Stare v. Tate

21 Cal.App.3d 432, 98 Cal.Rptr. 264 (1971)

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Nature of the Case

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Facts

H and W were at each other throats in a divorce. They were trying to settle the property through negotiations. W claimed that certain real property (the Holt property) which she and the husband, Tim, owned as tenants in common with his brother, was worth $550,000. H's valuation was somewhere between $425,000 and $450,000. W had very little evidence on which to base her contention. They also disagreed on the ownership of stock in a family corporation and the proper basis for its valuation. H owned 25,500 shares. Of these, he had owned 5,000 shares long before he married W. H conceded that a block of 7,500 shares was community property. Another block of 5,000 shares was, according to W, given to her and H as a wedding present by his parents. Yet another block of 8,000 shares was, again according to W, given to both her and H as a present during their marriage. The shares were, however, in H's name alone and he denied that the community had any interest in them. The book value of the shares was about $7.00 per share. H claimed that the fair market value was, $1.50 per share over the book value and that Tim should 'buy' her community interest in the shares at that value. W's attorney prepared a document which, among other things, arrived at a suggested figure of $70,081.85 for the value of W's share in the Holt property. This value was arrived at by a computation set forth in the proposal. In his computations, W's attorney made two substantial errors and both were obvious. First, the net value after deducting the encumbrances from the asserted gross value of $550,000 is $241,637.01, not $141,637.01; second, one-half of $141,637.01 is more than $70,081.85. The correct figure for the equity should have been $120,818.50 or, roughly $ 50,000 more. H's accountant immediately discovered the error while helping H's attorney in preparing a counteroffer. A counteroffer was then submitted in a way designed to minimize the danger that H or her attorney would discover the mistake. A formal agreement was quickly signed. H decided to rub it in to W by showing her the mistake. W sued for reformation. It is, of course, no defense that it was negligently made by W's attorney. H offered proof that the property was worth no more than an amount that would result in the $70,000 equity. The trial court permitted H to prove the value of the Holt property by expert testimony and other means, found that the property was worth no more than $425,000, that Joan had received an equitable division of the community property 'and that no reformation is required for said reason.' W appealed.