Opinion ID: 2082303
Heading Depth: 1
Heading Rank: 2

Heading: the purchase price

Text: The terms for the price of the property were the same in both the 1971 and 1973 build-and-lease agreement. The specific provision, article 23b, reads: In the event of the exercise of said option, the purchase price for the premises . . . shall be the sum of: Lessor's cost of acquisition of the land herein described, site improvements, and building construction, increased at the rate of five percent (5%) per annum of such cost (but not compounded) for each year or pro-rated for a portion thereof from the commencement of the term of this lease to the date of exercise of said option. (Emphasis added.) Article 31 of the 1973 lease provides: This lease shall supersede a lease between the parties dated March 25, 1971, and that lease shall have no further validity. (Emphasis added.) The master ruled that the plain meaning of these two provisions is that the purchase price should be computed from the 1973 lease, not the 1971 lease. In other words, under the master's interpretation, defendant receives no appreciation on its investment from 1971 to 1973. The defendant argues that the writing as it has been interpreted does not conform to the actual agreement of the parties and must therefore be reformed. Specifically, it alleges that the inclusion of this lease in the 1973 agreement was a scrivener's error, and that the parties really intended the appreciation to run from 1971 until the exercise of the option. The master found and ruled to the contrary. [7-8] The law is well settled in this jurisdiction that reformation may be granted in a proper case where the instrument `fails to express the intention which the parties had in making the contract. . . .' Gagnon v. Pronovost, 97 N.H. 58, 60, 80 A.2d 381, 383 (1951), quoting Minot v. Tilton, 64 N.H. 371, 374, 10 A. 682, 684 (1887). It is equally well settled that reformation will only be granted when the evidence is clear and convincing that (1) there was an actual agreement between the parties, (2) there was an agreement to put the agreement in writing and (3) there is a variance between the prior agreement and the writing. J. CALAMARI & J. PERILLO, THE LAW OF CONTRACTS § 9-31, at 313 (2d ed. 1977); see 3 A. CORBIN, CONTRACTS §§ 614-16 (1960); 13 S. WILLISTON, LAW OF CONTRACTS §§ 1547-49 (3d ed. W. Jaeger 1970). [9] This court will uphold a master's findings and rulings when the record discloses sufficient evidence to support them. Ecko Enterprises, Inc. v. Remi Fortin Constr., Inc., 118 N.H. 37, 41, 382 A.2d 368, 371 (1978). We hold, however, that the record in this case does not warrant a finding that the parties intended that 688 Properties was to forego a full return of its investment. The evidence unequivocally demonstrates that both parties at the time of execution of the 1973 lease agreed that 688 Properties was to receive a return on its investment from 1971 until the date of sale. Indeed, Mr. Murray of Erin Food Services, on cross-examination admitted this fact. Q. Now isn't it in fact true, sir, that at the time the 1973 lease was executed you never had, at any time, at least prior to the court's ruling in a supplementary report you never at any time thought that the partnership [688 Properties] was not entitled to appreciation from August 1971. A. Correct. The most compelling evidence of the existence of an agreement that appreciation would accrue from 1971 until the date of sale, can be seen from Mr. Murray's own conduct. In October 1976, Erin Food Services attempted to exercise the purchase option and tendered $497,796.96. This figure included appreciation from the date the leasehold had started, in 1971, to the date of exercise. Moreover, even the master found that the 1973 lease was simply a replacement of the 1971 lease, and was entered into to reflect the new investments made by 688 Properties. The plaintiff argues that irrespective of such evidence, defendant's own conduct should foreclose the possibility of reformation. Specifically, plaintiff asserts that defendant earlier obtained a court interpretation of the provision that is now in controversy. In that action, which was initiated by 688 Properties, the master interpreted the provisions of the 1974 supplemental agreement to require that the five-year period in which Erin had to offer 688 Properties an available site commenced from the 1973 lease rather than the 1971 lease. Because of this interpretation, the plaintiff argues that the defendant should not be allowed to revive the 1971 agreement, when it was previously successful at having it terminated. We disagree with Erin's characterization of the previous proceeding. At that proceeding the master interpreted only the 1974 supplemental agreement; he did not interpret the 1973 agreement, nor did he consider the possibility of whether a mistake existed in the 1973 agreement. [10] The evidence is clear and convincing that the parties agreed that 688 Properties was to receive a full return of its investment, that they agreed that terms were to be put in writing, and that the 1973 agreement as written is at variance with the parties' real agreement. The lease should therefore be reformed to indicate that 688 Properties is entitled to appreciation from the beginning of the leasehold until the actual date of sale. Accordingly, the purchase price tendered by Erin Food Services was incorrect and the defendant had no duty to convey. The trial court's decree of specific performance is vacated. Exceptions sustained in part and overruled in part.