Schindler v. Wageman , 2019 ND 41 ( 2019 )

Filed 2/21/19 by Clerk of Supreme Court
IN THE SUPREME COURT
STATE OF NORTH DAKOTA
2019 ND 41
Larry Schindler, Julie Schindler
a/k/a Judy Schindler, and
Estate of Eugene Weisbeck, Plaintiffs and Appellants
v.
Richard D. Wageman, Defendant and Appellee
and
all other Persons unknown or
claiming an Estate of interest therein, Defendants
No. 20180024
Appeal from the District Court of Morton County, South Central Judicial
District, the Honorable Gail Hagerty, Judge.
REVERSED AND REMANDED.
Opinion of the Court by Jensen, Justice.
Garrett D. Ludwig, Mandan, ND, for plaintiffs and appellants.
Malcolm H. Brown, Bismarck, ND, for defendants and appellees.
Schindler v. Wageman
No. 20180024
Jensen, Justice.
[¶1] Larry and Julie Schindler and the estate of Eugene Weisbeck (“the Estate”)
appeal from a judgment dismissing their action to reform warranty deeds and quiet
title in themselves to certain Morton County property. Because we cannot determine
whether the district court correctly applied the law, we reverse and remand this case
for further proceedings.
I
[¶2] In November 1981, Richard Wageman’s parents, Arthur and Doris Wageman,
entered into a contract for deed to sell to Julie Schindler’s father, Eugene Weisbeck,
a portion of a quarter section of Morton County property described in part as “lying
North of the service road” and “being eleven (11) acres more or less.” The contract
for deed listed the purchase price as $70,000. On the same day, the Schindlers
entered into a lease agreement with Weisbeck in which they agreed to rent to own the
property that was the subject of the contract for deed. The property described in the
lease was identical to the legal description in the contract for deed and the purchase
price listed in the lease was also $70,000. The Schindlers made the payments on the
contract for deed between the Wagemans and Weisbeck.
[¶3] In order to obtain a loan to pay off the balance owed on the contract for deed,
the Schindlers were required by the lender to have the land surveyed because the land
subject to the loan had to be less than 10 acres. The Schindlers had platted a 9.99 acre
parcel of the property which was described as “Auditor’s Lot ‘A’” (“Lot A”). Lot A
did not include 5.43 acres, which the parties refer to as “Outlot ‘B’” (“Lot B”), that
comprises the remainder of the property described in the contract for deed. In August
1993, after the contract for deed had been satisfied, Doris Wageman executed a
warranty deed conveying to Weisbeck only Lot A “in fulfillment of Contract for
Deed.” The deed listed the consideration as $70,000. On the same day, Weisbeck
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executed a warranty deed conveying to the Schindlers only Lot A. The deed listed the
consideration as $57,000. In February 2001, Richard Wageman also executed a
warranty deed to the Schindlers conveying only Lot A to assist them in refinancing
a mortgage.
[¶4] After learning they were not considered the owners of Lot B, the Schindlers
and the Estate brought this action to reform the warranty deeds and quiet title to both
Lot A and Lot B in conformity with the 1981 contract for deed. Following a trial, the
district court found the “Schindlers have not met the burden of proving the parties to
the contract for deed and the warranty deed conveying Auditor’s Lot ‘A’ to Eugene
Weisbeck did not correctly state the intention of the parties to those documents,” and
dismissed the action.
II
[¶5] The Schindlers and the Estate seek to reform the warranty deeds to match the
property description in the 1981 contract for deed. They contend, in part, that the
district court misapplied the law in determining their cause of action seeking to reform
the warranty deeds should be dismissed.
[¶6] Section 32-04-17, N.D.C.C., provides for reformation of written instruments:
When, through fraud or mutual mistake of the parties, or a mistake of
one party which the other at the time knew or suspected, a written
contract does not truly express the intention of the parties, it may be
revised on the application of a party aggrieved so as to express that
intention so far as it can be done without prejudice to rights acquired by
third persons in good faith and for value.
[¶7] In George v. Veeder, 2012 ND 186, ¶ 13, 820 N.W.2d 731, we explained:
“‘The party seeking reformation of a written instrument must
establish by clear and convincing evidence that the document does not
state the parties’ intended agreement.’” Arndt [v. Maki], 2012 ND 55,
¶ 12, 813 N.W.2d 564 (quoting Johnson [v. Hovland], 2011 ND 64, ¶
12, 795 N.W.2d 294). In considering whether to grant the high remedy
of reformation of a written instrument, “courts should exercise great
caution and require a high degree of proof, especially when death has
sealed the lips of the original parties or a party.” Spitzer v. Bartelson,
2009 ND 179, ¶ 24, 773 N.W.2d 798 (quotations omitted). A court
should grant reformation “‘only upon the certainty of error.’” Id. at ¶
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24 (quoting Ell v. Ell, 295 N.W.2d 143, 150 (N.D. 1980)). Parol
evidence is admissible in a reformation action on the grounds of fraud
or mutual mistake of the parties. Arndt, at ¶ 12; Johnson, at ¶ 12. “A
mutual mistake that will justify reformation requires that, at the time of
the execution of the agreement, both parties intended to say something
different from what was said in the document.” Arndt, at ¶ 12
(quotations omitted).
