William Fox, Appellant, v. Edwin W. Coggeshall and O. Egerton Schmidt, Respondents

William Fox, Appellant, v. Edwin W. Coggeshall and O. Egerton Schmidt, Respondents. Reformation of a lease as to steam pressure,¿not horse power, to be furnished by the lessor —proof required of a mutual mistake — a practical construction given by the , act of the parties is almost conclusive — the acts and understanding of the meaning of a contract by a broker acting for one of the parties bind his principal. . In order to justify a court of equity in reforming a written contract, the evidence should he so clear and convincing as to leave no reasonable doubt.as to the mutual mistake.' The practical construction put upon a contract by the parties thereto is sometimes almost conclusive as to its meaning, and there is no surer way to find out what the parties meant than to show what they have done. In an action-brought by a lessee against his lessors to reform the lease and tó recover damages for the breach of a covenant contained in the lease as reformed it appeared that the lease provided that the lessors should “ furnish * * * four (4) horse-steam power or (60) sixty lbs. pressure to be supplied through li inch pipe to the stone floor to be used for sponging purposes from the hours 7:30 a. m. to 6 p. m., each working'day during the year * * Upon the trial testimony was given that the plaintiff was engaged in the cloth sponging business, and that this business necessitated the use of steam at not less than sixty pounds pressure, and that it was' the custom, when engaging steam for that purpose, to contract for a given pressure through a given pipe; that the negotiations for the lease were made with the lessors’-broker; that the plaintiff informed the broker that he would require steam at sixty pounds pressure; that in drawing up the lease, the broker inserted four horse power and that the plaintiff objected thereto saying.that he knew nothing of horse power, but wanted sixty pounds pressure;, that the broker then said that he ■ had been told that fifteen pounds equaled one horse power and that four horse power would be sixty pounds; that it made no difference to him, and that he would put down sixty pounds, which he did; that the lease was then signed by the parties thereto and that the plaintiff entered into possession- of the ■premises. .... The pressure was satisfactory for about -a year when it diminished. The plaintiff having objected to the diminished pressure, the lessors éndeavored to keep up the pressure, but being unable to do so'because of the defective^condition of ttie.boiler they claimed that they were only obliged to furnish four horse power. There is no connection between the terms four horse power and sixty pounds pressure, the former term relating simply to the quantity of the steam. Held, that as the lease was arranged between the plaintiff and the defendants’ broker, the latter’s acts and understanding of the meaning and purpose of the language used therein were binding upon the defendants; That the entire evidence, including the nature of the plaintiff’s business, the custom in furnishing steam for that business, the way in which the lease was made and the conduct of the defendants in supplying for over a year the pressure needed, pointed with unerring certainty to the fact that the .words “four (4) horse steam power ” were inserted in the lease as the result of a mutual mistake and that the plaintiff was entitled to have the lease reformed by striking out therefrom those words. Appeal by the plaintiff, William Fox, from a judgment of the Supreme Court in favor of the defendants, entered in the office of the clerk of the county of Hew York on the 18th day of February, 1904, upon the decision of the court rendered after a trial at the Hew York Special Term. The action was brought by the plaintiff as lessee against the defendants as lessors for the twofold purpose of reforming a lease of. premises occupied by the plaintiff in the city of Hew York, and of recovering damages in the sum of $3,000 alleged to be due for the breach of the lessors’ covenants therein contained after obtaining reformation thereof. The plaintiff leased the' premises for a period of three years from February 1, 1901, at a rental of $1,500 per annum, and as the business in which he was engaged was that of sponging cloth or passing steam through it to shrink it, the lease stipulated with respect to the defendants’ furnishing steam as follows: “The parties * * * will furnish * * * four (4) horse steam power or (60) sixty lbs. pressure to be supplied through lj¡ inch pipe to the stone floor to be used for sponging purposes from the hours 7:30 a. m. to 6 p. m., each working day during the year * * The plaintiff testified that in 1901 he was with a Mr. Moss in the cloth sponging business and desired to rent premises, and the defendants’ broker, Spyr, came and they told him they would need sixty pounds of pressure of steam all day long to do their business, which required that pressure, and he returned, saying the owners would rent for $2,000; that they objected to this because of the high insurance rates, and so upon telephoning the owners the amount was reduced to $1,500, and the next day Spyr came to draw up the leases; that he put down four horse power, and plaintiff objected, saying he knew nothing of horse power and didn’t ask that, but wanted sixty pounds pressure, and Spyr said the engineer told him fifteen pounds equaled one horse power and four horse power would be sixty pounds, but it was no difference to him and he would put down sixty pounds, which he did,, preparing a new lease; that the lease was so signed and