| BY L. L. LEONARD. It is with a feeling of some diffidence that this analysis of the principles which govern the Law of Mistake is offered for it is realized that the posi the trend of juridicial thought, but at least it may help to present the subject in a different light from that in which it is usually regarded. It has not been the endeavor of the writer to cover the adjudicated cases with any degree of thoroughness. On the contrary care has been taken to confine the consideration to those early decisions which like Boulton v. Jones, Raffles v. Wichelhaus, Couturier V. Hastie and the Thoroughgood Case, are the very foundation of the Law of Mistake in the four text writers, and that it is clearly at variance with great subdivisions of the subject. financial houses. This man answers to the AN ANALYSIS OF THE LAW OF MISTAKE OF FACT AS APPLIED IN THE AVOIDdescription of a professional advertising ANCE OF CONTRACTS. schemer named Edward Payson Weston, and we believe him to be the same man. The scheme he presents is one where the page of some daily paper is subsidized for the purpose of carrying on a private enterprise. This, of course, gives the scheme the backing of the paper to a certain extent. The question taken finds little, if any, support among the tion is: Why did this man change his name? This came to the knowledge of Mr. Critcher and thereupon an action for libel was brought. The defendants insisted strenuously that this was a privileged communication, as it was marked "confidential" and sent out to subscribers only and not to the general public; that there was no malice, as it was clearly a mistake as to identity; that the words were not libelous in themselves, and, in any event, the plaintiff must be limited to nominal damages as he had not proved any special damage. Judge Andrews ruled, however, that the privilege claimed extended only to the communication sent to the party who made the inquiry and this privilege was destroyed if the statements therein were wilfully false or if they were made wantonly and recklessly without proper investigation to ascertain their truth. In such case the law would presume malice and, if the jury found this to be a libel, they might award exemplary or punitive damages. No attempt was made by defendants to justify and plaintiff's general character and business probity were shown to be beyond reproach. The jury determined that this was a libel per se, and brought in a verdict of two thousand dollars ($2,000) damages for plaintiff. fendant's motion for new trial and to set aside the verdict as excessive was denied. The case was tried for plaintiff by Gilbert Ray Hawes, of the firm of Hawes & Judge. De A farmer who gives his children school facilities, takes a house in town in which he places some of his household effects and lives with his family, is held, in Montgomery v. Lebanon ([Ky.] 54 L. R. A. 914), not to be subject to taxation there, where he keeps his country house at all times in readiness to receive the family and performs his duties as a citizen where his country house is located, claiming that as his home. We must at the outset remove from consideration those cases in which, while mistake exists, it is not of a nature to avoid the contract. Thus a mistake as to motive is not a ground of relief. If the vendee finds that the article purchased is not applicable to the purpose for which he bought it, his mistake is not remedial. In like manner a mis take uninduced by a fraud as to the qualities of the subject-matter of the contract does not afford a ground for avoidance. "Ordinary mistakes of the purchaser relative to the qualities of the property by no means call for the interposition of a court of equity" (Taylor v. Fleet, 4 Barb. 95, 102). We must also avoid the error into which so many of the text-writers fall, of considering under this head. those cases in which the mistake of one party was caused by the acts or statements of the other. The ground of relief here is in reality fraud rather than mistake. The consideration of the conditions under which contracts can be avoided for mistake present several perplexing features. True it is that the principles governing the remedies granted have become crystallized by judicial sanction into fairly wellsettled rules. For, although the decisions present many variances, they are not more than should be expected when, as in this case, the equitable conscience works out a gradual disintergration of the sacred bonds of express contract. But the carelessness which exists in the use of familiar terms and expressions, the failure of the text-writers to keep distinct the various remedies and the confusion evidenced in many decisions as to the fundamental principles upon which these remedies are based, all combine to make the subject more perplexing void for the reason that there is a mistake as to than it should be. Yet is it not true that the greater part of this confusion is caused by failure to keep in mind the fundamental principles of the law of mistake and a growing inclination to treat is as being a positive and arbitrary reason for the avoidance of contracts? And yet it requires but slight analysis to see that its principles are the ordinary principles of law and its effect is but the logical result of a failure of some of the elements necessary to every valid contractual relation. Pothier defines a contract (Pothier on