
    Joseph O. Miller, Respondent, v. Reese Carpenter, Appellant.
    
      Mistake of one party to a contract — in the absence of mutual mistake or of fraud or inequitable conduct the parties will not be restored to their former position — admissibility of paroi evidence.
    
    ¡Joseph O. Miller executed the two following instruments: (1) “ I hereby assign two hundred shares Kensico cemetery to my wife, under condition, and two hundred and thirty-two shares Kensico cemetery to Reese Carpenter, upon his paying off loan, Tarrytown bank, ten thousand dollars, and securing me for three thousand dollars, to be paid as follows: §1,300 in Dec., 1899; §1,000, Jan., 1900, and §800, Feb., 1900.” (3) “For value received, I hereby sell, assign and transfer unto Elizabeth Miller, two hundred shares, and the balance, two hundred and thirty-two shares, to Reese Carpenter, and appoint the treasurer to transfer the said shares on the books of the within-named corporation. Dated February 13th, 1900,” Thereafter he brought an action against Carpenter to compel the latter to restore the stock to him upon his payment of Carpenter’s charges and to enjoin the latter from dealing with the stock as the owner thereof.
    The defendant interposed an answer alleging that the stock had been sold to him outright.
    Upon the trial the plaintiff testified that the agreement between him and the defendant was that the stock was to be assigned as a security for the loan and that he executed the writings supposing that they were in furtherance of such agreement. There was no allegation or proof of a mutual mistake or of fraud or inequitable conduct on the part of the defendant.
    The Special Term found that the plaintiff understood that the writings effected an assignment of the stock; that the defendant understood that they effected a sale; that the minds of the parties did not meet, and that they should be restored to the position which they occupied prior to the transaction.
    Judgment was directed in accordance with the prayer of the complaint.
    
      Held, that the instruments constituted a written contract and that so far as appeared the plaintiff was seeking relief from a mistake of law;
    That, in the absence of any allegation or proof of mutual mistake, or of any finding of fraud or other inequitable conduct on the part of the defendant, the court at Special Term had no power to grant the relief which it did.
    
      Qumre, whether paroi evidence was admissible to vary or contradict the writings.
    Appeal by the defendant, Reese Carpenter, from a judgment of the Supreme Court in favor of the plaintiff, entered in the office of the clerk of the county of Westchester on the 25th day of May, 1901, upon the decision of the court rendered after a trial at the Westchester Special Term.
    
      Isaac N. Mills, for the appellant.
    
      W. J. Townsend, for the respondent.
   Jenks, J.:

The plaintiff complains that lie assigned certain stock to the defendant as collateral security for loans; that he tendered the debt and asked for the security, but that the defendant refused, saying that the plaintiff did not pledge the stock, but sold it to him. The plaintiff prays a judgment to restore the stock to him upon his payment of the charges of the defendant, and to enjoin the defendant from dealing, with- the stock as the owner thereof. The defendant answers that the transaction was a sale of the stock outright. The agreement between the parties was reduced - to two writings. The learned Special Term found that the plaintiff understood that these writings effected an assignment of the stock; that the defendant understood that they effected a sale; that the minds of the parties did not meet; that, therefore, the transaction was not an absolute sale, and that equity should restore the parties to the position which they occupied prior to the transaction.. The judgment awarded the stock to the plaintiff upon liis' payment to the defendant of the latter’s charges thereon, with interest, and granted the injunction.

The plaintiff testified that the agreement between him and' the defendant was for a loan for which the stock was to. be assigned as security, and that he executed these writings supposing that they were, in furtherance of such agreement. His proposition then is that the minds of the plaintiff and the defendant met on a loan, and that the transfer of the stock was meant as collateral security therefor. And his object of ■ attack is the writings, which are as follows: (1) “ I hereby assign two hundred shares Kensico cemetery to my wife, under condition, and two hundred and thirty-two shares Kensico cemetery to Reese Carpenter, upon his paying off loan, Tarry town bank, ten thousand dollars, and securing me for three thousand dollars, to be paid as follows: $1,200 in Dec., 1899; $1,000 Jan., 1900, and $800, Féb., 1900.” (2) “ For value received, I hereby sell, assign and transfer unto Elizabeth Miller, two hum dred shares, and the balance; two hundred and thirty-two shares, to Reese Carpenter, and appoint the treasurer to transfer the said shares on the books of the within-námed corporation. Dated February 12th, 1900.” •

I think that these agreements must be read together as the written expression of the transaction. (Harper v. Raymond, 3 Bosw. 29; Van Hagen v. Van Rensselaer, 18 Johns. 420; Coddington v. Davis, 1 N. Y. 186; Knowles v. Toone, 96 id; 534.) It is to be noted that by the first writing the plaintiff assigns to the defendant oh condition that he pays off the loan to the Tarry town bank of $10,000; that he secures to him $3,000 to be- paid at certain times stated therein, and that plaintiff testifies that the defendant did pay $2,400 to him prior to February 27, 1900. It further appears that the plaintiff subsequently tendered the balance, alleged to be due thereon, and that the defendant discharged the debt at the bank though that was subsequent to the demand made for a return of the stock alleged to have been secured thereby.

