Engebrecht v. Shelton

California Court of Appeal May 9, 1945 No. Civ. 3157Published

Before: Marks

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Holding. The court held that a promissory note and deed of trust containing a mutual mistake regarding payment terms should be reformed to reflect the parties' actual agreement, and modified the trial court's judgment to align with the established findings of fact.

Issues

Whether a promissory note and deed of trust containing a mutual mistake may be reformed to reflect the parties' original agreement.
Whether the trial court's judgment was supported by its own findings of fact.
Whether the plaintiff's action for reformation was barred by the statute of limitations due to a failure to discover the mistake earlier.

Disposition. modified and affirmed

Quotations verified verbatim against the opinion

“the trial court was fully justified in concluding that the note as executed was the result of the mutual mistake of the parties and did not conform to their agreement.”

“It is apparent that the conclusions of law and the judgment are not supported by the evidence or by the findings of fact but conflict with both.”

“As the evidence of plaintiff and the findings of fact already quoted are clear on the terms of the. agreement between the parties, we need not reverse the judgment but may modify it and the conclusions of law to conform to the findings of fact.”

MARKS, J.

This is an appeal from a judgment reforming a promissory note and deed of trust.

Plaintiff was the owner of real property in Fresno which was leased to defendants for a term of ten years from June, 1938, at a monthly rental of $25 for 'the first five years and $30 per month thereafter.

Negotiations for the sale of the property to defendants were started which resulted in a sale for $10,000, payable $50 cash, and the balance in instalments., Deferred payments were secured by a deed of trust on the property.

Plaintiff testified that the note and deed of trust were prepared by a real estate agent engaged by defendant, J. W. Shelton. The note as prepared and executed contained the following:

“In installments as herein stated for value received, WE, . . . Promise to pay to HERMAN C. ENGEBRECHT, . . . NINE THOUSAND NINE HUNDRED FIFTY and NO/100 DOLLARS with interest from date on unpaid principal at the rate of five (5%) per cent per annum; principal and interest payable in installments of — THIRTY-FIVE and NO/100 ($35.00) DOLLARS or more on the fifteenth of each and every month, beginning on the fifteenth of April, 1940, and continuing until said principal and interest have been paid. Each payment shall be credited first, on interest then

due;

and the. remainder on principal; and interest shall thereupon cease upon the principal so credited. ...”

Plaintiff testified, and the trial court found in exact accordance with his evidence, that the parties mutually agreed that defendants would pay plaintiff ‘ ‘ $10,000.00 for said property in the following manner: $50.00 in cash, the sum of $35.00 per

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month, payable in monthly installments, interest on deferred payments at the rate of five per cent per annum, payable annually, ...” There is the further finding that the note containing the provisions already quoted was executed through “mutual omission, inadvertence, and mistake of the parties”; that plaintiff did not discover the mistake until February, 1944.

Defendants made the down payment and the instalments of $35 per month until this action was instituted, but declined to pay more for various reasons though requested to do so by plaintiff.

Engebrecht v. Shelton

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MARKS, J.

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