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District Court of Appeal, Second District, Division 2, California.

CHAPMAN COLLEGE, a California corporation, Appellant, v. Russell H. WAGENER et al., Respondents.*

Civ. 20227.

Decided: January 04, 1955

Bromley, Ritter & Lindersmith, Los Angeles, for appellant. R. D. Sweeney and J. E. Simpson, Los Angeles, for respondent.

This action was tried and decided upon the sole issue that the minds of the parties never met on the proposition that payments by the College should first be credited on interest, the balance upon principal. The finding that the notes which were made pursuant to a contract were not executed as a result of mutual mistake and should not be reformed is utterly inconsistent with the finding that no contract was in fact made. The latter finding was specific and that it was intended as the basis of the decision made by the trial court is evidenced by its ‘memorandum opinion.’ If there was no contract, as the court found, how can it be said that the terms set forth in the writing executed by the parties may now be invoked to establish that there was a contract?

If there was no contract, all the declarations and asseverations contained in the voluminous findings with reference to appellant's action for reformation are without substance. The simple answer to that count of the complaint is the finding that ‘no contract was made.’ Therefore the court will not besmear the record by declaring facts to show that appellant is not entitled to a reformation. The entire writing, included in the findings with reference to reformation of the contract, is meaningless except in so far as it be cited to becloud the finding that there was no contract.

The writing executed by the parties contained a formula by which appellant would pay for the 934 acres of land at a price specified, to be paid, partially in cash and and the balance by notes secured by trust deeds on the property. That original writing provided that the note and trust deeds should provide that ‘all payments thereon shall first be credited on interest, the balance on principal.’ When the notes and trust deeds were delivered by appellant and accepted by respondents, they did not contain the language of the original writing. However, they were all parts of the same transaction. Civ. Code, sec. 1642; Lynch v. Bank of America, etc., 2 Cal.App.2d 214, 37 P.2d 716; Spotton v. Dyer, 42 Cal.App. 585, 184 P. 23. And whether or not reformation was had under court 1, appellant was entitled to an interpretation of the contract by the trial court, and to have its rights under the contract declared. Moreover, the court should have determined whether or not the omission of the language of the contract to the effect that all payments to be made on the notes and trust needs should first be credited on interest and the balance on principal made any difference in the substantive rights of the parties.

If contracts may be so lightly considered after they have been entered into with full knowledge, upon legal advice, and have been acted upon for several years; if they can be rescinded and annulled at the whim of a party simply because there is a dispute as to the proper interpretation, then there is little safety for contracting parties under the law.

The motion for a rehearing is denied.


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