Contracts, I, ch. I, sec. 1) as 'That kind of agreement, the object of which is the formation of an engagement." Blackstone says (Bk. I, p. 441) it is "An agreement upon sufficient consideration to do or not to do a particular thing." And Pollock defines it (Poll. on Const., ch. I, p. 1) as "An agreement and promise enforcible at law." Broad as these definitions are, we can see that there are certain elements which must exist in each and every contract. There must be a genuine consent, to a legal object, expressed in offer and acceptance, based upon a consideration and between two or more parties capable of contracting. Now is it not because some of these elements are lacking that a contract can be avoided for mistake? In itself, mistake does not affect the validity of a contract. Apparent consent is given, the offer is accepted and the forms of law are satisfied. But notwithstanding this it may be that no real agreement has been reached; the apparent consent is not an actual one; some element is lacking. Hence arises the doctrine of mistake. It involves no new principles. The name itself is not necessary, for whenever it is available as a legal defense, its efficacy is due to broad principles of law and whenever relief is sought in equity for this cause we find that the relief would have been granted on the simplest of equitable grounds. There are two broad classes of mistake, viz.: Mistakes of Fact and Mistakes of Law. Mistakes of fact fall naturally into the subdivisions usually adopted first, mistake as to the identity of the parties; second, mistake as to the nature of the contract and third, mistake as to either (a) the identity or (b) the existence of the subject-matter. These subdivisions are comprehensive and universally accepted. Let us consider them in the light of the principles above laid down. One of the best recognized classes is that of mistake as to identity of parties. The law in such cases is laid down in the United States and in England by those two familiar decisions, Boston Ice Company v. Potter (123 Mass. 28), and Boulton v. Jones (2 H. & N. 564). The courts have held under these and similar condition that the contract is the identity of the parties. But the contract is void for a much more fundamental reason, viz., because there exists but one contracting party. The facts are these: A intends to contract with B, in point of fact he contracts with X the successor of B. It is obvious that there is but one party to the alleged contract, viz., A. The offer made to B has not been accepted by him nor has any consideration moved from him. It is customary to say that here is mistake as to the identity of the parties and the contract is avoided. But the nomenclature is needless. The fact is apparent that one of the most vital elements of a contract, viz., two contracting parties, is absent and hence no contract exists. As correctly expressed by the court in another Massachusetts case (Radliff V. Dollinger, 141 Mass. 1): "The invalidity of the transaction in the case at bar does not depend upon fraud, but upon the fact that one of the supposed parties is wanting, it does not matter how." And so in the second class of cases where there is said to be a mistake as to the nature of the contract we find that the mere circumstance, that one of the parties acted under a misapprehension of facts, is not the ground of relief. The contract is void because the state of mind is such that consent is never given. It is even immaterial that investigation always shows that in the cases cited to illustrate this class, fraud existed and induced the execution of the instrument. The remedy is based upon a deeper principle than that and is more farreaching than fraud will justify. So in the Thoroughgood Case (2 Coke Ref. 9) the deed was held void not because an illiterate man was induced to sign it by fraud but because he had never consented to execute that deed and a necessary element to such a contract being absent, the deed was void. As the court said in Foster v. Mackinnon (4 Com. Pleas, 704), which Pollock refers to as a luminous decision," the mind of the signer did not accompany the signature; in other words he never intended to sign and, therefore, in contemplation of law never did sign the contract to which his name is appended." So in a Michigan case, McGinn v. Tobey (66 Mich. 252), the deed was held void because the grantor had not given his consent to the transfer, and the absence of the vital element prevented the formation of a contract. "Non videntur consentire qui erant." Take another class of cases, viz., where the mistake is as to the identity of the subject-matter. In this class it is a well-settled principle, both in England and the United States, based upon the decision in Raffles v. Wichelhaus (2 H. & C. 906) and Kyle v. Kavanugh (103 Mass. 356) that the contract is avoided by mutual mistake as to the 66 The fourth customary division of cases relievable for mistake is that of mistake as to the existence of subject-matter. And in this class more than any other is apparent the truth of the statement that the relief granted in cases of mistake is not because of the state of the parties' mind, but because there is lacking an essential element. Thus in the case usually cited of Couturier v. Hastie (5 H. L. C. 673), where the contract was for the sale of a cargo of identity of the subject-matter. But the