National Resort Communities v. Cain
| Decision Date | 28 May 1975 |
| Docket Number | No. B--4868,B--4868 |
| Parties | NATIONAL RESORT COMMUNITIES, INC., Petitioner, v. Kenneth L. CAIN et al., Respondents. |
| Court | Texas Supreme Court |
Clark, Thomas, Denius, Winters & Shapiro, Barry K. Bishop, Austin, for petitioner.
Stayton, Maloney, Hearne, Babb & Cowden, Douglass D. Hearne, Austin, for respondent.
The purchasers of lots in a lake subdivision are seeking to reform the lot descriptions in their contracts of sale on the ground of mutual mistake. The trial court reformed the contracts to meet the prayer of the purchasers, and the Court of Civil Appeals affirmed. 512 S.W.2d 367. We hold that the mistake of the parties to the contracts cannot be rectified by reformation because of the absence of any agreement by the parties at the time of making the contracts that the writing would bind them to the transfer of the particular land purchasers now seek to obtain.
Between March and July of 1969 these five purchasers selected areas which they desired to purchase in the Lago Vista subdivision on Lake Travis. The surveying of the roads and lots was not completed until July. The purchaser and the subdivision sales agent agreed that the former would have the option of purchasing lots which would extend on the west to the former bed of the Colorado River, which meant that the lots would always reach into the water of this inconstant level lake. When the surveying was done, however, the west boundary of the lots was placed along the 715 foot elevation, the contour line to which the Lower Colorado River Authority had a flowage easement. This put the lots allocated to these purchasers away from the edge of the water. Since July of 1969 the seller has been willing to rescind all of the transactions, and it offered to execute contracts for certain lots as subdivided and platted nearest the water, but the seller has refused to contract for the sale of land between the 715 foot contour line and the old river. The difference being critical to the purchasers, who wanted and agreed with the selling agent that they were to get waterfront land, this litigation resulted.
The purchasers first sued the seller to enforce the promises of its agent and to obtain specific performance of the lot selected by each purchaser and extending to the bed of the old river. That effort fell unsuccessful on the horns of the statute of frauds. National Resort Communities, Inc. v. Cain, 479 S.W.2d 341 (Tex.Civ.App. 1972, writ ref'd n.r.e.). The Court of Civil Appeals then remanded in the interest of justice to permit the purchasers to prove, if that were the case, that the parties were mutually mistaken in a belief that the descriptions of the property used in the contracts were sufficient to identify the land between the platted lots and the old river channel. The purchasers applied for writ of error in this Court, contending unsuccessfully that they were entitled to the judgment of specific performance as rendered by the trial court. The seller did not apply for writ of error and accepted the remand.
Back in the trial court, the purchasers amended their pleadings to seek reformation of the contracts and contended that the parties were mutually mistaken in the belief that the descriptions were sufficient to bind them to the transfer of the water-front property. A summary of the evidence of the transaction with each of the purchasers follows.
Cain was the one who discovered this attractive land and who told the other purchasers. He was at the Lago Vista lake resort in March of 1969 when he met and spoke of his interest in acquiring lakefront property with the Lago Vista salesman, T. M. Irvin. Irvin told him that Lago Vista had just acquired a new tract and that lakefront lots would be available. This new tract contained 776 acres and in March there were no improved roads into the area; Cain and Irvin rode in a jeep and walked over the land to inspect it. Cain selected an area of the lakefrontage that he desired to purchase and one stake was placed to designate that area. No surveying had been done within the 776 acres; so Cain and Irvin agreed that when the lot lines were located, an adjustment would be made if necessary to give Cain the lakefrontage he desired. There is no dispute but that the two agreed that the land to be conveyed would extend into the lake and to the old river bed.
On March 18, 1969 a contract with the seller was executed by Cain. It consisted of a complete contract for lot 408 which was located in an older section of Lago Vista. The parties also signed a sales deposit receipt which provided under 'other terms and conditions' the following:
Buyer herein may transfer equity to stake parcel in new area for 6500 total purchase price lakefront at least 100 125.
Thereafter Cain received a letter from the seller, confirming the March 18 contract and saying in part:
This letter will confirm that you have the option to trade your equity in said lot toward the purchase of a lot on the lakefront as near as possible to the location of a stake with your name thereon. Said lot shall be a minimum of 100 feet by 125 feet with a purchase price of $6,500.00.
Lago Vista filed with the County Clerk a subdivision plat of its 'Country Club Estates, Section Five' on July 15, 1969. All of the lots in the area of controversy have the 715 foot contour line as their western boundaries. Prior to the trial of this cause, Cain and his fellow purchasers employed a surveyor to extend the north and south lines of certain lots westwardly toward the lake. By this means they obtained fieldnotes which described lakefrontage matching the area originally desired by each purchaser. These fieldnotes were used by the trial court in its judgment reforming the contracts in accord with the contentions of the purchasers. The contract for Cain was thus reformed to describe lot 776 as shown on the Lago Vista plat but extended on west to the old Colorado River bed.
Yarbrough desired lakefront next to Cain, and the agreement and transaction were to the same effect in all material respects. On March 27, 1969, Yarbrough signed a contract for platted lot 607 as well as a sales deposit receipt which stated:
Customer has option to exchange this lot on lot where stake on new section of Country Club. Waterfront price $6,500--100 125 at least.
The contract for Yarbrough was reformed by the trial court to describe lot 777 as shown on the Lago Vista plat but extended on west to the river bed.
Donald Yarbrough selected an adjoining site for his mother, Irene Yarbrough. Her contract to purchase lot 426 is dated April 2, 1969. At the bottom of that contract is written: 'Customer has option to exchange for waterfront lot in new section CC.' On the sales deposit receipt is written:
Customer has option to exchange this lot for waterfront lot in new section Country Club at $6500. 100 125 above the waterline 715.
Her contract was reformed by the trial court to describe lot 778 as shown on the Lago Vista plat but extended on west to the river bed.
By June 15 when Young made his agreement and signed the contract, some surveying had been done and a plat was available, although the work was not completed. Young was interested in two areas, each composing two lots. He signed contracts to purchase lots 755 and 757, and on his sales deposit receipts is written: 'Customer has option on 772 and 773 at same price.'
At that time Irvin and Young were not certain of the numbers of the lots which Young wanted, and which they named in the receipts as 772 and 773. They had an agreement as to the lots on the ground but were to adjust the description to 771 and 772 if those were the correct lot numbers (as was later determined to be so).
As to the west line of lots 771 and 772, the stakes on the ground were at the 715 contour line, and there had been no surveying or any line...
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