202 U. S.

Argument for the United States.

during its life a similar contract was given to such a person and the corporation sued in the Court of Claims for reformation of its contract on ground that the omission was mutual mistake and also for loss of profits on business diverted to such person. The Court of Claims took jurisdiction and awarded damages. Held, by this court in reversing the judgment on the merits:

While reformation of the contract is not an incident to an action at law, and can only be granted in equity; under § 1 of the act of March 3, 1887, 24 Stat. 505, the Court of Claims has jurisdiction to reform a contract, and of the money claim under the contract as it should have been drawn. On the evidence in this case there was no mutual mistake justifying the reformation of the contract.

THE facts are stated in the opinion.

Mr. Louis A. Pradt, Special Assistant to the Attorney General, with whom The Solicitor General was on the brief, for the United States:

The Court of Claims was without jurisdiction in equity. Harvey v. United States, 105 U. S. 679; Jones v. United States, 131 U. S. 1. Its jurisdiction in equity is derived from special statutes. District of Columbia v. Barnes, 197 U. S. 146.

There was an entire failure of proof of mistake. The purpose of an action for reformation of a contract on the ground of mistake is not to interpret the written contract, but to correct it so that it shall truly state the agreement of the parties. And since in such an action the court is simply called upon to declare the true and complete contract of the parties, which the written contract, through mistake, does not fully set forth, it is clear that the mistake alleged must be mutual. Alabama Midland Ry. Co. v. Brown, 98 Alabama, 648; Pomeroy's Eq. Jur. §§ 870, 1376; Maher v. Hibernian Insurance Co., 67 N. Y. 290.

The evidence of this mutual mistake must be clear and convincing" the strongest possible." Pomeroy's Eq. Jur. § 850; 1 Story's Eq. Jur. § 152; Phanix Fire Ins. Co. v. Gurnee, 1 Paige Chancery Rep. 279; Newton v. Holley, 6 Wisconsin, 604. The mistake must be established beyond reasonable doubt. Hearne v. Marine Ins. Co., 20 Wall. 490; Stockbridge Iron Co. v.

Argument for Appellee.

202 U. S.

Hudson Iron Co., 102 Massachusetts, 49, Meade v. West Chester Fire Ins. Co., 64 N. Y. 455; 1 Story's Eq. Jur., 13th ed., 153.

At most, the proof shows only a one-sided mistake and this is not ground for reforming a contract. Hearne v. Marine Ins. Co., 20 Wall. 491.

Mr. Malcolm Lloyd, Jr., and Mr. David Milliken for appellee: The Court of Claims has jurisdiction in equity. South Boston Iron Works v. United States, 34 C. Cl. 200; District of Columbia v. Barnes, 197 U. S. 146.

A contract may be reformed and enforced as reformed, in the same action. Harvey v. United States, 105 U. S. 671; Avery v. Eq. Assn. Soc'y, 52 Hun, 392; Maher v. Ins. Co., 67 N. Y. 283; Jaye v. Ins. Co., 55 N. Y. 657; West v. Suda, 69 Connecticut, 60.

A bill or complaint which asks the rectification of a mistake in a written contract and the enforcement of the instrument as reformed states but one cause of action. Harvey v. United States, 105 U. S. 671; Avery v. Ins. Co., 52 Hun, 392; Maher v. Ins. Co., 67 N. Y. 283; Jaye v. Ins. Co., 55 N. Y. 657; West v. Suda, 69 Connecticut, 60; Hutchinson v. Ainsworth, 73 Colorado, 452; Franklin Ins. Co. v. McGea, 4 Greene (Iowa), 229; McClurg v. Phillips, 49 Missouri, 315; Mayer v. Van Cullam, 7 Abb. Pr. (N. Y.) 222; Pomeroy on Remedies, § 459.

The written application in connection with the proposal and the acceptance of that application constitutes the contract between the parties. Hearne v. Ins. Co., 20 Wall. 488; Equitable Ins. Co. v. Hearne, 20 Wall. 494; Harvey v. United States, 105 U. S. 671; Garfield v. United States, 93 U. S. 242.

There was in the first written draft agreed upon by the claimant and defendant, the contract between them. Palmer v. Hartford Ins. Co., 54 Connecticut, 510. Where the agreement, as reduced to writing, omits terms or stipulations contrary to the common intention of the parties, the instrument will be corrected or reformed, so as to make it conform to their real intent. Hearne v. Marine Ins. Co., 20 Wall. 488; Hunt

v. Rousmainer, 1 Pet. 1; Andrews v. Essex Ins. Co., 30 Mason, 10; Oliver v. Mutual Ins. Co., 2 Curtis, 277; Van Tuye v. Ins. Co., 55 N. Y. 657; 2 Pomeroy's Eq. Jur. § 849; 1 Story's Eq. Jur. § 152.

