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.
There are, however, some exceptions to the general rule, on which the authorities are in substantial accord. If A is not in fact liable at all to B, a promise to pay made under mistake as to his liability is void.1 Where A gave a release to B's assignee in insolvency, thinking that he would receive a dividend on his claim therefor, but the release was filed too late to enable A to receive a dividend, A was allowed to have cancellation of the release and to maintain an action on the original debt.2 So where A owned a mare and left it with B, and X, B's husband, sold it, and was indicted for larceny, and A and B, mistakenly thinking that the only question involved in X's case was the ownership of the mare, agreed that A should take charge of the mare, but if X were acquitted, he should return her to B, no valid contract existed.3 If A agrees to sell certain interests in public land to B and such interests can not be sold under the law of the United States, such mistake prevents the existence of a contract.4 A release by an administrator of a policy upon the life of the decedent in the sum of one thousand dollars, which is made in consideration of the return of one premium amounting to less than fifty dollars, and which is induced by the false statement of the insurance company that the policy was void by reason of false statements in the application, when in fact such statements did not avoid the policy because the application was not attached to the policy as required by statute, is voidable.5 If by statute a contract for the sale of a homestead is void unless the wife signs such contract as well as the husband, a contract to pay a certain sum of money for the release of a contract for the sale of a homestead which was not signed by the wife, is inoperative.6 In cases of this class the presence of the mistake obscures the controlling feature of the case, which is that there is no consideration for the promise and that even if there were no mistake such promise would be unenforceable. If mistake at all, it is really a form of mistake as to the subject-matter.7
13Iowa Loan & Trust Co. v. Schnose, 19 S. D. 248, 103 N. W. 22, Rev. Civ. Code Sec. 1196, 1205.
14 United States. United States Bank v. Daniel, 37 U. S. (12 Pet.) 32, 9 L. ed. 989; Upton v. Tribilcock, 91 U. S. 45, 23 L. ed. 203; Allen v. Galloway, 30 Fed. 466; Hamblin v. Bishop, 41 Fed. 74.
Alabama. Dill v. Shahan, 25 Ala. 694, 60 Am. Dec. 540.
Missouri. Kleimann v. Gieselmann, 114 Mo. 437, 35 Am. St. Rep. 761, 21 S. W. 796.
New York. Gilbert v. Gilbert, 9 Barb. (N. Y.) 532.
Virginia. Zollman v. Moore, 62 Va. (21 Gratt.) 313.
Wisconsin. Burkhauser v. Schmitt, 45 Wis. 316, 30 Am. Rep. 740.
1Illinois. Koenig v. Haddix, 21 111. App. 53.
Kentucky. Blakemore v. Blakemore (Ky.), 44 S. W. 96. (An heir assumed a debt of his ancestor, barred by limitations, thinking it a lien on his realty.) Underwood v. Brockman, 34 Ky. (4 Dana) 309, 29 Am. Dec. 407 [cited and approved in Ray v. Bank, 42 Ky. (3 B. Mon.) 510, 39 Am. Dec. 479]; Louisville, etc., Ry. v. Hopkins County, 87 Ky. 605, 9 S. W. 497; Titus v. Ins. Co., 97 Ky. 567, 53 Am. St. Rep. 426, 28 L. R. A. 478, 31 S. W. 127.
Maine. Neal v. Coburn, 92 Me. 139, 69 Am. St. Rep. 495, 42 Atl. 348.
Massachusetts. Warder v. Tucker, 7 Mass. 449, 5 Am. Dec. 62.
New Jersey. Skillman v. Teeple, 1 N. J. Eq. 232.
New York. Haviland v. Willetts, 141 N. Y. 35, 35 N. E. 958.
South Carolina. Whitehill v. Dacus, 49 S. Car. 273, 27 S. E. 200.
Sec. 403. Mistake of law coupled with inequitable conduct If the party acting under mistake of law is also subject to undue influence a still clearer case for equitable relief exists.1 Thus rescission was given of a conveyance of a homestead by a grantor eighty-six years old, believing that it could be taken from him by a judgment in a threatened suit for slander.2 Thus where an executor, in whom the legatees confide, takes a release from one of them knowing that it is given under the mistaken belief that such legacy had lapsed,, such release may be avoided.3 Rescission may be given for ignorance of her homestead rights whereby a widow is induced to buy land in which she had such right greatly in excess of the true value of the estates which she was buying.4 In cases of this sort, the true ground of relief is not the mistake of law perse, but the fact that all the circumstances of the case show that the party seeking relief was the victim of constructive fraud or undue influence.
2Whitehill v. Dacus, 49 S. Car. 273, 27 S. E. 200.
3 Fink v. Smith, 170 Pa. St. 124, 50 Am. St. Rep. 750, 32 Atl. 566.
4 Miller v. Thompson, 40 Nev. 35, 160 Pac. 775.
5Rauen v. Prudential Ins. Co., 129 la. 725, 106 N. W. 198.
6Silander v. Gronna, 15 N. D. 552, 125 Am. St. Rep. 616, 108 N. W. 544.
7See Sec. 261 et seq.
11llinois. Baehr v. Wolf, 59 111. 470;
Evans v. Funk, 151 111. 650, 38 N. E. 230.
Kentucky. Sallee v. Sallee (Ky.), 35 S. W. 437.
Maine. Jordan v. Stevens, 51 Me. 78, 81 Am. Dec. 556.
Nebraska. Loosing v. Loosing, 85 Neb. 66, 122 N. W. 707.
New Jersey. Flummerfelt v. Flum-merfelt, 51 N. J. Eq. 432, 26 Atl. 857.
West Virginia. Tolley v. Poteet, 62 W. Va. 231, 57 S. E. 811.