The Opinion of the Court was delivered by
Caton, J.This bill was filed by Thompson and wife, formerly Mary Jane Sweat, to enforce the specific performance of a bond, dated the fourth of January, 1827, executed by the defendant, in the penal sum of one thousand dollars, payable to David Broadwell and others named, conditioned for the conveyance of the premises in question, to the obligees. “ It is understood and agreed by the contracting parties, that if Mary Jane Sweat and Wm. Broadwell, infant son of William Broadwell, deceased, or either of them, shall live to lawful age, and the said John B. Broadwell shall make a deed to them, or the survivor of either of them, to the one equal half of the above described land, then the above obligation to be void, and of no more effect than as though the deed had been made to the first parties named.” Then follows this provision : “ The true intent and meaning of the above obligation is, that if Mary Jane Sweat and William Broadwell shall live to a lawful age, they are to have the land equally divided between them; and if either, or both of them should die before they arrive at lawful age, their part or parts are to go to the persons first named.”
The case shows that the obligor and obligees are brothers and sisters, and that Mary and William, for whose benefit the bond was given, in case they should survive their minority, were their nephew and niece, infants and orphans. That Moses Broadwell, the father of John B. Broadwell, being desirous of making some provision for his infant grand children, conveyed the premises in question to the defendant, and took back this bond from him at the time it bears date, and retained it until his death, which took place a few months after. No conveyance of the premises has ever been made by John, but he has ever since enjoyed the rents and profits thereof; has made improvements, and committed waste upon it. The principal defence relied upon, and the only one which we think it necessary to notice, is, that at the time of making the bond, “ it was finally agreed that respondent should have the option either to pay the one thousand dollars, or to satisfy it by conveying the land in the said papers mentioned.” The answer further states, that “preparatory to completing said contract, the said Moses drew up the paper aforesaid, and read it to your respondent, both supposing, as was very common among the unlearned men at that day, that it would he, from the paper ^ optional with the respondent, either to pay the penalty of the bond (if completed) or convey the land.” There is some evidence tending to show that such may have been the understanding at the time.
While the rule of law is indexible, that a written instrument cannot be altered by parol proof, yet the Court of Chancery will never hesitate to rectify mistakes in fact, which have occurred in drawing up the paper, when a proper case is presented and clearly proved, and then carry into effect the instrument when thus corrected, as if it had been written as the parties supposed it was at the time. But here, no mis» take in the structure of the instrument is alleged. After it was drawn up it was read over to the obligor by his father, and there is no pretence that it was not correctly read. He must have distinctly understood every word that was read, as much as if had been written by himself; nor is it intimated but that it contained every word which he desired that it it should contain, and no more. If there was any mistake, it was in the legal construction, or effect of the instrument, and not as to what it contained, and the question is, whether the Court can inquire into, or relieve against a mistake of law ? This question underwent a very attentive consideration in the case of Hunt v. Rousmaniere’s ad'mr., first reported in 8 Wheat. 174, and again in 1 Peters, 1, where the direct question was before the Court. In that case, Hunt had loaned two sums of money to Rousmaniere, and as security, had taken irrevocable powers of attorney to sell two ships, which they were advised by counsel, and really believed were as ample and complete securities on the vessels as mortgages or bills of sale, and under that supposition and belief they were executed and received. Rousmaniere died before a sale was made by Hunt, which revoked the powers of attorney, whereby Hunt lost his security. The bill was filed for the purpose of continuing the security on the vessels. The Supreme Court of the United States in that case say: “ The question then, is, ought the Court to grant the relief which is asked for, upon the ground of mistake arising from any mistake of law ? We hold the general rule to be, that a mistake of this character is not a ground for reforming a deed founded on such mistake. And whatever exceptions there may be to this rule, they are not only few in number, but they will be found to have something peculiar in their character.” In this case, the Court hold that they could not direct a different security to be given, than that selected by the parties, te or decree that to be done which the parties supposed would be effected by the instrument finally agreed upon.”
Where the parties make a particular agreement which is correctly reduced to writing, the Court will be confined to the writing itself, to ascertain what was the intention of the parties. And hence the Court will not inquire, whether the parties did not intend to effectuate a different object frota that which the legal effect of the instrument indicates. The intention of the parties may be one thing, and the agreement another. Thus in the case in 1 Peters, the intention of the parties was to provide a most perfect security on the vessels for the loans, at least as complete as a mortgage or bill of sale, and yet by their agreement, they did not effect that object.
There is, however, another class of cases standing on independent grounds, where the Courts will relieve against agreements made according to the intention and understanding of both parties, and that is, where the agreement is made in ignorance of some material fact, but in such case the Court will not make a new agreement for the parties. It merely grants relief against, refuses to execute or destroy the old one, as the circumstances of the case may require. Where however, the parties are acquainted with all the facts on which their rights depend, and then enter into an agreement under a misapprehension as to the nature or extent of those rights, the Courts of Equity have very rarely, if ever, interfered with them.
