been no sale.1 If the seller names a price by mistake which is accepted with knowledge that there is a mistake, the contract may be avoided, but not if the buyer is unaware of the mistake, for then the seller is bound by what he leads the other party to believe.2

A mistake by one party alone in adding up a column of figures in consequence of which he makes a certain bid which is accepted is no ground for rescission. But it is otherwise

if both parties are mistaken in a computation as to the amount of work to be done, upon the faith of which the price is fixed.*

$74.

Mistake as to Ownership. A contract to purchase a thing which is really the property of the buyer is void, although the parties may be ignorant of the fact.1 The voidability of such an agreement may also be put upon the ground that there is no consideration, and upon the ground that it is impossible for the seller to transfer ownership.

2

It is commonly said that ignorance or mistake of law, as opposed to a mistake of fact, is no ground for relief, because everybody is presumed to know the law. But in a case where a contract by a man to purchase his own property was held to be void, Lord Westbury said: "Private right of ownership is a matter of fact; it may be the result also of matter of law; but if parties contract under a mutual mistake or misapprehension as to their relative and respective rights, the result is that the agreement is liable to be set aside as hav

1 Rupley v. Daggett, 74 Ill. 351. See also concerning mistake as to price, Rovegno v. Defferari, 40 Cal. 459; Hume v. U. S., 132 U. S. 406. 2 Harran v. Foley, 62 Wis. 584; Webster v. Cecil, 30 Beav. 62; Paget v. Marshall, 28 Ch. D. 255.

3 Steinmeyer v. Schroeppel, 226 Ill. 9; 10 L. R. A. (N. S.) 117. See also Brown v. Levy, 29 Tex. Cir. Ap. 389.

+ Dunn v. O'Mara, 70 Ill. Ap. 607. Cf. Long v. Athol, 196 Mass. 497; 17 L. R. A. (N. S.) 96; Moffatt Co. v. Rochester, 178 U. S. 378. 12 Blackstone, Com. 450; Bingham v. Bingham, 1 Ves. Sr. 126. Suae rei emptio non valet, sine sciens sine ignorans emit. Dig. 18, 1. 16.

2 Baltimore City v. Lefferman, 4 Gill, 425, and cases cited in note.

ing proceeded upon a common mistake." So, if one thinking that he has only a leasehold interest in certain land buys the supposed reversion, he may recover the money as paid under a mistake of fact upon discovering that he was really the owner in fee. Conversely, it has been held that if a man sells property in his possession, which he supposes to belong to A. and as A.'s agent, and it afterwards turns out, contrary to the expectation of all parties, that it was the seller's own property, there is no sale.5

An administrator sold land supposing that he was selling the fee and the purchaser supposed that he was buying that interest. When it turned out that nothing passed but an equity of redemption, it was held that this was a material and mixed mistake of fact and law which entitled the purchaser to relief." A deed executed in consequence of a common mistake as to the extent of the grantor's interest in the land will be vacated. A mistake "as to the ownership of land is a mistake of fact in regard to which equity will grant relief, although the mistake arose from an erroneous view of the legal effect of a deed.8

When a party consents to the distribution of money to another under the erroneous belief that the latter is entitled to it, that consent does not afterwards estop him from requiring that the mistake be corrected.9

3 Cooper v. Phibbs, L. R. 2 H. L. 170. See also concerning mistake as to title, Wilson v. Md. Life Ins. Co., 60 Md. 157; Ankenny v. Clark, 148 U. S. 345; Bigham v. Madison, 103 Tenn. 358; Hatch v. Kizer, 140 Ill. 583.

4 Martin v. McCormick, S N. Y. 431. See also, Haven v. Foster, 9 Pick. 112.

5 Cutts v. Guild, 57 N. Y. 234.

6 Griffith v. Townley, 69 Mo. 13.

7 Burton v. Haden, 108 Va. 51; 15 L. R. A. (N. S.) 1039.

8 Livingston v. Murphy, 187 Mass. 315. In this case a husband and wife agreed to secure their joint note by a mortgage covering all their interest in a tract of land. All the parties supposed that the land belonged to the wife, while in fact it belonged to the husband. He united in the mortgage only to release his curtesy. It was held that the mortgagee could compel the execution of a new mortgage.

