SA.NDERS V. PECK.
61
that the parties in interest have been guilty of no negligence or undue delay in not applying for relief at an earlier period," but granted leave for an amendment. We have said nothing in regard to the stock of Peirce, which was not to be delivered until 1893, because the bonds were in 1890 the only thing of value which is the subject of the suit. Where a circuit court dismissed a bill generally upon demurrer, and the supreme court, upon appeal, was of opinion that the bill was demurrable, but amendable, it reversed the decree, and remanded the case, with die rections to allow the complainants to amend their bill. House v. Mullen, 2,2 Wall. 42. Let the decree be reversed, without costs of this court, and the case be remanded to the circuit court, with directions to allow the complainants to amend their bill in conformity with this opinion, or, if they fail to do this in a reasonable time, to dismiss it, with costs. SANDERS v. PECK et 81. (CIrcuit Court ot Appeals, Seventh Circuit, May 2, 1898.) No. 394. L PRINCIPAL AND AGENT-UNAUTHORIZED SALE BY AGENT-RATIFICATION.
Where the owner of property which has been sold wjIthout authority by one assuming to act as his agent enters into negotIations with such assumed agent, without reservation, for a settlement, on the basis thart: the latter Is accountable for the price received for such property, he thereby ratifies the sale, and cannot afterwards withdraw such ratification, and claim the property from the purchasers.
8.
JUDGMENT-CONCLUSIVENESS-PERSONS BOUND.
One for whose benefit certain petitioners in a suit In equity prosecuted their claims, being represented therein by his authorized attorney, Is bound by the decree therein, unless set aside by direct proceedings therefor.
Appeal from the Circuit Court of the United States for the Northern Division of the Northern District of Illinois. . W. A.Foster, for appellant. James L. High, Henry W. Booth, and D. T. Corbin, for appellees. Before WOODS, JENKINS, and SHOWALTER, Circuit Judges. Circuit Judge. The bill in this case was brought by Joshua C. Sanders, the appellant, against Ferdinand W. Peck, William R. Page, Harvey W. Booth, and David T. Corbin, to set aside a sale of 22 bonds, of $1,000 each, executed by the Riverside Improvement Company. The sale was made on September 10, 1890, by Corbin, as agent of the owners, to Peck, who was represented in the transaction by Page and Booth, and the bill charges a conspiracy of the defendants to cheat and defraud Sanders out of his interest in the bonds, and in certain decrees in which the bonds, excepting two, had been merged. The appellees answered, deny. ing all fraud, averring a purchase in good faith through Corbin, who, ;:Ls agent and attorney of the owners of the bonds, it is alleged, had full authority to make the sale, and setting up certain
62
REj>ORTER.
a;nd decrees of. ,the-circuit court Cook cQu;nty, Ill., in caseo! Peck against dhkago& Railroad Land pany and others, as an adjudication 'olPeck's title as against the title asserted by It .is not found necessary to rehearse the ;numerous .facts dent to this A. few propositions are controlling. That Corbin hadn,o authori,ty .to sell tlle two bonds which had belonged to Hendrickson is clear, :;tnd the prep()nderance of the evidence seems to us to be that the sale made of the other bonds was un· authorized, and that, having been, notified oj the appellant's ew;nhis denial of Corbin's authority before the purchase mOD,ey was paid, Peck and his agent,s proceeded at their peril in l:>Y paying the pdce to Corbin and - an effort .to consummate the by taking assignments of the decrees, which,though obtained in the names of Vel' Nooy and Temple, belonged ,to the But, though unauthorized, we are of opinion that Sanders ratified the sale by his subsequent conduct, when, with full knowledge of the circumstances, he entered into negotiati,Ons with Corbin for a settlement of the account between them on the basis that the sale to him for the price was valid, and that Corbin was' received for the bonds or decrees. , In that negotiation, which was entered upon without any reservation of a right to repudiate the sale if a settlement should not be effected, a sum was agreed upon, as proper compensation to Corbin f()r l;llaldng the sale, and the difference between them which preyented an 'ad'j'llstinent was in respect to a matter in no way connected with the sale of the bonds. This unreserved assertion of ownership of the proceeds amounted to recognition of the validity of the sale. A ratification once fairly made, it was not revocable. , 'If itlJe ,said that this ratification did not extend to the Hendrickson bonds, of which Sanders was not then the owner, he is nevertheless in no better position, in respect of those bonds,because of, his failure for more than a year after acquiring Hendrickson's title to question the sale.' ' In respect to tbe Vel' Nooy and Temple bonds, we are of opinion that the decrees and orders of court in the Peck foreclosure suit constitute an estoppel'against Sanders to deny Peek's title. The petitions brought in thl'lJ case in the names of Vel' Nooy and Temple, respectively, were brought at the instance of Sanders, and were prosecuted by hie attorney, Corbin, for his benefit. Decrees were rendel1!11 whereby,. through the petitioners, his right to share in the pr!)ceed.s of the sale was establiShed. After the rendition of the decrees there was a reference toa master, who, acting in the scope of his 8:uthority, reported that the decrees in favor of Vel' Nooy Temple had been assigned to Peck, and in pur,sua.nce of that repoct afina,l decree ,was, giving to Peck whatotherwise. would awa:r'q,ed to VerNQoY' and'T{mlple for the appellant. In contemplation of ,law, the appellant was. a party to, the proGeedipgs and decree, represented, by his attorney, Corbin, of whose qprevoked authority in, the premises there is and can be ,no question, and, if the decree so rendered is not to be hllving been consented to by th,e appellant, it is at
NEW YORK LIFE IKS. CO. V: M'MASTER.
