The facts in evidence tended to show that The American Iron and Steel Company owned two adjoining tracts of land in the *Page 588 county of Chatham, known as the Foushee tract and the McIntosh tract, the divisional line between them originally running from Deep River north to a pond on the public road and, for a part of the distance, along an "old hedgerow," and that on the McIntosh place, near this line, was a large body of timber, 2 1/2 or 3 million feet; that some time after acquiring the land, the precise date not given, the company ran a new line dividing the property and by which the timber was thrown on the Foushee tract, and thereafter the timber and the portion of land on which it was situated was treated as part of the Foushee tract, and so termed on the company's books. Thereafter, The American Iron and Steel Company mortgaged the land, known as the Foushee land as now termed by them, to the Lobdell Car Company, a corporation of the State of Delaware and having its principal place of business in said State, and the remainder of the property, to wit, the McIntosh place, as constituted under the new division, was mortgaged by the Iron and Steel Company to the Lobdell Car Company and J. M. Heck, now deceased, of the city of Raleigh; that plaintiff, desiring to purchase the body of timber heretofore mentioned, and having learned that same was owned by defendant J. D. Boushall, in 1913 approached said Boushall (505) for the purpose of acquiring the timber and purchasing the land on which the same was situate, and said Boushall, having come into possession and control of the Heck interest, and having assurance that, as to the part of the land mortgaged to Mr. Heck, now deceased, his negotiations would be approved by the iron and steel and the car companies, contracted to convey the McIntosh place to plaintiff company under the terms and provisions of the written contract above set forth. It further appeared that during the negotiations defendant, acting honestly in such belief, represented that the timber in question was on the property owned by him, and that his agent, a man living out there, pointed out the "old hedgerow" as the dividing line; that plaintiff contracted for the timber under the impression that defendant owned it, and that procuring the timber was a principal inducement to the deal, and the value thereof called for the larger portion of the purchase price agreed upon, and that the descriptive terms used in the bond, as understood by plaintiff, covered and was intended to cover the land on which the same was situated. On the other hand, it was admitted that defendant was guilty of no fraud in the transaction, and it also appeared that he acted throughout in the honest belief that his boundaries covered the timber; that he told plaintiff's representatives in the trade that he had no personal knowledge of the lines or boundaries; that the title deeds were in possession and control of the car company, in the State of Delaware, and that, while plaintiff was under the impression that his boundaries *Page 589 covered the timber and made the trade in reference to that, he only intended to sell the land that was mortgaged to him, and, in using the descriptive terms of the contract, he understood and intended that they only referred to such land.
Upon these the facts chiefly relevant, and about which there is no substantial conflict in the testimony, we are of opinion that there has been no valid contract between these parties, and that the verdict establishing a breach and assessing damages on that theory must be set aside.
It is recognized as a fundamental principle in the law of contract that there must be a meeting of the minds of the parties on the same thing at one and the same time. It is true that when the parties have expressed their agreement, either oral or written, in terms that are explicit and plain of meaning — that is, when their minds have met on the terms of the contract — it may not be revoked or altered by reason of the mistake of "one of the parties alone, resting wholly in his own mind," there being no fraud or misrepresentation by the other; but where essential terms of an agreement are ambiguous, so much so as to be fairly and reasonably susceptible of different interpretations, and it is clearly made to appear that these terms have been used and intended by one of the parties in one sense and by the other in a different sense, in such case there has been no meeting of the minds on the (506) terms of the contract, and unless some facts have arisen creating an estoppel or rendering such course altogether inequitable, the agreement or attempted agreement should be set aside and the parties placedin statu quo. This was held in substantially these terms in Strong v.Lane, 66 Minn. 94, a case not unlike the one before us, and the principle will be found very generally approved in the decided cases and textbooks of approved excellence. Machine Co. v. Chalkley, 143 N.C. 181;Lumber Co. v. Wilson, 51 W. Va. 30; Silliman v. Gillespie, 48 W. Va. 374;Contan v. Sullivan, 110 Cal. 624; Chamberlain v. Martin, 20 Va. 283;Werner v. Rawson, 89 Ga. 619; Kyle v. Kavenagh, 103 Mass. 356;Rice v. Dwight Mfg. Co., 56 Mass. 80; Fink v. Smith, 170 Pa. St., 124; Bingham v. Bingham, 27 Eng. Rep. Repr. Chan., 7, 934;Cooper v. Phipps, 29 L. R. Eng. and Ir. App. Cases, 49; Pomeroy Eq. Jurisprudence, sec. 856; Pomeroy on Contracts, secs. 250-251; 29 A. and E. (2 Ed.), pp. 664-665; 9 Cyc., 398.