fact remains the ground of relief was not mistake in the sense of that the law judges by external phenomena, not by a mental condition, but the absence of some conthe state of the parties' minds. In the former case tractual element preventing the formation of a a contract was made with reference to cotton to contract. arrive ex Peerless from Bombay." As it happened, there were two ships of this name sailing from Bombay, but at different times, and the parties did not have in mind the same ship. It was held there was no consensus ad idem no contract at all. Yet if one party had spoken of the ship "Peerless" meaning to say "Fearless" there being but one "Peerless" - he would have been bound. The law does not grant relief for the mistake in complainant's mind. Clearly then the reason that relief, corn supposed to be in transit. In point of fact it was granted in these cases was because each party said a different thing. The offer made by the plaintiff was of a different object than that which the defendant accepted. Hence there was no common object of contract and a vital element being lacking, the agreement fell to the ground. had been necessary to sell the corn before the contract was entered into as it had begun to heat. It is useless to say that the contract is void for mutual mistake. It is void for the much more substantial reason that there was a lack of consideration. The court well expressed this in the decision in Strickland v. Turner (7 Ex. Ref. 266), when it said that because he upon whose life the annuity sold was based had died before the contract of sale was entered into "the money, therefore, which was paid was paid wholly without consideration and may now be recovered back." The case of Cochrane v. Willis (1 Ch. App. 58), so often cited by the text-writers as illustrating this class of mistake shows on investigation that the decision is based on lack of consideration. The court says, “In reality Joseph Willis had been dead more than a month, and, therefore, there was substantially an absence of consideration." It is for a similar reason that the decision in the much criticised Wisconsin "diamond case" (Wood v. Boynton, 64 Wis. 265) was not justified by the facts. Here the offer was not of one thing and the acceptance of another, but the property transferred was neither that which the woman sold nor the jeweller bought. They contracted for a stone of a certain specified nature and the delivery of an uncut diamond was as far from fulfilling the contract as the delivery of a barrel of mackerel would have been. Had they contracted over the stone as a stone of unknown nature or worth, the vendee would have been entitled to all the profits accruing from this purchase. But they contracted for the sale of a specific article; delivery was made of an article entirely different and the contract, being unsatisfied, fell to the ground. The reasoning of the court in Sherwood v. Walker (66 Mich. 568), is applicable to this case and should solve its difficulties. In the latter case the contract was for the sale of a cow supposed to be barren at a contract price of eighty dollars. She was found to be with calf and hence her value for breeding purposes was increased tenfold.. The court said, "It is true she is now the identical animal that they thought her to be when the contract was made, there is no mistake as to the identity of the creature. Yet the mistake was not of the mere quality of the animal. A barren cow is substantially a different thing than a breeding one. *** She was not in fact the animal, or the kind of animal the defendant intended to sell or the plaintiff to buy. She was not a barren cow and if this fact had been known there would have been no contract. The thing sold and bought had, in fact, no existence." So, in every decision where relief is granted for mistaken as to the iden- | utmost impartiality in the use of the terms. tity of the subject-matter, analysis will show that So, in ever case we find that it is not mistake in its literal meaning, as a state of mind, that affords a ground of relief, but a lack of one or more vital contractual elements. This being plain we find an immediate key to the confusion that exists in the use of the terms - void and voidable — a confusion met with not only in the judicial decisions, but in the works of the most careful of the text-writers. A contract is void when, although it seems to be complete, yet in fact it has never been made. A contract is voidable when, having been made, it can be rescinded at the option of one party. Plainly then these are two cases of widely divergent results. If a contract be declared void, it is destitute of legal effect; it can create no legal rights even as to bona fide third parties. If, on the other hand, it be only voidable it exists, but with a flaw of which one of the parties may take advantage. If he be guilty of laches, or enjoy any benefit under the contract, or third parties acquire rights under it, his power of avoidance is gone and he is bound. Yet we find contracts held to be void or voidable with the We have seen that relief is granted in mistake for reason that contracts have been called voidable for mistake. It does appear to be a misuse of terms to say that a contract, when executed, can be void and especially so when we confess the rule of law requiring restitution as a prerequisite to recission for then the case