There is a difference of judicial opinion upon the question whether a court of equity may first reform a contract by the introduction into it of a new term derived from parol evidence, and then enforce it as a written contract sufficient under the statute of frauds. See 2 Pomeroy's Equity Jurisprudence (4th Ed.) § 862 et seq. But in this State the question is no longer open. Osborn v. Phelps, 19 Conn. 63. In that case the parties had agreed upon an exchange of lands and the contract was expressed in two separate writings. The intention was that each party should sign the paper containing the agreements to be by him performed, but by mistake each party put his signature to the *Page 214 paper intended to be signed by the other. In the lower court parol evidence was received and the writing signed by the defendant was reformed accordingly, that is to say, an entirely new contract for the sale of another property on different terms was written over the defendant's signature, and a decree for a specific performance was rendered on the theory that the reformed contract was a contract signed by the defendant. This decree was reversed on appeal, on the ground that the defendant had never signed the agreements contained in the reformed contract. See also Glass v.Hulbert, 102 Mass. 24; Elder v. Elder, 10 Me. 80; Macomber v. Peckham, 16 Rawle I. 485, 17 A. 910; Wirtz v.Guthrie, 81 N.J. Eq. 271, 87 A. 134; Safe Deposit Trust Co. v. Diamond Coal Coke Co., 234 Pa. 100,83 A. 54. The doctrine of Osborn v. Phelps is, that after the contract has been materially varied by resort to parol evidence with the result of introducing new terms into it, it is no longer the contract signed by the defendant.
But we think that doctrine is inapplicable to the case presented by this complaint and demurrer. In this case no attempt is made to reform the operative part of the written contract. The subject-matter of the contract is correctly described therein, and the agreements of the vendor and vendee are truly stated. The only mistake sought to be corrected is admitted by the demurrer to have been a clerical mistake made by the draftsman whereby the vendor is described in the preamble as party of the second part instead of party of the first part, and the vendee is described as party of the first part instead of party of the second part. In the body of the contract the agreement to sell the land is ascribed to the party of the first part, and the agreement to buy is ascribed to the party of the second part, and the result of this admitted error in transposing the *Page 215 words "first" and "second" is that all the agreements of the vendor are erroneously attributed to the vendee, and vice versa.
Nevertheless, the contract is, on its face, consistent, because it does not happen to contain a recital that Sophie Stein is the owner of the premises. That fact, however, is alleged in the complaint and admitted by the demurrer, and it is a fact which may be proved by extrinsic evidence without in the least degree going outside of the limits permissible in any action on a written contract. "In arriving at the intent expressed or implied in the language used, . . . it is always admissible to consider the situation of the parties and the circumstances connected with the" execution of the contract. Bartholomew v. Muzzy, 61 Conn. 387,393, 23 A. 604; Strong v. Benedict, 5 Conn. 210,220; Griswold v. Allen, 22 Conn. 89, 98; Birkery Mfg.Co. v. Jones, 71 Conn. 113, 120, 40 A. 917.
The moment it appears, as it does in this record, by the admission of the demurrer, that the defendant Sophie Stein was the owner of the premises at the date of the execution of the contract, Exhibit A, an ambiguity is developed. In the preamble Blackman is described as the party of the first part, but the agreement to sell the premises contained in the next paragraph is necessarily the agreement of the owner, Sophie Stein, who is described as party of the second part. Again, the contract recites that the party of the second part has paid $100 to the party of the first part to bind the bargain, and the demurrer admits the allegation of the complaint that this payment was made by Blackman. If so, Blackman is wrongly described in the preamble as party of the first part. The fact of payment by Blackman before the contract was executed is also admissible as one of the circumstances surrounding the execution of the contract. *Page 216
In this way a latent ambiguity, obviously arising from a clerical misdescription of the parties, is developed and resolved without resort to any other kind of parol evidence than that which is always admissible in every action at law for breach of a written contract. The effect is not, as the defendant Sophie Stein insists, to write an agreement for the sale of the premises over her signature. The agreement is already there, and it is of course the agreement of the owner of the land. Therefore, it is the agreement of the defendant Sophie Stein, notwithstanding the fact that in another part of the contract she is by clerical error described as party of the second part instead of party of the first part.
We have no doubt that a court of equity may correct a clerical error which can be proved to be such by evidence of the situation of the parties and the circumstances connected with the execution of the contract, and may then enforce the written contract as corrected without running counter to the statute of frauds; for the reason that in so ascertaining the real meaning of the contract, the court does not travel outside of the legal boundaries of the writing itself.
There is error and the cause is remanded with direction to overrule the demurrer to the complaint.
In this opinion the other judges concurred.