Martin v. Oakhurst Development Corp. ( 1944 )

Where the owner of land executed a written lease and option agreement to one who in turn assigned it to a corporation to secure the payment of a loan, the proceeds of which were used in making improvements on the land, and the corporation elected to exercise the option and made proper tender, and where the corporation filed a suit in equity against both the owner and the optionee, seeking reformation of the description of the land, which, as contained in the agreement, was alleged to be inadequate, and also seeking specific performance against the owner, and praying judgment for the amount of the loan due by the optionee, and that the court decree foreclosure, as of a mortgage, upon the plaintiff's assignment of the lease and option agreement, and that the funds derived therefrom be distributed under order of court in accordance with the equities of the parties, Held.

1. Where a petition is brought for reformation of a written lease and option agreement, alleging a valuable consideration, and that permanent improvements had been made on the property involved, and that an alleged inadequate description of the property had been made by mistake of the scrivener, it having been the intention of the parties that the description contended for be inserted in the agreement, and further alleging that unless so reformed an unconscionable advantage would be acquired by the defendant, such allegations were not subject to general demurrer.

2. Though the description of the land as contained in the lease and option agreement was insufficient to be the basis of a decree for specific performance, a definite and specific description could be supplied by amendment.

3. In an action for specific performance of an agreement to convey land, the petitioner may in the same proceeding have the description of the land reformed so as to fulfill the manifest intention of the parties to the agreement.

4. There was no mis, under of parties defendant.

No. 14769. FEBRUARY 10, 1944. Oakhurst Development Corporation filed a petition against Sam Hargraves Sr. and P. H. Ricks. Hargraves died, and Martin, his administrator, was made a party. The petition alleged that on November 20, 1940, Hargraves executed a written lease to Ricks covering a vacant lot of land in the City of Hinesville for a period of five years for a monthly rental of four dollars, the agreement further containing an option to purchase said lot at the sum of $250 within ninety days, with an agreement to execute a warranty deed in the event Ricks elected to exercise the option.

About ten days later, Ricks secured a loan of $335 from Oakhurst Development Corporation, and gave as security therefor a transfer and assignment of the lease and option agreement. Ricks paid to Hargraves four dollars for the first month's rent, and each subsequent month thereafter, through February 1941, tendered to Hargraves the agreed rental, but Hargraves refused to accept said payments. Ricks desired to exercise his right and option under said agreement, and on or about January 1, 1941, notified Hargraves of his intention so to do, but Hargraves refused to accept payment, or to execute a deed in accordance with the option agreement. And again on February 18, 1941, before the expiration of the option to purchase, both Oakhurst Development Corporation and Ricks offered and tendered to Hargraves the sum of $250, and demanded that he execute to Oakhurst Development Corporation, as assignee of Ricks, a warranty deed, which Hargraves then and there refused to do. The petitioner further alleged that the buildings upon said lot were erected with the funds furnished to Ricks, and that Ricks had no actual equity in the property, as the reasonable market value was not sufficient to pay the debt of the petitioner; that Ricks was insolvent, and that the petitioner had no adequate remedy at law.

Hargraves demurred on the grounds, that the petition set forth no cause of action, that it did not disclose a description of the land sufficient to be the basis of recovery, that there was a nonjoinder of parties plaintiff, and a misjoinder of parties defendant.