63
least bindingup<>n him until set aside, as Ofcoufse it might 'be on J)foofof fraud. See Freem. Judgm. §§174, 175; Cheney v. Patton, 134 Ill. 422, 25 N. E. 792; Id., 144 Ill. 373, 34 N. E.416; PrentissV-..Holbrook, 2 Mich. 372; Louis v. Brown Tp., 109 U. S. , . , 162, 3 Sup. Ct. 92. If anything is due the appellant from Corbin, it should be recoveI'M 'in an action or suit against him alone, not upon this bill for conspiracy against the appellees jointly. The decree below is affirmed.
NEW YORK LIFE INS. CO. v. McMASTER. (Circuit Court of Appeals, Eighth Circuit. No. 976. 1. SPECIFIC PERFOR}lANCE-FRAUD-MISTAKE.
March 21, 1898.)
A contract may be reformed in equity where a parol. agreement was made which f;tiled of embodiment in the subsequent written contract through the fraud of one, or the mistake of both, of the parties to it; but such agreement, and the fraud or the mJstake, must be clearly proven before any such relief can be granted. Where an Insurance company, In preliminary negotiations, agreed with an applicant, when he signed the application, to insure him for a longer time than was subsequently' fixed by the policy, the oral agreement is not bindIng, since .nothing was paid in. consideration. thereof, and the applicant was at liberty to reject the policy before payment of the premium. Customary negotiations for Insurance do not constitute a contract, where there is no Intention to contract otherwise than by poliCies made and delivered upon payment. of the premiums. ,
2.
LNIlURANCE-PRI<JLIMINARY NEGOTIATIONS-CONSIDERATION.
BAKE......RlllFORMATION OF CONTRACT-ESTOPPEL.
Where it is sought, on the plea of fraud, to reform a policy so as to. give It the legal effect claimed under an oral agreement made in prelimlnarynegotlations, the insurance company is not estopped from denying that the actual contract was the oraJ agreelDent, unless there was on its part a willful intent to deceive, or such gross. negligence as is tantamount thereto, involvIng some moral turpitude or breach of duty.
4.
8AME-:.AcCEP'l·ANCE OF POLICtEs-KNOWLEDGE OF CONTENTS.
An applicant for insurance, who accepts policies, the provisions of which are plain, clear, and free from all ambiguity, Is chargeable with knowledge of the terms and legal effect of these contracts. It Is his duty to read and know the contents of the' policies before accepting them, and, where he falls to do so, he is estopped from denying knowledge thereof, unless he. proves that he was dissuaded from reading the poliCies by some trick or fraud of the other party. The mistake which will warrant the reformation of a contract must be made in common by the parties to it. A court of equity may not reform a written agreement, on the ground of mistake, so as to impose on one of the parties, obligations which he did not Intend to assume.
5.
REFORMATION OF CONTRACTS-MISTAKE.
6.
WRITTEN CONTRACTS-PAROL NEGOTIATIONS.
No representation, promise, or agreement or opinion expressed, in the previou,s parol negotiations, as to the terms or legal effect of the resulting written agreement, can be permitted to prevail, either at law or in equity, over the plain provlsio1J.S and just interpretation of the contract, in the absence of some artifice which COncealed its. terms, and prevented the complainant from reading it.