9 Patterson v. Buchanan, 92 Md. 334; Prince de Bearn v. Winans, 111 Md. 434.

$ 75.

Mistake as to Essential Facts.

Sometimes a mis

take by one or both of the parties as to the existence of a fact which they assume to be true as an inducement to their agreement may render the contract void or voidable. This effect may also be produced by another cause apart from the mistake. Thus an agreement to do that which is impossible or unlawful may be void for illegality or impossibility, or it may be voidable for fraud or mistake.

Plaintiff

Defendant, a credit insurance company in New Jersey, employed plaintiff to act as its agent in Massachusetts, where that kind of business is prohibited by statute. was discharged before the end of his term of employment and sued for damages. It was held that if both parties were ignorant of the Massachusetts statute, this common mistake, which was of fact, since it related to the law of another State, rendered the contract void, but that if the defendant alone knew it, the concealment was fraudulent.1

Many of the instances in which an action lies to recover money paid to the defendant under a mistake of fact are cases in whch the money was paid under an agreement void for mistake as to a material fact.2

A. contracted to erect for B. a flour mill capable of an output better in kind and quantity, to a designated extent, than that produced by the X. mill. The parties thought that the X. mill made a certain grade of flour, when in fact it did not. It was held that since the parties contracted under a mutual mistake and upon the assumption that something existed which did not, the contract is void.3

When a party is led to make a contract for the construction of a sewer at a certain price under a mutual mistake as to the amount of work to be done, caused by the erroneous

1 Rosenbaum v. U. S. Credit System Co., 64 N. J. L. 34.

2 Baltimore City v. Lefferman, 4 Gill, 425, note. As a general rule, money paid or property voluntarily transferred to a claimant under a mistake of law common to both parties cannot be recovered back. Baker v. Baker, 94 Md. 627.

3 Nordyke, etc., Co. v. Kehlor, 155 Mo. 643.

estimate of an engineer, he is entitled to rescission on the ground of mistake.*

If a policy of marine insurance is cancelled because both parties erroneously assume that the vessel had arrived in port, the agreement to rescind may be vacated.

4 Long v. Athol, 196 Mass. 497; 17 L. R. A. (N. S.) 96.

5 Duncan v. N. Y. Ins. Co., 138 N. Y. 88.

CHAPTER VII

MISREPRESENTATION AND FRAUD

$76. Misrepresentation Distinguished from Fraud. An untrue statement respecting a material matter made by one party to a contract which influences the conduct of the other party, may or may not be believed to be true by the party making it. If such statement is known by the party making it to be false, or is not actually believed by him to be true, his statement amounts to fraud. The effect of fraud will be treated separately. We will first consider simple misrepresentations; that is, the affirmation of material facts, not actually true but believed to be true by the party making them, whether such party had reasonable ground for his belief or not.

A misrepresentation in this sense is to be distinguished from a condition or warranty. The party to whom a statement concerning the subject-matter of a contract is made may refuse to rely upon the mere word of the other party and demand that the statement be made a component part of the contract. If this is assented to, the statement becomes a condition or warranty or a term in the agreement, and in that case it is entirely immaterial whether the party knew the statement to be false or not. What would otherwise have been a misrepresentation, then becomes a promise, and the question is whether it is broken or performed, not whether the statement was true or false at the time it was made. It is often difficult to determine whether a statement is a term of the contract or not. The question is one of construction.

In a few cases an innocent misrepresentation has been treated as causing such a mistake as to the subject-matter of the contract as to render it void, because both parties believed such subject-matter to be something other than it really was.1

1 See Kennedy v. Panama, etc., Co., L. R. 2 Q. B. 588; Brooks v. Martin, 15 Minn. 33.