ARE. COMMON IN EALTH BUILDING & LOAN ASS'N 1033 v. WINGo. COMMONWEALTH BUILDING & LOAN ASSOCIATION V. WINGO.
4-3595 Opinion delivered November 19, 1934. 1. REFORMATION OF INSTRUMENTS-MUTUAL M I STAKE.-A deed releasing a tract of land from a vendor's lien held subject to reformation on the ground of mutual mistake. 2. REFORMATION OF IN STRU MEN TS-JURISDICTION .-Equity has jurisdiction to reform instruments, including deeds • and mortgages, in order to give effeet to the intention of the parties or where there has been a mistake of one party, accompanied by fraud or other inequitable conduct of the other. 3. JUDGMENT-RES JUDICATA. —The decision . (in a' mechanic's lien case that a mortgage on land was subsequent to materialmen's lien held not res judicata as to the right of a purchaser at the mortgage foreclosure.sale to reformation of the deed releasing the lot from a vendor's lien . by correcting the description of tbe land. Appeal from .Sevier Chancery Court; Pratt P. Bacon, Chancellor; reversed. Lake,'Lake & Carlton-, for appellant. • E. K. Edwards and Will Steel, for appellee. McHANEY, J. On August 25, 1926, -the late Con-- gressman, Otis Wingo, and his wife, the appellee, convey-
1034 COMMONWEALTH BUILDING & LOAN ASS IN- [189 WINGO. ed-by warranty deed a certain eleven :acre tract of 'land adjacent to DeQueen; in -Sevier County, Arkaifsas; to Robert A: Brown for a consideration of $5,500, of which $500. waS. paid in cash, and for the remainder notes.*ere executed and a vendor's lien was retained in the deed to seciire the payment of the unpaid purchase money, represented by said notes. Said deed contained the following clause : , "It is further agreed that, upon full compliance wit. h -all of the conditions herein set out, the grantor will release the lien herein retained upon any lot or-parcel' of said land, and upon the payment to the legal' holder :Of the mites of 3 1/ 2 ' cents per square' foot, embraced in the said lot, provided that interest due at the sub'sequent semVannual interest payment periods is paid, which said payments shall be applied-upon the indebtedness." This clause was placed in the deed to' enable Brow* who was constructing a number of residences in DeQueen and vicinity at that time, to construct houses on certain lots in said eleven-aére tract, clear the title thereto by procuring a release of the vendor's lien to such lots without paying the.whole of the balance of the purchase money due on' the whole tract. This enabled him to borrow money to construct the houses by showing .a clear title to any particular lot or tract on which he decided to build a house. The tract in controversy is a lot 100 by 110 feet. Brown began the construction of a: -reSidence and garage thereon in the fall of 1926. .1Ie applied to appellant for a loan of $2,000- thereon for the purpose of comPleting the consiruction of said building, and, in order to clear the title, he procured a release deed from Mr. Wingo to said 'lot, which was . placed- of record. Thereafter . appellant approved 13rdivn's , application for a loan, advaneed to him the sum of $2,000 on January 14, 1927; taking a mortgage on said plot of ground which described the plot the same as in the release deed from Wingo -fo Brown which was executed on . the 3d day of December, 1926. Brown completed the . residence and garage, and he built two other residences on the eleven-acre tract in.the same way: Bro wl failed to pay for certain materials : and labor entering into the construction of said buildings, and .mechanics' liens were filed against them.
