Stubbs v. Standard Life Ass'n

• Decision Date: 17 March 1952
• Docket Number: No. 16640,16640
• Citation: 242 P.2d 819,125 Colo. 278
• Parties: STUBBS v. STANDARD LIFE ASS'N.
• Court: Colorado Supreme Court

Page 819

242 P.2d 819

125 Colo. 278

STUBBS v. STANDARD LIFE ASS'N.

No. 16640.

Supreme Court of Colorado, en Banc.

March 17, 1952.

Rehearing Denied April 7, 1952.

Lawrence Thulemeyer, John R. Stewart, La Junta, for plaintiff in error.

Harry E. Mast, Ordway, for defendant in error.

STONE, Justice.

This is an action for reformation of mortgage and of sheriff's deed issued on foreclosure thereof. J. E. Stubbs and W. R. Stubbs were formerly owners of a tract of farm land consisting of 1006 acres in Crowley County, and made application for and procured a loan of $24,000 to be secured by mortgage thereon. The legal description of the property was long and complicated, and in drafting the loan and mortgage documents there was omitted one parcel of the farm property comprising about 290 acres and described as 'all that part of Indian Claim No. eight lying West of the East line of Section seventeen (17), Township twenty-two (22) South, Range fifty-eight (58) West of the 6th P.M.' The mortgagee named in the instrument was an official of the corporation making the loan, who took it in behalf of the company and later assigned it to the company. Thereafter the mortgage was sold and assigned to defendant in error, Standard Life Association, which foreclosed and bid the property in at foreclosure sale for the total amount due and received sheriff's deed. Throughout the foreclosure proceedings, and in the sheriff's deed, the property was described as in the mortgage. The foreclosing mortgagee was let into possession of the entire farm, including the parcel omitted from the description, prior to the issuance of the sheriff's deed, and continued in such possession for a period of more than ten years without objection or apparent knowledge by anyone that the entire farm was not included in the mortgage and sheriff's deed. In 1945, some nine years after acquiring sheriff's deed, the mortgagee leased the property for a long term, with option to purchase for the full price of $20,000, upon which it was agreed that there should be credited the rental paid under the lease above taxes and cost of upkeep and interest. Thereafter the mortgagee purchaser had a survey made of the property, whereby the omission was discovered, and this action was begun for reformation of the mortgage deed, the foreclosure proceedings and the sheriff's deed to show inclusion of the omitted parcel. Plaintiff had favorable judgment in the trial court. J. E. Stubbs and W. R. Stubbs are deceased and the defendant here appearing as plaintiff in error is the widow of W. R. Stubbs and the assignee of the other heirs of the mortgagors.

It is urged as ground for reversal that the court could not quiet title in plaintiff corporation to the omitted parcel for the reason that it held no title thereto. This contention has no merit for, while the decree in form follows the old terminology of quieting title, the action was specifically an action for reformation, setting out properly the basis of the claim and complying sufficiently with Rule 105, Rules of Civil Procedure, as an action to obtain an adjudication of the rights of the parties with respect to real estate.

It is contended further that the proof is insufficient to establish that the parcel was omitted by mistake. No testimony was introduced in behalf of defendant. The evidence in behalf of plaintiff disclosed that the application for mortgage recited a farm of 1006 acres, which was the acreage of the entire farm, including the omitted parcel; that said parcel had been owned by mortgagors and farmed with the remainder of the farm continuously as one unit; that the appraiser who approved the loan in behalf of the mortgagee examined the entire farm, including the omitted parcel, accompanied by the mortgagors, and he would not have recommended the mortgage without including the omitted parcel; that since some time prior to the date of the foreclosure, taxes have been paid continuously by plaintiff on the entire farm, and that the name of defendant appears on the tax rolls up to the year of foreclosure, but since that date she has never filed a tax schedule to the omitted parcel or any tax schedule in that county. The proof is ample to support the finding of the trial court that the parcel was omitted by mutual mistake.

It is urged that plaintiffs are barred by laches and negligence, but we find no basis in the record for that contention. Laches cannot be predicated on delay alone, and the mere fact that a mistake is made in the mortgage does not show such negligence as to bar recovery, especially where the parties are equally at fault. These same contentions were made and overruled in many of the cases hereinafter cited.

It is contended that plaintiffs are assignees of the mortgage and, as such, lack necessary privity to bring action for reformation. The very fact of assignment by the mortgagee established the interest of the assignee. It is urged that in this jurisdiction right to reformation is restricted, and Waters v. Massey-Harris Harvester Co., 86 Colo. 98, 278 P. 614, is cited as authority for the contention that the right to reformation will not extend to a purchaser whose deed merely describes the same land as conveyed to his original grantor. We think the rule as there declared was more narrow than its application. If not, it was departed from in Heini v. Bank of Kremmling, 93 Colo. 350, 25 P.2d 1113, 89 A.L.R. 1442, and we prefer to follow the broader rule there employed, in harmony with that of virtually all other jurisdictions.

The one serious question with which we are here concerned is the right of reformation of a mortgage, as sought in this case, after foreclosure and issuance of sheriff's deed to the mortgagee. In some cases, such right has been denied,...