Safe Deposit & Trust Co. v. Diamond Coal & Coke Co. , 234 Pa. 100 ( 1912 )

Opinion by

Mr. Justice Mestrezat,

This is a cross bill in which the Diamond Coal & Coke Company (herein called the coal company) is plaintiff, and the Midland Steel Company (herein called the steel company) and the Safe Deposit & Trust Company, trustee (herein called the trustee), are defendants. The plaintiff seeks to reform by parol an executory contract in writing for the sale of coal lands, and prays for a decree of specific performance of the contract as reformed. The. facts and the proceedings leading up to the filing of the cross bill are stated by the reporter. The part of the contract sought to be reformed is the description of the coal lands sold by the steel company to the coal company, the cross-plaintiff.

Analyzing the written contract between the parties we find that the agreement is a proposition to sell 200 acres of coal the precise boundaries of which could not then be exactly stated, but the description of the boundaries was to be substantially as stated. The eastern boundary line is stated with the privilege of the steel company to extend it, and the northern boundary line was to be the line of the lands of the coal company, at least the full length thereof, with the right of the steel company, in its discretion, to extend the line along the line of the Lilley coal. The western boundary of the tract “shall be the boundary line as decided upon between the Steel Company and the land of the Monongahela River Consolidated Coal & Coke Company,” and the southern boundary was to be a straight line determined in consideration of the other boundaries so that the tract should contain 200 acres.

If there is any more uncertain and indefinite description of lands, agreed to be sold and purchased, in any case in this court, it . has escaped observation. There is neither course nor distance given to any of the four boundary lines. In fact the memorandum of agreement distinctly states that at the date of its execution the precise boundary lines “cannot be exactly stated.” The only thing definitely stated in the memorandum is the number of acres to be sold. The vendor company owned 903 acres of coal and out of that body it proposed to sell 200 acres to the coal company. There is not one of the boundary lines, as will be observed, that is definitely described. The length of the east and north lines is not fixed but depends upon the discretion of the vendor, the western line “shall be the boundary line as decided upon between the Steel Company and land of the Monongahela River Consolidated Coal & Coke Company as determined by a proposed trade arrangement between the Steel Company and the Monongahela River Consolidated Coal & Coke Company,” which leaves the line undetermined until the boundary fine has been fixed by the proposed trade arrangement, and the southern fine is not given but is to be “determined in consideration of the other boundaries.” It is not averred in the bill, and hence must be assumed not to be a fact, that the proposed trade arrangement has yet been consummated and the boundary line therein provided for has been determined. It is apparent that without this line neither the north nor the west fine of the coal lands sold can be ascertained. It is not alleged that the coal company took possession of any definitely described tract of 200 acres, or in fact, of any coal land in pursuance of the sale, or made any improvements thereon. Neither these nor any other matters of estoppel, except the payment of $5,000 on the $300,000 consideration, are averred in the bill. It follows that by reason of the defective description of the lands, the contract of sale is indefinite, uncertain, and not self-sustaining, and is therefore void and not enforceable under the statute of frauds.

The Act of April 22, 1856, P. L. 532, 2 Purd. 1757, known as the statute of frauds, provides in its fourth section that “all declarations .... of any lands, .... and all grants and assignments thereof shall be manifested by writing, .... or else to be void.” Without this statute, an agreement either in writing or by parol to sell lands is not valid unless its terms are sufficiently definite to identify the subject of the sale. Under the statute, the land must not only be sufficiently described to identify it, but the contract must be in writing or it is void and not enforceable. The statute requires both the consideration and the subject of the agreement to be definitely defined. The land must be described in the agreement or by reference to a plan or other matter so that it can be identified and located, and the description must be sufficiently definite within itself and not require the aid of parol testimony or be left to the future action of the same or other parties: Holthouse v. Rynd, 9 Sadler, 193; McCoy v. Brunot, 183 Pa. 105; Soles v. Hickman, 20 Pa. 180; Cunningham v. Neeld, 198 Pa. 41; Agnew v. Southern Avenue Land Company, 204 Pa. 192, and Baldridge v. George, 216 Pa. 231.

