Dysart v. Circle J, L.L.C.

2016 Ohio 869

• Court: Ohio Court of Appeals
• Decided: March 7, 2016
• Docket: 14AP0027
• Status: Published

Opinion

[Cite as Dysart v. Circle J, L.L.C., 2016-Ohio-869.]

STATE OF OHIO ) IN THE COURT OF APPEALS )ss: NINTH JUDICIAL DISTRICT COUNTY OF WAYNE )

DAVID J. DYSART, et al. C.A. No. 14AP0027

Appellees

v. APPEAL FROM JUDGMENT ENTERED IN THE CIRCLE J., LLC, et al. COURT OF COMMON PLEAS COUNTY OF WAYNE, OHIO Appellants CASE No. 13-CV-0457

DECISION AND JOURNAL ENTRY

Dated: March 7, 2016

CARR, Presiding Judge.

{¶1} Appellants Jamie and Jody Snyder and Circle J, LLC appeal the judgment of the

Wayne County Court of Common Pleas that granted judgment in favor of appellees David and

Kathryn Dysart. This Court affirms.

I.

{¶2} Leslie and Joan Maust owned substantial acreage in Wooster, Ohio. In 1996,

David and Kathryn Dysart acquired 50 acres of that property from the Mausts. There was one

home on the 50 acres acquired in which the Dysarts would reside. As the Mausts and Dysarts

thereby owned adjoining properties, the four parties executed five easements at the time of

conveyance, three of which granted access by one family over the property of the other for

utilities purposes. The document at issue in this case granted a driveway easement from the

Mausts as grantors to the Dysarts as grantees. According to this easement, the Dysarts were 2

granted the right to use an existing driveway, which traversed the Mausts’ property, between

Pleasant Home Road and their home for residential, farm-related, and home offices purposes.

{¶3} In 2008, the Mausts negotiated to sell almost 86 acres of property to Jamie and

Jody Snyder. The real estate purchase contract between the Mausts and the Snyders provided

that the Snyders were purchasing the property subject to existing easements, including the

driveway easement referenced above. All five easements executed by the Mausts and Dysarts in

1996 were appended to the real estate purchase contract. Title to the property was subsequently

transferred pursuant to a general warranty deed from the Mausts to Circle J, LLC, the company

which holds the Snyders’ farming assets. By all accounts, there were no problems between the

Snyders and the Dysarts arising out of the Dysarts’ use of the driveway.

{¶4} In 2011, the Dysarts attempted to sell their 50-acre property without success.

Later, they arranged to dispose of the property by auction on April 13, 2013. The day before the

scheduled auction, however, Mr. Snyder informed the auctioneer that he was unilaterally

terminating the driveway easement relative to the Dysarts’ property. Believing that no one

would bid on a property where access to the home had been called into question, the Dysarts

acquiesced in the auctioneer’s advice to cancel the auction.

{¶5} The Dysarts filed a four-count complaint against the Snyders and Circle J, LLC

(collectively “Circle J”), seeking reformation of the driveway easement to reflect the original

parties’ intent to create a perpetual easement and seeking damages for diminution in value of the

property, defamation of title, and interference with business contract. Circle J answered,

generally denying the allegations. The matter proceeded to trial before the bench. At the

conclusion of trial, the court issued findings of fact and conclusions of law and entered judgment

in favor of the Dysarts, reforming the easement document. Circle J appealed. This Court 3

dismissed the appeal for lack of a final, appealable order because the Dysarts’ three claims for

damages remained pending. The trial court subsequently issued a judgment in which it noted

that the Dysarts had dismissed their three claims for damages without prejudice immediately

prior to trial. The trial court further entered judgment in favor of the Dysarts on their remaining

claim and reformed the easement document. Circle J appealed, raising two assignments of error

for review. This Court consolidates the assignments of error to facilitate review.

II.

ASSIGNMENT OF ERROR I

THE TRIAL COURT ERRED IN FINDING THAT THE [DYSARTS] WERE GRANTED AN EASEMENT OVER PROPERTY NOW OWNED BY [CIRCLE J].