In reformation cases, a presumption arises from the terms of the instrument that it
correctly expresses the true agreement and intention of the parties. See Van Berkom
v. Cordonnier, 2011 ND 239, ¶ 11, 807 N.W.2d 802. The mere discrepancy between
a contract for deed and a deed is insufficient to demonstrate the deed was signed in
error. See In re Estate of Vaage, 2016 ND 32, ¶ 25, 875 N.W.2d 527; Van Berkom,
at ¶ 13; Spitzer, at ¶ 28.
[¶8] Whether a contract contains a mistake sufficient to support a claim for
reformation is a question of fact which will not be reversed on appeal unless it is
clearly erroneous under N.D.R.Civ.P. 52(a). See Motter v. Traill Rural Water Dist.,
2017 ND 267, ¶ 10, 903 N.W.2d 725. A finding of fact is clearly erroneous if it is
induced by an erroneous view of the law, if there is no evidence to support it, or if an
appellate court is left with a definite and firm conviction a mistake has been made.
See Freidig v. Weed, 2015 ND 215, ¶ 13, 868 N.W.2d 546.
[¶9] The Wagemans and Eugene Weisbeck are deceased. The parties agree the
contract for deed includes all of the property described as Lots A and B, and further
agree the warranty deeds only include the property described as Lot A. It is
undisputed that Richard Wageman paid the property taxes on Lot B during the
relevant time period. The warranty deed between Weisbeck and the Schindlers lists
the consideration as $57,000 rather than the $70,000 stated in the contract for deed.
Other than the discrepancy between the contract for deed and the warranty deed, the
Schindlers rely on Larry Schindler’s testimony that he “walked” their property with
Arthur Wageman and their walk encompassed both Lot A and Lot B. However,
Richard Wageman testified his parents’ intent was to sell only the ten acres
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comprising Lot A, and although the Schindlers offered to purchase Lot B from him,
he declined the offer because he wanted his son to have the property.
[¶10] The Schindlers and the Estate are seeking to reform the warranty deeds. The
Schindlers and the Estate assert the district court misapplied the law by requiring them
to provide clear and convincing evidence the contract for deed did not state the
parties’ agreement, rather than requiring them to provide clear and convincing
evidence the warranty deeds did not correctly state the parties’ agreement.
[¶11] There are at least two statements within the district court’s decision that
incorrectly state how the law applies to this case. The first statement appears in the
analysis section of the district court’s decision and reads as follows: “The Schindlers
must establish by clear and convincing evidence that the contract for deed does not
state the parties[’] intended agreement.” That statement misstates the law by directing
the inquiry about the parties’ intent to the contract for deed rather than the warranty
deeds. The second statement appears in the concluding paragraph of the district
court’s decision and reads as follows: “The Schindlers have not met the burden of
proving the parties to the contract for deed and the warranty deed conveying
Auditor’s Lot ‘A’ to Eugene Weisbeck did not correctly state the intention of the
parties to those documents.” The second statement misstates the law by again
directing the inquiry about the parties’ intent to the contract for deed.
[¶12] We agree with the Schindlers and the Estate that the district court misstated
how the law applied to this case. We also note that the district court’s decision is
devoid of a correct statement of the law; that the Schindlers were required to provide
clear and convincing evidence showing the warranty deeds did not correctly state the
parties’ intent. Further support for the Schindlers’ and the Estate’s argument is
provided by the following statement in the district court’s decision: “While there may
be an argument that the contract for deed leaves open the possibility it could be
interpreted to include not only what was later platted as Auditor’s Lot ‘A,’ but also
Auditor’s Lot ‘B,’ the subsequent documents weighed against such an argument.”
That statement is contrary to the parties’ agreement that the contract for deed
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unambiguously included the property described in both Lot A and Lot B, and supports
a conclusion that the district court had improperly directed its attention toward
determining whether there was clear and convincing evidence that the contract for
deed did not state the parties’ intent rather than determining if there was clear and
convincing evidence that the warranty deeds do not reflect the parties’ intent. While
it is possible that the above statements were inadvertent mistakes, in the absence of
any correct statement of how the law applies to this case, we are compelled to remand
this case to the district court.
