If a party, by reasonable diligence, could have had knowledge of the truth, equity shall not grant relief; nor shall the ignorance of a fact known to the opposite party justify an interference if there has been no misplaced confidence, misrepresentation, or other fraudulent act.
(Orig. Code 1863, § 3059; Code 1868, § 3071; Code 1873, § 3126; Code 1882, § 3126; Civil Code 1895, § 3984; Civil Code 1910, § 4581; Code 1933, § 37-211.)
Law reviews.- For article, "Limitations on the Meaning and Impact of DeGarmo v. DeGarmo," see 4 Ga. St. B.J. 20 (1998).
JUDICIAL DECISIONSANALYSIS
This section was not intended to lodge any arbitrary discretion in judge or jury to deny reformation on the ground that the party seeking relief could by reasonable diligence have had knowledge of the mistake. Bender v. Randall Bros., 189 Ga. 197, 5 S.E.2d 889 (1939).
Elements essential to equitable relief.
- Two essential elements must affirmatively appear before a court of equity will be authorized to relieve a purchaser from the purchaser's bid because of mistake of fact; the exercise of ordinary diligence in discovering the truth, and the fact that the relief will not prejudicially affect the rights of anyone. Kurfees v. Davis, 178 Ga. 429, 173 S.E. 157 (1934).
Equity will not relieve a person from the person's erroneous acts or omissions resulting from the person's own negligence. Mangham v. Hotel & Restaurant Supply Co., 107 Ga. App. 619, 131 S.E.2d 74 (1963).
No basis for reformation.
- Any possible violation of a fiduciary bond which remained between a city and a law firm as a result of a prior attorney-client relationship provided no basis for reforming an amended lease because there was no indication that the law firm was a party to its attorney's alleged duplicity and there was no proof in the record of any occurrence which prevented the city from reading the amended lease prior to executing the document. City of College Park v. Sheraton Savannah Corp., 235 Ga. App. 561, 509 S.E.2d 371 (1998).
An insurer was entitled to reformation of a policy when coverage of a vehicle was extended at the insured's request, after the vehicle was involved in an accident; even though the insurer could have inquired before extending the coverage, the insured was not prejudiced by the insurer's action and would obtain a windfall absent reformation of the contract. Cotton States Mut. Ins. Co. v. Woodruff, 215 Ga. App. 511, 451 S.E.2d 106 (1994).
Specific performance warranted in foreclosure sale.
- Superior court did not err in granting a purchaser summary judgment in the purchaser's action seeking specific performance pursuant to O.C.G.A. § 23-2-131 and requiring a mortgage company to deliver a deed conveying certain property because the company failed to demonstrate any merit in the company's contention that the superior court improperly refused to invoke the court's equitable power to relieve the company from performing under the foreclosure sale contract on the ground that the opening bid the company set forth was a mistake. Because the dollar amount of the high bid at the foreclosure sale alone made it immediately apparent that there had been a mistake, a reasonable inference arose that had reasonable diligence been employed before the foreclosure sale, the alleged unilateral mistake would not have occurred. Decision One Mortg. Co., LLC v. Victor Warren Props., Inc., 304 Ga. App. 423, 696 S.E.2d 145 (2010).
Equitable interference not authorized in quiet title action.
- Trial court did not err in granting a bank and purchasers summary judgment in a son's action to quiet title to a parcel of land because the son did not act with reasonable diligence to verify that a house was located on the land that the son received under a deed, and the purchasers would be prejudiced if the son were granted relief. Haffner v. Davis, 290 Ga. 753, 725 S.E.2d 286 (2012).
Constructive trust denied due to laches.
- Former wife was not entitled to impose a constructive trust on her former husband's military pension pursuant to O.C.G.A. § 53-12-132 because she failed to object to the absence of any provision for the pension in their divorce decree for 12 years and failed to bring suit until five years after payments allegedly became due. Davis v. Davis, 310 Ga. App. 512, 713 S.E.2d 694 (2011).
