Court Opinion

ID: 9729065
Source: CourtListenerOpinion
Date Created: 2023-08-26 14:25:44.181471+00
Date Added: 2024-06-11T18:25:55.108138
License: Public Domain

STEPHEN N. LIMBAUGH, JR., Judge,
dissenting.
I respectfully dissent. This case presents a clear example of a mutual mistake for which reformation is the appropriate remedy. In my view, the deed of trust should be reformed to give effect to the intent of the parties, which is that Mary Ethridge agreed to be bound by its provisions.
In 1999, Mary and David Ethridge purchased a home in Dallas County, Missouri, and took title as tenants by the entirety. In 2001, Fidelity First Residential Lending, Inc. (Fidelity) made a loan to David Ethridge, evidenced in part by a promissory note in the principal amount of $100,000, in order to refinance existing indebtedness that was secured by a mortgage lien with Countrywide Home Loans on the Ethridge’s home. On the deed of trust prepared by Fidelity, the blank on the line that defined the term “Borrower” was erroneously filled out to read, “DAVID ETHRIDGE, A MARRIED MAN, AS HIS SOLE AND SEPARATE PROPERTY” and provided that the Borrower “accepts and agrees to the terms and covenants contained [therein]” and “Covenants that Borrower is lawfully seized of the estate hereby conveyed and has the right to grant and convey the Property....” Both Mary and David Eth-ridge signed the deed of trust after initialing each page. Both then signed a loan settlement statement in which they both were repeatedly listed as borrowers. From the $100,000 loan proceeds, they were paid $15,754.17, and the balance was used to pay off the existing loan to Countrywide and other fees associated with the refinancing. At that point, the note and deed of trust were assigned to TierOne Bank. Now, having enjoyed the benefits of the loan proceeds for several years, Mary Ethridge has unjustly and inequitably persuaded this Court that the deed of trust should be declared void ab initio simply because her name was mistakenly omitted from the definition of borrower.
“Reformation is that remedy in equity by means of which a written instrument is made or construed so as to express or conform to the real intention of the parties when some error or mistake has been committed.” 76 C.J.S. Reformation of Instruments, sec. 2 (2007). As correctly noted by the majority, TierOne bears the burden of proving by clear and convincing evidence (1) a preexisting agreement between Mary and David Ethridge and the lender, Fidelity, that a lien be placed on the property described in the deed of trust, (2) a scrivener’s error in drafting the deed of trust, and (3) mutuality of mistake as between all the parties. Ethridge [no relation disclosed] v. Perryman, 363 S.W.2d 696, 698 (Mo.1963).
At the outset, the deed of trust is arguably ambiguous because, on the one hand, only David Ethridge is named as the “borrower,” and on the other, both Mary Eth-ridge and David initialed each page, and Mary signed her name immediately below the signature line at the end of the document where David signed the space marked “borrower,” indicating that she was a borrower as well. Indeed, the deed of trust contains a customary term of con*136struction stating that singular terms in the document shall include the plural, and plural terms, the singular.
Regardless, the remedy of reformation does not depend on ambiguity, nor does it depend on fraud (as required for the other equitable remedies sought by TierOne)— mere mutual mistake is sufficient. Moran Bolt & Nut Mfg. Co. v. St. Louis Car Co., 210 Mo. 715, 109 S.W. 47, 51 (Mo.1908); Morris v. Brown, 941 S.W.2d 835, 840 (Mo.App.1997). Furthermore, the majority’s full-blown reliance on the ancient case of Bradley v. Missouri Pac. Ry. Co., 91 Mo. 493, 4 S.W. 427, 428 (Mo.1887), should not control the disposition here. To be sure, Bradley holds, in essence, that a signatory to a deed does not convey his or her interest in the property unless the signatory was also named as a grantor in the body of the deed, but the remedy of reformation was not sought in that case, and the Court did not address it.
Instead, the case must be decided simply on the evidence that pertains to the three above-stated elements of mutual mistake. In that determination, the majority unfortunately omitted from its citation to the standard of review the principle that “[w]hen considering appeals from summary judgments, the Court will review the record in the light most favorable to the party against whom judgment was entered.” ITT Commercial Fin. Corp. v. Mid-America Marine Supply Corp., 854 S.W.2d 371, 376 (Mo. banc 1993). By overlooking the proper standard of review, it was much easier for the majority to conclude that “there was no evidence that Mary Ethridge had a preexisting agreement with the lender to grant a deed of trust,” that “the evidence reflects that the agreement was always between David Eth-ridge and the lender,” and that “there is no evidence that there was a scrivener’s error [because the agreement between David Ethridge and the lender] was, in fact, accurately reflected in the deed of trust.” For these reasons, then, the majority concludes there was no mistake at all.
But a critical mistake did in fact occur. The mistake was that the bank prepared and the Ethridges signed a deed of trust that inaccurately identified the property as David Ethridge’s “sole and separate property.” Only as a result of that mistake can Mary Ethridge and the majority now claim that David Ethridge’s agreement with the bank was his, and his alone. Had the deed of trust accurately stated that the property was owned jointly by both Mary and David Ethridge, then it could not have been lawfully executed without Mary’s agreement and signature, and the Ethridges would have been foreclosed from arguing that the agreement was David’s alone.
As it happened, however, Mary Ethridge did in fact sign the deed of trust in order to convey her interest to the bank. To hold otherwise would be to ignore the uncontested evidence that Mary Ethridge was required by her husband and the bank to attend the closing for the purpose of executing whatever paperwork was necessary to perfect the deed of trust and otherwise facilitate the issuance of the loan. She, herself, testified that she attended the loan closing with her husband because she knew their house was being refinanced, and she assumed she would have to sign something in connection with the loan. Moreover, she was listed in the settlement statement as a “borrower” and signed the statement as “borrower” in two places. In this way, and despite the majority’s conclusion to the contrary, she was indeed a party to the preexisting agreement with the bank, and her involvement was an essential component of that agreement.
In sum, applying the three element test from Ethridge v. Perryman, I would hold *137that TierOne presented clear and convincing evidence (1) that Mary Ethridge was a party to the agreement with the bank, (2) that a scrivener’s error was made in identifying the property as David Ethridge’s “sole and separate property,” and (3) that the mistake was mutual because all agree that David did not own the property as his “sole and separate property.” Accordingly, I would reform the deed of trust to reflect that Mary Ethridge owned the property with her husband and that she signed the deed of trust as such, thus conveying her interest in the property. Only then will the transaction reflect the true intent of the parties.
Under these circumstances, I would reverse the judgment of the trial court and enter summary judgment in favor of Tier-One, or at the very least, the case should be remanded for a trial on the issue of Mary Ethridge’s intent.