It is apparent that the contract as written cannot be specifically performed, and it is equally clear that no essential part of it can be supplied or reformed by parol testimony and, as thus varied or changed, be specifically enforced against the vendor. If the written agreement lacks any of the essentials necessary to make it a complete contract, the statute declares it void: Mellon v. Davison, 123 Pa. 298. The vendee corporation, recognizing the invalidity of the agreement as written and its inability to enforce specific performance of it,. seeks by its cross bill to reform the contract by parol, and then to have the contract as thus rectified specifically carried out by the vendor. The ground on which the reformation is sought is fraud which, as set out in the ninth paragraph of the bill, is averred to consist in the steel company, prior to the consummation of the agreement, exhibiting to the coal company a map showing the steel company’s property and designating thereon the coal agreed to be conveyed and the western boundary of the tract, and fraudulently misrepresenting that such boundary line was substantially the line decided upon as determined by the proposed trade arrangement with the Monongahela company, by reason of which representations, the coal company accepted said designation and description in the contract as the western boundary line. We have possibly gone as far as any American state in admitting oral testimony to vary and contradict written instruments. We have uniformly held that parol evidence is competent to vary or contradict a writing where there was fraud, accident or mistake in the creation of the instrument itself, or where there has been an attempt to make a fraudulent use of the instrument in violation of a promise or agreement made at the time the instrument was signed and without which it would not have been executed. In such cases where the parol evidence is sufficient to warrant a chancellor in reforming the instrument it is admissible to contradict or vary the writing. Wherever the oral evidence furnishes this degree of proof our courts in the exercise of equitable jurisdiction have reformed the writing so as to make it conform to the intention of the parties in the execution of the instrument. We. have applied this doctrine, and permitted parol testimony to be introduced for the purpose of reforming both executory and executed contracts. Wherever a written instrument fails to express the intention of the parties by reason of fraud, accident or mistake the injured party may invoke the equitable jurisdiction of the court which, by the aid of parol testmony, may reform it. This is the well-settled doctrine of our state as has frequently been declared by this court. No party can, in morals or in law, insist upon the performance of a written agreement which by reason of fraud, accident or mistake does not speak the intention of the parties, and a chancellor will reform the instrument so as to make it declare their real intention. Equity looks alone to justice and fair dealing, and will command even the law, hampered by its technicalities, to obey her decree enforcing the true intention of the parties to a contract.

While, therefore, the admissibility of parol evidence, under proper limitations, to alter, vary and even to contradict a written instrument in such cases is settled in this state, it has not yet been determined by this court that the instrument having been varied or rectified by the evidence, the court may decree specific performance of the agreement in its varied or corrected form where the contract is-required by statute to be in writing. It is one thing to alter or vary a written contract by parol evidence, and quite another to specifically enforce it in its varied or altered form. In the absence of fraud, accident or mistake a written contract speaks for itself, and parol evidence will not be received to vary or contradict it. The rule that a written contract cannot be altered or contradicted by parol evidence is, however, relaxed, and the courts the intention of the parties by reason of fraud, accident or mistake, but will rectify the contract so as to declare their real intention. In the absence of statutory inhibition a chancellor will, where there-is no adequate -remedy at law, compel a party to keep his written- engagements. That is one of the settled powers of a court of equity. It simply involves the application of the exception to the general rule that parol evidence is not admissible to vary or contradict a written instrument.