ASSIGNMENT OF ERROR II

THE TRIAL COURT ERRED IN REFORMING THE PURPORTED “EASEMENT” OVER PROPERTY NOW OWNED BY [CIRCLE J].

{¶6} Circle J argues that the trial court erred by finding that the Dysarts had been

granted a driveway easement over the Snyders’ property and by reforming the easement

document to comport with the original parties’ intent in that regard. This Court disagrees.

{¶7} The provision relevant to this matter is contained in paragraph 6 of the driveway

easement document, which originally stated:

This Agreement may be amended, or terminated in whole or in part by Grantors or Grantees, or their respective successors in title to Parcel 1 and Parcel 2 without the consent of any tenant, lessee, mortgagee or other person claiming by or through them.

(Emphasis added). The trial court reformed the agreement by substituting the word “or” between

“Grantors” and “Grantees” with the word “and.”

{¶8} The issue below was whether the Mausts granted an easement to the Dysarts to

access their home via a driveway that traversed the Mausts’ property, or whether the “easement” 4

agreement merely constituted a license. The Dysarts argued that the original parties intended to

create an easement allowing permanent access to the home on the Dysarts’ property, rather than

a mere license that could be unilaterally terminated by either party. The Dysarts argued that, to

the extent that the easement document may have indicated that the easement could be terminated

by either the grantors or the grantees, the document contained a mutual mistake as to the parties’

intent. Specifically, the Dysarts argued that none of the original parties intended to allow any

party to terminate the easement unilaterally. Moreover, the Dysarts argued that the Snyders had

both actual and constructive notice of the easement and were, therefore, not bona fide purchasers

without knowledge. After considering the evidence presented at trial, the trial court agreed with

the Dysarts and reformed the easement document.

{¶9} The Snyders focus on the plain language in paragraph 6 of the easement

document in their first assignment of error in support of their argument that the document merely

creates a license. The Dysarts never disputed that the driveway easement document stated that

the easement could be terminated by the grantors “or” the grantees. Instead they always argued

that the use of the word “or” was a mistake that did not manifest the mutual intent of the original

parties to the agreement. Accordingly, the Snyders’ reliance on a plain language reading of the

agreement is misplaced.

{¶10} In their second assignment of error, the Snyders argue that the Dysarts failed to

present clear and convincing evidence of the original parties’ mutual mistake in the drafting of

the easement document. In addition, they argue that the Dysarts failed to prove that the Snyders

were not bona fide purchasers without knowledge of the easement.

{¶11} Reformation of a written instrument makes it comport with the intended

agreement of the parties. Castle v. Daniels, 16 Ohio App.3d 209, 212 (2d Dist.1984), citing 1 5

Restatement of the Law 2d, Contracts 406, Section 155, Comment a (1981). Before the trial

court may reform a written agreement, it must find that the party seeking reformation has proven

by clear and convincing evidence that the parties were mutually mistaken as to the substance or

meaning of the document. Harvey v. Harvey, 91 Ohio App.3d 404, 410 (9th Dist.1993). An

exception to reformation of a property agreement exists, however, where the opposing party can

demonstrate that he was a bona fide purchaser without knowledge of an encumbrance on the

property. Zwaryz v. Wiley, 11th Dist. Ashtabula No. 98-A-0073, 1999 WL 689940, *2 (Aug. 20,

1999).

{¶12} In reviewing the quantum of proof, a reviewing court

will not generally consider the mere weight of the evidence; but, where the law requires in a particular case a higher quality and quantity of evidence than is sufficient in ordinary cases to support the judgment by the preponderance of the proof, [a reviewing] court will consider whether the [trial] court applied the proper rule of proof and the evidence attains to that higher degree of probative value to constitute clear and convincing proof.

Frate v. Rimenik, 115 Ohio St. 11, 18 (1926).

{¶13} “An easement is a property interest in the land of another that allows the owner of

the easement a limited use of the land in which the interest exists.” (Internal quotations omitted)

Merrill Lynch Mtge. Lending, Inc. v. Wheeling & Lake Erie Ry. Co., 9th Dist. Summit No.

