Real Property – Deed Reformation – Gift Deed – Unilateral Mistake – Reformation Unavailable

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Willis v. Willis (Lawyers Weekly No. 12-06-0300, 7 pp.) (Robin E. Hudson, J.) Appealed from Carteret County Superior Court. (W. Allen Cobb Jr., J.) On appeal from the Court of Appeals. N.C. S. Ct. Full-text opinion.

Holding: Even if the grantor received no consideration for the deed, her unilateral mistake does not entitle her to reformation of the deed.

We modify and affirm the decision of the Court of Appeals.

In January 2005, Janice Willis executed a general warranty deed reserving a life estate in her home for herself and conveying the remainder to her son Eddie in fee simple. Eddie died suddenly in November 2007 while Mrs. Willis was still alive. When it became clear that Eddie’s interest in the property had passed to his children, Mrs. Willis contended that the result was not what she had intended. She filed this lawsuit seeking reformation of the deed based on her unilateral mistake.

The trial court directed a verdict for defendants, and the Court of Appeals affirmed.

In Nelson v. Harris, 32 N.C. App. 375, 232 S.E.2d 298, disc. review denied, 292 N.C. 641, 235 S.E.2d 62 (1977), our Court of Appeals wrote, “The grantor of a conveyance for which no consideration was given by the grantee is entitled to reformation when the deed fails to express the actual intent of the parties due to the grantor’s unilateral mistake.”

This statement from Nelson is nonbinding dictum and is actually contrary to N.C. law. Thus, we need not examine the evidence or review the directed verdict issued in this case because the remedy sought is unavailable as a matter of law.

Nelson v. Harris involved reformation of a deed based on mutual mistake of the parties. The analysis of the issues before the court comported with precedent, and those portions of the opinion remain good law without regard to the discussion that follows.

However, the above-quoted statement did not describe the facts of Nelson, had no impact on the decision, and had no basis in prior N.C. law. Our research has found no N.C. appellate court decision that has relied on the quoted statement in Nelson to reform a deed based on unilateral mistake. Accordingly, plaintiff’s reliance on Nelson for the claim fails because the statement in Nelson regarding reformation of gift deeds is contrary to settled N.C. law.

In Crawford v. Willoughby, 192 N.C. 269, 134 S.E. 494 (1926), this court offered three circumstances under which reformation could be available as a remedy: (1) mutual mistake of the parties, (2) mistake of one party induced by fraud of the other, and (3) mistake of the draftsman. The court further explained that “mistake of one party to the deed, or instrument, alone, not induced by the fraud of the other, affords no ground for relief by reformation.”

The three bases for reformation identified by Crawford have been cited and reaffirmed in this state many times in various situations since 1926.

In this case, there were no allegations of mutual mistake, unilateral mistake induced by fraud, or a mistake of the draftsman. Thus, reformation is unavailable under Crawford and its progeny.

While Mrs. Willis may have truly intended a different result, the mistake of one party to the deed, or instrument, alone, not induced by the fraud of the other, affords no ground for relief by reformation.

Modified and affirmed.