Cline v. Hoyle & Associates Ins., Inc.

• Citation: 108 Idaho 162,697 P.2d 1176
• Decision Date: 29 March 1985
• Docket Number: No. 15447,15447
• Court: United States State Supreme Court of Idaho
• Parties: Jack CLINE, Plaintiff-respondent, Cross Appellant, v. HOYLE & ASSOCIATES INSURANCE, INC., an Idaho corporation; and Richard W. Hoyle, Defendant-appellants, Cross Respondents.

Page 1176

697 P.2d 1176

108 Idaho 162

Jack CLINE, Plaintiff-respondent, Cross Appellant, v. HOYLE & ASSOCIATES INSURANCE, INC., an Idaho corporation; and Richard W. Hoyle, Defendant-appellants, Cross Respondents.

No. 15447.

Supreme Court of Idaho.

March 29, 1985.

Michael L. Schindele, Boise, for defendant-appellants-cross respondents.

Richard B. Eismann, Homedale, for plaintiff-respondent-cross appellant.

BAKES, Justice.

This appeal is taken from the trial court's judgment which interprets the price term contained in the contract for the purchase of an insurance agency business. The judgment is affirmed.

Appellant, Hoyle, was a commissioned insurance salesman for respondent, Cline. In May, 1979, Cline extended to Hoyle an option to purchase the "book" of insurance accounts for Cline's Boise office in which Hoyle was employed. The option purchase price was to be 1.75 times the "annual commission income" from July 1, 1978, to June 30, 1979. At the time of executing the option agreement, the purchase price was estimated to be $84,411.00, but the estimate was not stated in the option.

On July 2, 1979, buyer exercised the option to purchase and the parties executed a sale agreement containing the following price term:

"PURCHASE PRICE. The purchase price that the Buyer shall pay the Seller for said insurance business shall be computed using the following formula: By multiplying 1.75 times the annual commission income, notice and fees of the business including all renewal commission income from July 1, 1978, to June 30, 1979. Said sum as of July 2, 1979, is estimated to be in the sum of $84,411.00, and the Seller and Buyer agree to make a final adjustment in purchase price as of October 1, 1979, in accordance with the aforementioned formula, and the parties further agree to enter into, in writing, an addendum to this agreement reflecting the final and actual purchase price on or before October 1, 1979. In any event, said sum shall not be less than the sum of $84,411.00. Said sum shall be payable in the following manner and amounts, to-wit: ..."

Neither party attempted to enter into the "addendum" on or before October 1, 1979. However, buyer did pay $65,000 in several installments toward the purchase price. About one year after the purchase, the parties finally met to attempt the final adjustment, but the parties could not agree.

Seller sued to collect the balance of the $84,411 minimum purchase price plus 10% interest per annum, as provided by the contract. At trial seller attempted to prove that the formula yielded a purchase price of $90,928. Buyer attempted to prove that the minimum price stated in the contract was a mutual mistake and that the formula yielded a purchase price of $72,477. The trial court, sitting without a jury, found no mutual mistake and also found that the seller failed to prove that the price exceeded the minimum stated in the contract. Therefore, the district court granted judgment to the seller for the unpaid balance on the $84,411 minimum purchase price, plus interest of 10% per annum to the date of judgment, and interest thereafter at the rate provided by law.

Buyer assigns as error the trial court's finding that no mutual mistake existed and the trial court's interpretation of the price formula. Seller has cross appealed, also assigning as error the trial court's interpretation of the price formula.

Buyer seeks to avoid or reform the minimum purchase price stated in the contract by alleging that the minimum price was a mutual mistake. Buyer's position is that: (1) the parties intended the formula to determine the purchase price; (2) the "estimated" and "minimum" price of $84,411 included the accounts of Demontigny Trucking and J & P Enterprises, which were billed after the formula's one-year period; and (3) therefore the price should be approximately $80,151 which is the formula price based on actual billing dates not including the two accounts billed after the one year. Seller argues that the Demontigny and J & P accounts were fully intended to be included in the purchase price since the policies were sold during the one-year period and all expenses and effort to obtain the accounts were expended by the seller's business.

A mistake must be common to both parties in order to...