Arnold Olson, Sr., et al., Respondents, vs. Gary Olson, et al., Appellants.

may not be cited except as provided by

Minn. Stat. § 480 A. 08, subd. 3 (1996).

STATE OF MINNESOTA

IN COURT OF APPEALS

C9-97-1978

Arnold Olson, Sr., et al.,

Respondents,

vs.

Gary Olson, et al.,

Appellants.

Filed April 14, 1998

Affirmed

Short, Judge

Polk County District Court

File No. CO971149

Delray L. Sparby, Ihle & Sparby, P.A., 312 North Main Avenue, P.O. Box 574, Thief River Falls, MN 56701 (for respondents)

Kenneth F. Johannson, Johannson, Taylor, Rust & Fagerlund, 407 North Broadway, P.O. Box 605, Crookston, MN 56716 (for appellants)

Considered and decided by Harten, Presiding Judge, Short, Judge, and Amundson, Judge.

U N P U B L I S H E D O P I N I O N

SHORT, Judge

Arnold Olson, Sr. (father) and his wife Mervyn Olson (now deceased) deeded property to their six children in equal shares, reserved for themselves a life estate, and continued to live on that property. The father and his children subsequently executed a second deed to his son and daughter-in-law, Gary and Patricia Olson (the Olsons), granting them part of that property, which included the home and several buildings. The deed, which was prepared by an attorney and signed by the father and his children, did not reserve a life estate for the father. Approximately four years after execution of this deed, the Olsons decided to sell the property. The father and his other children sued the Olsons seeking to enjoin the sale and to reform the deed to reflect the parties' intent that a life estate be reserved for the father. After trial, the court ordered reformation of the deed based on mutual mistake. On appeal, the Olsons argue the trial court improperly: (1) reformed the deed; and (2) admitted oral testimony concerning the deed. We affirm.

D E C I S I O N

This court will not set aside a trial court's findings of fact unless clearly erroneous. Minn. R. Civ. P. 52.01; Gjovik v. Strope, 401 N.W.2d 664, 667 (Minn. 1987). On appeal from the decision of a trial court sitting without a jury, we determine whether the evidence sustains the findings of fact and whether such findings sustain the conclusions of law and judgment. Minn. R. Crim. P. 52.01. While we afford due regard to the trial court's opportunity to judge witness credibility, we do not defer to a trial court's decision on purely legal issues. Id. (witness credibility); Frost-Benco Elec. Ass'n v. Minnesota Pub. Utlis. Comm'n, 358 N.W.2d 639, 642 (Minn. 1984) (legal issues).

I.

Courts will not reform a written contract absent a mutual mistake, or a mistake on the part of one of the parties and fraud or inequitable conduct on the part of the other party. Karger v. Wangerin, 230 Minn. 110, 115, 40 N.W.2d 846, 850 (1950). A mutual mistake occurs if: (1) there is a valid agreement between the parties expressing their real intentions; (2) the written instrument failed to express those intentions; and (3) this failure was due to a mutual mistake of the parties, or a unilateral mistake by one of the parties accompanied by fraud or inequitable conduct by the other party. Theros v. Phillips, 256 N.W.2d 852, 857 (Minn. 1977).

The Olsons argue the facts do not support reformation based on mutual mistake. However, the record shows: (1) the father owned the disputed property for over 50 years; (2) while the initial deed to his children reserved a life estate for the father, the second deed to the Olsons failed to do so; (3) prior to executing the second deed to the Olsons, the father told them he would give them the part of the land with the buildings, but that they couldn't sell the property while he was alive because he wanted to live on the property; (4) the father claims the Olsons agreed to this arrangement, and that he would not have transferred the property under different circumstances; (5) two of the father's other children, who were present during this conversation, confirmed the parties reached this agreement; (6) the father's other children understood the agreement to be that the father would stay in a trailer house on the property for as long as he lived or wanted to live there, and that the property would not be sold until he chose to leave or until his death; (7) after executing the deed, the father moved a trailer home and garage onto the property, without the Olsons' permission or consent, and remained there until 1997; (8) the father paid no rent while living on the property; and (9) the Olsons are the only parties to the deed who deny the existence of this oral agreement.

Viewing the record in the light most favorable to the trial court's decision, there is ample evidence that the parties orally agreed to reserve a life estate for the father, that the deed failed to reflect this agreement, and that the mistake was made by all parties involved. Under these circumstances, we cannot say the trial court erred by reforming the deed. See Metro Office Parks Co. v. Control Data Co., 295 Minn. 348, 353, 205 N.W.2d 121, 124 (1973) (concluding trial court's determination regarding reformation will not be disturbed unless it is manifestly contrary to evidence); see, e.g., Hines v. Bauer, 158 Minn. 298, 299, 197 N.W. 483, 483 (1924) (concluding trial court did not err in reforming deed where, on conflicting evidence, plaintiffs convinced trial court truthfulness and right on their side, and ample evidence supports conclusion).

II.

The Olsons also argue the trial court improperly admitted oral testimony in violation of the statute of frauds and parol evidence rule. See Minn. Stat. § 513.04 (1996) (providing no estate or interest in lands may be created, granted, assigned, surrendered, or declared unless conveyance in writing); Hruska v. Chandler Assocs., Inc., 372 N.W.2d 709, 713 (Minn. 1985) (concluding parol evidence not admissible to contradict express terms of written agreement). We disagree. Where a written contract fails, through mistake or fraud, to express the actual oral agreement, it may be reformed even though it comes within the statute of frauds. Olson v. Erickson, 42 Minn. 440, 443, 44 N.W. 317, 318 (1890); see, e.g., National Resort Communities, Inc. v. Cain, 526 S.W.2d 510, 513 (Tex. 1975) (concluding statute of frauds is no bar to reformation of contract for sale of land where parties had agreement and by mutual mistake failed to state agreement in writing); Bench v. Pace, 538 P.2d 180, 182 (Utah 1975) (concluding statute of frauds does not prohibit receipt of testimony concerning oral agreement where evidence warrants reformation on grounds of mutual mistake). In addition, parol evidence is admissible to prove a mutual mistake of fact and to show how the instrument should be corrected to reflect the actual intent of the parties. Rosen v. Westinghouse Elec. Supply Co., 240 F.2d 488, 491 (8th Cir. 1957). Because there is clear evidence of mutual mistake, the trial court properly admitted oral testimony.

Affirmed.