In Marsh v. McNair (99 N. Y. 174) the plaintiff assigned a policy of insurance to C. by assignment absolute in form for one dollar and other valuable consideration and .at the same time executed this instrument: “ This is to certify that, in consideration of crediting C. H. Marsh at the Exchange Bank of Lima $353.72, paying mortgage (on property formerly deeded by J. R. Marsh, in Avon, to C. W. Gibson) given by William F. Russell to C. H. Marsh, $110.46, and indorsing $35.82 upon a note made by C. H. Marsh, June 8, 1871, for $300, we jointly and severally sell, assign and transfer all our right, title and interest in two policies, Nos. 4277 and 4287, upon the lives of Charles II. Marsh and John R. Marsh, issued by the National Life Insurance Company of the United States of America to Chauncey W. Gibson, of Lima, N. Y.” The court, per Earl, J., said that this instrument is more than an assignment. It contains what both parties agreed to do. It shows that the assignment was made for the purpose mentioned and precisely what Gibson was to do in consideration thereof. He became bound to do precisely what was specified for him to do, and he could have been sued by the assignee for damages if he had failed to perform. Hence, the instrument is not a mere assignment, a transfer of the policy. “ It is a contract in writing within the rule which prohibits paroi evidence to explain, vary or contradict such contracts.” I think that upon this authority the instrument in this case must be held a contract in writing. The position of the plaintiff then neces- . sarily is that he has executed a contract which does not convey the true terms of the transaction. In other words, if the instrument is a contract in writing, then he has made a mistake óf law in executing that which is absolute for that which is conditional. The learned Special Term has not found that he was hoodwinked or that there was any inequitable dealing on the part of the defendant. Pomeroy in his Equity Jurisprudence (§ 843) states the rule as follows : Where the parties, with knowledge of the facts and without any inequitable incidents, have made an agreement or other instrument as they intended it should be, and the writing expresses the transaction as it was understood and designed to be made, then the above rule uniformly applies; equity will not allow a defense or grant a reformation or rescission, although one of the parties — and, as many cases hold, both of them —: may have mistaken or misconceived its legal meaning, scope and effect.” After Marsh v. McNair (supra) was heard in the Court of Appeals the case was retried, and the appeal therefrom is reported in 48 Hun, 117. The court, per Bead let, J., said: “ The mistake,- as such, which permits oral evidence to modify or reform a written agreement must be mutual and in some sense have relation to facts, for, as a general rule, a mere mistake of its legal effect affords no such relief. That is to say, if the written agreement is made as the parties intended, a mistake of its legal import furnishes no ground for the introduction of oral evidence to qualify its terms,” citing authorities. (See, too, Lanning v. Carpenter, 48 N. Y. 408, 412; Trotter v. Brevoort, 60 App. Div. 562, and authorities cited.) There is no allegation or proof that the written contract was made under a mutual mistake, nor is there any finding of fraud or other inequitable conduct on the part of the defendant. If such testimony could be admissible under the pleadings without amendment and the learned Special Term had found that there was an oral contract,' which, by mutual mistake, was not expressed in the written contract, then it might have decreed reformation; or, if the learned Special Term had found that the defendant, by any inequitable conduct on his part, had brought about the execution of the written contract, then it might have interfered (Haviland v. Willets, 141 N. Y. 35, 50; Greene v. Smith, 160 id. 533; Griswold v. Hazard, 141 U. S. 260), but in view of the fact that the plaintiff testified that he executed the written contract and' also testified that the minds had previously met on a different oral contract, 1 think that the learned Special Term could not, under the findings that the written contract was duly executed and delivered and that the minds of the parties never met, proceed virtually to reform the contract so as to make it express' the intention of the plaintiff alone or annul it merely upon the principle that the plaintiff could be relieved under a mistake of law* (Marsh v. McNair, supra.)

The oral testimony was admitted without objection or exception. In Marsh v. McNair (supra, 180) the court say that it is believed that there is no case where oral evidence has been received to show that an instrument like that under consideration was given as a collateral security. The rule is elementary that oral evidence to explain, to vary or to contradict written contracts, is inadmissible. Of course, such rule presupposes that such written contract has been established. (Pechner v. Phoenix Ins. Co., 65 N. Y. 195; Jones Ev. § 437; Allen v. Konrad, 59 App. Div. 21; Kalamazoo Nov. Mfg. Co. v. Macalister, 40 Mich. 84, 87.) And oral evidence may be received to destroy or to complete a written instrument. (Thomas v. Scutt, 127 N. Y. 133; Stowell v. Greenwich Ins. Co., 163 id. 298, 305; Starkie Ev. [10th Am. ed. *675.)

The judgment should be reversed and a new trial granted, costs to abide the final award of costs.

All concurred.

Judgment reversed and new trial granted, costs to abide the final award of costs.  