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.
Where A is entering into a contract under mistake and the circumstances are such that if B, too, were mistaken, reformation would be given on A's application, a still clearer case for reformation exists where B knew of A's mistake and took advantage of it, or by his own conduct or representations led him into such mistake.1 The difference between this class of cases and the general types of cases where reformation is allowed is that there is no valid oral prior agreement to which the written contract is to be reformed to conform. By a principle analogous to estoppel, however, the party who led the other into mistake or took advantage of the mistake, is not allowed to deny that the contract which he induced the adversary party to think he was making ,is not in force as it would have been had the mistake not been made. It is in cases of this sort that equity comes the nearest to making a new contract for the parties. Thus where B misleads A as to the description of the specific property contracted for,2 or as to the amount to be paid,3 or where A is a member of a firm which has made an oral contract with B, and on reducing it to writing B inserts a term and falsely represents to A that his co-partner has assented thereto,4 A may have the mistake corrected and the contract, as reformed, enforced with the mistake eliminated, though B did not intend to be bound thereby. Reformation may be given for a mistake caused by an innocent misrepresentation by the adversary party.5 Reformation may also be given where A understands that he is contracting for a given subject-matter and the adversary party B knows that A will not receive such property by the terms of the contract as executed.6 So where the grantee knows that the grantor believes that a coal vein under the realty conveyed is excepted from the operation of such conveyance, when in fact it is not and grantee knows that it is not, reformation will be granted.7
21 Citizens' National Bank v. Judy, 146 Ind. 322; 43 N. E. 259.
22Gaffney Mercantile Co. v. Hopkins, 21 Mont. 13; 52 Pac. 561.
1 Simmons Creek Coal Co. v. Do-ran, 142 U. S. 417; Home Ins. Co. v. Chemical Co., 109 Fed. 681; Bowers v. Ins. Co., 68 Fed. 785; Hig-gins v. Parsons, 65 Cal. 280; 3 Pac. 881; Deischer v. Price, 148 111. 383; 36 N. E. 105; Roszell v. Roszell, 109 Ind. 354; Sutton v. Risser, 104 la. 631; 74 N. W. 23; Williams v. Hamilton, 104 la. 423; 65 Am. St. Rep. 475; 73 N. W. 1029; Winans v. Huyck, 71 la. 459; 32 N. W. 422; Goodenow v. Curtis, 18 Mich. 298; Stanek v. Libera, 73 Minn. 171; 75 N. W. 1124; Crookston Imp. Co. v. Marshall, 57 Minn. 333; 47 Am. St.
Rep. 612; 59 N. W. 294; Smith v. Jordan, 13 Minn. 264; 97 Am. Dee. 232; Sanford v. Gates, 21 Mont. 277; 53 Pac. 749; Husted v. Van Ness, 158 N. Y. 104; 52 N. E. 645; Welles v. Yates, 44 N. Y. 525; Jones v. Warren, 134 N. C. 390; 46 S. E. 740; Day v. Day, 84 N. C. 408; Archer v. Lumber Co., 24 Or. 341; 33 Pac. 526; McCormick, etc., Co. v. Woulph, 11 S. D. 252; 76 N. W. 939; McCormick v. Ratcliffe (Tenn. Ch. App.), 64 S. W. 332; Graham v. Guinn (Tenn. Ch. App.), 43 S. W. 749; Kyle v. Fehley, 81 Wis. 67; 29 Am. St. Rep. 866; 51 N. W. 257; James v. Cutler, 54 Wis. 172; 10 N. W. 147; Dane v. Derber, 28 Wis. 216.
If from the entire contract it can be seen that a certain clause does not express the real intention of the parties, reformation can be had without showing specifically that the parties had a mutual understanding of what the term in question should really be. Thus where A took thirteen shares in a building and loan association, the by-laws of which, being a part of the contract, required a payment of one dollar per share per month, a clause in the note requiring a payment of twenty-six dollars per month on such shares may be corrected.8 This is really a question of construction, not reformation, and involves the principle that the paramount general intent prevails over an inconsistent subordinate particular intent.9
2McCormick, etc., Co. v. Woulph, 11 S. D. 252; 76 N. W. 939; Mc-Cormick v. Ratcliffe (Tenn. Ch. App.), 64 S. W. 332.
3Sanford v. Gates, 21 Mont. 277; 53 Pac. 749; Graham v. Guinn (Tenn. Ch. App.), 43 S. W. 749.
4 Sutton v. Risser, 104 la. 631; 74 N. W. 23.
5 Bush v. Merriman, 87 Mich. 260; 49 N. W. 567.
6 Stevens v. Holnian, 112 Cal. 345; 53 Am. St. Rep. 216; 44 Pac. 670.
7 Cook v. Liston, 192 Pa. St. 19; 43 Atl. 389.
8 Abbott v. Loan Association, 86 Tex. 467; 25 S. W. 620; reversing 23 S. W. 629.