Plaintiffs John and Robert Paz and one Bashaw, an attorney, as partners, entered into a contract for the purchase of the DeSimone farm. Although Bashaw, one of the original purchasers, is and was an attorney, neither side was represented by counsel. Within a few days of settlement each side engaged counsel and went to settlement. At settlement Bashaw assigned his interest to plaintiff Pistilli and although he remained at settlement his role is not otherwise explained.
The DeSimone farm qualified under the requirements of the Farmland Assessment Act, N.J.S.A. 54:4-23.1 et seq. , and had therefore been assessed at its value as farmland. As such the land became subject to the provisions of N.J.S.A. 54:4-23.8 which imposes liability for "roll-back taxes" when a change in use from farmland to other is effected.
At settlement all adjustments were made and, although controverted, it appears that roll-back taxes may have been discussed but the parties were not able to agree. Purchasers' attorney said it was sellers' responsibility, and sellers' attorney insisting to the contrary, the matter was left unresolved. Nothing in the agreement of sale controlled the issue of roll-back taxes. Defendant DeSimone does not deny that he was aware of the fact that sometime in the near future the purchasers intended to change the use of the land to a racetrack. It is alleged that having failed to reach an accord as to the taxes the title company insisted that the exception for liability arising out of the Farmlands Assessment Act was to remain on the policy of title insurance to be subsequently issued. However, defendant title company through inadvertence failed to list the exception on the title insurance policy and they now seek reformation.
Thus the issues before the court are as follows: Does the credible evidence support the claim for reformation of the title insurance policy and, if so, as between a buyer and seller of lands receiving tax benefits under the Farmland Assessment Act, absent any provision in the agreement of
sale, who assumes the cost of added roll-back taxes assessed on a change of use from farmland to some other use?
As to the issue of reformation, the credible evidence before the court supports the title company's contention. The testimony of the title company's clerk and the revised testimony of the attorney who represented the buyers at settlement support the proposition that the exception for liability under the Farmland Assessment Act was to remain on the policy of title insurance to be issued. It has also been shown that the clerk through honest mistake did not include the exception on the marked up settlement report given the typist who typed up the issued policy.
The applicable rule of law is stated in 76 C.J.S. Reformation of Instruments § 26, p. 356:
Whenever an instrument is drawn with the intention of carrying into execution an agreement previously made, but, by reason of mistake or inadvertence of the draftsman or scrivener as to a matter of fact, it does not fulfill the intention of the parties, but violates it, there is ground to correct the mistake by reforming the instrument.
In Scult v. Bergen Valley Builders, Inc. , 76 N.J. Super. 124 (Ch. Div. 1962), it is stated that "if [an] instrument as drawn and executed does not, by mistake of [the] draftsman either as to fact or law, carry into execution [the] agreement of [the] parties, equity will correct [the] mistake so as to produce conformity of [the] instrument and agreement." See also, Katchen v. Silberman , 109 N.J. Eq. 613 (Ch. Div. 1932), and Simeone v. Varloro , 107 N.J. Eq. 204 (E. & A. 1930).
I find such rule of law to pertain here and hold the insurance policy to be so reformed as to reflect the exception for liability under the Farmland ...