THIS was an appeal from the Circuit Court of the United States for the Eastern District of Pennsylvania, sitting as a court of equity. The facts in the case are very fully stated in the opinion of the court. It was argued by Mr. Gerhard for the appellant and by Mr. Meredith for the appellee. The counsel for the appellant made the following points.
The opinion of the court was delivered by: An award may be good for part and bad for part; and the part which is good will be sustained, if it be not so connected with the part which is bad, that injustice will thereby be done. Banks v. Adams, 10 Shep. 259.
First Point. The express terms and proper construction of the statement of the accounts between the parties by William Foster, entitle the appellant to a recovery.
The 'settlement' or 'statement' of the accounts by Mr. Foster, giving rise to this suit, is careful to provide for any such contingency as that which has occurred. The amount to be paid by Mr. Archer to Mr. Bispham, is declared to be 'in liquidation and full settlement between them, of all matters, claims, and demands, relating to or growing out of the transactions of their late firm, so far as they are now known, ascertained, or believed to exist.'
This seems to include every future contingency, and to reserve to each party the benefit of it. To prevent any possible future misunderstanding, however, the paper goes on to provide,
First. 'But as liabilities may hereafter be established or ascertained,'
Second. 'Or claims received, not now known to exist, growing out of transactions during the partnership for partnership account, it is understood that the same are not embraced in the foregoing settlement and determination by me as the agent and umpire of the parties, and especially any matter of such character contingent on the result of pending suits, is excepted from this adjustment of the affairs of said firm.'
It will be observed, that there were no pending suits unless a reference was intended, as was doubtless the case, to the suits by the United States against Mr. Archer on the custom-house duty bonds in question–no others existed. There was one and one only, in New York, besides those, which are the foundation of this suit. And it is submitted that the court below erred in refusing to recognize, as pending suits, those in which judgments had been recovered, but the judgments themselves were unsatisfied–and that, too, when the phrase is used by mercantile men in an informal paper writing.
If a reference is only made to the second reservation above quoted, it is submitted that the appellant's case is made out. What difference is there between the actual facts, and the hypothetical case of a payment by Mr. Archer, and a repayment by Mifflin? Could there, in such an event, have been a doubt as to Mr. Bispham's right to participate in that recovery? The facts then would have been literally within the provision.
Second Point. If it is necessary to sustain the case for the appellant, the court as a court of equity, would reform the agreement and statement made in pursuance of it, to give relief to the appellant in the present case. It is a case within the principles of both mistake and accident. It is clearly settled, that where, either in a settlement, award, or even a solemn adjudication by the judgment of a competent court, there has been a technical mistake, such as has occurred in the present case, courts of equity will relieve against such a mistake. Courts of equity will grant relief in cases of mistake in written contracts, not only when the fact of the mistake is expressly established, but also when it is fairly implied from the nature of the transaction. Story's Equity, § 162.
Equity will give effect to the real intentions of the parties, as gathered from the objects of the instrument, and the circumstances of the case. The general rule, 'Quoties in verbis nulla est ambiguitas, ibi,' &c., shall not prevail to defeat the manifest intent and object of the parties, where it is clearly discernible, on the face of the instrument, and the ignorance, or blunder, or mistake of the parties has prevented them from expressing it in the appropriate language. Id. § 168.
'The same principle applies where a legacy is revoked, or is given upon a manifest mistake of facts.' Id. § 182. 8 Hare's R. 222; Osgood v. Jones, 10 Shep. 312; Williamson v. Johnson, 3 Halsted, Ch. 537.
So also in the case of settlements, so called.
A settlement of accounts, where one of the parties had but little knowledge of the matters settled, will be considered as prima a facie evidence, subject to be rebutted by satisfactory proof, under proper allegations, in the pleadings charging fraud or mistake as to particular items. Lee's Administrators v. Reed, 4 Dana, 109.
The court will open settlements made by mistake, although receipts in full have passed, and the note on which payments were made, has been taken up. M'Crae v. Hollis, 4 Desaus. 122. See also Shipp v. Swann, 2 Bibb, 82. Waggoner v. Minter, 7 J. J. Marsh. 173.
Where a bond was in form only a joint bond, but it was suggested to have been the intention of the parties to have made it joint and several, the court referred it to the master to inquire whether this was the intention of the parties. Where such intention appears on the face of the bond, the court will treat it as a joint and several bond, although it is only a joint bond in form. Ex parte Symonds, 1 Cox, 200. See also Rawstone v. Parr, 3 Russ. 539.
And so anxious is a court of equity to correct a mistake, that even parol evidence is admitted to prove one made by a solicitor in the draft of a settlement. Rogers v. Earl, Dick. 294. See also Shipp v. Swann, 2 Bibb, 82.