This being the established position, the case before us, as heretofore stated, is one which, in our opinion, clearly calls for its application, the facts showing that the description in the contract is ambiguous and that both parties designing, the one to sell and the other to buy the timber, and honestly believing that the defendant owned it, entered into a contract for the land on which it was supposed to be situate, and, in the *Page 590 written instrument, the plaintiff used and intended to use the descriptive terms as covering the McIntosh place as it formerly was, "the land commonly known as the McIntosh tract," and the defendant intended to confine the contract to that part of the McIntosh place which he controlled and which was then owned by the three parties mentioned, the Iron and Steel Company, The Lobdell Car Company, and the Heck estate.
It has been said that culpable negligence of the complaining party will sometimes prevent the operation of the principle, but, as stated in one of these citations, Pomeroy Eq. Jur., sec. 856: "It is not every negligence that will stay the hand of the court, but the best authorities are to the effect that the neglect must amount to the violation of a positive legal duty," and the qualification, if it applies at all to the case presented, should not prevail in this instance, the evidence showing further that defendant informed plaintiff that he was personally unacquainted with the boundaries, and also that the interest had come to him by devise or descent and the title deeds were in the keeping of others.
It is true that neither party is asking relief on any such ground, but plaintiff, in his pleadings, asserting the contract to be one way and demanding damages for its breach, and the defendant asserting that it is another way and praying for specific performance, the allegations are sufficiently broad to present the question, and the evidence clearly showing the mistake, the respective prayers for relief are not of the (507) substance, and the decree must be entered that the contract be set aside, or rather that there has never been a contract between them. Alston v. Connell, 140 N.C. 485.
It is insisted for defendant that plaintiff is restricted in the bond to the sum of $500; that this should be regarded as an agreement for liquidated damages, and that no recovery by plaintiff can exceed this amount, and no greater sum can be considered as a basis for adjustment; but, on the facts presented, the authorities are against this position. The bond is in the old form in which the sum of $500 is evidently stated as a penalty, and was never intended, in a contract of this character and value, to restrict the plaintiff's recovery, in case of breach, to such an amount. The decisions are that where a contract of this kind is established the plaintiff, at his election, may sue for the damages actually sustained.Rhyne v. Rhyne, 160 N.C. 559; Noyes v. Phillips, 60 N.Y. 408; Lowe v.Peers, 4 Burr, 2228; 11 Cyc., p. 1026.
On the record, it must be adjudged that there has been no contract between the parties; that the verdict, establishing a breach of same and assessing damages for such breach, be set aside; and it appearing from the pleadings that the plaintiff has paid on the contract the sum of $565, he is entitled to recover this sum and interest thereon from time of payment *Page 591 and, on repleader by defendant, he is entitled, as an offset to this sum, to the value of the timber as it stood on the ground and which was cut by plaintiff from the part of the McIntosh place owned by the defendant while he was acting under the agreement as he understood it to be.
The plaintiff is entitled to costs in the lower court, thus far accrued, and the costs of appeal will be divided.
Error.
Cited: Strickland v. Shearon, 191 N.C. 566; Potter v. Miller,191 N.C. 817; Sweet v. Spinning co., 205 N.C. 141.