24943, 2010-Ohio-1827, ¶ 10. An easement is created by agreement whereby the servient estate

confers a benefit upon the dominant estate, granting “some lawful use out of or from the estate of

another.” Warren v. Brenner, 89 Ohio App. 188, 192 (9th Dist.1950). As a property interest, an

easement runs with all transfers of the dominant estate. Merrill Lynch, 2010-Ohio-1827, at ¶ 11.

{¶14} A license, by contrast, is a “personal, revocable, and nonassignable privilege * * *

to do one or more acts upon land without possessing any interest [in the land].” Yeager v.

Tuning, 79 Ohio St. 121, 124 (1908). “A license is present where an easement or a tenancy is 6

granted, but if no interest in land is proposed to be created and nothing beyond a mere temporary

use of the land is promised, there is nothing but a bare license. It depends * * * upon the

intention of the parties.” Bozzelli v. H.H. Seff Advertising Co., 9th Dist. Summit No. 1776, 1930

WL 2221, *3 (Apr. 4, 1930).

{¶15} At trial, Leslie Maust testified that in 1984, he and his wife bought 158 acres of

land in Wayne County. Located on that acreage was the house in which the Dysarts now reside,

the house being accessible from Pleasant Home Road via the same driveway at issue in this case.

In 1996, the Mausts sold 50 acres of land along with the above-referenced house to the Dysarts.

Along with four other easements, the Mausts and Dysarts executed a document whereby the

Mausts granted an easement to the Dysarts for use of the driveway over the Mausts’ retained

property. All five easements were recorded.

{¶16} Mr. Maust testified that he directed his attorney to draft the agreement to

“guarantee access to the house that’s on that 50 acres.” He emphasized that his intention was to

allow permanent access to the house over that driveway for as long as the house existed.

Moreover, he testified that the parties intended not to give either the grantors or grantees the

unilateral ability to terminate the easement. Although the modification/termination provision in

paragraph 6 of the easement contains the word “or,” Mr. Maust testified that the parties did not

negotiate that term. Nor did Mr. Maust instruct the drafting attorney to use the word “or.”

{¶17} All five easements granted by either the Mausts or the Dysarts to the other in

1996, contained similar modification/termination provisions. Mr. Maust acknowledged that,

while three of the easements contained the word “or” in that provision, two easements utilized

the word “and.” Nevertheless, Mr. Maust was clear that all five easements were intended to be

permanent and not unilaterally terminable by either party. Although he read all five easement 7

agreements prior to signing, it did not occur to him that the “or” language in the termination

provisions could allow for unilateral termination.

{¶18} Morris Stutzman testified that he has 39 years of experience as an attorney

focusing on real estate, business, trust, and estate law. He is also a licensed title agent and has

drafted hundreds of easement agreements. He presented the five easement agreements in this

case to the Mausts and Dysarts, although his office staff would have prepared the documents

using templates containing certain boilerplate provisions. Mr. Stutzman testified that the

modification/termination provisions in the easements were boilerplate provisions and that the

parties did not negotiate the use of any terms in those provisions. He could not explain why

some easements used the word “or” while others used the word “and” between grantors and

grantees in the termination provisions except to surmise that different office staff may have

utilized different templates. Attorney Stutzman testified that, while he reviewed the easements

and discussed them with the Mausts and Dysarts, he too did not recognize the mistake in the

termination provisions containing the word “or.” He admitted, however, that use of the word

“or” was a mistake and that his office was responsible for the mistake.

{¶19} Attorney Stutzman defined an “easement” as “an interest in real property,

whereby the owner of the easement has limited use of the property of another.” He characterized

easements as interests running with the land, being assignable, and being perpetual unless

terminated by the acts of both parties or by operation of law. He emphasized that easements

cannot be terminated unilaterally by any individual party. He defined a “license” as “a personal

right or privilege granted by the owner of property.” He clarified that licenses do not convey a

property interest, are not assignable, and do not run with the land so that they cease when the 8

property is conveyed. Significantly, licenses are revocable and can be terminated unilaterally by

the grantor.

