Title: Mathis v. Wendling

State: wyoming

Issuer: Wyoming Supreme Court

Document:

Mathis v. Wendling1998 WY 90962 P.2d 160Case Number: 97-303Decided: 07/28/1998Supreme Court of Wyoming

Roy 
O. MATHIS and Gloria J. Mathis, Appellants (Plaintiffs),

v.

H. Richard WENDLING and Mary F. Wendling, husband and 
wife, Appellees (Defendants).

 

Appeal from the District Court, Platte County, Keith 
G. Kautz, J.,

 

Eric M. Alden, Wheatland, 
for Appellants.

Patrick M. Hunter, Casper, 
for Appellees.

 

Before LEHMAN, 
C.J.,* MACY and GOLDEN, JJ., and DONNELL and VOIGT, 
D.JJ.

 * Chief Justice effective July 1, 
1998.

 

DONNELL, District Judge.

 [¶1]Appellants purchased certain real estate from 
appellees under a contract for deed. A dispute as to the payoff of the purchase 
price arose several years later as the result of a mathematical error in the 
payment schedule. After trial, the district court determined that appellants 
should pay the full amount of the purchase price and interest as stated in the 
contract, and appellants now challenge that result. We affirm the decision of 
the district court.

 

                                             
I. ISSUES

 

[¶2] Appellants, Roy O. and 
Gloria J. Mathis (the Mathises), have stated the following issue for 
review:

 

The vendor under a real estate contract for deed made 
a computational error and specified a payment schedule which did not completely 
retire the principal and interest term intended by the vendor. Unaware of the 
computational error, the purchaser executed a contract and made the prescribed 
payments. After making the final payment, the purchaser demands performance by 
delivery of the deed. The vendor refuses, demanding additional payments to 
completely retire the principal and interest amounts. Must the purchaser make 
the additional payments in order to obtain the property?

 

[¶3] Appellees, H. Richard 
and Mary F. Wendling (the Wendlings), state the issues somewhat 
differently:

 

          
1. Is there sufficient evidence to support the trial court's 
determination as to the intent of the parties?

 

          
2. Did the trial court properly interpret the contract to reflect the 
intent of the parties?

 

                                             
II. FACTS

 

[¶4] In May 1986, the 
parties entered into a written agreement for the purchase of a ranch in Platte 
County, Wyoming. This agreement was the result of several years of sporadic 
negotiation that finally resulted in a general agreement as to terms at a 
meeting in the offices of the Wendlings' realtor. The Wendlings' attorney then 
reduced the agreement to writing. Following several reviews and revisions by the 
Mathises, the agreement was finalized and signed by the 
parties.

 

[¶5] The written contract 
was fairly standard in its terms. It provided for a total purchase price of 
$362,000.00. The contract required that the Mathises provide a down payment of 
$47,500.00 and assume two mortgages. The Wendlings agreed to finance the 
remaining balance of $83,809.10, which the Mathises agreed to pay in ten annual 
installments of $12,399.59, including interest at ten percent per annum, until 
the balance of the purchase price was paid in full. Finally, the agreement 
required the Wendlings to provide the Mathises a deed upon payment of the 
purchase price and accrued interest in full. The amount of the annual payment 
specified in the contract remained 
constant throughout the process of review and revision of the draft contracts. 
Unbeknownst to the parties, however, the annual payment specified was incorrect. 
Ten annual payments of $12,399.59 with interest at ten percent would not, in 
fact, fully pay the entire principal balance and accrued interest. At the end of 
ten years, the annual payments paid on the contract would be about $20,000.00 
short of the total purchase price. The record is unclear as to whom actually 
made the computational error, although 
it appears that either the Wendlings' attorney or realtor made the 
mistake.

 

[¶6] The parties proceeded 
for the next several years in accordance with the contract terms. Although they 
were often late, the Mathises made their annual payments of $12,399.59. The 
Wendlings did not attempt to charge interest on the late payments, although the 
contract allowed them to do so. In 1992, however, the fly was discovered in the 
ointment. The Wendlings' attorney wrote a letter to the Mathises advising them 
of the mathematical error and proposing two solutions. First, that the Mathises 
continue the annual payments with a balloon payment at the end or, second, that 
the annual payments simply continue beyond the specified ten years until the balance was paid in full. The 
Mathises did not reply to this letter, but continued to make the required annual 
payments. They marked their tenth check "final payment" and demanded the deed be 
delivered to them. The Wendlings refused, contending the Mathises had not paid 
the purchase price and interest in full.