III
[¶13] The Schindlers and the Estate argue the district court erred in failing to
consider their alternative argument, made in a post-trial brief, that they acquired Lot
B under the doctrine of acquiescence. The Schindlers and the Estate acknowledge
this ground for relief was not specifically pled in their complaint, so we assume they
argue that acquiescence was tried by the implied consent of the parties. See, e.g.,
Mann v. Zabolotny, 2000 ND 160, ¶¶ 12-13, 615 N.W.2d 526. “The doctrine of
acquiescence allows a property owner to acquire neighboring property due to an
honest mistake over the location of the boundary line.” Brown v. Brodell, 2008 ND
183, ¶ 9, 756 N.W.2d 779. Acquiescence is a “sister doctrine” of adverse possession,
and the doctrines are conceptually similar and share some of the same elements.
Sauter v. Miller, 2018 ND 57, ¶¶ 11, 16, 907 N.W.2d 370.
[¶14] At the beginning of the trial in this case, Wageman’s attorney noted for the
record that the Schindlers and the Estate had withdrawn their pled claim of adverse
possession. At the end of the trial, Wageman’s attorney objected to a question about
taxes and the attorney for the Schindlers and the Estate assured him “[i]t’s not for
adverse possession purposes.” Consent to try an issue outside the pleadings cannot
be implied from evidence which is relevant to the pleadings but which also bears on
an unpled issue. See Mann, 2000 ND 160, ¶ 12, 615 N.W.2d 526. There is no basis
on this record to imply any consent on the part of Wageman to a trial on an unpled
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claim of acquiescence, when that issue is similar to the withdrawn claim of adverse
possession.
IV
[¶15] The district court misstated how the law applies to this case. We reverse the
judgment and remand the case to the district court for a determination of whether
there is clear and convincing evidence that the warranty deeds do not correctly state
the parties’ intent.
[¶16] Jon J. Jensen
Jerod E. Tufte
Daniel J. Crothers
Gerald W. VandeWalle, C.J.
McEvers, Justice, concurring in part and dissenting.
[¶17] I agree with the majority that the district court did not err by not addressing the
Schindlers and the Estate’s argument on acquiescence as set forth in part III of the
majority opinion. I also agree with much of the majority’s analysis in part II. Where
I part ways is in reversing the court based on a perceived misapplication of the law.
[¶18] The Schindlers and the Estate brought this action to reform the warranty deeds
and quiet title to both Lot A and Lot B in conformity with the 1981 contract for deed.
Following a trial, the district court found the “Schindlers have not met the burden of
proving the parties to the contract for deed and the warranty deed conveying
Auditor’s Lot ‘A’ to Eugene Weisbeck did not correctly state the intention of the
parties to those documents,” and dismissed the action. (Emphasis added.)
[¶19] The Schindlers presented no evidence to show a mistake in the legal
description of the property conveyed that would foreclose the possibility that the
Wagemans and Weisbeck changed their minds about the amount of the property to be
conveyed by the warranty deed. The district court explained:
In 1993, Ms. Schindler’s father had the property platted and
Auditor’s Lot “A” was identified. On August 19, 1[99]3, Doris
Wageman conveyed that specific parcel to Mr. Weisbeck in a document
that referenced the contract for deed. Mr. Weisbeck must have been
familiar with the plat and with portions referred to as Auditor’s Lot “A”
and Auditor’s Lot “B.” In fact, Mr. Weisbeck conveyed Auditor’s Lot
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“A” to the Schindlers. Mr. Wageman later signed a warranty deed
conveying Auditor’s Lot “A” to the Schindlers, although the parties do
not recall why the document was prepared.
The Schindlers have not met the burden of proving the parties
to the contract for deed and the warranty deed conveying Auditor’s Lot
“A” to Eugene Weisbeck did not correctly state the intention of the
parties to those documents.
(Emphasis added.)
[¶20] The Schindlers and the Estate argue the district court’s decision was induced
by an erroneous view of the law because the court stated that they “must establish by
clear and convincing evidence that the contract for deed does not state the parties[’]
intended agreement.” It appears the court’s reference to the contract for deed was an
inadvertent misstatement because the court clearly recognized in its opinion that the
Schindlers requested “reform[ation of] the warranty deeds in this matter to convey
both Auditor’s Lot ‘A’ and an additional piece of property platted as Auditor’s Lot
‘B’ to the Schindlers.” (Emphasis added.) I agree with the majority that the court
made some misstatements in its analysis. However, I am satisfied that the court’s
decision was not induced by an erroneous view of the law. Even if the court applied
the wrong analysis, the result would be the same based on the lack of evidence to
show a mistake was made in conveying the property. Where the court comes to the
correct conclusion, it will not be disturbed because it gives an incorrect reason for its
decision. Heinzeroth v. Bentz, 116 N.W.2d 611, 616 (N.D. 1962).
[¶21] I would conclude the district court’s finding that the Schindlers failed to
establish by clear and convincing evidence there was a mistake in the property
description in the warranty deeds is not clearly erroneous and would affirm the
judgment.
[¶22] Lisa Fair McEvers
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