The plaintiff amended the petition, and set up a more definite description of the land involved. In the original petition the description as contained in the rent and option agreement was stated as follows: "That certain tract or lot of land situate, lying, and being in the City of Hinesville, 17th G. M. District, Liberty County, Georgia, containing one-half acre, lying on the north side of the Shepherd Ford public road, which is the main route to the Savannah anti-aircraft base headquarters, having a frontage on said road of ninety-four (94) feet, and extending back a distance of one hundred and seventeen (117) feet, bounded on the south by said Shepherd Ford road and all other sides by lands of Sam Hargraves Sr." The amendment as to the description of the lot alleged the following: "Petitioner will show that the lot, tract, or parcel of land referred to in, and intended by both said Ricks and said Hargraves to be conveyed by said written contract, is better and more particularly described as follows: All that certain tract or lot of land situated, lying, and being in the City of Hinesville, 17th G. M. District, Liberty County, Georgia, containing one-half (1/2) acre, more or less, lying on the north side of the Shepherd Ford public road, which is the main route to the Savannah anti-aircraft base headquarters (Camp Stewart), beginning at a point on said road five (5) feet west of the line or row of pecan trees standing near the western yard-line to the home place of Sam Hargraves Sr., and running back from said road in a line parallel to said line or row of pecan trees a distance of one hundred and seventeen (117) feet northwardly to a stake; thence westwardly a distance of ninety-four (94) feet to a stake; thence southwardly a distance of one hundred and seventeen (117) feet to said Shepherd Ford public road; thence along the right of way of said road eastwardly a distance of ninety-four (94) feet to the point of beginning on said road; said lands having a southern frontage and boundary on said Shepherd Ford public road of ninety-four (94) feet, a depth northwardly of one hundred and seventeen (117) feet, and being bounded on all sides except the south by lands of said Sam Hargraves Sr. Petitioner shows that the above described is the exact tract, lot, or parcel of land intended by both parties to said written agreement or contract to be embodied and described therein, as mutually agreed upon orally by the parties prior to and at the time of the execution of the same; that said lot or parcel of land was actually measured and staked off by both Ricks and Hargraves in accordance with the above description prior to the execution of said contract; but due entirely to mutual inadventure, mistake of fact, and lack of understanding of the legal effect and significance of the same, the said parties failed to inform their draftsman, Hon. Wallace F. Mills, who prepared said contract and agreement, the complete and exact legal description of said lands, as aforesaid, and for said reason the same was omitted from said written contract at the time of the preparation and execution thereof."

The petitioner further amended by striking previous prayers and inserting in lieu thereof the following prayers: (a) that the contract be reformed so as to recite the correct description of the property as set forth in the amendment; (b) that the court render a decree of specific performance decreeing equitable title in Ricks, subject to the legal claim of the petitioner covered by assignment; (c) that the petitioner have a judgment and decree for $350 plus interest, and a decree of foreclosure as of a mortgage upon its assignment from Ricks, and that the property be advertised and sold by the sheriff; (d) that the expenses of the proceeding be paid from the $250, and that the balance be paid to Hargraves: (e) that so much of the proceeds of the sale as shall be found due to the petitioner be applied to the lien of the petitioner, and the remainder, if any be paid to Ricks, or his assigns; (f) that the petitioner recover judgment against Ricks for any deficiency existing after application of proceeds of sale, and rental funds impounded by previous order of the court, as prayed in paragraph (e) above; and (g) for other and further relief as may be proper.

Hargraves demurred to the petition as amended, as follows: (1) "Because reformation of the contract in this case, can not be maintained in an action for specific performance;" (2) "Because the description of the property in the alleged contract of rental and option to sell, is not ambiguous, and therefore is not the subject-matter of reformation;" (3) "Because there is no sufficient allegation of mistake as contemplated by law, alleged in the second paragraph of said amendment, to authorize the intervention of a court of equity to reform the alleged contract;" (4) "Defendant demurs to and moves the court to strike all of the prayers, a, b, c, d, e, f, and g, because the same are not germane to the issues in this suit, or rights to which the plaintiff may be entitled under a proceeding to require specific performance."

Hargraves excepted to the order overruling the demurrer.