{¶20} With regard to the Maust-Dysart easements, Attorney Stutzman testified that,

after conferring with the parties, he intended to draft agreements that could not be terminated

unilaterally by either the grantor or grantee. He pointed to multiple reasons why the agreements

were easements not subject to unilateral termination. First, he testified that in his practice he

would never title a document as an “easement” (as the agreements here were titled) if it could be

terminated unilaterally by any party. Second, these agreements were recorded, and there would

be no reason to publicly record a mere license. Third, other provisions in the driveway easement

supported the conclusion that neither party could unilaterally terminate the agreement. For

example, paragraph 2 establishes the limitations of the easement for “residential, farm-related or

home office purposes” solely for the grantees, their heirs, successors, and assigns only as to the

single family residence. In the event of a subdivision of the property, grantees are precluded

from granting a license to any person who is not the owner of the property on which the current

home sits. Paragraph 2 further provides the sole means of unilateral termination by the grantor

where the grantee uses the easement beyond the enunciated scope or where the grantee grants a

license to owners or inhabitants of subdivided lots. Attorney Stutzman testified that there was no

reason to include a specific unilateral termination provision if either party could otherwise

unilaterally terminate the agreement.

{¶21} Attorney Stutzman cited to two other provisions in the agreement to support the

conclusion that all parties intended to create a perpetual easement rather than a mere license. He

noted that paragraph 3 allows the grantees to assign their interest, a characteristic of an easement

but not a license. Finally, he noted paragraph 8 which specifically directs that the agreement 9

“shall run with [the land] and be binding upon and inure to the benefit of Grantors and Grantees

and their respective heirs, personal representatives, successors and assigns.” Attorney Stutzman

emphasized that only an easement can run with the land, while a license cannot.

{¶22} David Dysart testified that when he and his wife bought the subject property in

1996 from the Mausts, the parties all discussed their intent to create an easement granting

permanent access to the home via the existing driveway. He described the agreement as a means

to safeguard the rights of all the property owners. Moreover, Mr. Dysart cited to paragraph 4 of

the easement which sets out the mutual obligations of the grantors and grantees to pay an

assigned portion of the maintenance and repair costs for the easement driveway. He testified that

he would never have agreed to assume any financial responsibility for the driveway on the

Mausts’ property if he believed that the grantors could unilaterally terminate the easement at any

time. Finally, he testified that he would never have purchased the property if he believed that the

grantors could deprive him of access to the roadway.

{¶23} Kathryn Dysart testified that her understanding and intent in signing the easement

documents coincided with her husband’s. Neither spouse negotiated the language in the

termination provision of the easement, and neither realized the mistaken use of the word “or” in

that provision.

{¶24} Upon review, this Court concludes that the trial court applied the proper rule of

proof and correctly determined that the Dysarts proved by clear and convincing evidence that the

driveway easement document contained a mutual mistake with regard to the

modification/termination provision in paragraph 6. Although that provision’s use of the word

“or” indicated that either the grantors or the grantees had the authority to unilaterally terminate

the driveway access to the house on the Dysarts’ property, the parties to the agreement, as well 10

as the attorney who drafted the agreement after consultation with the parties, testified that the

intent was to create an easement granting permanent access to the house, not a mere license.

Moreover, the document was titled “easement,” it contained other provisions which specifically

provided for unilateral termination, and the instrument was recorded, all further indicia of the

parties’ intent to create an easement rather than a license. Accordingly, reformation of the

easement agreement was proper unless the Snyders were bona fide purchasers of the Maust

property without knowledge of the easement.

{¶25} Generally, a court may not reform an instrument as against a bona fide purchaser

without notice of the encumbrance. Zwaryz v. Wiley, 11th Dist. Ashtabula No. 98-A-0073, 1999

WL 689940, *2 (Aug. 20, 1999). Notice may be either constructive or arise from actual

knowledge. Emrick v. Multicon Builders, Inc., 57 Ohio St.3d 107, 109 (1991). Where an

encumbrance has been recorded, a subsequent purchaser is charged with constructive notice. See

Tiller v. Hinton, 19 Ohio St.3d 66, 68 (1985).

{¶26} In this case, a copy of the recorded driveway easement was admitted into

evidence. The easement was filed for record in Volume 26, page 95, on June 17, 1996, in

Wayne County.

