so acted in reliance upon the offer that he will be prejudiced by rescission, except insofar as his hopes and expectations are disappointed. If the offeror has, without negligence, made a mistake in computation and has thus made an offer which he would not have made if he had known the facts, and if he has given notice of such mistake promptly, before the adversary party has altered his position, it has been held that he may have relief in equity.22 The fact that the offeror is sick and nervous and that the work of addition in which the mistake is made is on that account done in haste by his bookkeeper,21 or that the offeree, who accepts, is unable to read without his eyeglasses and that in the haste of the transaction he does not stop to put them on,24 has been held to show that the party who made the mistake was not, as a matter of law, so negligent that relief should be denied to him. If the offeror has omitted an item and has thus made a mistake in his bid, a finding that he is free from negligence has been upheld without, apparently, any further explanation.21
It is often difficult to determine from the language used by the courts whether refusal to rescind for mistake is imposed as a penalty for negligence; or whether they are attempting to impose the loss upon the party through whose fault the loss occurred, "Where no loss has as yet occurred, contractual liability can be enforced against the party who made the mistake only on the theory that it is a penalty for his negligence; or on the theory that the outward acts of the parties determine their liability and not their real intent.
19 State Savings Bank v. Buhl, 129 Mich. 193, 56 L. R. A. 944, 88 N. W. 471.
20 See Sec. 271.
21 See Sec. 384.
22 Bromagin v. Bloomington, 234 HI. 114, 84 N. E. 700; St. Nicholas Church v. Kropp, 135 Minn. 115, L. R. A. 1917D, 741, 1G0 N. W. 500; Barlow v.
Jones, - N. J. Eq. - , 87 Atl. 649.
23 Barlow v. Jones, - N. J. Eq. - , 87 Atl. 649.
24 Werner v. Rawson, 89 Ga. 619, 15 S. E. 813.
25 St. Nicholas Church v. Kropp, 135 Minn. 115, L. R. A. 1917D, 741, 160 N. W. 500.