R & B Farms v. Cedar Valley Acres

R and B FaRms , I nc., a neBRaska coRpoRatIon, appellee ,
v. cedaR valley acRes , I nc., a neBRaska
coRpoRatIon, appellant.
798 N.W.2d 121
Filed June 10, 2011. 	No. S-10-568.
1. Contracts: Reformation: Equity. An action to reform a contract sounds
in equity.
2. Equity: Appeal and Error. In an appeal of an equitable action, an appellate
court tries factual questions de novo on the record, provided that where credible
evidence is in conflict on a material issue of fact, the appellate court considers
and may give weight to the fact that the trial judge heard and observed the wit-
nesses and accepted one version of the facts rather than another.
3. Rules of Evidence: Appeal and Error. When the Nebraska Evidence Rules
commit the evidentiary question at issue to the discretion of the trial court, an
appellate court reviews the admissibility of evidence for an abuse of discretion.
4. Rules of the Supreme Court: Pleadings. The key inquiry of Neb. Ct. R. Pldg.
§ 6-1115(b) for “express or implied consent” is whether the parties recognized
that an issue not presented by the pleadings entered the case at trial.
5. Reformation: Presumptions: Intent: Evidence. To overcome the presumption
that an agreement correctly expresses the parties’ intent and therefore should be
reformed, the party seeking reformation must offer clear, convincing, and satis-
factory evidence.
6. Evidence: Words and Phrases. Clear and convincing evidence means that
amount of evidence which produces in the trier of fact a firm belief or conviction
about the existence of a fact to be proved.
7. Reformation: Intent. A mutual mistake exists where there has been a meeting of
the minds of the parties and an agreement actually entered into, but the agreement
in its written form does not express what was really intended by the parties.
8. Contracts: Reformation. The fact that one of the parties to a contract denies
that a mistake was made does not prevent a finding of mutual mistake or prevent
reformation.
9. Reformation: Intent. If incorrect language or wording is inserted by mistake,
including a scrivener’s mistake, into an instrument intended to reflect the agree-
ment of the parties, such mistake is mutual and contrary to the real intention and
agreement of the parties.
10. Parol Evidence: Contracts. The parol evidence rule states that if negotiations
between the parties result in an integrated agreement which is reduced to writing,
then, in the absence of fraud, mistake, or ambiguity, the written agreement is the
only competent evidence of the contract between them.
Appeal from the District Court for Boone County: mIchael
J. owens, Judge. Reversed and remanded with directions.
John B. McDermott, of Shamberg, Wolf, McDermott &
Depue, for appellant.
706 	281 NEBRASkA REPoRTS
Nebraska Supreme Court Online Library
www.nebraska.gov/apps-courts-epub/
11/01/2026 04:45 AM CST

John C. Hahn and Brent C. Stephenson, of Jeffrey, Hahn,
Hemmerling & Zimmerman, P.C., L.L.o., for appellee.
heavIcan, c.J., connolly, G eRRaRd, stephan, mccoRmack ,
and mIlleR-leRman, JJ.
mccoRmack , J.
NATURE oF CASE
This case arose from a boundary dispute between R and B
Farms, Inc. (R and B), and Cedar Valley Acres, Inc. (Cedar
Valley). R and B sought reformation of the contract which con-
veyed the land and an order quieting title in it as owner of the
property. The district court determined that mutual mistake had
occurred which necessitated reformation of the written agree-
ment. Cedar Valley appeals. The issues on appeal are whether
the theory of mutual mistake was properly before the district
court, whether parol evidence was properly admitted, and
whether R and B’s recovery is precluded under the doctrine of
conscious ignorance. Although the issue of mutual mistake was
properly before the district court, the record does not support a
finding of mutual mistake in the instant case. Accordingly, we
reverse, and remand with directions.
BACkgRoUND
Reginald Dobson, Sr. (Reginald Sr.), and his sons, Reginald
Dobson, Jr. (Reginald Jr.); Daniel Dobson; and David Dobson,
farmed 	together 	operating 	under 	a 	corporation 	known 	as
Reginald Dobson & Sons, Inc. (Dobson & Sons). In 1993, the
farming operations were divided among Reginald Jr., Daniel,
and David. Reginald Jr. formed R and B, and Daniel formed
Cedar Valley. David formed a third corporation not at issue in
this appeal. Reginald Jr. and Daniel act as president for their
respective corporations.
In 1993, the three newly formed corporations executed
a written “Agreement and Plan of Reorganization” (written
agreement) with Reginald Sr. on behalf of Dobson & Sons. The
written agreement provided for the division of Dobson & Sons’
property among the corporations. The cropland was valued at
$1,100 per acre, and the pastureland was valued at $300 per
acre. R and B was to receive 348 acres of cropland, and Cedar
R & B FARMS v. CEDAR VALLEy ACRES 	707
Cite as 281 Neb. 706