seems to be on all fours with fraud, duress, etc., in so far as its remedy goes at least, and it has been stated (supra) that in the last mentioned cases the contract is voidable. But even in executed contracts wherever relieved against for mistake, analysis shows that it was in reality because there had never been a fair offer and acceptance · a perfect meeting of the minds. In reality there had the sole reason that, owing to the absence of some necessary element, the contract was never formed. Then it is easy to see that a contract is never voidable from mistake. Whenever a contract can be relieved against on the ground of mistake, it is because no contract exists - it is void as to all the world. This is the more noticeable, since of the different grounds of avoiding contracts, viz., mistake, fraud, misrepresentation and duress, mistake alone voids the contract. Proof of any of the others makes it voidable at the option of the injured party. Whether a contract be void or voidable is usually of importance only in contracts of sale where third parties may have become interested. But even here the contract is void, accurately never been a contract. For the mere delivery of speaking. That the vendee must make restitution before seeking recission is a rule which equity enforces to quiet titles, holding in effect, that it is better to compel the complainant to accept the new contract as executed, reserving the right to seek indemnification in damages, than that all subsequent transfers should be avoided. Of course, I have excluded from consideration all but the most evident classes of mistake. That a mistake of expression, for example, does not void the contract, does not militate against the accuracy of the statements made above. the subject-matter and the purchase price, does not make a contract where such intention has never existed. This principle is clearly enunciated in Gardner v. Lane (9 Allen, 492), where in a contract for the sale of mackerel of the first quality in barrels, delivery was made by mistake of a certain number of barrels of inferior fish and an equal number of barrels of salt. The Supreme Court of Massachusetts held that the vendee received no title to the barrels delivered by mistake. The court said: "Delivery of itself can pass no title; it can be effective and operaIn considering these principles I have not tive only when made as incidental to and in purdifferentiated between executory and executed con- suance of a previous contract of sale." Why then tracts. Carefully speaking, an executory contract should restitution in integrum be demanded before can not be avoided and hence is without the limits recission is allowed? An interesting case admirably of this subject. In pleading mistake as a defense in illustrating this apparent inconsistency is that of such an one, the defendant proves, as I have pointed Hills v. Snell (104 Mass. 173). Here on a contract out, that no contract has arisen owing to the lack of sale of twenty-eight barrels of flour of a certain of some primal element. He is in the position then, grade, by mistake, flour of a higher grade was not of one seeking to avoid a contract, but of one delivered. The vendee, a baker, used the entire who refuses to have a contract to which he has amount before discovery of the mistake was made. never become a party, foisted upon him. On the It was held that the defendant was not liable upon other hand, when the contract is executed, then the implied assumpsit for its value nor any part of its mistaken party is no longer purely on the defensive value nor in tort for its conversion. Here, then, but comes actively forward seeking to have the there was a contract sealed by delivery, yet the apparent contract avoided. With full appreciation court refused relief since the parties could not be of this distinction I have thought it advisable to put in statu quo and there was no element of fraud consider the effect of mistake upon both classes of present. The court expressly said, in conclusion, contracts for the reason that the principles upon that the delivery by mistake "might have entitled which relief is granted is identical in each class and the plaintiffs to reclaim the property from one the kinds of relief are the same. In this connec- having it in possession or to recover its value from tion, however, it is important to note that when the one who had disposed of it with knowledge of the contract has been executed, the complaining party mistake." The explanation of this seeming anomoly is obliged to make restitution in integrum before, is not in claiming that the executed contract was he can avoid the contract. Failing this he is confined to compensation in damages. The law on this point is well settled and the same rule has been generally held even where the complainant's mistake was caused by the fraud of the other party. And it is also in this connection that we find the, the stranger to it. not void ab initio but in placing this among the exceptions that equity is ever making in the strict rules of law. For it is better, if there must be loss, that it fall upon him whose mistake, though without imputation of negligence, caused it than upon There is no logical reason for holding that the delivery of the subject-matter changes the nature of the case. The minds of the parties having never met, can the absence of this vital element be supplied