The real question is, not what the real instrument was intended to mean or how it was intended to operate, but what it was intended to be. Tillis v. Smith, 108 Alabama, 264; Connor v. Armstrong, 86 Alabama, 265; Midland R. R. Co. v. Brown, 98 Alabama, 647; Parker v. Parker, 88 Alabama, 362.

The mistake is documentary and indisputable. This court will not review the finding of the Court of Claims in this respect. United States v. Smith, 94 U. S. 214.

MR. JUSTICE HOLMES delivered the opinion of the court.

This is a petition praying for the reformation of a contract and for damages for breach of the same as reformed. The Court of Claims granted the prayer and made a decree for damages, 40 C. Cl. 81, whereupon the United States appealed to this court.

The contract is an elaborate and formal instrument, dated June 19, 1899, under the seal of the petitioner and executed on behalf of the United States by the Commissioner of Internal Revenue. It is unnecessary to state its terms. Members of a partnership subsequently incorporated as the petitioner had a contract of like sort expiring July 1, 1899. On or about April 25, 1899, they received from the Commissioner of Internal Revenue the following communication bearing that date:

"To contractors for imprinting stamps:

"In awarding contracts for imprinting stamps on checks, drafts, and other instruments for the year commencing July first, 1899, it has been determined to add the following provisions to contracts in addition to these now contained in the existing contracts for imprinting stamps.

"Each contractor will be required to pay salaries aggregat

ing thirty-four hundred dollars ($3,400) per annum for one Government stamp agent and two counters, payable monthly. "As compensation in full for imprinting stamps, the contractor shall charge all persons requiring the same the sum of eighty cents per thousand stamps imprinted, when imprinted upon sheets containing five or more stamps, and one dollar per thousand stamps when imprinted upon sheets containing less than five stamps to the sheet. In order to secure absolute uniformity in prices these charges shall be rigidly adhered to, and any evasion or attempted evasion of the express terms hereof shall be deemed a violation of the terms of the contract.

"No application for contract to imprint stamps for period named will be considered from any person, firm, or corporation not now engaged in imprinting stamps under contract with the Government.

"Each application for contract must be accompanied by the guarantee of at least two responsible persons, that in case contract is entered into and accepted, bond will be furnished in the sum of twenty-five thousand dollars ($25,000) for the faithful performance thereof.

"The Commissioner reserves the right to reject any or all applications and to cancel any contract wherever and whenever it shall appear to the interests of the public and the Government to do so.

"Applications will be received at the office of the Commissioner of Internal Revenue, Washington, D. C., until 12 m., May 25, 1899, such applications to be carefully sealed and marked 'Applications for contract for imprinting internal revenue stamps' and addressed to the Commissioner of Internal Revenue.

"G. W. WILSON, Commissioner."

On May 25, 1899, the firm wrote to the Commissioner stating that they then had the privilege to imprint stamps, etc.,

and "would most respectfully make application to you for a contract to continue the same for the period of one year, commencing July 1, 1899, and in accordance with your official communication, dated April 25, 1899, we to pay salaries aggregating thirty-four hundred dollars for one Government stamp agent and two counters, and to receive as compensation for imprinting stamps the sum of eighty cents per thousand when imprinted upon sheets containing five or more stamps and one dollar per thousand when imprinted upon sheets containing less than five stamps per sheet." They added that they attached a guarantee to furnish the required bond and referred to letters accompanying the original application. This letter now is denominated an acceptance of what is called. the offer of April 25, above set forth. The alleged mistake is the omission, from the formal contract, of the paragraph in that communication, to the effect that no application will be considered from any person not now engaged in printing stamps under contract with the Government, and the following one limiting the time for applying to May 25. After May 25 an application was accepted from the American Imprinting Company, a corporation not engaged in imprinting stamps under contract with the Government on April 25. The damages awarded were the profits which would have been made by the petitioner had it not lost the customers who went to the corporation last named.

The Government objects at the outset that the Court of Claims has no jurisdiction in equity, and that, although the petitioner's demand is for money under a contract as it should have been drawn, yet in this suit that demand is incident to the reformation asked, which certainly is true. Reformation is not an incident to an action at law, but can be granted only in equity. When relief is granted also on the contract as reformed it means only that the court of equity sees fit to go on and finish the whole case. But we are of opinion that the court was warranted in taking jurisdiction under a fairly liberal interpretation of the act of March 3, 1887, c. 359, § 1,