Rotenberry v. Hooker

For the Court.

¶ 1. Scottye R. Hooker and Clinton Grice Rotenberry, Jr., were sole and equal beneficiaries of a trust. Hooker made an offer to sell Rotenberry her one-half interest in a farm held by the trust. Rotenber-ry accepted the offer, but Hooker rejected the acceptance because of a perceived misconstruction of the offer. Rotenberry’s claim for specific performance was denied because the chancery court found that there was never an agreement with regard to the contract price and a unilateral mistake permitted rescission of the contract. We find that the chancellor was not manifestly wrong in finding unilateral mistake which warranted rescission of the contract.

FACTS

¶ 2. Clinton Gilliam Rotenberry established a trust, the corpus of which consisted of farm land, bank stocks, and other accounts. The trust provided for distribution to the remainder beneficiaries, Clinton G. Rotenberry, Jr., and Scottye R. Hooker, upon the death of the last remaining income beneficiary. The last remaining income beneficiary died in 1997. At the time of termination, the trust’s corpus consisted of Trustmark bank stock, various bank accounts, a leasehold interest in two lots on the reservoir, a judgment entered against a prior trustee, several policies of life insurance, and a 3,262 acre farm in Panola and Tallahatchie Counties.

¶ 3. The farm is the asset at issue in this litigation. Rotenberry and Hooker each had a one-half interest in the remainder assets. A prior trustee had borrowed money from the Met Life Company and had given a deed of trust on the farmland to secure the indebtedness. This debt had a balance of $459,000 at the time of the termination of the trust,

¶ 4. Upon termination, the trustee began preparing for distribution of the assets. Efforts were made to distribute separate assets to Rotenberry and Hooker. Roten-berry made it known that he was interested in purchasing Hooker’s portion of the farmland. The trustee had been able to collect $150,000 a year from leasing the farmland. If Rotenberry and Hooker were unable to reach an agreement on the 3,262 acres, then the trustee was prepared to partition the property, with the result being that each would take one-half of the property and each would assume one-half of the Met Life debt.

¶ 5. On December 2, 1998, Patrick H. Johnson, as attorney for Hooker, communicated an offer to sell her interest in the farmland to Rotenberry’s attorney. The letter specifically stated, “Earlier today I spoke with Scottye and she authorized me to offer to sell to Clint her undivided one-half interest in the 3,262 acres of the Pano-la and Tallahatchie County farm land for $1,062,500 less the balance of the debt due Met Life.” The offer made “time of the essence” and allowed only one day for acceptance.

¶ 6. On December 3, 1998, Rotenberry authorized his attorney to accept the offer. His offer was communicated by letter transmitted by facsimile which stated, “I am authorized by Clint to accept and do hereby accept the offer of Scottye Hooker to sell to Clint her undivided one-half interest in the 3,262 acres of the Panola and Tallahatchie County farm land for $1,062,500 less the balance of the debt due Met Life.”

¶ 7. On December 7, 1998, Rotenberry, through his attorney, sent a second letter to Hooker’s counsel stating that he was willing to place $100,000 in escrow pending the completion of the sale if Hooker would sign a document authorizing Rotenberry to enter into a farm lease pending the closing. The farm lease from the preceding year had expired, and Hooker was attempting to secure a new farm lease to ensure the land would continue to be active and income producing.

¶ 8. On December 9, 1998, Rotenberry, through his attorney, sent a third letter to Hooker’s counsel stating he was immediately ready to tender the sum of $603,500.00 ($1,062,500.00 less the $459,000.00 balance due on the Met Life debt) to finalize the transaction. This letter brought an immediate response from Hooker’s attorney who considered the assessment of all of the debt instead of one-half as a counteroffer and rejected the same. The December 9 letter stated:

It was my client’s intent on December 3, 1998, as it has been over the last several months of negotiations, to establish a price for her interest in the farmland and to proceed from there with negotiating the remainder of the transaction once the offer was accepted.... The facts and pattern of conduct state a very clear and convincing case that this sale was and continued up to this point to be in the process of negotiation and had never been finalized.... Your client’s December 9, 1998 offer to purchase Scottye’s one half undivided interest less the total on the entire piece of property rather than the debt attributable to her one half interest flies in the face of equity and is totally unacceptable and is hereby rejected.

