The brig
Ann, of Boston, on a voyage from New Orleans
to Madeira, was unlawfully captured by a part of the Portuguese
squadron, and was, with her cargo, condemned. Upon the remonstrance
of the government of the United States, the claim of the owner for
compensation for this capture was, on 19 January, 1832, admitted by
the government of Portugal to an amount exceeding $33,000,
one-fourth of which was soon after paid. On 27 January, 1832, the
owner of the
Ann and cargo, neither of the parties knowing
of the admission of the claim by Portugal, made an agreement with
the appellant to allow him a sum, a little below one-third of the
whole amount of the sum admitted, as commissions, on his agreeing
to use his utmost efforts for the recovery thereof. At the time
this agreement was made, which was under seal, H., the appellee,
was indebted to the appellant A. $268 for services rendered to him
in the course of a commercial agency for him. In the contract it
was agreed that this debt should be released. Under the contract,
A. received the payment of one-fourth of the amount admitted to be
due to H. by Portugal, and H. filed a bill to have the contract
rescinded and delivered up to him, the debt of $268 to be deducted
from the same with interest, &c. The circuit court made a
decree in favor of H., and on the payment of $268 with interest,
the contract was ordered to be delivered up to be cancelled. The
decree of the circuit court was affirmed, the court being of
opinion that the agreement had been entered into by both the
parties to it under a mistake and under entire ignorance of the
allowance of the claim of the owner of the
Ann and her
cargo. It was without consideration: services long and arduous were
contemplated, but the object of those services had been
attained.
If a life estate in land is sold, and at the time of the sale
the estate is terminated by the death of the person in whom the
right vested, a court of equity would rescind the purchase. If a
horse is sold which both parties believed to be alive, the
purchaser would not be compelled to pay the consideration.
The law on this subject is clearly stated in the case of
Hitchcock v. Giddings, Daniel's Exchequer Reports 1, where
it is said that a vendor is bound to know he actually has that
which he professes to sell. And even though the subject of the
contract be known to both parties to be liable to a contingency,
which may destroy it immediately, yet if the contingency has
already happened, it will be void.
In the circuit court, the appellee, John Hammond, filed a bill
praying that a certain instrument in writing executed by him and
the appellant in January, 1832, by which he had stipulated to allow
to the appellant a compensation for establishing a claim on the
Portuguese government for the illegal capture of a
Page 36 U. S. 64
vessel belonging to him, should be cancelled, the consideration
for the said stipulation having failed; the bill also prayed for
further and other relief.
The instrument referred to was an irrevocable power of attorney
from Hammond to Allen to receive from the government of Portugal or
of the United States and of and from all and every person and
persons whomsoever a certain claim or demand which said Hammond had
for and on account of the capture and condemnation of the American
brig
Ann, of Boston and her cargo on a voyage from New
Orleans to Goree (intending to stop and trade at Fayal, Madeira,
and Teneriffe), by the Portuguese squadron cruising off the Island
of Terceira, and condemned by the tribunal sitting at Lisbon, under
the authority of the Portuguese government, on 22 December 1831.
The agreement was made on 27 January 1832, between Hammond and
Allen by which Hammond agreed to pay Allen ten percent on all sums
recovered until the amount should equal $8,000, and on all sums
over that amount, thirty-three percent, and Allen agreed to use his
utmost efforts to bring the claim to a favorable issue and to
receive the aforesaid commission in full compensation for his
services and expenses, already incurred, or thereafter to be
incurred, in prosecuting the claims.
The bill, amongst other things, alleged, that on 19 January
1832, in consequence of measures taken by the representatives of
the government of the United States at Lisbon, the Portuguese
government
Page 36 U. S. 65
recognized and admitted the complainant's claim to the amount of
$33,700, of which he alleged he was ignorant, until the month of
March 1832. That the power of attorney was executed in consequence
of certain representations made by Allen that he could render
important services in prosecuting the claim against the Portuguese
government, without which services the claim would be lost, and
that Allen proposed to Hammond to appoint him his agent, that he
was then ignorant his claim had been recognized, and also that the
agreement was executed while he remained ignorant of the fact.
The bill also charged that the claim has not been liquidated or
paid in consequence of any interference or exertions of the
defendant or through any agency or influence on his part. That both
said instruments were executed without due consideration and when
the complainant was ignorant of the situation of his claim on the
Portuguese government. That the contract of January 27, 1832, "was
entered into and executed without any adequate consideration or
services to be by the said Crawford Allen paid or performed," under
mistaken views and ignorance of the then situation of the
complainant's claim, and was hard, unconscionable and unequal, and
ought on that account to be set aside, even if said claim had not
been liquidated by the Portuguese government at the time said
contract was made and executed.
The answer gave the history of the acquaintance between the
complainant and defendant; showed the measures to enforce this
claim, which the defendant had taken as the agent of the
complainant prior to the execution of the power of attorney; that
those measures were approved by the complainant; that the power was
read to him; that three copies were executed, and that the
complainant saw all the letters which the defendant had received.
