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.
If A, not meaning to bind himself personally, signs the contract in such a way as to bind himself, the question of his right to reformation depends on substantially the same principles as those governing a mistake as to the legal effect of the words employed.1 If there has been a prior valid contract between the parties, by the terms of which no personal liability was fixed on A, and in attempting to reduce this to writing A by mistake as to the legal effect of the method of executing the contract employed by himself signs it so as to incur a personal liability, he may have reformation.2 Thus where A is agent for X and signs "A, agent of X," he may have reformation so as to relieve himself from personal liability.3 Conversely in an action against X, reformation may be had so as to make him personally liable on the written contract.4 Thus where the name of the corporation was printed at the top of the contract, followed by the words "we promise" and signed "R. J. Beatty, President," reformation was allowed in a suit against the corporation.5 So where A signs as township trustee when he means to sign as trustee for the school township, the latter office being held by A ex officio as township trustee, reformation may be had to make the school township liable.6 Further, if A does not sign so as to assume the liability intended by the oral contract, reformation may be had against him on B's application. This rule has been applied where the parties meant to sign an injunction bond so as to make it valid, though probably they had no specific intention to seal, as they did not know that it was necessary, but the bond purported on its face to be a sealed instrument.7 Some authorities seem to deny the right of equity to reform so as to give relief against a mistake as to the legal effect of a signature.8 In these cases, however, though it is not always clear from the report, the decision is often based on the other branch of the principle under discussion; that if there is no prior oral contract, reformation cannot be given to a party who makes himself personally liable when he did not intend to. Thus where A signs a contract so as to bind himself personally, though he thinks he is liable as guardian only,9 or officers of a corporation, meaning to bind the corporation, sign a note so as to bind themselves personally,10 or A on depositing money in a bank accepts as security therefor the individual notes of the president and the cashier, thinking they were certificates of deposit,11 reformation has been refused.
1Dulo v. Miller, 112 Ala. 687; 20 So. 981; Cooke v. Husbands, 11 Md. 492; Clayton v. Freet, 10 0. S. 544; as failing to reserve a life-estate as intended. Purvines v. Harrison, 151 111. 219; 37 N. E. 705.
2Kyner v. Ball, 182 111. 171; 54 N. E. 925; Nicholson v. Caress, 59 Ind. 39; Holme v. Shinn, 62 N. J. Eq. 1; 49 Atl. 151; Vickers v. Leigh, 104 N. C. 248; 10 S. E. 308; Brock v. O'Dell, 44 S. C. 22; 21 S. E. 976; Lardner v. Williams, 98 Wis. 514; 74 N. W. 346.
3Trusdell v. Lehman, 47 N. J. Eq. 218; 20 Atl. 391; Springs v. Harven, 3 Jones Eq. (N. C.) 96; Brock v. O'Dell, 44 S. C. 22; 21 S. E. 976.
4 Vickers v. Leigh, 104 N. C. 248; 10 S. E. 308.
5Kyner v. Ball, 182 111. 171; 54 N. E. 925. (Thus creating what at Common Law was a fee-tail but under the Illinois statutes was a life estate in the first taker and a fee in his descendants.)
6 M. E. Church v. Town, 47 N. J. Eq. 400; 20 Atl. 488.
7 Pinkham v. Pinkham. 60 Neb. 600; 83 N. W. 837; affirmed on rehearing 61 Neb. 336; 85 N. W. 285.
8 Canedy v. Marcy, 13 Gray (Mass) 373; Green Bay, etc.. Co. v. Hewitt, 62 Wis. 316; 21 N. W. 216; 22 N. W. 588.
9 Hamilton County v. Owens, 138 Ind. 183; 37 N. E. 602.
1 See Sec. 1241.
2 Fisher v. Barnett, 56 111. App. 649; Second National Bank v. Steel Co., 155 Ind. 581; 52 L. R. A. 307; 58 N. E. 833; Sparta School Township v. Mendell, 138 Ind. 188; 37 N. E. 604; Prescott v. Hixon, 22 Ind. App. 139; 72 Am. St. Rep. 291; 53 N. E. 391; Lee v. Percival, 85 la. 639; 52 N. W. 543; Richmond v. Ry., - Or. -; 74 Pac. 333; Moser v. Libenguth, 2 Rawle (Pa.) 428.
3 Western Wheeler Scraper Co. v. Stickleman, 122 la. 396; 98 N. W. 139; Western Wheeler Scraper Co. v. McMillen, - Neb. -; 99 N. W. 512. Thus a signature in the following form has been corrected by reformation: "O. O. Prescott, Pres. Mid. B. & Cheese Co.; M. A. Cordrey, Sec. Cr. & Cheese Co." Prescott v. Hixon, 22 Ind. App.
139; 72 Am. St. Rep. 291; 53 N. E. 391.
4 Second National Bank v. Steel Co., 155 Ind. 581; 52 L. R. A. 307; 58 N. E. 833; McNaughten v. Partridge, 11 Ohio 223; 38 Am. Dec. 731; Moser v. Libenguth, 2 Rawle (Pa.) 428.
5 Second National Bank v. Steel Co., 155 Ind. 581; 52 L. R. A. 307; 58 N. E. 833.
6 Sparta School Township v. Mendell, 138 Ind. 188; 37 N. E. 604. While in some of these cases the party signing the contract might be shown in an action at law on the contract to be the real principal (see Sec. 606. 607, 695, 761, 1233-1236), reformation may be had in cases where the real principal could not be held in an action at law.