 

[¶7] The Mathises then filed 
their action for declaratory relief. Following trial, the district court 
determined that $19,840.35 remained owing on the principal balance. The district 
court also determined that the use of the term "ten (10) annual payments" 
provided only a guideline for amortization of the agreed principal balance and 
did not modify the total purchase price, the amount financed or the interest 
rate. The district court also determined that any mistake was mutual and that 
both parties should bear responsibility for it.  Finally, the district court ordered the 
Mathises to continue making annual payments of $12,399.59 until the remaining 
principal balance and interest had been 
paid in full. This appeal followed.

 

                                    
  III. STANDARD OF 
REVIEW

 

[¶8] Here, the district 
court made express findings of fact and conclusions of law. We have stated that 
we do not afford the factual findings of a judge the limited review given a jury 
verdict. Springer v. Blue Cross and Blue Shield of Wyoming, 944 P.2d 1173, 1176 
(Wyo. 1997) (citing Hopper v. All Pet Animal Clinic, Inc., 861 P.2d 531, 538 
(Wyo. 1993)). While this court presumes that the district court's findings of 
fact are correct, we may examine all of the properly admissible evidence in the 
record. Springer, 944 P.2d  at 1176.  
Our review does not include reweighing disputed evidence, and we give the 
judge's opportunity to assess the witnesses' credibility due regard. Id. We will 
not set aside the district court's findings of fact unless the findings are 
inconsistent with the evidence, clearly erroneous, or contrary to the great 
weight of the evidence. Frost Const. Co. v. Lobo, Inc., 951 P.2d 390, 394 (Wyo. 
1998) (citing Narans v. Paulsen, 803 P.2d 358, 360 (Wyo. 1990)). Additionally, 
we review a district court's conclusions of law de novo. Springer, 944 P.2d  at 
1176.

 

                                          
IV. DISCUSSION

 

[¶9] At the heart of this 
dispute are the interpretation and construction of a written contract, the 
parties' Agreement for Warranty Deed, which is a matter of law for the court. 
Prudential Preferred Properties v. Underwood Ranch Co., 873 P.2d 598, 600 (Wyo. 
1994) (citing True Oil Co. v. Sinclair Oil Corp., 771 P.2d 781, 790 (Wyo. 
1989)). The well-established rules of contract construction require that our 
prime focus be on the parties' intent. Prudential Preferred Properties, 873 P.2d  
at 600. This court first looks at whether the contract is clear and unambiguous, and if it is, we 
confine our review to the four corners of the document to determine the parties' 
intent. Prudential Preferred Properties v. J and J Ventures, Inc., 859 P.2d 1267, 1271 (Wyo. 1993). A contract is ambiguous if the agreement is obscure in 
its meaning because of indefiniteness of expression or because a double meaning 
is present. Brockway v. Brockway, 921 P.2d 1104, 1106 (Wyo. 1996) (quoting 
Carlson v. Water Unlimited, Inc., 822 P.2d 1278, 1281 (Wyo. 1991)). In making 
such determination, this court considers the contract as a whole and reads each 
provision in light of all the others to find the plain meaning of the words. 
Martin v. Farmers Ins. Exchange, 894 P.2d 618, 620 (Wyo. 1995). This court will 
not consider extrinsic evidence to contradict the plain meaning of an 
unambiguous contract, and the intent of the parties, as stated in their 
agreement, must be given effect. J and J Ventures, Inc., 859 P.2d  at 1271 
(citing Wyoming Bd. of Certified Public Accountants v. Christensen, 800 P.2d 853, 856 (Wyo. 1990)).

 

[¶10] The Mathises argue 
that the contract is ambiguous because paragraph 2(e) of the Agreement for 
Warranty Deed contains two phrases in the same sentence that contradict each 
other. However, they ignore this court's long-standing rules of contract 
interpretation. The district court did not find the contract ambiguous, but 
construed the contract as a whole to determine the intent of the parties. The 
Agreement for Warranty Deed clearly states the total sales price and the manner 
of payment. The contract states that the Mathises would pay a $47,500.00 down 
payment, assume two mortgages totaling $230,690.90, and pay the "unpaid 
principal balance of $83,809.10, 
together with interest at the rate of 10% per annum on any unpaid balance 
* * *." (Emphasis added.)  The provisions also state that the 
Mathises would pay the latter in ten annual installments of $12,399.59, and 
neither party recognized at the time of closing that this would not satisfy the 
unpaid balance in full. Additionally, the accelerated payment clauses provide 
for the advance payment of the outstanding principal balance plus accrued 
interest on the $83,809.10.

 

[¶11] The contract clearly 
specifies the total purchase price of $362,000.00. It is also apparent from the 
"whole" contract that in order to fulfill the Agreement for Warranty Deed, the 
Mathises are required to pay the unpaid principal balance of $83,809.10, and the 
annually accrued interest at ten percent, in order to satisfy the total purchase 
price. The Mathises would have this court construe the contract to require ten 
annual payments of $12,399.59 without regard to the total remaining unpaid 
principal balance. To interpret the contract thusly would be playing "fast and 
loose" with the parties' clear intent. That intent is that the Mathises pay the 
full purchase price and accrued 
interest. Although a mathematical error exists within the terms for payment, 
that error does not necessarily make the contract ambiguous. However, it does 
mean that a mistake exists.