by the transfer of the object of sale or the execution of the contract? Of course, if the mistake has been discovered ere the contract is executed, the mistaken party has waived his right and is estopped from obtaining relief. But, if the mistake was subsisting at the time of the execution of the contract, the nature of their relations has not been changed. The effect of delivery is dependent upon the intention with which it was made. In itself it cannot transfer the ownership. And thus we find the court saying, in Gardner v. Lane (supra), that delivery of itself can pass no title. "Nunquam nuda traditio transfert dominum" was the wise maxim of the jurisconsults. And since the traditio does not affect the merits of the case, and the fact remains that there was no genuine consent, it would seem that, accurately speaking, even executed contracts are void for mistake. This would seem to be borne out by the generally-accepted rule that money paid under a mistake of fact can be recovered. As the court said in Tybout v. Thompson and Taylor (2 Browne, 27): "It has never been decided that if one man, by mistake, pays the debts of another, he shall not recover the money back; it is included in the general principle which applies to money that he is not bound in honor or conscience to pay." This question, in its more important aspect of the delivery of property, came squarely before the court in Radliff v. Dallinger (141 Mass. 1, 6), where A supposed he was selling to B's undisclosed principal, but such principal did not in fact exist. Here the court held the sale void and allowed A to replevin the goods from the bona fide pledgee of B. The court said: "The invalidity of the transaction in the case at bar does not depend upon fraud. When one of the former constituents of a legal transaction is wanting, there is no question of rescission; the transaction is void ab initio. The sale being void and not merely voidable, or, in simpler words, there having been no sale, the delivery to Clementson gave him no power to convey a good title to a bona fide purchaser. He had not even a defective title." Whether the court did right in refusing to recognize the pledgee's title, or should have accepted the equitable doctrine and protected a bona fide transferee, may be open to discussion, but it is evident that the court appreciated the fact that the absence of a vital contractual element voids the contract whether it be executory or executed. We have seen that mistake is a ground for avoidance of contracts, for the reason that where a vital element is lacking no contract can arise. The simplest condition to which this is applicable is that of mutual mistake, for here, if anywhere, is lacking that "meeting of the minds"- to use a phrase hallowed by time-from which every contract has its birth. We are at once confronted with the question what is the effect of an unilateral mistake? Bishop lays down the rule (Bish. on Cont. sec. 701), that "if one party only acts under a mistake and the other is in no degree responsible for it,' the contract is ordinarily valid," and bases it on the ground of estoppel. Kerr is still more emphatic, stating (Kerr on Fraud and Mist. p. 479), that an unequivocal acceptance of an unambiguous proposal can never be avoided. He adds: "If a man will not take reasonable care to ascertain what he is doing, he must bear the consequences." Benjamin agrees to this doctrine (Benj. on Sales, Bk. I., Pt. I, sec. 67, Ed. '99), and puts it with Bishop on the ground of estoppel. And, beyond question, this is a well-settled rule of the law both in England and in this country. In the case of implied warranty and that class of sales involving especial good faith (uberrimae fidei), the law will protect a party against defects concerning the absence of which he may have been mistaken, but outside of these cases the law judges the liability of the party alleging mistake by his acts, and not by the state of his mind. If, however, his mistake was known to the other party, it will be relieved against, but the ground of relief is fraud rather than mistake, especially so if it was caused by the other party with a wrongful intent. And if it be innocently caused by the other party, it will generally fall under the head of misrepresentation. But, if the mistake be not known to the other party the contract, as we have said, is generally held to be valid. It is at once evident that admitting this as a general rule of law, we find ourselves face to face with another striking inconsistency. Bearing in mind the fundamental principle of the law of mistake, is not a vital element lacking in the case of unilateral as well as of mutual mistake? Undeniably it is, and, speaking with the greatest accuracy, no contract has been formed when one of the parties entered into it through mistake. But, as in so many questions of the law, the rights of the one must yield to the interests of the many, the individual is subordinated to the state. That the contract is theoretically void is true, but the courts justly hold it is impossible to allow one to avoid his contract on the simple allegation of mistake, else every contract can be avoided, and commercial peace and social security is at an end. In the case of express contracts, the impossibility of allowing their terms to be changed by parole evidence is obvious, though analyzed, this rule is but the crys |