they entered into possession, and there was no trouble about the pressure for over a year, but from February 13, 1902, to May 20, 1902, the pressure decreased so that it was impossible to do all their work, and they sustained loss in consequence ; that in December, 1902, Moss left the business to him. Mr. Moss testified that Spyr had “ 4 horse power ” in the lease, .and they objected and said they wanted sixty pounds pressure, and he said he would furnish all the steam needed and could furnish sixty pounds, and would as leave put down sixty pounds, and did so, and none of them knew there was any difference between the terms; that the pressure gave out in February, 1902, and they sustained financial loss. A Mr. Leo, who was present, testified that j3pyr put in four horse power instead of sixty pounds, and objection was made and Spyr said it was the same thing, but plaintiff insisted on having the words “ 60 pounds ” put in, and it was done. The plaintiffs also gave evidence of a police boiler inspector who said he examined the boiler in February, 1902, and “they wanted 60 pounds,” but the boiler would not stand it and leaked, and he ordered the tubes repaired, which was done, and the pressure was cut down to fifty pounds in the certificate, and verbally he told them thirty-five or forty pounds; that there is no connection between the terms four horse power and sixty pounds pressure. O’Xéill, who ran the boiler, says that every morning he had the pressure at sixty pounds when the spongers arrived, and he tried to keep the pressure up to sixty pounds, but finally the boiler gave out and was repaired, the pressure becoming less, whereupon plaintiff objected, as they needed sixty pounds in their sponging business. Two other witnesses' testified that sixty pounds was essential to do the business, and it was customary in furnishing steam for such business to state pressure needed and figure the costs; that it was not customary • to make anj limitation as to quantity, but simply the pressure. The defendant Schmidt testified that the lease was made through the broker Spyr, and that personally he knew nothing about the relation between four horse power and sixty pounds pressure ; that the boiler gave out and repairs were made, and finally a new boiler was put in May twentieth. Mr. Spyr testified that the plaintiff mentioned four horse power to him, and he knew little about it .and asked the engineer, who said that power could be furnished; that he put four horse power in the lease and then the plaintiff said that would have to be changed, • as they needed sixty pounds pressure, and so he went to the engineer who said he could give sixty pounds pressure, and then he wrote in the lease “ (4) horse steam power or (60) sixty lbs. pressure,” and got the lessee to sign it and thereafter submitted it to the lessors, who then signed the lease; that he did not tell plaintiff that four hoi'se power was equivalent to sixty pounds pressure, but that they declined to sign with four horse power, and so he wrote in the sixty pounds pressure as they said they would have to have that in their business and he did not know the difference.. It further appears from the defendants’ evidence that the boiler used was fifteen horse power and one of the lessors testified that when objections were made he called the engineer’s attention to the decrease and told him to keep up the pressure, but this was impossible, as the boiler leaked so that repairs had to be made, and finally in May a. new seventy horse power boiler was put in. An expert testified for defendants that there was a great difference in the cost of furnishing an unlimited quantity of steam at sixty pounds pressure through one and one-half inch pipe and furnishing four horse power, the cost of the former being about $3,000, and the latter about $120; and steam is sold by quantity generally. A witness of defendants, who said he rented steam power, testified that four horse power was worth about $300, but that with respect to spongers, they always contract to furnish a given pressure through a given pipe as that is the only way to determine it, and fifty or sixty pounds was ordinarily required. The court found that the defendants had no intention of furnishing steam other than four horse power, and gave judgment for the defendants from which judgment the plaintiff appeals. Henderson Peck, for the appellant. Sanford Robinson, for the respondents. [MAJORITY — O’Brien, J.:] O’Brien, J.: The complaint, after setting forth the lease in- extenso, alleges • that the clause therein contained relating to the supply of steam by the lessors, should be reformed by eliminating therefrom the words and figure “ four (4) horse,”' on the ground of mutual mistake and inadvertence of the plaintiff and"the defendants. It will be noticed, therefore, that there is no claim of fraud or deceit practiced by the defendants in inducing the execution of the lease^ but the question presented is as to whether the words “four (4) horse” power were inserted in the lease by mutual mistake. It ;will be further noticed that in the lease itself tlie covenant of the defendants is in the alternative, and under it the defendants agreed to-furnish “four (4) horse steam power or (60) sixty lbs. pressure.” A review of the testimony will show- beyond cavil that in the negotiations which led up to the making of the léase and the insertion of this alternative covenant, it was thought and understood by the plaintiff and the broker who represented the defendants, that its terms were equivalent; and that it was only after more than a year when the defendants failed and -neglected, owing to the inability of