Chimart Associates v. Paul, 66 N.Y.2d 570 (1986)
A contract may be reformed when there is clear and convincing evidence that the writing does not accurately reflect the parties’ prior agreement due to a scrivener’s error, especially in circumstances where a court-ordered auction sale occurred based on announced terms.
Summary
Chimart Associates successfully bid on property at a court-ordered auction. The contract of sale contained conflicting descriptions of the property. The deed conveyed a larger property than was advertised in the notice of sale. The Ludlam estate sought reformation of the deed to reflect the smaller property described in the notice of sale. The New York Court of Appeals held that the deed should be reformed because the parties intended to sell and purchase only the property described in the auction notice, and the discrepancy in the deed was due to a scrivener’s error. The title company’s counterclaim for reformation was denied because the error was solely the title company’s.
Facts
The Ludlam brothers owned a tract of land bisected by Peconic Bay Boulevard. They conveyed several parcels south of the boulevard. After Frank Ludlam’s death, his executors sought a court order to sell the remaining property, including the Jamesport parcel. The notice of sale described the property as “20 acres of vacant land in Jamesport on the north side of Peconic Bay Boulevard.” The contract of sale, drafted by defendant Zausmer, used a metes and bounds description that included land both north and south of the boulevard, but excepted 11 deeds of parcels south of the boulevard. The contract also referenced a tax assessment roll that included only the property north of the boulevard. At the auction, the notice of sale description was read aloud. Chimart Associates was the successful bidder. The deed incorporated the broad metes and bounds description, including the exceptions, but omitted the tax assessment roll reference.
Procedural History
Chimart sued the Ludlam estate, the title company, and Uhlendorf individually, due to the discrepancy in the property conveyed. The estate counterclaimed for reformation of the deed. The title company counterclaimed to void or reform the policy. The trial court severed and tried the counterclaims, dismissing all of them. The Appellate Division modified, granting judgment to Uhlendorf and Zausmer for reformation and affirming the dismissal of the title company’s counterclaim. The Court of Appeals affirmed the Appellate Division’s order.
Issue(s)
1. Whether the deed should be reformed to reflect the property described in the notice of sale, based on the claim of scrivener’s error.
2. Whether the title insurance policy should be reformed based on mutual mistake or voided based on the plaintiff’s misrepresentation.
Holding
1. Yes, because the evidence clearly shows that the parties intended to sell and purchase only the property north of Peconic Bay Boulevard, as described in the notice of sale, and the discrepancy in the deed was a result of scrivener’s error.
2. No, because there was no evidence of misrepresentation by the plaintiff, and the mistake in the title policy was solely the title company’s error, not a mutual mistake.
Court’s Reasoning
The Court of Appeals relied on the principle that reformation is appropriate “[w]here there is no mistake about the agreement and the only mistake alleged is in the reduction of that agreement to writing, such mistake of the scrivener, or of either party, no matter how it occurred, may be corrected.” The court emphasized that this principle applies when the parties have a clear agreement but the written document fails to accurately reflect that agreement. In this case, the court-ordered auction sale, with its announced terms, established the agreement. The notice of sale clearly identified the property to be sold as being north of Peconic Bay Boulevard. The court noted there was no evidence that Chimart’s bid was disproportionate to the value of the property described in the notice of sale.
The court distinguished this case from situations where there is a mistake as to the agreement itself. Here, the absence of prior negotiations made it clear that the only agreement was the one established by the auction terms. The court concluded that the deed embodied an agreement the parties had not made, justifying the equitable remedy of reformation.
Regarding the title company’s counterclaim, the court found no evidence of misrepresentation by Chimart. The court also found that the title company’s error in failing to include certain exceptions in the title report and policy was a unilateral mistake, not a mutual one. The court emphasized that the title company’s own tax search contradicted the description in the report, further demonstrating the company’s negligence. Therefore, reformation of the title policy was not warranted.