Whenever the Courts shall establish it, as a general rule, that they will go out of the instrument, and inquire what construction each or both parties put upon it at the time it was made, they will be starting upon a path which will lead to interminable labyrinths, and will present an inducement to perjury which will be alarming in its consequences. Whenever a difficulty shall arise about an agreement, where there is any doubt as to its meaning, each party will of course insist that he understood it as may be most for his own interest, and efforts will not be spared to find witnesses to prove that such was his understanding. All of the mischiefs intended to be avoided by the Statute of Frauds would" again be revived. To some extent, it is true, those objections may be urged against the practice which has been adopted by the Court of inquiring into and correcting mistakes of fact, which have occurred in drawing up the instrument when it does not contain the whole of the agreement or mistates it; but the danger is nothing to what it would be, should we undertake to inquire into and relieve against mistakes of law. Formerly the Courts would not relieve against a mistake of fact, unless it was admitted by the defendant. They however latterly have allowed the defendant’s answer to be disproved, but they have never rectified any such mistake, unless it was admitted by the defendant, or was most clearly and explicitly proved. We are not prepared to lead the way in extending the rule.
To all of those rules, however, fraud constitutes an exception, and that may as well be committed in an intentional misrepresentation of the law, as of the facts. When that is established, the Courts will not only refuse to enforce a specific performance of the agreement, but they will relieve against it.
And it seems to be, from a very careful examination of the case of Cathcart v. Robinson, 5 Peters, 264, cited by the defendant, that fraud was one of the principal grounds of the decision of that case.
There, Cathcart had agreed to purchase of Robinson premises worth five thousand dollars for eight thousand, for which Cathcart was to give his bonds payable at future days. The contract was drawn up in the form of an agreement or covenant, and concluded with a penalty of $1000, in which each bound himself to the other. The proof showed that Cathcart expressly refused to execute the agreement, if the penalty was any higher, on the ground that he might find it for his advantage to forfeit the contract and pay the penalty; and he explained to Robinson, at the time, circumstances which might happen, which might induce him to that course. It appears clear to my mind, from a remark which Robinson made as to the .time, that he was aware of the construction put on such instruments in Courts of Equity, for when inquired of by the scrivener, what the penalty should be, he said, “he did not care how much — it made no difference to him,” or words to that amount, and added, “twenty thousand dollars.” This penalty, however, was reduced to one thousand dollars, with the understanding by Cathcart, that he could get.rid of the agreement by paying that sum; and Robinson permitted him' to execute the agreement under that belief, although he did not affirmatively express that opinion, and this circumstance is much relied upon by the Court. The Chief Justice, after stating the facts, says: “Mr. Robinson, without hinting that the object would not be obtained by the condition, assented to it, and the agreement was signed. If this be a correct view of the transaction, it is not simply an instrument executed by a person who mistakes its legal effect, as it would have been had it been prepared with a penalty of one thousand dollars, and silently executed by Cathcart with full conviction that it left him the option to perform the contract, or to pay the penalty. It is something more. The assent of Mr. Robinson to this reduction of the penalty, when demanded, avowedly for the purpose of enabling Mr. Cathcart to terminate his obligation by paying it, is doing something active on his part, to give effect to the mistake and turn it to his advantage. It is, in some measure, co-operating with Mr. Cathcart in the imposition he was practising on himself.” After stating that the case was not as strong as it would have been had Mr. Robinson suggested that the legal effect was as Mr. Cathcart supposed, the Chief Justice proceeds: “No untruth has been suggested, but if Mr. Robinson knew that Mr. Cathcart was mistaken, knew that he was entering into obligations much more onerous than he intended, that gentleman is not entirely exempt from imputations of suppressing the truth.” From this, it is manifest that the Court looked upon the conduct of Mr. Robinson as improper, unfair, and fraudulent, although the opinion does not, in express terms, say that it was fraudulent. But there could have been no middle ground in his conduct, between impropriety and fraud, because if he had the same understanding of the effect of the agreement which Mr. Cathcart had, his silence was in no wise blameable, while if he was, in fact, aware of its true legal effect, his suppression of that information was a clear fraud. But these circumstances were not alone relied upon by the Court in refusing to decree a specific performance; they also took into consideration the inequality between the price and value of the land.
Whether the Court would in this case have refused to enforce the agreement, had the whole rested in a mutual mistake, without the circumstances of fraud relied upon by the Court, we cannot say. We have been unable to find any case which goes that length. It may be said that it is indifferent to the suffering party, whether he has fallen into the error from ignorance or fraud. As to him, it may be true, but as to , the rights of the other party, it is not. But the Court will frequently refuse its aid to enforce the specific performance of an agreement, when they would not interfere to set the agreement aside for fraud. The Chief Justice, in the above case, says: “Omission or mistake in the agreement, or that it is unconscientious or unreasonable, or that there has been concealment, misrepresentation or unfairness, are enumerated among the causes which will induce the Court to refuse its aid.” And in 4 Scam. 299, this Court said: “A specific performance will not be decreed, unless the agreement has been entered into with perfect fairness, and without misapprehension, misrepresentation or oppression.” And indeed, the whole doctrine on this subject, goes upon the ground that a meritorious case must be presented before the Court will act affirmatively, to enforce specifically the agreement. The application is addressed to its discretion, and I am not prepared to set a limit to its inquiries, beyond which it will not go, in enabling it properly to exercise this discretion. Nor am I prepared to say, that where the real agreement of the parties, and the whole of it is embraced in the writing which is the evidence of it, that the Court will, even to resist its specific execution, inquire into the notions of law which the parties had of it at the time it was executed. Some extraordinary case might possibly arise, so clear as to induce a Court of Equity to interpose its discretionary power. With the Supreme Court of the United States, we will say; “We find no case precisely in point, and are unwilling, where the effect of the instrument has been entirely misunderstood by both parties, to say that a Court of Equity is incapable of affording relief.”