Cited in Harrison v. Hester, 160 Ga. 865, 129 S.E. 528 (1925); Paris v. Treadaway, 173 Ga. 639, 160 S.E. 797 (1931); McCommons v. Greene County, 53 Ga. App. 171, 184 S.E. 897 (1936); Dobbs v. Perlman, 59 Ga. App. 770, 2 S.E.2d 109 (1939); J. Kuniansky, Inc. v. Ware, 192 Ga. 488, 15 S.E.2d 783 (1941); Hill v. Agnew, 202 Ga. 759, 44 S.E.2d 653 (1947); Loyd v. Loyd, 203 Ga. 775, 48 S.E.2d 365 (1948); Whitfield v. Whitfield, 204 Ga. 64, 48 S.E.2d 852 (1948); Tillman v. Byrd, 211 Ga. 918, 89 S.E.2d 479 (1955); Peerless Cas. Co. v. Housing Auth., 228 F.2d 376 (5th Cir. 1955); Charles v. Simmons, 215 Ga. 794, 113 S.E.2d 604 (1960); Dixie Belle Mills, Inc. v. Specialty Mach. Co., 217 Ga. 104, 120 S.E.2d 771 (1961); Cline v. Schuster, 221 Ga. 653, 146 S.E.2d 732 (1966); Vinson v. Citizens & S. Nat'l Bank, 223 Ga. 54, 153 S.E.2d 436 (1967); D.H. Overmyer Co. v. Joe Summers Roofing Co., 120 Ga. App. 188, 169 S.E.2d 821 (1969); Sikes v. Sikes, 231 Ga. 105, 200 S.E.2d 259 (1973); Martin v. Heard, 239 Ga. 816, 238 S.E.2d 899 (1977); Garden of Eden, Inc. v. Eastern Sav. Bank, 244 Ga. 63, 257 S.E.2d 897 (1979); FDIC v. Lattimore Land Corp., 656 F.2d 139 (5th Cir. 1981); Gulf Life Ins. Co. v. Folsom, 256 Ga. 400, 349 S.E.2d 368 (1986); Beasley v. Wachovia Bank, 277 Ga. App. 698, 627 S.E.2d 417 (2006); Levenson v. Word, 294 Ga. App. 104, 668 S.E.2d 763 (2008).
Reasonable Diligence
1. In General
Courts of equity grant relief only in favor of the diligent. City of Jefferson v. Trustees of Martin Inst., 199 Ga. 71, 33 S.E.2d 354 (1945).
The standard is one of reasonable diligence, and the defrauded party is not bound to exhaust all means at the party's command to ascertain the truth before relying upon the representations. Funding Sys. Leasing Corp. v. Pugh, 530 F.2d 91 (5th Cir. 1976).
Equity requires diligence in the protection of one's own rights. Phillips v. Hayes, 212 Ga. 148, 91 S.E.2d 19 (1956).
Equity requires diligence, and will not do for one that which one could have done for oneself but for one's own negligence. Glens Falls Indem. Co. v. Liberty Mut. Ins. Co., 202 Ga. App. 752, 44 S.E.2d 543 (1947).
While equity will, on reasonable application, and under proper circumstances, relieve a party from the injurious consequences of an act done under a mistake of fact, it will not do so if such party could, by reasonable diligence, have ascertained the truth as to the matter concerning which the mistake was made. Adler v. Adler Co., 205 Ga. 818, 55 S.E.2d 139 (1949).
The duty rests upon a party who seeks to rescind a contract on the ground of fraud, to make such effort to discover the fraud as would in law amount to ordinary diligence. Tingle v. Seignious, 212 Ga. 71, 90 S.E.2d 408 (1955).
If one has made a bad bargain by one's failure to acquaint oneself with facts which were easily ascertainable, a court of equity will not aid one in rescinding one's contract to purchase by decreeing a cancellation of the contract. Tingle v. Seignious, 212 Ga. 71, 90 S.E.2d 408 (1955).
While former Code 1933, § 37-207 (see O.C.G.A. § 23-2-31) provides that equity may rescind and cancel a written contract upon the ground of mistake of fact material to the contract of one party only, ignorance of fact is no cause for rescinding a contract; and when by reasonable diligence the plaintiff could have ascertained the extent of the plaintiff's injuries, and there was no necessity for the plaintiff's rushing into a settlement, former Code 1933, § 3-1004 (see O.C.G.A. § 9-3-33) gave the plaintiff two years in which to bring an action to recover for such injuries, a court of equity will not relieve the plaintiff from the injurious, unwise, or disadvantageous consequences of the plaintiff's own act in executing a release. James v. Tarpley, 209 Ga. 421, 73 S.E.2d 188 (1952).
