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DOCTRINE OF MUTUAL MISTAKE APPLIED TO REFORM NOTE AND MORTGAGE.

The Second Department determined the doctrine of mutual mistake applied and Supreme Court properly reformed the note and mortgage to correct the mistake:

“A party seeking reformation of a contract by reason of mistake must establish, with clear and convincing evidence, that the contract was executed under mutual mistake or a unilateral mistake induced by the other party’s fraudulent misrepresentation” … . “In a case of mutual mistake, the parties have reached an oral agreement and, unknown to either, the signed writing does not express that agreement” … . “Reformation is not granted for the purpose of alleviating a hard or oppressive bargain, but rather to restate the intended terms of an agreement when the writing that memorializes that agreement is at variance with the intent of both parties” … .

Here, the Supreme Court properly determined that the plaintiff established the existence of a mutual mistake by clear and convincing evidence … . The parties’ contract of sale clearly and unambiguously provided that the purchase price for the subject property was $550,000, which was to be paid, in part, by a $350,000 purchase money mortgage. Based upon the proof at trial, it was clear that the $206,065.79 balloon payment calculated by the plaintiff’s attorney and mutually agreed upon by the parties was the product of an inadvertent error, as it was inconsistent with the parties’ agreement that the mortgage was to be in the amount of $350,000. “[I]f, by the mistake of the scrivener or by any other inadvertence, [a] writing does not express the agreement actually made, it may be reformed by the court” … . Gunther v Vilceus, 2016 NY Slip Op 05847, 2nd Dept 8-24-16

CONTRACT LAW (DOCTRINE OF MUTUAL MISTAKE APPLIED TO REFORM NOTE AND MORTGAGE)/MUTUAL MISTAKE (DOCTRINE OF MUTUAL MISTAKE APPLIED TO REFORM NOTE AND MORTGAGE)

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