Opinion
Bradley, Campbell, Carney & Johnson, Leo Bradley, Golden, for plaintiff in error.
Sheldon, Bayer, McLean & Glasman, Charles W. Sheldon, Jr., Denver, for defendants in error.
SILVERSTEIN, Chief Judge.
This case was originally filed in the Supreme Court of the State of Colorado and subsequently transferred to the Court of Appeals under authority vested in the Supreme Court.
This is an action for reformation of a contract and for specific performance thereof. The plaintiff in error, California Liquid Gas Corporation (Cal Gas), was defendant below. The defendants in error, Mr. and Mrs. Rice (Rice), were plaintiffs below.
Rice owned all the stock in Household Gas and Appliance Company, a Colorado corporation, which they wished to sell. After extensive negotiations, Cal Gas entered into a contract to purchase the stock. So far as pertinent here the contract provided that Cal Gas would pay $70,000 'for the assets listed in the Prospectus of Household dated June 1, 1965, attached hereto * * *.' and that the purchase price would be increased by 'Inventories of salable merchandise on hand * * * comprising the inventory of liquefied petroleum gas, fittings and miscellaneous materials in salable condition, comprising the stock in trade of Household's * * * business * * *.'
The contract further provided that the information relative to the increase would be determined by the parties as soon as possible after the closing date. While trying to arrive at the amount of this increase a dispute arose as to whether certain storage tanks on lease or loan to customers were 'assets' or 'inventories.' Rice contended they were included in inventory and Cal Gas that they were fixed assets and included in the base price.
The case was tried to the court which made extensive findings of fact and held that Rice was not entitled to reformation of the contract but was entitled to specific performance of the contract as executed; that some of the tanks were held as assets and some as inventory, the latter having a value of $6,864 and that the value of the 'inventory' tanks should be included in the price increase. Both parties assert error. We affirm the trial court.
The case was pleaded in the trial court as a reformation of contract issue. It is clear from the findings that this is not a proper case for reformation. The fundlamental principles of reformation have been clearly set out by the Supreme Court.
'There can be no reformation unless there is a preliminary or prior agreement, either written or verbal between the parties, furnishing the basis for rectification, or to which the instrument can be reformed. In other words, the alteration sought to be made to the written instrument must be one to which the parties have earlier assented and which by mistake was either omitted or incorrectly set forth in the final instrument. A court should not, in the guise of reformation, write into a written agreement a term or provision which was not earlier agreed to by the parties themselves.' Segelke v. Kilmer, 145 Colo. 538, 360 P.2d 423.
In this instance there is full agreement between the parties that there was to be a sale; that all 'assets' were to be included in the base price of $70,000; and that items called 'inventory' would be in addition to the base price. The parties do not agree on whether the storage tanks are 'inventory' or 'assets' and, from the evidence, never did agree. Therefore the assent needed for reformation is lacking. The trial court also found that there was no pressure or undue influence exerted on Rice by Cal Gas and that there was no showing of fraud or misrepresentation.
The trial court properly treated the case as one for construction of the contract and found that some of the storage tanks were carried by Rice as 'fixed assets' on the company books and that these were assets as discussed in the contract. Rice maintains that these tanks were carried on the books as 'fixed assets' for income tax reasons and that he should not be bound by this classification in the sale. We find no merit in this argument.
The trial court next found that the other tanks were carried on the books as inventory. The court found that these were inventory as contemplated by the contract and ordered Cal Gas to pay Rice for them under the terms of the contract. Cal Gas maintains that it is the common practice of the liquefied petroleum gas business to consider all tanks of this nature as fixed assets. This may be. However, Cal Gas examined the books of the business before executing the contract and therefore it knew that a substantial percentage of the tanks were carried as inventory.
The other arguments raised by the parties are basically disagreements with the facts as found by the trial court. A study of the record discloses that these findings are supported by ample evidence and they will not be disturbed. Lestoque v. Arnold, 116 Colo. 293, 180 P.2d 862.
Judgment affirmed.
COYTE and DUFFORD, JJ., concur.