Valley was to receive 119 acres of cropland and 240 acres of
pastureland. Respectively, R and B paid $382,800, and Cedar
Valley paid $202,900 in consideration for the land.
The disputed property in this matter consists of a parcel
of cropland located north of a fence on property previously
belonging to Dobson & Sons (hereinafter referred to as “the
cropland”). The cropland was encompassed by the legal descrip-
tion deeded to Cedar Valley under the written agreement, but
R and B claims that all parties decided that a fence line would
serve as the boundary for the property. The fence line does not
conform to the legal description of the land contained in the
written agreement. The parties never conducted a survey on
the land described in the written agreement. Reginald Jr. stated
that everyone “[f]igured the fenceline was close enough” and
that “[e]verybody [gave] their word [the] fenceline would be
the boundary.”
The written agreement contained the following provisions:
Entire Agreement. This Agreement and the schedules
delivered herewith and the other agreements specifically
provided for herein represent the entire agreement of the
parties and no provision or document of any kind shall
be included in or form a part of this Agreement unless in
writing and delivered to the other parties by the party to
be charged.
. . . Prior Negotiations. All prior negotiations and dis-
cussions by and among the parties hereto which are not
reflected or set forth in this Agreement or the schedules
delivered herewith are merged into this Agreement and
said schedules have no force or effect.
The cropland has been irrigated by three center pivots
prior to execution of the written agreement. R and B pur-
chased these pivots from Reginald Sr. pursuant to the written
agreement. After the written agreement was executed, from
1993 through 2008, R and B farmed the cropland. During
this time, Cedar Valley used pastureland owned by R and B
and located south of the fence line for grazing cattle. There
was no exchange of rent requested or paid for either parties’
use of the respective parcels. Both parties paid taxes on their
708 	281 NEBRASkA REPoRTS

respective property as specified under the legal description in
the written agreement.
Cedar Valley claimed that R and B was allowed to farm the
cropland north of the fence in exchange for Cedar Valley’s
use of the pastureland south of the fence. From 1993 through
2008, R and B filed paperwork with the U.S. Department of
Agriculture which certified that R and B had a rental agreement
with Cedar Valley. The rent certification statement was signed
by Reginald Jr. and certifies Cedar Valley’s status as the owner
of the cropland and R and B’s status as tenant. To receive gov-
ernment payments for the land, the local Farm Service Agency
required both Cedar Valley and R and B to sign documentation
to allow R and B to receive such payments, which payments
R and B retained. Reginald Jr. disputed that any agreement was
in place regarding the exchanged use of land and claimed that
the representations made to the Farm Service Agency and the
U.S. Department of Agriculture were necessary because “[t]hey
had it all tangled up at the courthouse” and “[t]hat’s what they
had to go by.”
In 2008, Cedar Valley provided notice of its intent to ter-
minate what it considered to be the rental agreement with
R and B. Thereafter, R and B initiated this suit. In R and B’s
amended complaint, it alleged three specific causes of action:
(1) declaratory judgment, (2) quiet title on the theory of
adverse possession, and (3) mutual recognition and acquies-
cence. The operative complaint did not explicitly plead mutual
mistake as a theory of recovery. But R and B listed “Facts
Common to All Causes of Action” in the complaint, which
included that “the fence was the intended division of the two
tracts of land at the time of the sale” and that “the Subject
Property was incorrectly, contrary to the intent of the parties,
deeded to [Cedar Valley] by its legal description, as opposed
to a legal description based on the correct metes and bounds
description of the Fence.”
Prior to trial, Cedar Valley filed a motion for summary
judgment. In R and B’s brief in opposition to the motion, it
addressed the issue of mutual mistake. Hearing on the motion
was held, and R and B argued it was entitled to recovery
R & B FARMS v. CEDAR VALLEy ACRES 	709
Cite as 281 Neb. 706

