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.
Whether relief of any sort should be given for a mistake of law in cases in which the parties acted with full knowledge of the material facts is a question which has proved troublesome both to Roman law and to common law and equity. The Roman law seems to have started with the assumption that no relief should be given for a mistake of law and to have developed by building up exceptions and qualifications to this rule until it finally reached the opposite conclusion and gave relief to one who had been induced to enter into a transaction by mistake or fraud as to a matter of law.
On this point the English courts seem to have run a double line of authority and for a considerable time the courts following one line of cases disregard the cases in which the opposite view is taken. In equity relief seems to have been given from an early time against a mistake of law.2 At the same time language is used which seems to indicate that the court will not give relief against a mistake of law or even fraud upon a matter of law unless other facts are present which require equitable relief.3 In quasi-contract it seems to have been assumed that money which is not justly due and which is paid under a mistake of law may be recovered;4 but in later cases,5 the opposite view is taken and recovery in quasi-contract is denied under such circumstances. In the leading case in which this later view is taken, neither court nor counsel apparently knew of the line of cases in which relief for mistake of law had been granted.6 In cases in which a mistake of law was relied upon as a defense to an executory contract, such defense seems to have been assumed to be a good one at the earlier law;7 while the later cases appear to apply the other rule, in outward form at least, and to hold that mistake of law is no defense to an executory contract.8 It is possible that if the earlier cases had been reported more carefully, the conflict of authority would not seem so sharp and we might realize that some of the cases distinguished those which reached the opposite result, rather than ignored them. It may be that in some of the cases in which it seems as though mistake of law had no legal effect, the real fact was that the parties knew that they were uncertain as to the law and decided to act on such lack of knowledge and to take chances upon the actual condition of the law. Such conduct with reference to facts of which the parties are ignorant, is not mistake of fact,9 and no reason appears why such a mental attitude toward a rule of law should amount to a mistake of law if it would not amount to a mistake of fact in case the parties were taking chances upon the existence or non-existence of some unknown fact. In other cases it may be that the parties were attempting to compromise their rights and the uncertainty as to the law may have been the very thing which they were intending to compromise. In such a case the courts must either hold that no compromise can be upheld if the parties are attempting to compromise where the doubt as to their rights arises from a doubt as to the law, or else they must hold that such compromises are valid and will be upheld no matter what the actual truth as to the rule of law may prove to be.
1Hurd v. Hall, 12 Wis. 113, 124 [quoted in Birkbauser v. Schmitt, 45 Wis. 316, 30 Am. Rep. 740, and in Palmer v. Cully (Okla.), 153 Pac. 1541.
For definition and discussion, see also Stewart v. Ticonic National Bank, 104 Me. 578, 72 Atl. 741.
For the general subject of mistake of law, see Error of Law, by Corry M. Stadden, 7 Columbia Law Review 476; Mistake of Law as a Ground of Equitable Relief, by Melville M. Bigelow, 1 Law Quarterly Review 298; Mistake of Law Again, by Melville M. Bigelow, 2 Law Quarterly Review 78.
2 Hewer v. Bartholomew, Cro. Eliz. 614; Landsdowne v. Landsdowne, Mos. 364; Bingham v. Bingham, 1 Ves. 126; Pusey v. Desbonvrie, 3 P. Wms. 316.
3Frank v. Frank, 1 Cases in Chancery 84.
Some authorities have attempted to lay down the rule that relief should always be given for a mistake of law, arising from the erroneous result of active inquiry into the law,10 though no relief should be given for ignorance of the law, arising from omission to make inquiry into the law. This attempted distinction has been very generally repudiated.11 The early English rule was that relief should be given for a mistake of law if the rule of law was plain,12 but not if it were doubtful.13 This rule has been criticised and not followed.14
4Bonnel v. Foulke, 2 Rid. 4; Farmer v. Arundel, 2 W. Bl. 824; Bize v. Dick-ason, 1 T. R. 285.
5Bilbie v. Lumley, 2 East 460; Brisbane v. Dacres, 5 Taunt. 143.
6Bilbie v. Lumley, 2 East. 469.
7Herbert v. Champion, 1 Campb. 134.
8 See cases cited in note 15, this section.
9 See Sec. 233.
10 Lawrence v. Beaubien, 2 Bailey L. (S. Car.) 623, 23 Am. Dec. 155; Mc-Daniels v. Bank, 29 Vt. 230, 70 Am. Dec. 406.
If a party to the contract knows the material facts, but by mis-take of law draws an erroneous conclusion as to the legal consequences flowing from such facts, and is thereby induced to enter into the contract when but for such mistake he would not have done so, the general rule in outward form, at least (to be, as we shall see later, sharply hedged in by exceptions), is that such mistake has no effect in making such contract invalid.15
11Gruynn v. Hamilton, 29 Ala. 233; Boggs v. Fowler, 16 Cal. 550, 7G Am. Dec. 561; Kenyon v. Welty, 20 Cal. 637, 81 Am. Dec. 137; Hawralty v. Warren, 18 N. J. Eq. 124, 00 Am. Dec. 613; Birkhauser v. Schmitt, 45 Wis. 316, 30 Am. Rep. 740.