ARR.] COMMONWEALTH BUILDING & LOAN Ass'N 1035
v. WINGO. Suits were:brought to enforce said liens in which Wingo was made a party, and he filed an answer. and cross-complaint, alleging default of .Brown in the : payment of his notes, and prayed a foreclosure of the lien retained in his deed to Brown. It was,granted asto the-entire tract less three . small lots upon which building g lad been erected and which had been released from his vendor's lien. Appellant's mortgage on the lot in controversy was held to be secona and subsequent to the materialmen's liens which were adjudged against it. The property , was sold under the decree of , foreclosure, and,Mr. Wingo became the purchaser of all the land.not released, and appellant becamethe purchaser , of the,lot in controversy, said sales being duly approved and deeds thereto .acknowledged and approved. In , all these proceedings the lot in con- tioversy . was d r e i s b c ed as in , the release deed from Wingo to , Iirown ahove mentioned. Later, appellant soid the Jot in controversy to one : McCown, taking ,a .mortgage ' from him- , and , wife for the ,purchase prie. , In December, .1930, appellant foreclosed the McCown mortgage and:reacquired the property at the , foreclosure sale,' and • ii . ail these proceedings .said . lot, was described as Wingo's release deed to Brown...Mr. WingO , died testate in ,1930, and, under the terms of his ' will, appellee became the owner of his real estate, subject to all of the rights and liabilities. attaching , to 'it .at . the time of his , death. In October, 1932,.appellee wrote appellant a letter , stating that in running the lines . on her property known as Wingo Hill, she found that the , house,Owned 1y appeilant„ being the tract in controvefsy, , was . on a part of her property; that one-half ; of the garage, _two , ,door,:steps, the southwest corner of the house l and all of the front yard were on her land. She demanded $500 rent -, for the use of it, and:offered to sell sixteen feet Of it . .on the east side, forty feet onthe south side, , and fiftY fee( on the west , side, in ofder to enalcile appellant tO handle : its property. Mr. Byington;; agent for appellant at 'De-, Queen,: and a surveyor, assisted the appellee , in making the survey in which it,was Cliscovered that the house on the appellant's tract of land extended.over the lines, a:nd onto appellee's property ,. as heretofore stated. ,. ; There-
1036 CalcIAION AVEA1:1:11 BUILDING k LOAN Ass 'N [189
v.- WINGO. after appellant instituted this action to reform the release deed from Wingo to Brown and all subsequent transactions affecting the title to said lot so as to describe. a tract of ground 100 by 110 feet on which the improvements would be situated without extending over to appel-lee's property. The court denied reformation, and this appeal is from that decree. _We think the court erred in " refusing to reform the release deed in question, and all other instruments thereafter affecting the title to said lot based on said description. It is clear from the language used in the deed from Wingo to Brown that it was the intention of Mr. Wingo to release any particular plot or tract of ground which Mr. Brown desired to have released, upon the payment to him or to the holder of the notes of 3 1/2 cents per square foot. It was manifestl3; the intention of Brown and of Wingo in the execution of.the release deed to the plot in controversy to release from the vendor's lien the ground on which Brown was then building the improvements' mortgaged to aripellant. His failure to do so was the result of a mutual mistake. While Brown did not testify and Wingo is now dead, we think all the facts and circumstances . clearly indicate that Brown did not intend to build a house or any improvements on land belonging to Wingo, and that Wingo did not intend that he . should do so. The error was due to Brown's failure to properly describe the tract he wished released. BroWil intended to get released the land on which he was then building a house, the foundation of which had already -been laid, and it was Wingo'S intention, that this should be done: Brown's error in describing the tract was also Wingo's error in releasing it. This makes a clear case of mutual mistake. This court has many times held that courts of equity are vested with jurisdiction to reform inStruments, including deeds and mortgages, in order to give effect to the intention of the parties. Clark v. Roots, 50 Ark. 179, 6 S. W. 728, 8 S. W. 569 ; Smith v. Kaufman, 3.45 Ark. 548, 224 S. W. 978 ; Glover v. Bullard, 170 Ark. 58, 278 S. W. 645 ; Foster v. Dierks Lumber & Coal Co., 175 Ark. 73, 298 S. W. 495. The general rule is that equity has jurisdiction to cancel or reform written in-
strurnents, either where there is Mutual mistake or where • there has been mistake of one party, accompanied by fraud or other inequitable conduct of the other... We held in Sherwin-Williams Co. v. Leslie, 168 Ark. 1049, 272 S. W. 641, that, where the uncontroverted proof showed that it was the intention of the parties to a deed that certain lands should have been included, and that it was omitted through the oversight of the scrivener who prepared the deed, as .between . such parties, the deed will be reformed. Many other cases might be cited.. This court has also held in Blackburn v. Randolph, 33 Ark. 119, that : "Where a mistake in description of land occurs in a series of conveyances, under such circnm-stances as would entitle any one of the vendees to a reformation as against his immediate vendor, the eqUity will work back through all, and entitled the last vendee to a reformation against the• original vendor," to quote the. second syllabus. This same rule , was reaffirmed in the case of Modica v.• Combs, 158 Ark. 149, 249 S. W. 567. Nor do we agree with appellee that the decision in the mechanics' lien case herein referred to constituted res judicata of appellant's rights. _ Ail these proceedings were based upon the erroneous assumption that the description in Mr. Wingo's release deed was correct. This holding will work no•injUry to appellee, but the contrary holding wonld work a great loss' to appellant. The. decree Will be reversed, and 'the cause remanded with directions to reforth the release deed of Mr. Wingo, and also all subsequent instruments' incorrectly describing the tract of land, in accordance with the prayer of atipellant's complaint. •
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