Rotenberry’s attorney disagreed with this assessment and responded with a letter dated December 9, 1998, indicating a deal was struck and he was ready to perform. This letter stated:

You attempt to characterize my earlier letter of December 9, 1998, as a new offer but it obviously is not. It is merely a letter tendering full payment of the purchase price which had been agreed to in prior written communications between us which were authorized and approved by our clients.... [T]he original offer by your client was not for $1,062,500 less one half of the debt due to Met Life but was for the amount ‘less the balance of the debt due Met Life’ This offer has been made by your client and accepted by mine. It only remains to be fulfilled by both of our clients and, as I have informed you, my client stands ready to perform.

¶ 9. Rotenberry thereafter filed a complaint seeking specific performance. A bench trial was held in which testimony was heard from only two witnesses, the attorneys who represented the parties at the time of the alleged offer and the alleged acceptance. The chancellor denied Rotenberry’s request for specific performance and found that there was no meeting of the minds regarding the amount of Met Life debt to be deducted. She then applied the doctrine of unilateral mistake and rescinded the contract.

STANDARD OF REVIEW

¶ 10. The initial question of whether a contract is ambiguous is a matter of law. Lamb Constr. Co. v. Town of Renova, 573 So.2d 1378, 1383 (Miss.1990). If found ambiguous, the subsequent interpretation of the contract is a finding of fact. Id. We will uphold a chancellor’s findings of facts unless they are manifestly wrong or against the overwhelming weight of the evidence. Richardson v. Riley, 355 So.2d 667, 668 (Miss.1978).

DISCUSSION

I. WHETHER THE CHANCERY COURT ERRED BY FINDING THAT THERE HAD BEEN NO MEETING OF THE MINDS OF THE PARTIES.

¶ 11. Rotenberry argues that Hooker is procedurally barred from raising the issue of ambiguity because she failed to plead ambiguity in the trial court. He.also asserts that the chancellor erred by finding there was no meeting of the minds regarding the amount of Met Life debt to be deducted from the price stated in Hooker’s offer.

¶ 12. The argument that Hooker is barred from raising the issue of contract ambiguity because of a procedural bar is without merit. We have held that “ambiguity is not a defense that one must affirmatively set forth.” Century 21 Deep South Props., Ltd. v. Keys, 652 So.2d 707, 717 (Miss.1995). “Ambiguity analysis, unlike affirmative defense analysis, is by its very nature a necessary step in the examination of every contract.” Id. at 717. While not explicitly set out as an affirmative defense, Hooker did, on the first page of her answer, state, “The offer is ambiguous in that the term ‘the debt’ is a broad reference at best which could be construed and interpreted several different ways.”

¶ 13. Rotenberry argues that the chancellor erred in finding there was no meeting of the minds as to the price in the agreement and allowing extrinsic evidence. We agree. The elements of a valid contract are: “(1) two or more contracting parties, (2) consideration, (3) an agreement that is sufficiently definite, (4) parties with legal capacity to make a contract, (5) mutual assent, and (6) no legal prohibition precluding contract formation.” Lanier v. State, 635 So.2d 813, 826 (Miss.1994). A contract is unenforceable if the material terms are not sufficiently definite. Leach v. Tingle, 586 So.2d 799, 802 (Miss.1991). Price is an essential term that must be stated with specificity. Id. at 803. The contract fails when the price has not been stated with specificity. Id.

