## Facts

- Northfield Savings Bank (Northfield) held a note and mortgage given by Roy M. and Hazel C. Haggett on their home.
- K. E. Norton, who knew the Haggetts, went to Northfield intending to obtain the Haggett note and mortgage for himself.
- Norton told a bank clerk he wanted to “take up” the Haggett note.
- The clerk asked Norton if he wanted to “pay off the note,” and Norton answered “yes.”
- The clerk computed the balance due, and Norton paid the bank that exact payoff amount by check.
- The bank processed the transaction as a payoff and discharge (not a sale or assignment): the note was stamped “Paid,” and a mortgage discharge was prepared for execution.
- When the bank president executed the discharge, he remarked to Norton that Norton “must be making plenty of money” “to be paying someone else’s mortgage,” and Norton made no reply.
- Norton received the cancelled note and the discharge and was told to have the discharge recorded; Norton did not examine the documents when he received them.
- Norton was found to be familiar with notes and mortgages and to understand the meaning and effect of a note stamped “Paid” and a recorded mortgage discharge.
- Norton had intended to purchase the note and mortgage, but the Haggetts had not consented to any purchase by Norton.
- The same day, Norton wrote Roy Haggett stating that Norton had “purchased the note and mortgage,” which was the first direct dealing between Norton and the Haggetts about the note and mortgage.
- Roy Haggett became alarmed, believing Norton wanted to harm him due to recent arguments between them.
- Roy contacted the bank the next day and was told the note had been paid, not sold; the bank then furnished the Haggetts a second discharge, which was recorded.
- Norton filed a bill in equity alleging (1) mutual mistake as to whether the transaction was a purchase or a payoff and (2) fraud and conspiracy by the bank and the Haggetts; he sought equitable relief, including restitution.

## Issues

1. Whether Norton was entitled to equitable relief on a theory of mutual mistake when Norton intended to purchase the note and mortgage but the bank reasonably understood (from Norton’s words and conduct) that Norton was paying off and discharging the debt.
2. Whether the evidence supported Norton’s claims that Northfield and the Haggetts committed fraud or conspired to deprive him of rights in the note and mortgage.
3. Whether equity should award restitution or other relief to Norton after the bank discharged the Haggetts’ note and mortgage based on Norton’s payment.

## Decision

- The Vermont Supreme Court affirmed the chancellor’s decree dismissing Norton’s bill in equity.
- The court held that the bank did not share Norton’s alleged understanding that the instruments were being sold; any mistake was Norton’s alone, so mutual mistake was not shown.
- The court found the record did not establish fraud or conspiracy by the bank or the Haggetts.
- Because the transaction was completed as a payment and discharge—consistent with Norton’s affirmative response that he wished to “pay off” the note—equity would not treat Norton as the purchaser or holder of the note and mortgage or grant him restitution on that theory.

## Legal Principles

- Relief for mistake in equity generally requires a mutual mistake of a material fact; a unilateral mistake, without fraud or comparable wrongful conduct, is not enough.
- A party’s unspoken intent cannot override the transaction that his words and actions reasonably communicated to the other party.
- When a payor, familiar with negotiable instruments and mortgages, accepts a note stamped “Paid” and a mortgage discharge without objection, those objective facts support the conclusion that the transaction was a payoff and discharge rather than a purchase and assignment.
- Fraud and conspiracy must be proved with evidence of deceitful conduct or an agreement to commit a wrongful act; suspicion, later dissatisfaction, or after-the-fact advantage to others does not establish liability.
- Payment of another’s debt, without a valid agreement for an assignment of the security and without proof of wrongdoing by the obligee or debtor, does not entitle the payor to be substituted to the mortgagee’s rights through equitable relief.

## Conclusion

Norton paid the full balance on the Haggetts’ note after confirming to the bank that he wished to “pay off” the note, and the bank acted consistently with a payoff by cancelling the note and issuing a mortgage discharge. Because the bank reasonably understood the transaction as a discharge, any misunderstanding was unilateral, and Norton also failed to prove fraud or conspiracy, the Vermont Supreme Court affirmed dismissal of Norton’s equity action and denied relief that would have treated him as a purchaser of the note and mortgage.


Norton v. Haggett, 85 A.2d 571, 117 Vt. 130 (1952)