Where, however, the people speaking through the legislative branch of the government, have declared that contracts relating to certain subjects shall possess certain requisites necessary to their validity, it is not within the power or the jurisdiction of a court of equity to annul or disregard the mandate. Equity corrects that wherein the, law is deficient, but where the. statutory law has spoken equity must remain silent. A chancellor cannot by his decree repeal or set at naught an act of assembly constitutionally valid. To uphold such a power or to ■enforce such a doctrine is in the very teeth of the proposition that “all power is inherent in the people.” Where the federal or state constitution imposes no prohibition, the legislature may declare the manner in which or the' instrument by which lands in the state shall be sold and transferred, and the courts have no discretion in the enforcement of the statutory provision. We are clear that upon reason and authority a court of equity cannot vary or rectify by parol an executory agreement in writing for the sale of lands and as thus varied, in the absence of an estoppel, specifically enforce performance of it. It is-the doctrine of this court, declared in numerous cases, that where, a written agreement is varied by oral testimony the whole contract in legal contemplation becomes parol. If there is anything settled in our law that principle is firmly established. When therefore a party to an executory agreement in writing for the sale of lands succeeds in reforming it by oral testimony he reduces the whole agreement to a parol contract, and deprives himself of the right to have it specifically performed. He pulls down the house on his own head. When he converts the writing into an oral agreement, the statute declares it to “be void.” He has rectified the written contract and in its place has established an agreement which in contemplation of law is parol and therefore, by statutory mandate, absolutely invalid and without force. The true contract, as declared ■ by the chancellor, cannot be enforced. “It is then apparent,” says Judge Hare, 2 Wh. & Tudor’s Lead. Cas. in Eq. (4th Am. ed.) 994, “that the contract as it stands is not the true one, and that the true contract is invali- , dated by the statute, and as the former ought not to be, ¡and the latter cannot be enforced, there is no room for a decree of specific performance.” Our statute of frauds .declares that all grants and assignments of land shall ¡be manifested by writing “or else to, be void,” and under this statute, therefore, a parol contract for the sale of land is a nullity and no court can decree its specific performance. It is equally apparent that this rule applies whether the contract originally was oral, or whether it becomes so by the decree of a chancellor reforming the written agreement and thereby reducing the whole contract to parol. Equity strikes down the written agreement and substitutes the parol contract as expressive of the intention of the parties. In either case the statute declares the agreement void, and it is not within the power of a chancellor to rehabilitate and make it a valid instrument for the conveyance of land. Whether a written contract is reformed on the ground of fraud, accident or mistake, the effect is the same, the whole contract is, in contemplation of law, reduced to a parol agreement which the statute of frauds declares to be void and incapable of being specifically enforced so as to compel the transfer of title to real estate. The statute is not a mere rule of evidence, but a limitation of judicial authority to afford a remedy: Glass v. Hulbert (Mass.), 3 Am. Rep. 418, 423.

The above conclusion is in accord with the English doctrine as announced in the leading case of Woollam v. Hearn, 7 Ves., Jr., 211, decided in 1802. The case has been followed in subsequent decisions and is the present law of England. The leading American case in support of this view is Glass v. Hulbert, 102 Mass. 24, 3 Am. Rep. 418. The bill was filed by the vendee against the vendor and asked relief in several particulars connected with the alleged oral contract of purchase. In dismissing the bill Mr. Justice Wells delivered an exhaustive opinion reviewing all the authorities on the subject in which he said inter alia: “When the proposed reformation of an instrument involves the specific performance of an oral agreement within the statute of frauds; or when the term sought to be added would so modify the instrument as to make it operate to convey an interest or secure a right which can only be conveyed or secured through an instrument in writing, and for which no writing has ever existed, the statute of frauds is a sufficient answer to such a proceeding, unless the plea of the statute can be met by some ground of estoppel, to deprive the party of the right to set up that defense. . . . Rectification by making the contract include obligations or subject-matter, to which its written terms will not apply, is a direct enforcement of the oral agreement, as much in conflict with the statute of frauds as if there were no writing at all.” The same doctrine is announced and enforced in Elder v. Elder, 10 Me. 80, 25 Am. Dec. 205; Osborn v. Phelps, 19 Conn. 63, 48 Am. Dec. 133; Macomber v. Peckham, 16 R. I. 485; Climer v. Hovey, 15 Mich. 18; Davis v. Ely, 104 N. C. 16, 17 Am. St. 667; Westbrook v. Harbeson, 2 McCord Ch. (S. C.) 112; Bogard v. Barhan, 52 Ore. 121, 132 Am. St. 676; Alabama Mineral Land Company v. Jackson, 121 Ala. 172, 77 Am. St. 46; Miller v. Chetwood, 2 N. J. Eq. 199; Webster v. Gray, 37 Mich. 37; Dennis v. Dennis, 4 Rich. Eq. (S. C.) 307; Allen v. Kitchen, 16 Ida. 133, 100 Pac. Repr. 1052.