¶ 14. When examining a contract, a court should first examine the four corners of the contract to determine how to interpret it. McKee v. McKee, 568 So.2d 262, 266 (Miss.1990). If the language in the contract is clear and unambiguous the intent of the contract must be effectuated. Pfisterer v. Noble, 320 So.2d 383, 384 (Miss.1975) See also Pursue Energy Corp. v. Perkins, 558 So.2d 349, 352 (Miss.1990). Vagueness and ambiguity are more strongly construed against the party drafting the contract. Lamb Constr. Co. v. Town of Renova, 573 So.2d at 1383. Only when the intent of the parties is not clear the Court should then resort to extrinsic evidence. Perkins, 558 So.2d. at 353. Hooker’s original letter which offered to sell her half of the farm states “the price less the amount due Met Life.” Nowhere in the letter does it indicate Hooker would only pay one-half of the amount owed Met Life. Since the letter was clear and unambiguous the chancellor should not have looked outside its four corners to determine the parties’ intentions. Once accepted by Rotenberry, Hooker’s letter offering to sell her interest in the land created a valid agreement.

II. WHETHER THE CHANCELLOR ERRED BY FINDING THAT THE DOCTRINE OF UNILATERAL MISTAKE REQUIRES THE CONTRACT TO BE RESCINDED.

¶ 15. Rotenberry argues that the chancellor erred in finding that Hooker was entitled to recision of the contract due to unilateral mistake. He claims that Hooker is barred from raising the issue of unilateral mistake on appeal because she failed to raise the issue in the trial court, and that the evidence does not support a finding of unilateral mistake. We do not agree.

¶ 16. While Hooker did not assert unilateral mistake in her pleadings, the chancellor made specific findings in resolving the issue. Therefore we are not limited in our review of the issue. See Boutwell v. Merritt, 232 Miss. 811, 815 100 So.2d 604, 605 (1958).

¶ 17. We hold that the chancellor’s finding of unilateral mistake was not manifestly wrong. In Mississippi, equity will prevent an intolerable injustice such as where a party has gained an unconscionable advantage by mistake and the mistaken party is not grossly negligent:

But where the mistake is of so fundamental a character, that the minds of the parties have never, in fact, met; or where an unconscionable advantage has been gained, by mere mistake or misapprehension; and there was no gross negligence on the part of the plaintiff, either in falling into the error, or in not sooner claiming redress; and no intervening rights have accrued; and the parties may still be placed in statu quo; equity will interfere, in its discretion, in order to prevent intolerable injustice. This is the clearly defined and well established rule upon the subject, in courts of equity, both in England and America.

Miss. State Building Comm’n v. Becknell, 329 So.2d 57, 60-61 (Miss.1976) (quoting State Highway Comm’n v. State Constr. Co., 203 Or. 414, 280 P.2d 370, 380 (1955) (italics in original & boldface added)).

¶ 18. The chancellor reviewed the dealings between the parties and found that neither party had an obligation to pay any more than one-half of the debt. As the chancellor noted, “[i]f the parties could not agree upon a tenant to lease the property in order to keep the property active and producing income, in which both parties would be entitled to share equally in the profits, then why would [Hooker] agree to sell her interest less the debt to be deducted from the asking price.” It is simply counterintuitive to think that Hooker would knowingly and consciously sell her one-half interest in the farmland less the amount of the entire debt when she was only obligated to pay one-half of it. A mistake to the time of $230,000 bestows an “unconscionable advantage” upon Roten-berry.

¶ 19. There is no evidence that Hooker was negligent. She contacted Rotenberry as soon as she realized he had seized upon an obvious error. No intervening rights have accrued, no escrow was paid or accepted and the parties never changed the positions they held before Hooker’s offer. The chancellor recognized the fundamental injustice of holding Hooker to such an obligation. As such, her findings were not manifestly erroneous.

CONCLUSION

¶ 20. Although the chancellor erred in allowing extrinsic evidence to determine that the parties did not agree to the amount to be deducted from the price in the agreement, we find that the chancellor did not abuse her discretion in finding that unilateral mistake entitled Hooker to rescind the contract. The chancellor’s judgment is affirmed.

¶ 21. AFFIRMED.

PITTMAN, C.J., SMITH, P.J., EASLEY, CARLSON AND GRAVES, JJ., CONCUR. McRAE, P.J., DISSENTS WITH SEPARATE WRITTEN OPINION. COBB AND DIAZ, JJ., NOT PARTICIPATING.

. Contrary to Presiding Justice McRae’s dissent, we find the agreement clear and unambiguous.