
    HARVEY & LIVESEY’S CASE.
    James W. Harvey et al. v. The United States.
    
      On the defendants’ Demurrer.
    
    
      The claimants bring their action upon a written contract. Parol evidence to shots a mistake and reform tlte contract is excluded. Judgment is rendered for a less amount than they claim. (8 C. Cls. R.., 501.) They accept payment and apply to Congress for relief. A private act is passed referring their claim to this court “for hearing and adjudication,” and conferring jurisdiction to proceed “ as a court of equity,” and¡“ according to the rules and principles of equity jurisprudence,” “ reform said contract.” The claimants bring their second suit accordingly, but set up in addition demands at law which might have been and were passed upon in the former action. The defendants demur.
    
    I. Where parties bring their action at law and recover damages, but are unable to obtain in the same suit equitable relief because the court has no equity power to reform a written contract, and Congress subsequently pass a private act referring the claim of the parties, without defining it, “for hearing and adjudication,” andcouferring equity j urisdiction to “ reform said contract,” it will be held that Congress intended merely to supply a defect of jurisdiction, and not to re-opeu demands at law extinguished in the former judgment; and that the court must proceed simply as a court of equity jurisdiction to give the relief which it could not give before as a court of law.
    II. A petition good as a declaration at law is bad as bill iu equity. It is not sufficient to set up matters which can be adjudicated by a court of law, and then ask a court of equity “ to reform the said contract if the same be necessary.” The facts which make it necessary must be set up to give jurisdiction. It must be alleged and proven that the written contract does not represent the true agreement.
    
      III. Tlie power of a court of equity to reform a written contract rests on fraud, mistake, or a grossly unconscionable advantage obtained by one party over another. It is only to establish such facts that parol evidence is admissible to vary the terms of the contract.
    IY. When the fact is established that a written contract should be reformed, a court of equity, considering that done which ought to be done, will give effect to the instrument not as it is, but as it would be if the fraud or mistake had never existed.
    
      The Reporters’ statement of the case:
    The petition in this suit recited at length the petition in the former suit, and then alleged as follows :
    “ The defendant having joined issue upon the allegations in said petition, and the testimony having been closed on both sides, the cause was regularly brought on for hearing. After argument by counsel and consideration by the court, a judgment was rendered in favor of the plaintiffs and against the United States for the sum of forty-two thousand three hundred and six dollars and forty-nine cents, the said amount being-allowed for damages to the plaintiffs caused by unreasonable delays of the defendant, and for work actually done upon and for said bridge, all of which will more fully and at large appear, reference being had to the records of this court in said cause.
    “ That the said judgment was paid to the plaintiffs according to law.
    “ That afterward the claimants petitioned the Congress of the United States for further relief in the premises, and thereupon an act was passed, (and approved August 14, 1876,) referring the claim of the plaintiffs to this court for hearing and adjudication, and authorizing this court to proceed in the adjustment of the accounts between these claimants and the United States as a court of equity jurisdiction, with power to reform said contract and render such judgment as justice and right may require.
    “The plaintiffs allege that there is still justly due to them from the United States a large sum of money for damages and for work and materials; and, in addition to the charges made in the aforesaid original petition, they say that, connected with the pivot-pier of said bridge, there were large walls of stone masonry ana crib-work, connecting the upper and lower rests of the pivot-pier with the pivot thereof, which were constructed mainly of irregular or riprap masonry; and that, to finish the abutment on the Iowa shore, wing-walls, constructed of riprap masonry, were necessary, all of which was a part of the plaintiffs’ work under the contract. That this work, being cheap and easily done, the officers in charge of said work in behalf of the United States refused to permit the plaintiffs to do it, and employed laborers and constructed the same for the United States, and thus unjustly and unlawfully deprived the plaintiffs of large profits, which they otherwise would have made. They allege that they could have made, on the said work, the sum of $51,000 in profits.
    “The plaintiffs aver that there is justly and equitably due to them from the United States, on account, of the premises, and in addition to the amount already paid to them, the "sum of $239,600, with interest, according to the following specifications, to wit,” &c.
    “The petitioners therefore claim judgment against the United States for the sum of $239,600, with interest thereon at six per centum per annum; and they pray the court to reform the said contract, if the same be necessary, so as to make the same conform to the intention of the parties, and to be in consonance with justice and equity, and for such other and further or general relief as in justice and right they may be entitled to have.”
   Uott, J.,

delivered the opinion of the court:

The claimants brought their former action in this court upon a written contract. By reason of the common-law rule prevailing in this court, all parol evidence tending to vary the terms of the agreement was excluded, and the claimants were held to be concluded by the terms of their contract. A judgment, however, was rendered upon the contract, as construed by the court, in favor of the claimants, though for a much less amount than they deemed themselves entitled to recover. This judgment was not appealed from; the claimants accepted payment thereof, and then applied to Congress for relief. A private act was passed, Act 14th August, 1876, (19 Stat. L;, p. 490, chap. 279,) referring the claim to this court, authorizing it to reform the contract, and to that end conferring equity jurisdiction. Under that act the claimants have brought this their second suit, and to their.petition the defendants have demurred. .

