Scoville v. Hampton , 217 Or. 256 ( 1959 )

SLOAN, J.

Two cases are here consolidated on appeal as they were for trial. Defendants appeal from the decree of the trial court which dismissed defendants’ cross complaint entered in each case and which denied the prayer therein for reformation of a contract between the parties for the sale and purchase of timber on lands owned by plaintiffs. For our purposes we will treat the cases as one.

For reasons later appearing we make only limited reference to the evidence. The plaintiffs Scoville are husband and wife. At all times mentioned herein they were the owners of approximately 600 acres of land in Lincoln County. All the land sustained timber to some extent, in part scrubby and of little value and some in concentrated sizable growth. The defendants Charles Hampton and John Hampton were brothers and partners in the operation of a sawmill on land adjacent to that owned by plaintiffs, doing business by the assumed name of Charles-John Lumber Company. The successful operation of the mill required, of necessity, the acquisition of timber. On or about May 25, 1951, the parties entered into a written contract by which plaintiffs sold and defendants bought timber standing upon a part of plaintiffs’ land. The timber involved was identified by the legal description of the land upon which it stood. Prior to the execution of this contract the parties had conducted negotiations of a cursory character both orally and by correspondence. The latter is in evidence as defendants’ exhibits 1, 2 and 3. It is admitted that plaintiffs offered to sell to the defendants the timber standing on any part or all their lands. Certain legal descriptions were set forth in the correspondence mentioned. However, when defendants’ attorney prepared the written contract he altered the legal descriptions as written in the letters and inserted in the written contract a description that can be construed as containing less land area than that contained in the correspondence. The contract was submitted to plaintiffs. They considered the terms of the contract including the legal description with their attorney and, finding no fault, executed the contract.

The dispute encompassed in the two cases before us results from this change of description. Defendants, by their cross complaints, allege that both parties executed the agreement with the mistaken intent or belief that the written contract contained the same description as the correspondence. They pray that the written contract be reformed to conform to the deseription contained in the correspondence. The plaintiffs assert that there was no mistake upon their part at the time they executed the agreement; that they construed the description in the contract as containing less land than in the correspondence but had no objections thereto and signed it with full recognition of the description and were laboring under no mistake. This is the issue we are called upon to resolve.

The trial was limited to evidence of reformation and the trial court entered a decree in each case denying the remedy and dismissing the cross complaint. The other issues presented by the respective complaints and answers were not heard and determined.

There are few areas of equitable jurisdiction wherein the rules of its application have been so well established and consistently followed by this court as the equitable concept of reformation for mutual mistake. Lewis v. Lewis, 5 Or 169; Meier v. Kelly, 20 Or 86, 25 P 73, to Weatherford v. Weatherford et al., 199 Or 290, 257 P2d 263, 260 P2d 1097. Other decisions of this court and of other jurisdictions are discussed by Mr. Justice Rand in De Tweede v. Barnett Estate, 160 Or 406, 85 P2d 361. The rule so consistently followed requires:

“* * * that in eases of this kind the complaint should distinctly show what was the original agreement and understanding of the parties, and should point out with clearness and precision wherein there was a mistake, and should show that it did not arise from gross negligence of the plaintiff.” Lewis v. Lewis, supra, p 176.

These allegations must be established with “evidence having a high degree of cogency. A mere preponderance of the evidence does not suffice.” Kontz v. B. P. John Furniture Co., 167 Or 187, 205, 115 P2d 319; 3 Pomeroy’s Equity Jurisprudence (5th ed) 353, § 859a.

We have analyzed the record and find the weight of the evidence to be most evenly balanced. Some of the evidence would tend to weigh heavily in favor of defendants’ prayer for reformation. Other testimony and exhibits cause us to believe the plaintiffs have fully established that there was no mistake on their part at the time they executed the questioned contract. Such being the case, we can only agree with the trial court and conclude that defendants have failed to meet the exacting burden of proof they assumed in attempting to establish a reformation of the contract. The defendants relied heavily upon their exhibits 1, 2 and 3 previously mentioned and particularly upon the failure of the trial court to mention exhibit 3 in its memorandum opinion.

Exhibit 3 is a letter written by plaintiff B. H. Scoville to the defendants wherein he acknowledges plaintiffs’ willingness to sell timber on a land area described in exhibit 2 which was a letter sent to him by defendants. Defendants contend that these exhibits conclusively prove that the intent of the parties had fully congealed as to the actual legal description of the timber land invloved and a binding contract formed. In the first place this is at variance with the allegations of the cross complaint in which defendants alleged the contract was formed by oral agreement made on September 14, 1950. In addition, other portions of the letter clearly show that plaintiffs were not in accord with other proposed terms submitted by defendants’ exhibit 2. Nor does the letter refute the evidence in behalf of plaintiffs that they were agreeable to the description subsequently inserted in the contract and executed it in full accord therewith and with no mistaken intent.

This is not a case like Bradshaw v. Provident Trust Co., 81 Or 55, 158 P 274, where a mistake made by one party to the contract is knowingly or fraudulently taken advantage of by the other party to the agreement. Here the plaintiffs had every reason to believe the defendants were aware of what they were purporting to buy. And, it should be pointed out that the construction given the description by plaintiffs when they executed the contract was less advantageous to them than the description contained in the exhibits mentioned. The contract provided that the amount of timber on the land described was to be determined by a mutual cruise and the plaintiffs were to be paid for the amount of timber thereby found to be on the land. The payment was to be made whether the defendants removed the timber or not. Consequently the less timber included in the contract the smaller the payment to be received by the plaintiffs. Under these circumstances it certainly cannot be said that they were taldng any advantage of the defendants.

Nor is this like the situation, for example, of a purchaser of land who intends to buy and pays for a section of land. The deed is prepared by the purchaser and, by inadvertence, he describes something less than a section. A vendor who would sign and deliver the deed in that situation, knowing of the deficiency in the description, could not be heard to say that the purchaser was bound by his deed. Such conduct is tantamount to fraud. De Tweede v. Barnett Estate, supra (160 Or at 417). This case is just the opposite. Here the contract called for the sale of less timber than plaintiffs had been willing to sell. In fact, by the description in the contract plaintiffs could then have considered that they were left with scattered blocks of timber that would be difficult to sell to any other buyer. However, they had agreed to sell any or all of the timber and in keeping with that belief signed the contract with the specific intent to sell the precise timber described therein. We cannot find that this was a mistaken intent or a fraudulent one. The decree is affirmed.