There is another suggestion made in the answer and urged on the argument, involving nearly the same principle which has been previously discussed, but which is worthy of particular remark, and that is, that it was generally understood among unlearned men at that time, that bonds of this description had the legal effect which these parties supposed this would have. Where a particular word or phrase has a particular or technical meaning, in a particular neighborhood, or at a particular period, and that word or phrase is used in an instrument made at that place or time, it is competent to show by parol that meaning. Yet, that by no means would authorize the introduction of proof for any other purpose, to show that an entire contract was understood at a particular place or period, to mean something different from what its legal effect imports. There are many familiar instances entirely inconsistent with such a rule. If, for instance, for the purpose of securing a loan of money, the parties should enter into an agreement, no matter how strong its terms or language might be, that in case the money was not repaid within a given time, the lender should transfer, by an absolute conveyance, certain premises to be held by the lender forever, in satisfaction for the debt. This in Equity is but a mortgage, and yet there is not probably, out of the profession, one business man in twenty, who would not suppose that after the expiration of the period, and the money not paid, the lender would be entitled to an absolute conveyance of the land at all events.
But if it were competent to prove that the construction now claimed for the defendant, were the one put upon the instrument by the parties at the time, the proof in this record comes far short of convincing our minds that such was the understanding of the parties, in the face of the most explicit declarations of the parties, in the instrument itself, as to what their real intention was, as we shall presently see.
We must then construe and give effect to the writing as we find it, irrespective of the parol proof which has been introduced for the purpose of explaining what was the understanding of the parties at the time.
Jn applications for specific performance of agreements, it is immaterial what the form of the instrument is; whether it be a covenant or a penal bond with a condition to do the the thing. The great "and leading inquiry is, what did the .parties expect would be done ? What was the moving causé of the transaction ? Wrhat is the real substance of the agreement and primary object of the parties P When that is ascertained, the Court will enforce its execution. Where the performance of a thing is secured by a penalty, the doing of the thing, and not the payment of the penalty, is considered the substance of the transaction. The parties may, however, if they choose, stipulate that the obligor shall have the option either to do the thing or pay the penalty; but as such a provision always gives one party a clear advantage over the other, such a construction is not given unless it is clear, from the face of the instrument, that such was the intention of the parties. But such was not the character of this instrument. So far from its being manifest that the obligor was to have the option either to convey the land to the infants, when they should arrive at their majority, or pay the penalty, it is remarkably explicit, that the conveyance of the land was the primary object. The penal part of the bond is payable to to the uncles and aunts of the infants, six in number, and the condition is, that the land shall be conveyed to Mary Jane and William, if they should live to their majority, in equal moieties, and if not, then the land was to be conveyed to the obligees; or if one should die during infancy, then the One moiety should be conveyed to the obligees, and the other moiety to the surviving infant at its majority. These provisions, of themselves, show conclusively that the transaction was for the benefit of the infants; and if the obligors had art election, either to pay the penalty or convey the land, he might have defeated the object of the agreement altogether, by paying the penalty to the obligees, which would have satisfied the bond, and the provision made by their grandfather for the infants would have been destroyed.
But as if these expressive features of the obligation were not sufficiently indicative of the object of the contract, it concludes with the following explicit declaratory clause: <c The true intent and meaning of this obligation being, that if Mary Jane Sweat and William Broadwell shall live to lawful age, they are to have the land divided equally between them; and if either or both of them should die before they arrive at lawful age, their part or parts are to go to the persons first named.”
With such a clause as this in the obligation, we may consider it as very remarkable, that a defence should be set up that the obligor supposed that he would have his election either to pay the penalty or convey the land; and this, too, when, from his own showing, he knew exactly what it contained. The complainants are entitled to a specific execution of the agreement, by a conveyance of an undivided half of the premises in question to Mary Jane Thompson, The complainants are also entitled to accounts of a moiety of the rents and profits, since she arrived at the age of eighteen, and also alike account for waste committed by the defendant, who-must he allowed for such permanent improvements as the Court may think just, for the taking of which accounts a reference must be made to a Master.
The decree of the Circuit Court is reversed with costs, and the cause remanded for further proceedings, consistently with the principles of this Opinion.
Decree reversed.