Story Case

Mr. Joshua Jacobs was a very old man and could not see very well. One day, Mr. Vassermann called upon him and asked him if he wished to purchase shares of stock in a corporation which he, Vassermann, was promoting. After some discussion Mr. Jacobs decided that he would make the purchase. Mr. Vassermann handed him a paper and told him to sign it. As Mr. Jacobs did not have his glasses with him and could not read the paper, he asked Vassermann to tell him of its contents. The latter replied that it was merely an agreement to purchase ten shares of stock in the corporation at $100 each. Mr. Jacobs signed his name to the instrument. However, it subsequently appeared that the paper signed was an agreement by Mr. Jacobs to sell his farm to Vassermann for ten thousand dollars. Of course, Mr. Jacobs refused to sell his farm for that price. He was sued, thereupon, on this alleged agreement. What should be the decision of the Court in this case?

Ruling Court Case. Walker Vs. Ebert, Volume 29 Wisconsin Reports, Page 194

Ebert, the defendant in this action, was a German by birth and education, and was unable to read or write the English language. Certain persons, who were the owners of a certain patented machine, came to Ebert and offered to sell him an interest in their patent rights and to give him an agency to sell the manufactured articles. Ebert thought well of the proposition and accepted it. Ebert was then handed a paper by these persons to sign. Being unable to read, he asked what the paper was. They replied that it was the contract, and contained the terms of the agreement, which they had just made. Ebert, believing this, and relying upon their statements, signed his name to the paper. The paper, as a matter of fact, had nothing to do with the contract which they had made, but was in form a promissory note, by which Ebert agreed to pay to them a large sum of money. These persons immediately transferred the note to Walker, the plaintiff in this action. He demanded payment and Ebert refused to pay it. Walker then sued him.

Ebert contended that he was not liable on the note, because there was a mistake as to the nature of the instrument he had signed. He had intended to sign a contract for the sale of an interest in a patent, and for an agency to sell, and he had never intended to sign any note of this kind. Mr. Chief Justice Dixon, who delivered the opinion of the Court, said: "The party whose signature to such paper is obtained by fraudulent representations as to the character of the paper itself, and who is ignorant of such character, and has no intention of signing it, and who is guilty of no negligence in affixing his signature or in ascertaining the character of the instrument, is no more bound by it than if it were a total forgery, the signature included".

In accordance with the opinion, the Court decided that judgment should be given for Ebert in this action.

Ruling Law. Story Case Answer

Earlier in this work, it was stated that a mutual agreement must exist between the parties concerned, as the basis of a legally binding contract between them. Heretofore we have assumed in each case that the consent of the parties to contract was real. We now come to examine in some detail what constitutes reality of consent, in order that the contract may be legally binding.

In the first place, it is said that the consent of one of the parties may not be real because it is given under some mistake of fact. If one of the parties is mistaken as to the nature of the contract he makes and the mistake is not due to any negligence on his part, his consent to that contract is not real and he may not be held upon it. If he thinks that he is signing a contract of guaranty he may not be held if the contract turns out to be a bill of exchange. In practically all such cases, however, there is an additional element, to-wit, fraud on the part of the other party. In the Story Case, the conduct of Mr. Vassermann was fraudulent. Nevertheless, aside from the fraud, the consent of Mr. Jacobs was not real, because he was mistaken as to the nature of the contract; and the mistake was not caused by any negligence on his part. Therefore, the contract is not binding upon him.