Du Bois Borough v. Du Bois City Water Works Co. , 176 Pa. 430 ( 1896 )

Opinion by

Mr. Justice Mitchell,

The power of a court of equity to compel the cancellation of a contract, though well established, is very exceptional in its. character. Its purpose is never to interfere with the freedom of contract or with proper legal liability even for bad bargains, but only to supplement the powers of courts of law where there is exceptional equity of a settled and recognized kind. Hence-it is never to be exercised except in very clear cases and for definite cause. The causes which will justify it were stated as long ago as Delamater’s Estate, 1 Whart. 362, and experience, and the amplification of equity powers in sixty years have not furnished any instance of their enlargement. In that case Gibson, C. J., said, “ The grounds on which equity interferes for rescission are distinctly marked, and every case proper for this branch of its jurisdiction is reducible to a particular head. They are principally fraud, mistake, turpitude of consideration, and Circumstances entitling to relief on the principle of quia timet.” In Yard v. Patton, 13 Pa. 278, this language was quoted as authoritative and it was added that each of these-causes should be established by positive and definite proof. In Graham v. Pancoast, 30 Pa. 89, it was said by Stbong-, J., “ Inadequacy of price, improvidence, surprise, and mere hardship have each been held sufficient to stay the active interposition of a chancellor. Yet no one of these, nor all combined, furnishes an adequate reason for a judicial rescission of a contract. For such action something more is demanded — such as fraud, mistake or illegality.” In Rockafellow v. Baker, 41 Pa. 319, it was said, “ our interposition is invoked, not to carry out- and accomplish what the parties have begun, but to undo what the parties have accomplished. How narrow the grounds are upon which a court of equity will interpose for such a purposemd how cautious and reluctant its steps will be in that direction, were fully shown in Graham v. Pancoast, 30 Pa. 97, and Nace v. Boyer, 30 Pa. 109. Nothing but fraud or palpable mistake is ground for rescinding an executed contract.” And in Stephens & Wife’s Appeal, 87 Pa. 202, it was said, “No fraud or mistake, or turpitude of consideration and circumstances entitling her to relief on the principle of quia timet are proven. Nothing less than one of these, clearly established, would justify the court in ordering the rescission of an executed contract.” No case has gone beyond these, and while we do not say that a willful and obstructive refusal to perform a contract, under circumstances which practically prevent the party aggrieved from entering into another, may not afford ground for equitable cancellation, yet some such special grounds must appear in order to take the case out of the general rule that 'remedy for mere breach must be sought at law.

Tested by these settled principles there is no case here at all for the court’s interference. Neither the bill nor the findings of fact under it charge any fault to the defendants. They show a want of strict performance, but they also show that strict performance was impossible, not from any lack of effort on the part of the defendants, but because the contract limits the source of supply to springs on the Du Bois land, and those springs are inadequate to furnish the needed quantity of water. The utmost that is made out by the bill and the evidence is that the contract calls for the performance of an impossibility by reáson of a mistake of fact as to the capacity of the stipulated source of supply. But this mistake was no more the fault of defendants than of plaintiff, and the parties cannot be put back in statu quo. If the defendants have, to their misfortune, made a contract whose full performance is impossible, they may be unable to recover the stipulated rental, either in whole or in part. But this is a matter of defense in an action at law, and affords no ground for the cancellation of the contract. Certainly there is no equity in putting the entire loss arising from a mutual mistake upon one party, with no consideration for the injury to its plant and franchise, and no allowance for the money already expended thereon without fault. The case is preeminently one for mutual concession and amicable adjustment on a fair basis, either by reduction of the rental, or by enlargement of the permitted source of supply. But failing this action by the parties themselves, equity will not help one of them to put the whole loss on the other, but will le'ave them to such remedies as they may have in a court of law.

Reference was made in the court below and here to the act of April 29, 1874, sec. 34, cl. 3, P. L. 94 (Purdon, 12 ed. 955, pi. 4), relating to gas and water companies, by which the courts of common pleas are authorized on bill filed by any citizen using the water, alleging impurity or deficiency, to compel the water company to correct the evil complained of, and to mate “such order in the premises as may seem just and equitable.” The learned judge below was of opinion that this remedy did not apply to cases of contract, but only to water rights acquired by eminent domain under the act of 1874, and it has been argued here by appellees, citing Lehigh Water Company’s Appeal, 102 Pa. 515, and Freeport Water Worts Co. v. Prager, 129 Pa. 605, that this section applies only to private citizens and does not include municipal corporations. Both these views however are erroneous. , What was decided in those cases was that the exclusive privilege of furnishing water, given by the act to the first company erecting works, does not prevail against a city or borough building waterworks in its municipal capacity and under its general powers. In the present case the borough is not the builder or owner of waterworks but a mere consumer under contract, and stands upon the same basis as any private citizen in regard thereto. The remedy given by the act is intended to be adequate, and we see no reason why it may not be made so. The whole subject is put under the control of the court in the broadest terms, and being one which concerns the public interests maybe treated with regard thereto, to the extent necessary, even to the reformation of the contract upon a basis just and equitable to both parties, where, as here, it was made in mutual mistake as to an essential fact, and a remedy for the difficulty may be found without violation of the main intent of both parties in the original instrument.

Decree reversed and bill dismissed with costs.