The private act under which the suit is brought necessarily measures the relief to which the claimants are entitled, and limits, while it confers, the jurisdictional authority in the exercise of which the court must act. So far as the court’s ordinary jurisdiction is concerned, the claimants’ grievances are at an end. Their demands at law growing out of the contract were merged in the judgment. The judgment was satisfied. All demands at law were forever extinguished. As to the soundness of the judgment, as to the correctness of the construction which this court gave to the contract, they are conclusions in which the claimants in a legal sense acquiesced, aud which cannot be inquired into now. If they were erroneous, they might have been corrected by appeal; but, so far as they are now involved, they must stand as unquestionable law. The controversy, whatever it is, must be kept within the bounds of the. private act, which is in the following terms:

“That the claim of James W. Harvey and James Livesey for alleged labor done and materials furnished under their contract with the United States for the building of the masonry-work for the piers and abutments of the bridge across the Mississippi River from Rook Island to Davenport, Iowa, bearing date June first, eighteen hundred and sixty-nine, be, and the same is hereby, referred to the Court of Claims for hearing and adjudication, and to that end jurisdiction is hereby conferred on said court to proceed, in the adjustment of the accounts between said claimants and the United States, as a court of equity jurisdiction, and may, if according to the rules and principles of equity jurisprudence, in its judicial discretion, reform said contract and render such judgment as justice and right between the claimants and the said Government may require.” (Act 14=th August, 1876,19 Stat. L., p. 490, chap. 279.)

The question of construction which it presents is a very simple one, viz, whether Congress intended to supply a defect of jurisdiction which, in the former action, might have prevented complete justice from being done; or whether they intended to undo all that had been judicially done and give the claimants an opportunity of re-opening demands, all of which were in a legal sense extinguished, aud some absolutely satisfied. Manifestly, in our view of the case, the purpose of the statute was to supply a defect and not to duplicate litigation. The court is to act as a court of equity, aud not to act, as it before might have acted, as a court of law. What has been done is to remain fixed, and what before could not be done is to be the sole subject of judicial ascertainment. The court is to proceed simply “ as a court of equity jurisdiction ,” and the accounts which' it may adjust and the relief which it may give must be limited to matters not before determined because of its inability to sit as a court of equity.

As to the petition which has been demurred to, it is sufficient to say that it is good as a declaration at law, and is therefore bad as a bill in equity. The matters which it sets up might be inquired into by any court of common-law jurisdiction, but its averments are absolutely silent as to any matter requiring the interposition of a court of equity. It does indeed ask the court “to reform the said contract, if the same be necessary, so as to make the same conform to the intention of the parties; ” but the jurisdiction of a court of equity in such cases does not depend upon the relief sought for, but upon averments showing that the party is entitled to some specific redress as to which a court of law is incompetent to give relief.

The power of a court of equity to reform the terms of a written contract rests on fraud, mistake, or a grossly unconscionable advantage obtained by one party over another. It is only to establish such facts that parol evidence may be admitted to vary or contradict the terms of a written agreement; and the aver-ments in the bill setting them up present the primary or fundamental issues on which equity jurisdiction in such cases depends. In other words, it must primarily be alleged and proven that the written contract does not represent the true agreement.

But it is not essential that there be two proceedings. When the fact is established that the terms of a written contract should be reformed, a court of equity will act upon the well-established principle of equity jurisprudence of considering that which ought to be done as actually done, and will give effect to the instrument “not as it is, but as it would be if the fraud or mistake had never existed.” (2 Ldg. G. in'Eq., 682.) For this reason the bill must be complete, showing the fraud, mistake, or wrong upon which the equitable relief depends, and then, by proper allegations, the facts which will entitle the party to recover upon the reformed agreement, and enable the court to determine the extent of the relief which should be awarded to him.

The demurrer is sustained, with leave to the claimants to file an amended petition.

Loring, J.,

dissenting:

I-dissent from the opinion read. I think the demurrer should be overruled. It is a general demurrer to the petition, and the only question that can be raised on it is, whether the petition sets forth a cause of action. That is the issue tendered by the demurrer, and the only issue joined. As to that, the statute refers here, to be heard in equity, the claim of petitioners “/or labor done and materials furnished” on the contract it describes. And the petitioner, following the statute, sets forth a claim for $75,000 “/or labor done and materials furnished” under the contract by the petitioners “ in constructing the coffer-dams and in performing the work necessarily connected therewith, and preliminary to the mason-work for said piers and abutments.” This certainly is a claim “ for labor done and materials furnished,” and therefore the petition specifies as a cause of action the very thing which the statute refers to our adjudication.

And I think it cannot be objected to this claim that it was heard and not allowed in the previous suit at law. For it cannot be questioned here that Congress heard all the circumstances of the case on which it acted, or that it was competent for Congress to set aside and waive any legal defense the previous suit might furnish, and to order this claim, not allowed at law, to be heard here in equity. The prescribed form of process here is a petition, and that is not, and is not intended to be, a declaration at common law or a bill in equity. And the jurisdiction of this court is created by. statute, and it may be modified by statute, at the pleasure of Congress j and the only reason that courts of equity do not generally entertain claims like this is not that, in their nature, they are not suitable for equity jurisdiction, but merely that there is for them a remedy in law. There is, therefore, no reason in the claim itself why Congress should not order it to be heard here in equity, and that intent is patent on the face of the statute, which, of its own force, gives us, over the claim, such jurisdiction as it prescribes.

And there is here no plea of a former suit and judgment, but only a general demurrer, which, as I have said, puts in issue only the question whether the petition, per se and on its face, sets forth a cause of action; and whether that cause of action is de-feasible by a plea of the former suit and judgment does not arise, and cannot be heard or considered on the pleadings before us.

And that the petition does not state in what the reform of the contract is desired only prevents relief in that "particular, and cannot affect the petitioners’ right to recover on a claim for labor done and materials furnished” specified in the petition, and within the terms of the statute of reference.

Peck, J., was absent when this case was heard, and took no part in the decision.  