In his brief the plaintiff in error insists that the court erred in overruling his demurrer for the following reasons: 1. That the description of the land as set forth in the lease and option was too vague and indefinite to be the basis of an action for reformation of the description of the land, and could not be amended so as to permit the description originally agreed upon and staked out, to be supplied by aliunde evidence. 2. That such description as was contained in the lease and option could not be reformed so as to authorize a decree of specific performance. And further, that there was a nonjoinder of parties plaintiff. (After stating the foregoing facts.) 1. The description of the lot as contained in the lease and option contract, giving the State, county, and district, and describing the lot as containing a half acre, 94 by 117 feet, as being on the north side of Shepherd Ford public road, and as being bounded on all other sides by lands of another person, where no starting point was designated, standing alone, was too indefinite to authorize a recovery of the land, or a decree for specific performance. Clark v. Knowles, 129 Ga. 291 (58 S.E. 841);Hunter v. Bowen, 137 Ga. 258 (73 S.E. 380); Stringer v.Mitchell, 141 Ga. 403 (81 S.E. 194); Scoville v. Lamar,149 Ga. 333 (100 S.E. 96); Darley v. Starr, 150 Ga. 88 (102 S.E. 819); Brewton v. Brewton, 167 Ga. 633 (5) (146 S.E. 444); Hamil v. Gormley, 188 Ga. 585 (4 S.E.2d 471).

But the plaintiff, by amendment, set up a complete and definite description of the lot, and asserted that the lot so described" . . is the exact tract . . intended by both parties . . to be embodied and described [in the lease and option agreement] . . as mutually agreed upon orally by the parties prior to and at the time of the execution of the same; that said lot . . was actually measured and staked off by both Ricks and Hargraves in accordance with [the description contained in the amendment] prior to the execution of said contract; but due entirely to mutual inadvertence, mistake of fact, and lack of understanding of the legal effect and significance of the same, the said parties failed to inform their draftsman, Hon. Wallace F. Mills, who prepared said contract and agreement, the complete and exact legal description of said lands, . . and for said reason the same was omitted from said written contract at the time of the preparation and execution thereof."

The Code, § 37-215, provides: "If the form of conveyance shall be, by accident or mistake, contrary to the intention of the parties in their contract, equity shall interfere to make it conform thereto." § 37-205 provides: "A mistake of law by the draftsman or other agent, by which the contract, as executed, does not fulfill or violates the manifest intention of the parties to the agreement, may be relieved in equity." A portion of § 37-212 declares: "Relief may be granted even in cases of negligence by the complainant, if it appears that the other party has not been prejudiced thereby." "Resort to parol evidence is necessary to reform form an instrument. Without parol evidence there can be no reformation." Green v. Johnson, 153 Ga. 738,751 (113 S.E. 402). A case almost identical with the instant case is that of Allen v. Purcell, 141 Ga. 226 (2) (80 S.E. 713), where the scrivener omitted to include in a deed the county, district, and section, and where a petition was brought for reformation alleging a valuable consideration, and that permanent improvements had been made thereon, and that such omission was by mistake on the part of the scrivener, it being the intention of both parties that the description contended for should be inserted in the deed, such allegations were held not subject to a general demurrer. In Harper v. Gleaton,170 Ga. 40, 45 (152 S.E. 70), it was held: "In other words, an omission on the part of the scrivener to reduce to writing the stipulations agreed upon in parol, but which can only be made binding by embodying the agreement in writing, will permit a reformation if the scrivener or the parties are ignorant of the legal effect of the instrument as reduced to writing." See alsoRichardson v. Perrin, 137 Ga. 432 (73 S.E. 649);Sweatman v. Dailey, 162 Ga. 295 (133 S.E. 257).

In view of the foregoing authorities, we hold that the petition properly set forth a case for reformation of the lease and option agreement.