their- -boiler, to then supply sixty pounds pressure, that attention was called to the fact that four horse power was not the equivalent .of sixty pounds pressure. Upon the trial it was conceded that the two terms are entirely different in- meaning and application, “ four (4) horse steam power ” expressing quantity of steam, and “ sixty lbs. pressure ” the quality or pressure at which the steam is delivered. It was also established that in the defendants’ business what-was needed-Was steam through a one- and one-half inch pipe supplied'as needed during-the day at sixty pounds pressure. The respondents (state the rule correctly, that'in order to justify the interposition of a court of equity in undertaking to reform a contract in Writing, the evidence should be clear. and convincing such as to leave no reasonable doubt as to the mutual mistake. The burden of producing satisfactory evidence rested-upon the plaintiff, and, in our opinion,- he has successfully sustained it, because it is seldom, if ever, that a case is presented wherein a mutual mistake has been so satisfactorily proved. According to the plaintiff the words “ four (4) horse steam power ” were in the lease when first presented to him by the broker, and he then objected to them upon the ground that he did not know what these words, meant, and that what he needed and must have in the conduct of his business was sixty pounds' pressure of steam, and he insisted that the covenant to supply that amount of pressure should be inserted in the lease, which was done, and the other words were allowed to remain upon the assurance of the broker that one horse . power equaled fifteen pounds pressure and four horse power would be equivalent to sixty pounds pressure. It was upon this representation as to the terms being equivalent, which was undoubtedly relied upon by the plaintiff, and. which we must assume that the broker himself believed, that the words “four (4) horse steam power” were allowed to remain in the lease. We do not, therefore, agree in the contention of the respondents that this evidence fails to show that there was any mistake on behalf of. the defendants in adopting the phraseology appearing in the lease relating to the supply of steam. The defendants were represented in the transaction by their broker, and as the agreement was arranged between the plaintiff and the broker representing the defendants, the latter’s acts and understanding of the meaning of the language used and its purpose are binding upon the defendants. The- broker’s testimony shows that he did not know the difference between four horse power and sixty pounds pressure, and all the surrounding circumstances support the plaintiff’s version that he refused to sign the lease with the words “ four (4) horse steam power ” in it until there was also inserted the covenant as to the sixty pounds pressure. "Unless the parties understood these terms to be equivalent,. it is difficult to see any reason for inserting them in the lease since they differ in meaning and application. What the plaintiff needed was sufficient steam for his business of sponging cloth, and this required a sixty pounds pressure of steam. Moreover, one of the defendants’ witnesses, who rented steam, testified that with ' respect to spongers they always contracted to furnish a given pressure through a given pipe, because it was the only way to determine the amount to be supplied, and that fifty pounds was the ordinary requirement. The lease itself states that the sponging business was to be carried on, and the uncontradicted testimony is that this could not be done with less than sixty pounds pressure. But the most significant fact as indicative of the construction which the parties themselves placed upon the covenant in the lease is that for more than a year, though it was attended with trouble and expense, the defendants actually furnished the sixty pounds pressure, the engineer’s testimony being that every morning he saw to it that sixty pounds was ready for the spongers when they arrived for work, and that he worked the boiler hard to keep up that pressure. It was only after the boiler had been used up and commenced to leak and was unable to furnish sixty pounds pressure that the defendants fell back upon the alternative provision in the lease of four horse power, and insisted that in furnishing that amount of steam they were complying with their lease, regardless of the amount of pressure. It has been many times held that the practical construction put upon a contract by the parties to it is sometimes almost conclusive as' to its meaning (Nicoll v. Sands, 131 N. Y. 24), and that there is no surer way to find out what the parties mean than to see whát they have done. (Insurance Company v. Dutcher, 95 U. S. 273.) The entire evidence, including the nature of the plaintiff’s business, the custom in furnishing steam for that business, the way in which the lease was made and the conduct of the defendants in supplying for over a year the pressure needed, seems to us to point with unerring certainty to the fact that the words “ four (4) horse steam power ” were inserted in the lease as the result of a mutual mistake and that the plaintiff was entitled to have -the lease reformed by striking out therefrom those words. The question of damages, if any, to which the plaintiff would' be entitled is not before us upon this appeal, the judgment having been for the defendants. The judgment accordingly should be reversed and a new trial ordered, with costs to the appellant to abide the event. Patterson, Ingraham, Hatch and Laughlin, JJ., concurred. Judgment reversed, new trial ordered, costs to appellant to abide event.