It alleged that the defendant relinquished all claims for
commissions and services, amounting to $268, then due him, and that
the consideration to the complainant for executing said instruments
was the defendant's relinquishment of the immediate payment of the
money then in his own hands of what was then justly due to him for
commissions and for services already rendered in regard to the
reclamation of said vessel from the Portuguese government and the
agreement on the part of said defendant, to use his "utmost efforts
to bring the aforesaid claim to a favorable issue" and to sustain
all the expenses in prosecuting said claim.
Page 36 U. S. 66
The defendant expressly denied that it was any part of the
understanding or agreement between him and the complainant that the
defendant was not to receive said stipulated sums in case there
should be little or no trouble in obtaining said money.
On the contrary (he stated), the understanding and agreement was
that the defendant was to receive said sums and no more, even
though his trouble and expenses should much exceed said sums, and
to receive said sums also if his trouble and expenses should be but
very small, and both parties fully understood that the value of the
bargain to the defendant depended on these contingencies -- and the
defendant averred that he had no knowledge at the time of the
situation of the claim except that derived from the letters annexed
to his answer, that all the information he had was made known to
the complainant and was common to them both; that it was made known
to the complainant in conversations and by exhibiting said letters,
and he denied that the agreement, when executed, was to depend for
its validity on any subsequent information from any source
whatever.
"On the contrary, it was fully understood that contingencies
like the one which unexpectedly happened or others of an opposite
character might render the agreement very advantageous or very
disadvantageous to the defendant."
The circuit court gave a decree in favor of the complainant, and
the defendant appealed to this Court. The decree required the
defendant to bring the agreement of January 27, 1832, into the
clerk's office within ninety days for cancellation, and enjoined
the defendant from asserting any title at law or in equity under
the same, and it also ordered the payment of $268 by the
complainant to the defendant.
Page 36 U. S. 68
MR. JUSTICE McLEAN delivered the opinion of the Court.
The bill was filed in the circuit court by the appellee to
compel the appellant to deliver up to be cancelled a certain
contract on the ground of its having been given through
mistake.
In the year 1830, the appellee being the sole owner and master
of the brig
Ann, of Boston, while on a voyage from New
Orleans to Madeira and thence to the coast of Africa, was illegally
captured, off the Western Islands, by a part of a Portuguese
squadron. Notice of the capture was given to the American
government, but the vessel and cargo were condemned. Such
remonstrances were made by the American government that on 19
January 1832, the claim of the appellee was
Page 36 U. S. 69
admitted to the amount of $33,700 by the Portuguese government.
On the return of the appellee to the United States, he executed a
power of attorney to the appellant, which is stated to be
irrevocable, authorizing him to prosecute his claim against the
government of Portugal. And on 27 January 1832, the parties entered
into a contract under seal in which Hammond agreed to pay Allen ten
percentum on all sums which he should recover, up to $8,000, and
thirty-three percent on any sum above that amount as commissions.
And Allen agreed to use his utmost efforts to recover the
claim.
Prior to this period and before the power of attorney was given,
Allen who was a commission merchant at Providence, Rhode Island,
had acted as the agent of Hammond in procuring insurances on his
vessel and cargo at various times and also in the transaction of
other business. Commissions were charged by Allen as in ordinary
cases, and it appears that Hammond was indebted to him for these
services at the date of the above agreement the sum of $268. Allen
had effected an insurance on the brig for the voyage in which it
was captured, and as soon as he heard of the capture, he made
representations of the fact to the Secretary of State at
Washington. This was not only sanctioned by Hammond, but from his
correspondence with Allen he seems to have placed great confidence
in his disposition and ability to serve him. There are a great
number of facts which are proved in the case and contained in the
record, but it is unnecessary to state them, as they can have no
direct bearing on the principal and indeed the only question in the
cause.
It appears that eight days before the agreement was entered into
by the parties, the Portuguese government admitted the claim of
Hammond, one-fourth of which was shortly afterwards paid. And the
question arises whether an agreement entered into under such
circumstances ought to be delivered up and cancelled. No one can
read the contract without being struck with the large sum that
Hammond is willing to pay on the contingency of recovering his
claim. Allen was to receive as a compensation for his services a
sum little below the one-third of the amount recovered. This shows,
in the strongest point of view, that Hammond could have entertained
but a remote prospect of realizing his claim, and indeed
Page 36 U. S. 70
it would seem, when the circumstances of the case are
considered, that he could have had little or no ground to hope for
success. His vessel and cargo had been condemned; the Portuguese
government was in an unsettled state and its finances in the
greatest confusion and embarrassment. In his vessel and cargo
Hammond appears to have lost his entire property, and this very
naturally threw him into despondency and induced him to agree to
pay nearly one-third of his demand to an agent who might, by
possibility, recover it. He no doubt supposed that by interesting
his agent so deeply in the claim he would secure his sympathies and
his utmost exertions. And the prospect was if the claim or any part
of it should be obtained, it would be the work of time and of great
effort.