2. While the description of the land involved, as set forth in the original petition, was not adequate to authorize a recovery of the land, or upon which to base a decree for specific performance of the contract, yet it was proper for the court to allow an amendment thereto which set forth a specific and definite description. An insufficient description of the land sued for may be cured by amendment, where it appears that the description in the original petition and that in the amendment refer to the same land. Polhill v. Brown, 84 Ga. 338 (2) (10 S.E. 921);Venable v. Burton, 118 Ga. 156 (45 S.E. 29); Luquire v.Lee, 121 Ga. 624 (49 S.E. 834); Williams v. Perry,136 Ga. 453 (1 a) (71 S.E. 886); Stringer v. Mitchell,141 Ga. 403 (2 a) (81 S.E. 194); Eppinger v. Seagraves,141 Ga. 639 (81 S.E. 1035); Milton v. Milton, 174 Ga. 92 (3) (162 S.E. 543). As to the right to amend generally, seeEllison v. Georgia Railroad Co., 87 Ga. 691 (13 S.E. 809);Summerour v. Felker, 102 Ga. 254 (2) (29 S.E. 448); Cityof Columbus v. Anglin, 120 Ga. 785 (48 S.E. 318).

3. The necessary description to authorize a reformation of the lease and option agreement, having been supplied by amendment, the prayer for specific performance and other relief was consistent with and within the scope of the pleadings, and was not subject to the demurrer. While in Harris v. Williams,103 Ga. 324, 326 (29 S.E. 929), a suit for specific performance, it was stated: "In actions for specific performance, equity can not make or alter a contract for the parties and then execute it. If the contract must be reformed before it can be executed, it must be done in a suit for that purpose;" such language was plainly obiter dictum, as the suit then under review was for specific performance with no allegation or prayer for reformation, and in that case the court merely held that the petition contained no grounds authorizing specific performance. The Code, § 37-105, provides: "Equity seeks always to do complete justice; and hence, having the parties before the court rightfully, it will proceed to give full relief to all parties in reference to the subject-matter of the suit, provided the court has jurisdiction for that purpose." As early as McDonald v.Davis, 43 Ga. 356 (2), it was said: "When equity obtains jurisdiction, as in this case, for specific performance, it will take jurisdiction over all the matters correlative to it, and retain the jurisdiction until full and satisfactory justice is accomplished between the parties." This is still the rule in equity cases. It has also been held that under a general prayer in an equity case, the plaintiff may have such relief as is consistent with and entirely within the scope of the pleadings.Peek v. Wright, 65 Ga. 638; Hickson v. Mobley, 80 Ga. 314 (5 S.E. 495); Copeland v. Cheney,116 Ga. 685 (43 S.E. 59); Pound v. Smith, 146 Ga. 431 (91 S.E. 405); Wimpee v. Burt, 148 Ga. 418 (96 S.E. 993);Broderick v. Reid, 164 Ga. 474 (2) (139 S.E. 18). We can see no reason why, under an equitable proceeding, an instrument can not be reformed in the same action in which specific performance is granted; indeed this gives effect to the very object of equitable jurisprudence. See 49 Am. Jur. 195, § 171, note 5; 66 A.L.R. 780.

4. It is also insisted that there was a misjoinder of parties defendant in the equitable petition, in that Ricks, to whom the lease and option agreement was originally executed and who subsequently transferred it to Oakhurst Development Corporation, should not have been made a party defendant. "All persons who are directly or consequentially interested in the event of the suit should be made parties." Blaisdell v. Bohr, 68 Ga. 56;Taylor v. Colley, 138 Ga. 41 (74 S.E. 694); East AtlantaLand Co. v. Mower, 138 Ga. 380, 384 (75 S.E. 418);Gormley v. Wilson, 176 Ga. 711 (168 S.E. 568). "In a case which presents for adjudication the determination of the ownership of a certain described piece of property or a certain fund of money which is within the jurisdiction of the court, all persons interested in the subject-matter are not only proper but necessary parties." Faughnan v. Bashlor, 163 Ga. 525, 533 (136 S.E. 545). "The two defendants named both being interested in the subject-matter of the suit, both were proper parties to the proceeding, and there was no misjoinder." Peoples Bank ofCalhoun v. Harry L. Winter Inc., 161 Ga. 898 (1 a) (132 S.E. 422). From the foregoing authorities it necessarily follows that under the allegations and prayers contained in the petition there was no misjoinder of parties defendant.

Judgment affirmed. All the Justices concur.