PRICE (MARY) VS. GODBY (SAMUEL RAY), ET AL.
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RENDERED: SEPTEMBER 5, 2008; 10:00 A.M.
TO BE PUBLISHED
Commonwealth of Kentucky
Court of Appeals
NO. 2007-CA-001347-MR
MARY PRICE
v.
APPELLANT
APPEAL FROM PULASKI CIRCUIT COURT
HONORABLE JEFFREY T. BURDETTE, JUDGE
ACTION NO. 06-CI-00993
SAMUEL RAY GODBY AND
SAMUEL RAY GODBY REALTY
AND AUCTION COMPANY
APPELLEES
AND
NO. 2007-CA-001600-MR
MARY PRICE
v.
APPELLANT
APPEAL FROM PULASKI CIRCUIT COURT
HONORABLE JEFFREY T. BURDETTE, JUDGE
ACTION NO. 06-CI-00993
MELVIN R. CHILDERS AND
ANNA CHILDERS
APPELLEES
OPINION
REVERSING AND REMANDING
** ** ** ** **
BEFORE: DIXON, NICKELL, AND STUMBO, JUDGES.
STUMBO, JUDGE: Mary Price (hereinafter Appellant) appeals the orders of
summary judgment granted in favor of Samuel Godby and his realty company
(hereinafter Godby collectively) and Melvin and Anna Childers. Because the
orders stem from the same case, we will resolve both appeals in a single opinion.
Appellant argues that summary judgment was improperly granted and asks that we
reverse. Additionally, she requests that a deed be reformed to show the intent of
the parties (which is the underlying issue in this case). We find that there is a
genuine issue of material fact in regard to the Godby summary judgment; that the
Childers are not entitled to summary judgment as a matter of law; and that
Appellant is entitled to have the deed reformed.
On March 7, 2003, Appellant entered into an auction sales contract
with Godby wherein he would sell at auction Appellant’s forty-acre farm in
Pulaski County, Kentucky. At the time of the initial contract, all the property was
to be sold except some dairy equipment located on it. Godby was to receive six
percent commission. The sale was scheduled for May 10, 2003.
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After signing the initial contract, but prior to the auction, Appellant
decided to reserve from sale the house located on the property. Godby accepted
this and noted the reservation in the written auction instructions. The reservation
of the house and dairy equipment was also announced at the auction.
At the auction, the Childers purchased the property upon which the
house was located. Appellant orally agreed to have the house moved off the
property within 60 days.
Godby then had a deed prepared which conveyed the land from
Appellant to the Childers. The deed was signed by Appellant on or about June 10,
2003. However, the deed was silent as to the reservation of the house. Around the
same time, Godby gave Appellant a closing statement setting forth the outcome of
the auction, i.e., how much the land was sold for, how much money was spent on
expenses and to pay off liens on the property, and how much money Appellant was
ultimately going to receive. Additionally, the statement contained a statement
which released Godby from any future claims arising from the transaction.
Appellant was directed to sign the closing statement as an acknowledgement that
she received it.
Appellant had trouble finding someone to move the house off the
property and entered into a lease agreement with the Childers to rent the land until
she could get the house moved. Appellant missed some rent payments and the
Childers moved to evict her from the land by filing a forcible detainer action
against her. The day of the hearing of the detainer action, the house burned down.
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Appellant had the house insured by Shelter Mutual Insurance, another
party in the underlying cause of action. However, because the deed did not reserve
the house for Appellant, the insurance company denied her coverage. Appellant
then filed suit against Godby for negligence, against the Childers for reformation
of the deed, and against Shelter Mutual Insurance for breach of contract.
After discovery was taken, all parties filed summary judgment
motions. Summary judgment was denied for Shelter Mutual Insurance and
Appellant, but granted for Godby and the Childers. This appeal followed.
Godby’s motion for summary judgment argued that he was released
from all liability due to the release language in the closing statement. Appellant
responded arguing that the waiver of liability language was never bargained for
and that no consideration was given in exchange for the waiver. The lower court
granted the summary judgment finding that Appellant signed the closing statement
and that exempting the house from the auction was additional consideration for the
waiver.
The Childers’ motion for summary judgment argued that Appellant
lost her interest in the house because she failed to move it within a reasonable time.
Also, because the deed did not mention the reservation of the house, the merger
doctrine merged all oral agreements into the deed and the deed was controlling,
which made the house property of the Childers. Appellant argued that there was a
mutual mistake in the deed because all parties knew the house was not part of the
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sale and that the merger doctrine does not apply when the parties do not intend it
to, as is the case with mutual mistake. The lower court found Appellant lost
interest in her house when she did not move the house within a reasonable period
of time, that the merger doctrine made the language in the deed controlling, and
that there was no genuine issue of material fact regarding the mutual mistake.
After a review of the arguments and the record, we conclude that the
lower court wrongly granted the summary judgments and reverse.
The standard of review on appeal of a summary judgment
is whether the trial court correctly found that there were
no genuine issues as to any material fact and that the
moving party was entitled to judgment as a matter of law.
Kentucky Rules of Civil Procedure (CR) 56.03. . . . “The
record must be viewed in a light most favorable to the
party opposing the motion for summary judgment and all
doubts are to be resolved in his favor.” Steelvest, Inc. v.