Allen is not chargeable with fraud in entering into the
contract, nor in using the most persevering efforts to get
possession of the installment paid. That the contract was entered
into by both parties under a mistake is unquestionable. Neither of
them knew that the Portuguese government had allowed the claim. Can
a court of equity enforce such a contract? Can it refuse to cancel
it? That the agreement was without consideration is clear. Services
long and arduous were contemplated as probable by both parties at
the time the contract was executed. But the object of pursuant was
already attained. No services were required under the contract, and
for those which Allen had rendered to Hammond prior to it regular
charges seem to have been made.
It is true the amount of services required by the agent was
uncertain. He took upon himself this contingency, and had not the
claim been allowed by the Portuguese government until after the
contract, he would have been entitled to his commissions, however
small his agency might have been in producing the result. This, it
may be supposed, was a contingency within the contemplation of the
parties at the time of the contract, so that, unconnected with
other circumstances, the smallness of the service rendered could
have constituted no ground on which to set aside the contract. But
no one can for a moment believe, that Hammond intended to give to
his agent nearly $10,000 on the contingency of his claim's having
been allowed at the time of the contract. And it is equally clear
that his agent, under such a circumstance, had no expectation of
receiving that or any other amount of compensation.
Page 36 U. S. 71
The contract does not provide for such a case, and it could not
have been within the contemplation of either party. Services were
made the basis of the compensation agreed to be paid, but the
allowance of the claim superseded all services in the case.
The equity of the complainant is so obvious that it is difficult
to make it more clear by illustration. No case, perhaps, that it is
difficult to make supposed where the principle on which courts of
equity give relief is more strongly presented than in this case.
The contract was entered into through the mistake of both parties;
it imposes great hardship and injustice on the appellee, and it is
without consideration. These grounds, either of which, in ordinary
cases, is held sufficient for relief in equity, unite in favor of
the appellee. Suppose a life estate in land be sold, and at the
time of the sale, the estate has terminated by the death of the
person in whom the right vested; would not a court of equity
relieve the purchaser? If the vendor knew of the death, relief
would be given on the ground of fraud; if he did not know it, on
the ground of mistake. In either case, would it not be gross
injustice to enforce the payment of the consideration? If a horse
be sold which is dead, though believed to be living by both
parties, can the purchaser be compelled to pay the consideration?
These are cases in which the parties enter into the contract under
a material mistake as to the subject matter of it. In the first
case, the vendor intended to sell and the vendee to purchase a
subsisting title, but which in fact, did not exist, and in the
second a horse was believed to be living but which was in fact
dead. If in either of these cases the payment of the purchase money
should be required, it would be a payment without the shadow of
consideration, and no court of equity is believed ever to have
sanctioned such a principle. And so, in the case under
consideration, if Hammond should be held liable to pay the demand
of the appellant, it would be without consideration.
There may be some cases of wager respecting certain events where
one of the contingencies had happened at the time of the wager
which was unknown to both parties and which was held not to
invalidate the contract; of this character is the case of
Earl
of March v. Pigot, 5 Burr. 2802. But the question in that case
arose upon the verdict of a jury on a rule to show cause, &c.,
and
Page 36 U. S. 72
Lord Mansfield said
"The nature of the contract and the manifest intention of the
parties support the verdict of the jury (to whom it was left
without objection) that he who succeeded to his estate first by the
death of his father should pay to the other without any distinction
whether the event had or not, at that time, actually happened."
In 1 Fonbl.Eq. 114 it is laid down that where there is an error
in the thing for which an individual bargains, by the general rules
of contracting, the contract is null, as in such a case the parties
are supposed not to give their assent. And the same doctrine is
laid down in Puffendorff's Law of Nature and Nations, b. 1, c. 3,
§ 12. The law on this subject is clearly stated in the case of
Hitchcock v. Giddings, Daniel's Exch. 1,
s.c. 4
Price 135, where it is said that a vendor is bound to know that he
actually has that which he professes to sell. And even though the
subject matter of the contract be known to both parties to be
liable to a contingency which may destroy it immediately; yet if
the contingency has already happened, the contract will be
void.
By the decree of the circuit court, on the payment of the amount
including interest which is due from the appellee to the appellant,
he is required to deliver up to be cancelled the agreement entered
into on 27 January 1832, which leaves the parties as they were
before the contract, and as we consider the decree just, and
sustained by principle, it is
Affirmed.
This cause came on to be heard on the transcript of the record
from the Circuit Court of the United States for the District of
Rhode Island and was argued by counsel. On consideration whereof it
is now here ordered, adjudged, and decreed by this Court that the
decree of the said circuit court in this cause be and the same is
hereby affirmed with costs.