In Adams on Equity (5th Am. ed.), 171, the learned author says: “Where land is the subject of the erroneous instrument, the reformation of an executed conveyance on parol evidence is not precluded by the statute of frauds, for otherwise it would be impossible to give relief, And where a mistake in an executory agreement relating to land is alleged, parol evidence may be admitted in opposition to the equity for specific performance. But it does not appear, that where the defendant has insisted on the benefit of a statute, the court has ever reformed such an executory agreement on parol evidence, and specifically enforced it with the variation.”

The authorities cited by the learned counsel for the appellants do not rule the question raised by this record. Those decisions deal with executed contracts and with the admissibility of parol evidence to reform contracts in cases where, as said by Woodward, J., in Workman v. Guthrie, 29 Pa. 495, 510, “the statute of frauds and perjuries has nothing to do with the question,” and, as said in Schettiger v. Hopple, 3 Gr. (Pa.) 54, 56, “where no statutory provision intervened.” While dicta in some of the opinions might apparently support the appellant’s contention, the decision of the case did not require the court to pass upon the question involved in the present case. On the other hand, Judge Biddle, in McCann v. Pickup, 17 Phila. 56, a bill filed to correct the description in an agreement in writing for the exchange of certain real estate, followed the English and Massachusetts rule and refused to decree specific performance of the contract on parol evidence. In his opinion he said (p. 57): “But when the omitted term or obligation is within the statute of frauds, there is no valid agreement which the court is authorized to enforce outside of the writing.” The same doctrine is recognized in Andrews Brothers Company v. Youngstown Coke Company, Limited, 7 Pa. C. C. Rep. 67, by the circuit court of the United States for the western district of Pennsylvania. Judge Hare also sustains the doctrine in his elaborate note to Woollam v. Hearn, 2 Wh. & Tudor’s Lead. Cas. in Eq. (4th Am. ed.) 920, 944, in which he exhaustively reviews all the English and American cases on the subject to that date.

There is a conflict of authority on this side of the Atlantic on the question of the right of a court of equity, in the absence of part performance or other matters of estoppel, to reform by parol evidence an executory contract for the sale of land and specifically enforce it with the variation. In several states, courts of great respectability have held that a parol variation-of the written agreement may be specifically enforced notwithstanding the statute of frauds. The leading case relied upon by those who support that doctrine is Gillespie v. Moon, 2 Johns. Ch. 585. That was a bill to reform, not an executory contract, but a deed which, it was alleged, by mutual mistake, included more land than was sold. The question under consideration here did not arise in that case, and hence what was said on the authority of the court to enforce a written contract with a parol variation for the sale of land must be regarded as dicta. In commenting on the doctrine announced in Gillespie v. Moon and analogous cases, the court in Elder v. Elder, 10 Me. 80, holding the opposite view, says: “In all these cases there was written evidence to amend by, either resulting from the plain intention of the parties, although defectively expressed, or from previous instructions, or subsequent declarations in writing.” The subject is ably and elaborately discussed in Macomber v. Peckham, 16 It. I. 485, and the court denies the power to enforce a written contract with a parol variation for the sale of lands, and says that the arguments used in support of the rule “seem to have been directed against the doctrine of English chancery courts, which, as we have seen, is applied to all written contracts, whether within the statute or not, and it does not appear that in making them, they gave thought to the distinction created by the statute.”

For the reasons stated, we are of opinion that in the absence of an estoppel, the court cannot reform a written contract for the sale of land and specifically enforce the agreement with the variation, and that therefore the court below was right in dismissing the plaintiff’s cross bill.

The decree is affirmed.