Raddue v. Le Sage

• Decision Date: 31 January 1956
• Citation: 292 P.2d 522,138 Cal.App.2d 852
• Parties: George RADDUE, Jr., also known as Geo. F. Raddue, Jr., Plaintiff, Cross-Defendant and Respondent, v. Vincent LE SAGE and Edna LeSage, Defendants, Cross-Complainants and Appellants. Civ. 8696. . California
• Court: California Court of Appeals Court of Appeals

Page 522

292 P.2d 522

138 Cal.App.2d 852

George RADDUE, Jr., also known as Geo. F. Raddue, Jr., Plaintiff, Cross-Defendant and Respondent, v. Vincent LE SAGE and Edna LeSage, Defendants, Cross-Complainants and Appellants.

Civ. 8696.

District Court of Appeal, Third District. California.

Jan. 31, 1956.

F.L. Sinclair, Auburn, for appellants.

Anthony J. Kennedy, Sacramento, for respondent.

VAN DYKE, Presiding Justice.

This was an action brought to reform a written contract for the purchase of merchantable timber upon a described parcel of land and to enforce the contract as reformed. The trial court reformed the contract and gave judgment in accordance with such reformation and the defendant appeals.

The complaint alleged that on the 4th of April, 1951 appellants and respondent entered into a written contract whereby respondent agreed to purchase from appellants all merchantable timber as defined in the contract upon section 1, township 16 north, range 7 east, M.D.B. & M. and to pay to appellants therefor the total sum of $35,000, payable $10,000 upon execution of the agreement and the balance at the rate of $16 per thousand board feet as merchantable timber was cut and felled; that the contract was entered into by the parties upon the belief that there was on the land merchantable timber in the amount of approximately 3,500,000 board feet and that this belief was shared by both parties; that both were mutually mistaken in that belief and that in fact the stand of merchantable timber was less than 1,000,000 board feet; that if there had been the amount believed to exist the price of $35,000 would have been at the rate of $10 per thousand and that such a rate would have been equitable; that the parties intended that respondent should pay to appellant for the timber actually on the property $10 per thousand board feet and that respondent was unaware of this mistaken belief as to quantity until he had engaged upon the harvesting of the merchantable timber; that when he ascertained the merchantable timber was less than the believed amount he had already paid the sum of $16,784, but that he continued to harvest until he had taken the whole stand, somewhat less than 1,000,000 board feet; that because of the mutual mistake the contract did not express the intentions of the parties and that this failure of the contract as written to express their mutual intentions had resulted in damage to respondent in that he should have paid less than $10,000, but had paid actually $16,784. He prayed that the contract be reformed to express the parties' intention and that he have judgment for his overpayment.

The trial court found as follows: That the parties had made the contract as alleged and that it had been entered into upon their mutual and mistaken belief that there was a stand of merchantable timber on the property of approximately 3,500,000 board feet; that the actual merchantable timber was only 1,150,000 board feet; that the parties had mutually intended by their written contract to fix a price for the timber of $10 per thousand board feet for second growth timber and $12 per thousand board feet for first growth timber and that accordingly the price that was to be paid to appellant totaled $12,522.12 instead of $35,000. The court concluded that respondent was entitled to judgment reforming the written contract so as to state the amount of timber sold as 1,154,000 board feet for a total price of $12,522.12, and that the contract should be enforced as so reformed. There were other provisions in the judgment and other findings made which we will discuss hereinafter.

Appellant contends that the evidence considered in connection with the contract provisions does not support the findings and judgment of the trial court and we have concluded that this contention must be sustained.

This is not a case where the claim is that the contract as drawn was not worded exactly as the parties intended it should be worded, that is, that by mistake the contract did not state the parties' agreement as they mistakenly believed it did. This case is one wherein the plea for reformation is based upon a mutual assumption of the existence of a fact or a condition which did not in fact exist. Respondent's contention specifically was that the parties mutually and in good faith, but mistakenly, believed there was approximately 3,500,000 board feet of merchantable timber as defined in the contract upon a described section of land and that, so believing, the parties agreed that for that timber respondent should pay appellant $35,000 in this manner: $10,000 upon execution of the agreement, and $16 per thousand as the timber was harvested until $25,000 more had been paid. Merchantable timber was defined as follows: "The term 'merchantable timber', as the same is used herein, shall include all sound Pine, Fir and Cedar trees having a stump diameter of not less than twenty (20) inches, breast high and inside the bark. The term 'sound', as used herein, shall include only trees that are commercially free from rot and disease, trees that are less than one-half ( 1/2) sound, by gross log scale shall not be deemed merchantable." It is obvious that belief as to the exact amount of that would meet these specifications upon a section of land could not be honestly entertained by either party to the contract; it is equally obvious that exact certainty could not be determined by any other means except the harvesting of the timber and that, even then, there was room for disagreement as to whether the amount selected, cut and felled by the buyer would meet the contentions of the seller as to whether or not that amount included all merchantable timber. Therefore, the basic assumption of the quantity was necessarily an approximation and the parties themselves in their pleadings so recognized. Williston on Contracts, Rev.Ed., under the topic "Mistake", in section 1543, says:

"It next becomes necessary to define the kinds of mistake which produce the various effects referred to and entitle either or both parties to the remedies spoken of. *** It remains, therefore, to consider what mistakes render contractual transactions voidable, and in what cases, if any, a mutual mistake as distinguished from a misunderstanding renders an agreement void, and to distinguish these cases from those where mistake has no legal effect.

"In the first place there must be excluded from consideration mistakes as to matters which the contracting parties had in mind as possibilities and as to the existence of which they took the risk. With respect to any matter not made a basic assumption of the contract the parties take their chances."

Restatement of Contracts, section 502, states:

"*** [W]here parties on entering into a transaction that affects their contractual relations are both under a mistake regarding a fact assumed by them as the basis on which they entered into the transaction, it is voidable, ***"

Under Comment a the following appears:

"Where both parties assume the existence of a certain state of facts as the basis on which they enter into a transaction, the transaction can be avoided by a party who is harmed, if the assumption is erroneous."

Under Comment f the following appears:

"Where the parties know that there is doubt in regard to a certain matter and contract on that assumption, the contract is not rendered voidable because one is disappointed in the hope that the facts accord with his wishes. The risk of the existence of the doubtful fact is then assumed as one of the elements of the bargain."

The present case is brought within the foregoing rules by the presence in the contract of a provision which demonstrates that the parties considered that their assumption as to the quantity of merchantable timber upon the land might be erroneous. In view thereof they expressly provided what should be their contractual relations in the event that the assumption did prove to be erroneous. By paragraph 15 of the written agreement the parties contracted as follows: "For the purposes of this agreement the parties hereto are relying upon a cruise of said lands as reported by Leland Smith in a letter to Seller [appellant] dated March 13, 1951. In the event cutting operations hereunder fail to yield Thirty Five Thousand and No/100 ($35,000.00) in timber at the rate of Sixteen and No/100 Dollars ($16.00) per thousand in timber cut and removed from said lands, the total consideration of Thirty Five Thousand and No/100 Dollars ($35,000.00) herein expressed shall be reduced pro-rata." When this provision is considered, along with the testimony as to why it was inserted in the contract, it becomes apparent that the alleged basic assumption as to the quantity of timber on the land was recognized as possibly erroneous; in short, that no mistake concerning the same existed in the sense that the assumption, if erroneous...