When two contracting parties deal at arms length with one another, and a written instrument is entered into and signed, and there is no evidence of artifice or fraud, and each party had ample opportunity to inform oneself as to the amounts claimed due, and a party negligently omitted to take such precautions as would reasonably serve to protect oneself, the defense of mistake of fact, if there is one, is obviously caused by the party's own neglect and is not available as a defense. Berry v. Atlas Metals, Inc., 152 Ga. App. 437, 263 S.E.2d 179 (1979).
A court of equity will not relieve a vendor of land from the vendor's own negligence in not ascertaining facts which the vendor could have ascertained by diligence, the vendee using no artifice or fraudulent scheme in order to prevent the vendor from ascertaining facts which might have prevented the vendor from executing the deed sought to be canceled on account of the alleged fraud on the part of the vendee. Browning v. Richardson, 181 Ga. 413, 182 S.E. 516 (1935).
Reasonable efforts in bidding contracts.
- A contractor who has bid for the excavation of highway sites on a basis of "unclassified material" may not, under the guise of mistake of fact, seek additional compensation in an action at law because the material excavated contained a higher percentage of rock than it expected, even though its only information at the time of the bid was results of test borings made available to it by the highway department (now Department of Transportation), when it was specifically stipulated that the data were not guaranteed and did not bind the department; when the department furnished all information which it had available, made no attempt to conceal actual conditions, and stipulated the provisional character of its tests, when the contractor had equal opportunity with the department to conduct its own investigation, and when the parties with knowledge of these facts elected to contract on a basis of material moved rather than to contract on a basis of the percentage of dirt and rock after removal. State Hwy. Dep't v. MacDougald Constr. Co., 102 Ga. App. 254, 115 S.E.2d 863 (1960).
Materialmen are charged with knowledge of the premises upon which they filed their claim of lien, with knowledge of the premises to which they delivered the materials, and where they knew that these premises differed, in plenty of time to properly record a claim of lien as required by law, they cannot seek the aid of a court of equity to relieve them from their own negligence. King v. Rutledge, 208 Ga. 172, 65 S.E.2d 801 (1951).
Plaintiff's petition to cancel and declare void the plaintiff's acknowledgement of service and to set aside the judgment probating a will on the alleged ground of fraud failed to state a cause of action for the relief sought, since the plaintiff by an exercise of the slightest degree of diligence could have ascertained and asserted in the probate proceeding the falsity of the act upon which the plaintiff relied to set aside the probate judgment. Ingram v. Rooks, 221 Ga. 701, 146 S.E.2d 743 (1966).
Due diligence to ascertain truth.
- When the terms of an instrument express the intent of the parties at the time the contract is made, as the parties are then informed, in the absence of any allegation of fraud, misrepresentation, or misplaced confidence, equity will not interfere to relieve on account of ignorance of a fact by one of the parties, if by the exercise of due diligence one might have ascertained the truth. Hargrove v. Bledsoe, 78 Ga. App. 107, 50 S.E.2d 223 (1948).
While the doctrine of caveat emptor would charge the purchaser with looking out for the title which the seller had to the tract offered for sale as the seller's, it would not charge the purchaser with looking out for the boundaries of that tract when the seller undertook to locate and point them out, thus professing to know them sufficiently to enable them to furnish this information to purchasers instead of leaving the latter to their own resources in acquiring the information. Bonner v. Cotton, 223 Ga. 843, 159 S.E.2d 61 (1968).
Reformation of a deed.
- Trial court properly ordered reformation of a deed of assent to include an entire eight acre tract of land as opposed to only a partial strip because reformation was not barred by the seven-year statute of limitations since the seller was not prejudiced as the deed should have been corrected previously, thus, equitable relief under O.C.G.A. § 23-2-32(b) was appropriate. Ehlers v. Upper West Side, LLC, 292 Ga. 151, 733 S.E.2d 723 (2012).
2. Duty to Read Written InstrumentsOne executing a contract or deed has the duty to read it and that negligence in not reading it before it is sent to one who acted in good faith can bar reformation by the negligent party. B.L. Ivey Constr. Co. v. Pilot Fire & Cas. Co., 295 F. Supp. 840 (N.D. Ga. 1968).
Because there was no fraud that prevented siblings from reading a deed presented to them by their brother, which he allegedly represented as an easement, and no fiduciary relationship upon which they could have justifiably relied, the siblings should have discovered the alleged fraud when they signed the deed, and the seven-year statute of limitations expired seven years later. McCall v. Williams, 326 Ga. App. 99, 756 S.E.2d 217 (2014).