{¶27} Moreover, Attorney Stutzman testified that he facilitated the real estate

transaction between the Mausts and the Snyders whereby the Snyders purchased the land

encompassing the driveway over which the Dysarts were granted an easement. The real estate

purchase contract (admitted as Exhibit Q) contains a section captioned “Subject to Existing

Easements/Agreements” in capital letters and bold font. The section states that “Buyer is

purchasing the property subject to the following Easements and Agreements[,]” and thereafter

delineates each of the five easements created between the Mausts and Dysarts in 1996. Each 11

easement description includes the date, volume number, and page number of the Wayne County

Official Records in which the easement is recorded. In addition, a copy of each easement

agreement is attached to the real estate purchase contract. In addition, the general warranty deed

(admitted as Exhibit R) transferring the property from the Mausts to the Snyders contains the

following notices: (1) “This parcel is subject to an easement recorded in Official Record Volume

26, Page 95.” (2) “The real property described above is conveyed free from all encumbrances

except taxes, easements, covenants, conditions and restrictions of record[.]”

{¶28} At trial, Jamie Snyder testified that he was aware of the easements when he

bought the Mausts’ property in 2008. He received a copy of the easement agreements during

price negotiations for the property and read them. His attorney also reviewed all documents

associated with the Snyders’ purchase of the property. Although the documents did not make a

lot of sense to him, Mr. Snyder testified that he did not know how the easements could be

terminated. Accordingly, he could not have believed that one party could unilaterally terminate

the driveway easement. In fact, Mr. Snyder testified that he never believed that he had unilateral

authority to terminate the driveway easement until April 12, 2013, after he asked his attorney to

review the easement documents. The same attorney had originally reviewed the purchase

contract with the Snyders. Until 2013, Mr. Snyder had no issues with the Dysarts’ continuing

use of the driveway and only became concerned that any new owners of the Dysart property

might drive recklessly over the driveway and be a threat to potential grandchildren he might

have.

{¶29} Based on a review of the record, it is clear that the Snyders had at a minimum

constructive notice of the driveway easement when they purchased the Mausts’ property. The

easement was recorded, and the real estate purchase agreement referenced the easement and 12

identified the volume and page number in the Wayne County Records where the easement

agreement was recorded. In addition, a copy of the easement was appended to the real estate

purchase agreement. Both Mr. Snyder and his attorney reviewed all documents relevant to the

purchase of the land. Mr. Snyder conceded that he had no reason to believe that he could have

unilaterally terminated the driveway easement, and in fact had no issue with acknowledging a

permanent easement while the Dysarts were living on the dominant estate because they were

prudent drivers. Under these facts, where the Snyders had notice of the encumbrance when they

purchased the servient estate, they were not bona fide purchasers without notice. Accordingly,

there was no evidence to establish an exception to the trial court’s authority to reform the

easement agreement to conform to the original parties’ understanding based on the parties’

mutual mistake.

{¶30} For the above reasons, Circle J’s assignments of error are overruled.

III.

{¶31} Circle J’s assignments of error are overruled. The judgment of the Wayne County

Court of Common Pleas is affirmed.

Judgment affirmed.

There were reasonable grounds for this appeal.

We order that a special mandate issue out of this Court, directing the Court of Common

Pleas, County of Wayne, State of Ohio, to carry this judgment into execution. A certified copy

of this journal entry shall constitute the mandate, pursuant to App.R. 27.

Immediately upon the filing hereof, this document shall constitute the journal entry of

judgment, and it shall be file stamped by the Clerk of the Court of Appeals at which time the 13

period for review shall begin to run. App.R. 22(C). The Clerk of the Court of Appeals is

instructed to mail a notice of entry of this judgment to the parties and to make a notation of the

mailing in the docket, pursuant to App.R. 30.

Costs taxed to Appellants.

DONNA J. CARR FOR THE COURT

WHITMORE, J. MOORE, J. CONCUR.

APPEARANCES:

RALPH F. DUBLIKAR and KARA D. WILLIAMS, Attorneys at Law, for Appellants.

DAVID W. ZACOUR, Attorney at Law, for Appellee.

NORMAN R. “BING” MILLER, JR., Attorney at Law, for Appellee.