Scansteel Service Center, Inc., Ky., 807 S.W.2d 476, 480
(1991). Summary “judgment is only proper where the
movant shows that the adverse party could not prevail
under any circumstances.” Steelvest, 807 S.W.2d at 480,
citing Paintsville Hospital Co. v. Rose, Ky., 683 S.W.2d
255 (1985). Consequently, summary judgment must be
granted “[o]nly when it appears impossible for the
nonmoving party to produce evidence at trial warranting
a judgment in his favor . . . .” Huddleston v. Hughes, Ky.
App., 843 S.W.2d 901, 903 (1992).
Scifres v. Kraft, 916 S.W.2d 779, 781 (Ky. App. 1996).
We will first address Godby’s summary judgment. As stated above,
the lower court granted summary judgment because it found that the reservation of
the house was consideration for the release. However, we find that this issue is not
ripe for summary judgment. Viewing it in the light most favorable to Appellant, it
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could easily be determined that this additional term was not bargained for in
exchange for the release. It could appear that the reservation of the house was an
additional term to the realty contract, which did not contain the release language.
Once Appellant informed Godby she wanted to reserve the house, he could have
either insisted that the original contract terms be followed or rescinded the
contract. Godby instead chose to follow through with the auction and sold
Appellant’s land while reserving the house. A jury could find that once the land
was sold, the original contract was finished and the release could be considered
separate from the underlying transaction, therefore requiring additional
consideration in exchange for it.
“When an instrument is clearly within the understanding of the
parties, one who for a valuable consideration signs without reading and without
inducement either to sign or not to read, cannot shelter under a claim of mistake . .
. .” Trevathan v. Tesseneer, 519 S.W.2d 614, 615 (Ky. 1975) (Emphasis added);
see also Brown v. Kentucky Lottery Corp., 891 S.W.2d 90 (Ky. App. 1995). We
find that there is still a genuine issue of material fact in this case. It is not clear
whether the reservation of the house from the sale is consideration for the release
or merely an additional term to the underlying contract. We therefore reverse the
summary judgment.
As for the summary judgment granted to the Childers, we must
reverse as well. As stated above, the trial court found summary judgment
appropriate for the Childers because Appellant lost her interest in the house after
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failing to move it in a reasonable time and that the merger doctrine negated any
agreement to reserve the house from the sale. We find that this is incorrect as a
matter of law and hold that summary judgment should have been granted in favor
of Appellant and not the Childers as all parties admitted the house was to remain
the property of Appellant.
Contrary to the holding of the trial court, we find that Appellant did
not lose her interest in the house after failing to move it within the agreed sixty-day
period. Appellant and the Childers entered into a lease agreement that would allow
Appellant to continue living on the land until she could remove her house. This
waived the sixty-day requirement.
The Childers claim that the lease agreement was not open ended, but
was for a reasonable amount of time only. It was not until January 2005 that
Melvin Childers sent a letter to Appellant asking her to vacate the property. This
terminated the lease agreement. Appellant did not leave the property and a
Forcible Detainer Complaint was filed in August 2005. Once Appellant stopped
paying rent, the Childers rightfully sought to evict her. However, the trial court
finding that she lost her interest in the house was erroneous. A house becomes
personal property, and not part of the real estate, if the owner of the house does not
own the land it is situated on. Columbia Gas of Kentucky, Inc. v. Maynard, 532
S.W.2d 3 (Ky. 1976). All parties agree that Appellant intended to retain her
ownership of the house. Absent evidence that she abandoned this property, the
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Childers’ only remedies were that of a landlord: to sue for damages and back rent.
Restatement (Second) of Torts, § 12(1) 1977; Ky. OAG 82-553.
“[R]eformation of a deed may be granted only if the mistake is mutual
. . . the evidence is clear, convincing and beyond reasonable controversy, and it is
shown that the parties had actually agreed upon terms different from those
appearing in the written instrument.” Pressley v. Morton, 325 S.W.2d 81, 83 (Ky.
1959). Here, all parties admitted that the house was to be exempt from the auction.
When the Childers purchased the land, they knew that Appellant was going to keep
the house. The exemption of the house should have been included in the deed
because both Appellant and the Childers agreed to it.
The trial court found that “[t]he merger doctrine holds that all prior
statements and agreements, both written and oral, are merged into the deed and the
parties are bound by that instrument.” Borden v. Litchford, 619 S.W.2d 715,
717 (Ky. App. 1981). However, “[t]he exceptions to the merger doctrine are fraud,
mistake, or contractual agreement clearly not intended to be merged into the deed.”
Harrodsburg Indus. Warehousing, Inc. v. MIGS, LLC, 182 S.W.3d 529, 532 (Ky.
App. 2005). It is clear that Appellant and the Childers intended the house to be
exempt from the sale and this exemption should have been referenced in the deed.
Since there was a mutual mistake, the merger doctrine does not apply and
reformation is in order.
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Accordingly, we reverse the summary judgments granted in favor of
Godby and the Childers and remand this case back to the trial court for an order
reforming the deed to exclude the house.
ALL CONCUR.
BRIEFS FOR APPELLANT:
Robert E. Norfleet
Somerset, Kentucky
BRIEF FOR APPELLEE, SAMUEL
RAY GODBY AND SAMUEL RAY
GODBY REALTY & AUCTION
COMPANY:
John S. Gillum
Somerset, Kentucky
BRIEF FOR APPELLEES, MELVIN
R. CHILDERS AND ANNA
CHILDERS:
John G. Prather, Jr.
Winter R. Huff
Somerset, Kentucky
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