One about to sign a written instrument cannot rely blindly upon the representations of other parties as to its contents, and if, without an emergency or fraud inducing him not to read it, he signs without reading, he cannot hold the other party responsible for his statements, though they be false. Livingston v. Barnett, 193 Ga. 640, 19 S.E.2d 385 (1942).
Any representation, act, or artifice intended to deceive, and which does deceive another, is such a fraud as may authorize cancellation of a written contract, but a party to a contract who can read must read or show a legal excuse for not doing so, and ordinarily, if fraud is the excuse, it must be such fraud as prevents the party from reading; nor in such case will a mere fraudulent statement by the opposite party or his agent as to the contents of the writing furnish a legal excuse. And where the contract is a deed to land, the rule will generally apply to the grantee as well as the grantor. Livingston v. Barnett, 193 Ga. 640, 19 S.E.2d 385 (1942).
Where two contracting parties deal with each other at arms' length and on equal terms, and where there is no such confidential relation between them as to justify special confidence reposed by one in the other, a written instrument entered into between them cannot be set aside upon the ground that the party seeking to be relieved was induced to enter in and sign the instrument in consequence of fraudulent representations as to its contents upon the part of the adverse party, when it appears that the party signing could read, that there was nothing to prevent him from reading the instrument, but that he did not do so, that there was no sufficient excuse for his failing to do so, but he signed after he had full opportunity to inform himself as to the terms of the instrument by reading it, but negligently omitted to read the same, when he could thus have informed himself of its contents. Livingston v. Barnett, 193 Ga. 640, 19 S.E.2d 385 (1942).
Where one, while negotiating for the purchase of realty, has an opportunity to examine it before agreeing to buy, but fails to do so and voluntarily relies on statements made by the seller concerning its character and value, a written contract to sell and purchase the property subsequently executed by the contracting parties will not, on petition therefor by the purchaser, be rescinded and set aside because of the falsity of such statements, unless some fraud or artifice was practiced by the seller to prevent such examination by the purchaser; and this is true although the purchaser in agreeing to buy relied upon the seller's representations as to the character and value of the property as being true, and in consequence of such reliance acted to his injury. Tingle v. Seignious, 212 Ga. 71, 90 S.E.2d 408 (1955).
Where plaintiff signed a deed which was read to her by an attorney which she did not read herself, and there was no evidence that there were emergency circumstances of disabilities preventing her from reading the deed, the mere fact that the plaintiff signed the deed in a room where the shades were not put up and the blinds were not open, where it does not appear that she could not have raised the shades nor opened the blinds and let in sufficient light by which she could read the deed, is insufficient as an excuse for her not reading the deed and becoming acquainted with its contents before she signed it. McCommons v. Greene County, 53 Ga. App. 171, 184 S.E. 897 (1936).
Equity will grant no relief in favor of one who buys land when he fails to exercise any diligence for his protection and asserts that he blindly relied on the representations of the seller as to matters of which he could have informed himself, and the same is true in the purchase of a stock of merchandise and fixtures. Holmes v. Walker, 207 Ga. 582, 63 S.E.2d 359 (1951).
While the inability of a plaintiff vendor, in an alleged fraudulent land sale case, to read the English language would be a circumstance which should be considered in determining whether or not he has been defrauded, the fact of such inability is not of itself sufficient to authorize the rescission of a contract. Robertson v. Panlos, 208 Ga. 116, 65 S.E.2d 400 (1951).
As a general rule, fraud voids all contracts; however, this rule is not applied in its entirety and without reservation to written contracts, for the reason that misrepresentations and false statements will not be heard in contradiction of the terms of a valid written instrument, unless it should appear that the party signing the contract has been induced to sign by a fraud, trickery, artifice, or emergency happening at the time of such signing. Livingston v. Barnett, 193 Ga. 640, 19 S.E.2d 385 (1942).
RESEARCH REFERENCES
Am. Jur. 2d.
- 27 Am. Jur. 2d, Equity, §§ 22, 34, 43, 45, 82.
C.J.S.- 30 C.J.S., Equity, § 47.
ALR.- Negligence in executing contract as affecting right to have it reformed, 81 A.L.R.2d 7.
Negligence as Precluding Rescission of Purchase Agreement for Unilateral Mistake, 43 A.L.R.7th Art. 5