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.
A simple executory contract is enforceable only if it is supported by a valuable consideration.1 If reformation is sought as against the promisor or the grantor where the original transaction is gratuitous, it is ordinarily held that such relief must be denied, since there is no valid oral agreement to which to reform the deed or other written instrument.2
7New York Life Ins. Co. v. McMas-ter, 87 Fed. 63, 30 C. C. A. 532; Rider v. Powell, 28 N. Y. 310; Nevins v. Dunlap, 33 N. Y. 676; Welles v. Yates, 44 N. Y. 525; Jackson v. Andrews, 59 N. Y. 244; Moran v. McLarty, 75 N. Y. 25; Whittemore v. Farrington, 76 N. Y. 452. "The court could not make a new contract for the parties but could only cause their actual agreement to be expressed according to its terms; nor could it reform the instrument according to the terms in which (A) understood it, unless it should be shown that (8) also had the same understanding of its terms." Ward v. Yorba, 123 Cal. 447, 449, 56 Pac. 58.
8 Du Bois v. Waterworks Co., 176 Pa. St. 430, 53 Am. St. Rep. 678, 34 L. R A. 92, 35 Atl. 248. The statute authorized the court on bill filed by any citizen who used the water, alleging impurity or deficiency, to compel the water company to correct the evil complained of and to make "such order in the premises as may seem just and equitable." Under this statute, the supreme court said the lower court might proceed "even to the reformation of the contract upon a basis just and equitable to both parties, where, as here, it was made in mutual mistake as to an essential fact, and a remedy for the difficulty may be found without violation of the main intent of both parties in the original instrument."
These remarks are obiter, as the question was as to the right of the borough to rescind the contract because the water supply was defective owing to a mistake in the capacity of the stipulated source of supply. Rescission was denied.
1 See ch. XIX.
2 England. Bonham v. Newcomb, 2 Vent. 364.
Arkansas. Peters v. Priest, 134 Ark. 161, 203 S. W. 1042.
Illinois. Strayer v.. Dickerson, 205 111. 257, 68 N. E. 767.
Massachusetts. Richardson v. Adams, 171 Mass. 447, 50 N. E. 941.
Michigan. Redding v. Rozell, 59 Mich. 476. 26 N. W. 677; Shears v. Westover, 110 Mich. 505, 68 N. W. 266; Miller v. Beardslee, 175 Mich. 414, 141 N. W. 566.
Nebraska. Gwyer v. Spaulding, 33 Neb. 573, 50 N. W. 681.
New Jersey. Miller v. Savage, 62 N. J. Eq. 746, 48 Atl. 1004.
North Carolina. Powell v. Morisey, 98 N. Car. 426, 2 Am. St. Rep. 343, 4 S. E. 186.
Two exceptions to this principle have been recognized in some jurisdictions. If the original transaction is gratuitous and the grantee has taken possession of the realty and constructed valuable improvements in reliance upon the gratuitous promise of the grantor, equity has given reformation of such conveyance as against the grantor so as to make it conform to his gratuitous promise.3 This, however, is one of the cases in which equity gives specific performance of a gratuitous promise upon which the adversary party has so acted that he will be seriously prejudiced if the gratuitous promise is not enforced.4 This can only mean that a contract means something in equity different from its meaning at law, or else that consideration has an entirely different meaning at equity from its meaning at law.5
The other exception which is recognized in some jurisdictions exists where reformation is sought by a gratuitous grantee not against the grantor himself, but against one who has succeeded to the rights of the grantor without paying value therefor. In some jurisdictions it seems to be held that although reformation could not be had against the grantor, it can be had as against all who claim under him and who have not given value for such interest.6 It has been sought to justify this result on the theory that the grantor himself might have assented to reformation if his attention had been called to the mistake in time; and that since the grantor is no longer in a position in which he can assent to reformation, equity will enforce reformation as against a volunteer who claims under the original grantor by a gratuitous conveyance. This result is contrary to a considerable mass of authority, for in many of the cases already cited,7 relief was denied as against the heirs of the grantor, although they were volunteers. It is also difficult to see upon what theory an executory promise to make a present can be enforced as against the estate of the deceased promisor, even though the deceased promisor might have kept his promise voluntarily if he had lived.
If a gratuitous conveyance is so drawn by mistake as not to express the intention of the grantor, reformation may be had in a suit by the grantor against the grantee.8 No attempt is made in cases of this sort, it will be noticed, to enforce any executory gratuitous promise. The only effect of such reformation is to keep a gratuitous grantee from acquiring greater interest than the grantor had intended to convey.
Oregon. Langley v. Kesler, 57 Or. 281, 110 Pac. 401, 111 Pac. 246.
Wisconsin. Willey v. Hodge, 104 Wis. 81, 76 Am. St. Rep. 852, 80 N. W. 75.
3 Cummings v. Freer, 26 Mich. 128.
4See Sec. 524.
5 See Sec. 524.
6 Lister v. Hodgson, L. R. 4 Eq. 30; Lackersteen v. Lackersteen, 30 L. J. Rep. (N. S. Ch. Div.) 5; Wyche v. Greene, 16 Ga. 49; Spencer v. Spencer, 115 Miss. 71, 75 So. 770.
7 See note 2 in this section.