Wright v. Gernandt

Decision Date23 November 1977
Docket NumberNo. 1238,1238
Citation559 S.W.2d 864
PartiesOna WRIGHT, Appellant, v. Margaret GERNANDT, Appellee.
CourtTexas Court of Appeals
OPINION

NYE, Chief Justice.

This is a declaratory judgment suit in which the plaintiff, Margaret Gernandt, sought a declaration that she was the owner of the proceeds of a fire insurance policy and that the defendant was required to maintain additional insurance to cover the fire loss incurred by the plaintiff. The defendant, Ona Wright, filed her cross-action seeking equitable reformation of the lease agreement, a share of the insurance proceeds and damages for unpaid bills. The trial was to a jury in which the jury answered issues favorable to the plaintiff resulting in a judgment being entered for the plaintiff, subject to offsets for the unpaid bills. The defendant appeals to this Court.

The defendant was the owner of land and a building in Corpus Christi, once known as the "Motts Restaurant." In 1973, the defendant's former husband (not a party to this suit or to the lease agreement) entered into negotiations to lease the premises to the plaintiff. The parties discussed the terms including insurance during the preliminary negotiations. After the negotiations had been completed, the defendant requested that her attorney draft the lease agreement. A five year lease on the restaurant was executed by both parties. Two years later, a fire destroyed the premises. Neither the plaintiff nor the defendant knew for sure, until the fire had destroyed the premises and until they had reread the lease, that paragraph 8 of the lease agreement required the defendant to procure insurance. The paragraph in question is as follows:

"8. During the term of this lease, Lessor agrees that she will, at her own expense, at all times maintain in force a policy or policies of insurance, written by one or more responsible insurance carriers, designated by Lessor, insuring the leased premises against fire, windstorm or other hazard for such amount or amounts as may be approved by Lessor. Such policy or policies shall insure Lessor or Lessee as their respective interest may appear."

The plaintiff procured a $12,000 personal property contents insurance policy prior to the fire. At trial, the plaintiff's theory was that the defendant breached the express covenant of the lease requiring the defendant to maintain insurance on the plaintiff's full interest in the leased property. The defendant's affirmative defense at trial, and her major contention here on appeal, is that the first reference to "lessor" in paragraph 8 of the lease, was a mutual mistake caused by a scrivener's error, thereby justifying equitable reformation of the lease. The defendant would reform the lease agreement so that the $12,000 proceeds of plaintiff's insurance policy would be apportioned between the parties as their interest would appear.

The answered issues returned by the jury were: (1) that the first reference to "lessor" in paragraph 8 was a mistake and should have read "lessee"; (2) that such mistake was not mutual in other words, not made by both plaintiff and defendant; (3) that such mistake, if unilateral, was not made by the plaintiff; (4) that such mistake, if unilateral, was made by the defendant; (5) that plaintiff did not represent to the defendant that she had adequate fire insurance on the contents at the restaurant; (6) through (9) (the balance of the fraud issues) were conditionally submitted and not answered; (10) that the actual value of the personal property owned by the plaintiff which was destroyed was $18,786.58; (11) that the actual value of the personal property owned by the defendant which was destroyed by the fire was $12,284.36; (12) that the plaintiff was not entitled to any lost profits and (13) that the unpaid bills owed to the defendant were $1,440.74.

Generally, a mistake of fact, if mutual, is grounds for reformation of a written contract. The parol evidence rules do not apply, where it is alleged that by reason of a mutual mistake, an agreement does not express the real intention of the parties. Extrinsic evidence in such cases, is admissible to show what the real agreement is. Olvey v. Jones, 137 Tex. 639, 156 S.W.2d 977, 980 (1941). The party seeking reformation must prove what the true agreement was, and that the terms of the writing which differ from the true agreement were placed in the instrument by a mutual mistake of the parties. Burrows v. Seale, 148 Tex. 411, 225 S.W.2d 966, 969 (1950); Sun Oil Co. v. Bennett, 125 Tex. 540, 84 S.W.2d 447 (1935). A scrivener's error or typist's failure to embody the parties' true agreement in a written instrument is such a mistake as to afford ground for reformation, if the mistake is a mutual mistake. Bates v. Lefforge, 63 S.W.2d 360, 362 (Tex.Comm'n.App.1933, jdgmt adopted); Snellings v. Snellings, 482 S.W.2d 707, 709 (Tex.Civ.App. Waco 1972, writ ref'd n.r.e.); Louviere v. Power, 389 S.W.2d 333, 335 (Tex.Civ.App. Waco 1965, writ ref'd n.r.e.); Williams v. Hooks, 333 S.W.2d 184, 187 (Tex.Civ.App. Beaumont 1960, no writ); see also Thomas v. Baptist Foundation of Texas, 123 S.W.2d 440, 448-49 (Tex.Civ.App. Fort Worth 1938, wr. dism., judg. corr.); Coker v. Hughes, 307 S.W.2d 354, 359-60 (Tex.Civ.App. Amarillo 1957, no writ); Eggert v. American Standard Life Insurance Company, 404 S.W.2d 99, 105 (Tex.Civ.App. Corpus Christi 1966, no writ); Louviere v. Power, supra.