An account stated, may be set up by way of plea, as a bar to all discovery and relief, unless some matter is shown which calls for the interposition of a court of equity. But if there has been any mistake, or omission, or accident, or fraud, or undue advantage, by which the account stated is in truth vitiated and the balance is incorrectly fixed, a court of equity will not suffer it to be conclusive upon the parties, but will allow it to be opened and re eamined.
Sometimes the account is simply opened to contestation, as to one or more items, which are specially set forth in the bill of the plaintiff. Story's Equity, § 523.
To some extent the courts of equity and of common law exercise a concurrent jurisdiction on this point. Wilkins v. Woodfin, Administrator of Pearce, 5 Munf. 183.
Assumpsit lies for one against his copartner, for money paid him on a dissolution, and adjustment of the concerns of the copartnership, more than was actually due. Bond v. Hays, 12 Mass. R. 34. Or for one who has paid over by mistake more than his partner was entitled to receive. Id. 36.
It is very plain that the error which occurs in the case before the court was not a mistake of law, but of fact, or a technical mistake, for the reason that, at the time when that settlement was made, there was an actual existing liability for which the appellant was obliged to account.
Where a party has been subjected by a decree to a contingent and probable liability, he may be compelled to account, with a view to that liability, when the state of things shall happen upon which it may depend. Bank of the State v. Rose, 2 Strobhart, Eq. 90.
If, therefore, the occurrence in question comes within the definition of a mistake, it was clearly one of fact; a mistake of fact in this, that the account was struck upon the basis, that the contingency would never happen by which those payments were discharged. This view of the subject, however, necessarily points out another light in which it may be viewed as within the scope of equitable relief, viz. 'accident.'
The definition of 'accident,' as given by Mr. Jeremy, embraces this very case; he defines it to be 'an occurrence in relation to a contract which was not anticipated by the parties, when the same was entered into, and which gives an undue advantage to one of them over the other in a court of 'law.'
And the exception, taken to this definition by Mr. Justice Story, is that the term 'contracts' is not sufficiently general. Story's Eq. § 78, note 3. By the term accident, is here intended not merely inevitable casualty, &c., but such unforeseen events, misfortunes, losses, acts, or omissions, as are not the result of any negligence or misconduct in the party. Story's Eq. § 78. It may be stated, generally, that where an inequitable loss or injury will otherwise fall upon a party, from circumstances beyond his own control, or from his own acts done in entire good faith, and in the performance of a supposed duty without negligence, courts of equity will interfere to grant him relief. Id. § 89. Under this definition the unforeseen death of Mr. Archer fairly brings the appellant's case within that ground for equitable relief. See also Hachett v. Pattle, 6 Mad. 5.
Third Point. There has been an entire failure of the consideration upon which the money sought to be recovered in this action was paid by the appellant to the appellee's testator. Parish v. Stone, 14 Pick. 198, 210. Fink v. Cox, 18 Johns, 145; 8 Mass. 46; 15 Johns. 503; 5 Pick. 391; 2 Penn. State Rep. (Barr) 200.
This is the appellant's case, to which various defences have been made. It is said that Mr. Bispham released Mr. Archer. There is no release, (technical,) express or by implication. Agnew v. Dorr, 5 Whart. 131; Tyson v. Dorr, 6 Ib. 256. Nor if it were a release would it be binding in a court of equity, where there was ground for relief on account of mistake or accident. Story's Eq. § 523; M'Crae v. Hollis, 4 Desaus. 122; Shipp v. Swann, 2 Bibb, 82. When construing the whole transaction together, with an effort and the right to arrive at the actual meaning of the parties, there can be no question that no such release, as is asserted in the answer, was designed or intended. Even construing exhibit E as a strict technical release, the defendant cannot at all sustain his construction of it. Mr. Bispham exonerates Mr. Archer from any further claims, 'further' than such as can be made under Mr. Foster's settlement, is the grammatical construction. And the plaintiff really asks for nothing beyond this.
Again, it is said by the appellee that the agreement to state the accounts was a submission to an arbitrament, and that Mr. Foster's statement was an award, and is conclusive on Mr. Bispham. The appellant denies that this was an award; but even if it was, the case has been shown to be carefully excluded from the effect of Mr. Foster's statement. It is submitted that an award, not made a rule of court, cannot be binding where, if it were a rule of court, it would be set aside, and it is a familiar principle of the law of awards that courts will set aside an award made upon a mistake appearing, as here, on the face of the award itself. Watson on Arbitraments and Awards, 280. In all awards, not made under a rule of court, it is the settled law that a court of equity will relieve against them on the ground of mistake in any such case as the present.
Another suggestion of the appellee is that the account stated between the parties bars the appellant. The law is otherwise where, as here, there was a mistake, accident, or any similar event. The court will open settlements made by mistake, although receipts in full ...