 

[¶12] The district court 
concluded that "[a]ny mistake concerning the amortization was a mutual mistake, 
for which both parties bear responsibility." This court has set forth the 
elements of mutual mistake:

 

"The essential elements of mutual mistake in a 
written instrument for which a court of competent jurisdiction may grant 
appropriate relief are that there was an antecedent agreement which the written 
instrument undertakes to evidence; that a mistake occurred in the drafting of 
the instrument and not in the antecedent agreement which it undertakes to 
evidence; and that in the absence of fraud or inequitable conduct on the part of 
one of the parties, the mistake was mutual."

 

Schulz v. Miller, 837 P.2d 71, 74 (Wyo. 1992) (quoting Northern Pac. Ry. Co. v. United States, 277 F.2d 615, 619 (10th Cir. 1960)). In other words, the mistake is "reciprocal and 
common to both parties with each party being under the same misconception as to 
the terms of the written instrument." Patel v. Harless, 926 P.2d 963, 966 (Wyo. 
1996) (citing Shrum v. Zeltwanger, 559 P.2d 1384, 1386 (Wyo. 1977)). Although 
the general rule is that parol evidence is inadmissible when a contract is 
unambiguous, we make an exception in the case of mutual mistake. Patel, 926 P.2d  
at 965 (citing Schulz, 837 P.2d  at 75 and Cordova v. Gosar, 719 P.2d 625, 640-41 (Wyo. 1986)). If a court 
finds that a mutual mistake exists, it may then cancel or reform the contract. 
Patel, 926 P.2d  at 966. Reformation must reflect the parties' intent and cannot 
represent only one party's subjective understanding of the intent of the 
agreement. Id.

 

[¶13] The written agreement 
in question was the end result of several years of sporadic negotiation. The 
Wendlings' attorney reduced the agreement to writing and the Mathises reviewed 
and revised the written agreement several times before the parties finalized and 
signed it. The Wendlings discovered the mistake in 1992, six years after the 
parties entered into their written agreement. Despite notification of the error, 
the Mathises thereafter continued the regular annual payments, tendering their 
tenth payment as "final payment." The 
common misconception the parties were clearly working under here, at least until 
1992, was that ten annual payments of $12,399.59 would pay the entire remaining 
balance of the total purchase price together with accrued interest. Obviously, 
both parties were incorrect.

 

[¶14]The district court 
found a mutual mistake and remedied it by ordering the Mathises to continue 
paying the annual installments beyond the ten-year period until they satisfied 
the full amount of the purchase price and accrued interest. Although the 
district court stated that reformation was not needed, its conclusions and 
actions belie that statement. However, this court has stated that when a mutual 
mistake is found, a court may reform the contract to "accurately memorialize the 
antecedent agreement of the parties."  
Toland v. Key Bank of Wyoming, 847 P.2d 549, 554 (Wyo. 1993). 
"Reformation is an equitable remedy which emanates from the maxim that 'equity treats that as done which ought to 
have been done.' " Id. at 553-54 (quoting 66 Am.Jur.2d Reformation of 
Instruments § 2 at 528 (1973)). Reformation recognizes that for one reason or 
another, written contracts do not always accurately reflect the parties' 
antecedent agreement. Toland, 847 P.2d  at 554. If the court finds clear and 
convincing evidence that there was a mutual assent prior to the time a writing 
was entered, that a written contract memorialized the mutual understanding, and 
that the written contract, due to a mutual mistake, does not conform to the 
parties' understanding, then it may reform the written instrument in question. Id. (quoting Gasaway v. Reiter, 736 P.2d 749, 751 (Wyo. 1987)). The record here clearly shows that the district court's 
actions were in conformity with these requirements.

 

                                          
V. CONCLUSION

 

[¶15] We agree with the 
district court in finding that the Agreement for Warranty Deed is not ambiguous 
and the parties' intent is set forth within the four corners of the document. 
The intent of the parties was not to contract for specific annual payments 
without regard of the total remaining unpaid principal balance. Although the 
Agreement for Warranty Deed contains a mathematical error, we find that this did 
not create an ambiguity in the agreement. Rather, this evidences a reciprocal 
misconception that the specified annual payments would retire the Mathises' debt 
to the Wendlings. The district court correctly found a mutual mistake and 
reformed the contract to accurately 
reflect the intent of the parties. The judgment of the district court is 
affirmed.