Actually, the vital fact issues that should be submitted in defendant's affirmative defense of mutual mistake in such a case would be: 1) whether the plaintiff ever agreed to maintain insurance on the leased premises; 2) whether at the time they signed the lease, plaintiff and defendant thought that the lease required the plaintiff to maintain insurance on the leased premises; and 3) whether through a scrivener's error, the instrument failed to set forth the parties' prior agreement or understanding.

The defendant by her first six points of error has attacked the jury findings to issues two and four by contending there is no evidence or insufficient evidence and that such findings are contrary to the great weight and preponderance of the evidence. We decide the no evidence point by considering only the favorable evidence and we consider the entire record in passing upon the remaining evidentiary points. Calvert, "No Evidence" and "Insufficient Evidence" Points of Error, 38 Texas L.Rev. 361, 362-3 (1960); Garza v. Alviar, 395 S.W.2d 821, 823 (Tex.Sup.1965).

The plaintiff testified that fire insurance had been discussed during the lease negotiations but that the parties had not reached a definite agreement regarding insurance prior to the signing of the lease. Plaintiff testified as follows "Q Was there any discussion of insurance prior to the signing of the lease?

A It was discussed, but no agreement was made.

Q Do you recall any at all at this time the extent of those discussions? (regarding insurance)

A No, I just went by what was in the lease, and read the lease and signed it."

The defendant's attorney, who prepared the lease, testified that he represented only the defendant and the plaintiff did not participate in any of the discussions that he had with the defendant prior to the preparation of the lease.

Plaintiff testified that she first saw the lease when she went to the defendant's office to sign the lease at defendant's request. She stated that the lease did not embody any previous agreement regarding insurance, because there had been no definite previous agreement concerning insurance between the parties. The defendant did not offer any testimony concerning any conversation that might have taken place on the day the lease was signed even though the evidence showed the plaintiff signed the agreement in defendant's presence. The defendant testified that she had a conversation with the plaintiff prior to the signing of the lease. She stated that the terms of the lease, including insurance, were discussed. The jury could reasonably infer and did answer that the mistake in the lease was unilateral and was made only by the defendant.

The jury is not only the judge of the facts and circumstances proven, but they are the judge of the credibility of the witnesses. They are at liberty to draw reasonable inferences and deductions from the evidence adduced at trial. Lynch v. Ricketts, 158 Tex. 487, 314 S.W.2d 273 (1958); Clark v. Brewer, 498 S.W.2d 957, 959 (Tex.Civ.App. Corpus Christi 1973, no writ). We have considered the entire record concerning the circumstances prior to and at the time the lease was signed and find that special issues 2 and 4 are supported by the evidence and are not against the great weight and preponderance of the evidence. In re King's Estate, 150 Tex. 662, 244 S.W.2d 660 (1951). All of defendant's evidentiary points of error are overruled.

Special issues 10 and 11 were directed to finding the value of the plaintiff's and defendant's destroyed personal property. The jury's answers to these issues would have provided a basis for the trial court to apportion the insurance proceeds between the parties had the defendant prevailed on her affirmative defense. Although special issue 11 should have been conditionally submitted based on a favorable finding on issues 2, 3 and 4, its submission and answer were harmless error. Rule 434, T.R.C.P. Rule 279 requires the trial court to submit only the controlling issues. Holmes v. J. C. Penney Company, 382 S.W.2d 472, 473 (Tex.Sup.1964). Appellant's seventh point of error is overruled.

Next, the defendant complains that the measure of damages submitted to the jury in special issue 10 should have been the reasonable market value and not actual value of the personal property destroyed by the fire. We recognize that the general rule is that if a chattel is totally...

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