
    Ohio Farmers Insurance Co. v. Clinton County National Bank and Trust Co.
    [Cite as Ohio Farmers Ins. Co. v. Clinton County Natl. Bk. and Trust Co., 8 Ohio Misc. 226.]
    (No. 19695
    Decided April 30, 1964.)
    Common Pleas Court of Clinton County.
    
      Messrs. McNamara & McNamara, for plaintiff.
    
      Mr. Charles R. Kirk, for defendant.
   Baynes, J.

(sitting by assignment). The defendant demurs to plaintiff’s petition on the ground that it does not state a cause of action. Memoranda pro and contra have been filed.

The substance of the cause of action plead for reformation of a banker’s blanket bond is as follows: On October 19, 1961, the parties agreed that plaintiff would issue and defendant would purchase an indemnity bond. The standard form of contract provides for inclusion or exclusion of certain coverages by attachment of a rider to the standard form. The premium to be paid is determined by the several coverages.

Coverage or Clause (E) relates to indemnity when securities are forged or counterfeited. On October 31, 1961, effective as of October 19, 1961, defendant executed a standard form of questionnaire which stated that Clause (E) should not be included. Subsequent to October 19, 1961, but effective that date plaintiff issued and delivered to defendant, by mistake, a contract which failed to contain a rider excluding Clause (E). The plaintiff did not discover the mistake until August 14, 1963. It is also specifically alleged :

“The Insurance Company and the bank did not intend that the bond issued and delivered to the bank should include coverage known as Clause (E).

“The bank mistakenly accepted and retained the bond issued * *■ '* which by inadvertence and mistake failed to exclude coverage under Clause (E).”

No premium was charged by plaintiff or paid by defendant for protection under Clause (E).

Defendant argues that no mutuality of mistake is alleged and that plaintiff is seeking relief from its own error or negligence and not from any error of defendant or mutual error or errors of both parties.

For purposes of this decision it is unnecessary, at this point, to consider whether plaintiff can meet the burden of proving the allegations made. Plaintiff alleges a pre-existing agreement which does not conform to the written contract. This impliedly, if not explicitly, contains the elements of mutual mistake.

There seems to be, outside of Ohio, respectable authority to support the proposition stated in 3 Corbin on Contracts, at pp. 729, 730, Section 614. This is to the effect that the remedy of reformation is available to strike provisions from insurance contracts where the agreement was that it was not to incorporate a particular provision. Where one party believes the writing correctly integrates the agreement and the other knows it does not, reformation may be a proper remedy, even though the mistake of writing the contract was not a mutual one.

We would suggest that what the courts actually do in many of these instances is to fictionalize the fact of mutuality of mistake. The relief in cases such as the instant case can be justified, if it needs justification at all, on a theory of partial cancellation of a separable instrument. A contract may be rescinded for a mistake which is unilateral, as well as for one which is mutual, 8 Ohio Jurisprudence 2d 420, 421, Section 28.

The First District Court of Appeals took a step in this direction in Administrator v. Casualty Co., 75 Ohio App. 122, 61 N. E. 2d 226, 30 O. O. 427, where the syllabus states that a release may be reformed on ground of mutual mistake, where the printed form furnished by the insurer was inept to accurately express the intended agreement of the parties.

Judge Hildebrant stated, at p. 129, 75 Ohio App.:

“If the knowing and informed use of the printed forms containing language transcending the pre-existing agreement, would amount to inequitable conduct under the circumstances here, surely the court cannot be called upon to supply the inequity or iniquity to the releases by confirming them as mistakenly or inadvertently worded. ’ ’

For authority with respect to reformation, see also 47 Ohio Jurisprudence 2d 135, 148, Sections 13 and 22. And with respect to negligence of the party preparing the contract, ibid, 160, 161, Section 31.

In any event the well pleaded facts, as above set forth, on the cause of action for reformation allege a mutual mistake in that the contract does not conform to the agreement. The proof and right to any or all relief prayed for must abide the trial on the merits.

A judgment entry accordingly is concurrently filed.  