New York Law Review

Tag: Scrivener’s Error

  • Chimart Associates v. Paul, 66 N.Y.2d 570 (1986): Reformation of Contract Based on Scrivener’s Error

    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.

  • Fredonia & Clean Garage Co. v. MacDonald, 212 N.Y. 249 (1914): Reformation of Contract Due to Scrivener’s Error

    Fredonia & Clean Garage Co. v. MacDonald, 212 N.Y. 249 (1914)

    A contract may be reformed in equity when a writing, due to a scrivener’s error or other inadvertence, does not reflect the actual agreement between the parties, even if the mistake is not mutual.

    Summary

    The Fredonia & Clean Garage Co. (Plaintiff) sued E. MacDonald (Defendant) to reform a written contract for the sale of an automobile and to recover damages for its breach. The Plaintiff claimed the writing incorrectly identified the E. R. Thomas Motor Company as a party when it was intended to be a contract solely between Plaintiff and Defendant. The trial court dismissed the complaint, and the Appellate Division affirmed. The New York Court of Appeals reversed, holding that the Plaintiff presented sufficient evidence to warrant reformation of the contract due to a scrivener’s error.

    Facts

    Plaintiff, an authorized dealer of “Thomas” automobiles, had an exclusive sales territory in Chautauqua County. Plaintiff and Defendant discussed trading the Defendant’s old car for a new one. They met at the Thomas factory, where they negotiated the deal with Van Deusen, the Thomas Company’s sales manager. Van Deusen prepared a written order form addressed to the Thomas Company, which both Plaintiff and Defendant signed. This form appeared to create a contract between Plaintiff, Defendant, and the Thomas Company. However, the Plaintiff maintained that the agreement was for Plaintiff to sell the car to Defendant. After signing, Plaintiff took possession of Defendant’s old car and began preparing it for resale. Defendant later took back his old car without Plaintiff’s consent.

    Procedural History

    The Plaintiff filed suit in equity seeking reformation of the contract and damages for its breach. The trial court dismissed the complaint at the close of the Plaintiff’s case. The Appellate Division affirmed the dismissal. The New York Court of Appeals granted leave to appeal.

    Issue(s)

    Whether the Plaintiff presented sufficient evidence to warrant reformation of the written contract to reflect the alleged true agreement between Plaintiff and Defendant.

    Holding

    Yes, because the evidence, viewed in the light most favorable to the Plaintiff, suggested that a scrivener’s error resulted in the written contract failing to reflect the actual agreement between the Plaintiff and Defendant.

    Court’s Reasoning

    The Court of Appeals reasoned that the written contract, on its face, did not reflect the intent of the parties. Van Deusen, the Thomas Company’s representative, told Defendant it was impossible to deal directly with the Thomas Company. Furthermore, the Plaintiff and Defendant were not acting as joint purchasers. The court noted that the Plaintiff also signed a separate, identical contract without the Defendant’s name, suggesting that the first contract was merely a means of transferring title to the Plaintiff for the sale to the Defendant. The court found significant that the Plaintiff, and not the Thomas Company, was to provide the allowance for the defendant’s old car. The court quoted Gordon Malting Co. v. Bartels Brewing Co., 206 N.Y. 528, 537 stating, “Parol evidence is competent to show that a written contract, not under seal, apparently made between the parties named in it, was in fact made between one of them and a person not named.” The court also cited Born v. Schrenkeisen, 110 N.Y. 55, stating, “Where there is no mistake as to the terms of an agreement, but through a mistake of a scrivener, or by any other inadvertence in reducing it to writing, the instrument does not express the agreement actually made, it may be reformed by the court.” Because the trial court directed a nonsuit, the Plaintiff was entitled to the most favorable inferences from the evidence. The Court of Appeals determined that the Plaintiff presented enough evidence to justify a new trial where the court could consider reformation of the contract.