Opinion ID: 451593
Heading Depth: 1
Heading Rank: 2

Heading: Reformation of the Real Estate Agreement Between Clark and the Government

Text: 10 Under Arkansas law a contract may be reformed only for mutual mistake or mistake of one party accompanied by fraud or inequitable conduct of the other party. American Public Life Insurance Co. v. Wheeler, 477 F.2d 1019, 1022 (8th Cir.1973) (quoting York v. McKamey, 175 Ark. 1170, 300 S.W. 371, 372 (Ark.1927)). To warrant reformation, the evidence must be clear and convincing. Harbour v. Sheffield, 269 Ark. 932, 601 S.W.2d 595, 597 (Ark.Ct.App.1980). McDermott argues that the District Court erred in concluding that Clark's conveyance of tract 200-1 was not the result of a mutual mistake, or a mistake on Clark's part induced by the inequitable conduct of Hairston, the government's real estate specialist.
11 A mistake is mutual when by reason of the mistake both parties have done what neither intended; in other words, the instrument must do violence to the understanding of both parties. American Public Life Insurance Co., 477 F.2d at 1022 n. 2 (quoting Weiss v. Turney, 173 F.2d 617, 619 (8th Cir.1949) (applying Arkansas law)). The District Court found that although Clark may have mistakenly conveyed tract 200-1 to the government, the government fully intended to receive tract 200-1 in the exchange. This intent, the court reasoned, was evident from the fact that documents the government prepared (the Offer to Sell, the Notice of Acceptance, the Right of Entry, and the General Warranty Deed) all specify that the government was to receive tract 200-1. Moreover, the court noted that tract 200-1 always appears first in the list of tracts to be conveyed to the government, and the description given of 200-1 is simple and concise, ending with the words 1.5 acres more or less. Finally, the court found no inconsistency in the way the land exchange was handled. McDermott argued that if the government had intended to take title to tract 200-1, it would have excluded that portion of 200-1 that overlaps 100E-1 when it released its easement in 100E-1. The court rejected this argument reasoning that since the government was receiving fee title to 200-1 and was releasing an easement in 100E-1, there was no need to exclude that portion of 100E-1 which overlaps 200-1. 12 The District Court's finding that the government intended to receive 200-1 in the exchange cannot be set aside unless it is clearly erroneous. See Fed.R.Civ.P. 52(a). We conclude that the finding is not clearly erroneous and therefore affirm the District Court's conclusion that the conveyance of 200-1 was not a mutual mistake. McDermott failed to meet his heavy burden of proving such a mistake by clear and convincing evidence. Harbour v. Sheffield, 601 S.W.2d at 597. 13
14 McDermott argues alternatively that the District Court should have found that the government's inequitable conduct caused Clark to convey tract 200-1 by mistake. Specifically, McDermott notes that Hairston failed to inform Clark about the overlap and assured him that after the exchange he would own all of tract 100E-1. 15 The District Court found that the government had engaged in no inequitable conduct in its dealings with Clark, i.e., that Hairston's failure to alert Clark to the existence of the overlap was not inequitable. 16 We hold that this finding is not clearly erroneous. Clark never inquired about an overlap, and it cannot be said that the government concealed the overlap from him. Clark was represented by counsel in his dealings with the government and was given maps and descriptions of tracts 200-1 and 100E-1 from which he could have discovered the overlap, had he examined them with care. As the District Court observed, Clark wasn't paying an awful lot of attention in making the land exchange. Trial Transcript at 76. 17 Furthermore, the evidence does not support McDermott's contention that Hairston assured Clark that Clark would receive all of tract 100E-1 after the transfer. During Clark's deposition the following exchange occurred: 18 Q. Mr. Clark, after the exchange with the Government in 1970, did you have complete ownership of all the riverfront land from the northwest corner of your property...? 19 A. That was my understanding. 20 Q. Was that the representations (sic) made to you by the Government people? 21 A. Again, insofar as I understood it, that was, that was the exchange that we made. 22 Clark Deposition at 12-13 (emphasis added). Clark stopped short of saying that the government told him that he would own all of 100E-1 after the exchange. Additionally, at trial McDermott's attorney repeatedly asked Hairston whether he told Clark that Clark would own all of tract 100E-1 after the exchange, and Hairston consistently responded that he told Clark only that the government's easement would be fully released after the exchange. The District Court's finding that the government did not engage in any inequitable conduct cannot be said to be clearly erroneous.