under, among other things, the theory of mutual mistake.
Cedar Valley addressed R and B’s first cause of action as one
of mistake. It stated, “The first cause of action is somehow
there was a mistake. Well, there was no mistake.” Cedar Valley
argued there was no mutual mistake as a matter of law, but it
did not object to the court’s consideration of the issue, argue
that it was surprised by the theory, or request a continuance.
The court overruled Cedar Valley’s motion for summary judg-
ment. Cedar Valley subsequently filed a motion in limine seek-
ing to prevent R and B from presenting any evidence regard-
ing discussions between the parties prior to entering into the
written agreement. The court overruled Cedar Valley’s motion
in limine.
The district court ultimately found in favor of R and B on
the theory of mutual mistake. The order stated that the theory
was adequately raised by the pleadings and that the evidence
adduced established that a mutual mistake had occurred which
necessitated reformation of the written agreement previously
entered into by the parties. The court determined that it was
the parties’ mutual intention that R and B receive the cropland
north of the fence. R and B was determined to be the owner of
the disputed property. Cedar Valley appeals.
ASSIgNMENTS oF ERRoR
Cedar Valley assigns, restated and renumbered, that the
district court erred in (1) finding that the theory of mutual
mistake was properly pled; (2) admitting extrinsic evidence
of negotiations and agreements made prior to the execution of
the written agreement, in violation of the parol evidence rule;
(3) finding that the evidence was sufficient to establish mutual
mistake; and (4) reforming the written agreement on the basis
of mutual mistake.
STANDARD oF REVIEW
[1,2] An action to reform a contract sounds in equity.1 In an
appeal of an equitable action, an appellate court tries factual
1 See J. J. Schaefer Livestock Hauling v. Gretna St. Bank, 229 Neb. 580, 428
N.W.2d 185 (1988).
710 	281 NEBRASkA REPoRTS

questions de novo on the record, provided that where credible
evidence is in conflict on a material issue of fact, the appellate
court considers and may give weight to the fact that the trial
judge heard and observed the witnesses and accepted one ver-
sion of the facts rather than another.2
[3] When the Nebraska Evidence Rules commit the eviden-
tiary question at issue to the discretion of the trial court, an
appellate court reviews the admissibility of evidence for an
abuse of discretion.3
ANALySIS
adequacy oF pleadInGs
on appeal, Cedar Valley argues that the district court erred
in admitting evidence relating to an alleged mutual mistake
because R and B failed to properly plead this theory. Cedar
Valley asserts that it was prejudiced when the district court
allowed R and B to proceed on the theory of mutual mistake
and that the court did not allow it adequate time to prepare a
proper defense.
[4] Neb. Ct. R. Pldg. § 6-1115(b) states:
When issues not raised by the pleadings are tried by
express or implied consent of the parties, they shall be
treated in all respects as if they had been raised in the
pleadings. Such amendment of the pleadings as may be
necessary to cause them to conform to the evidence and
to raise these issues may be made upon motion of any
party at any time, even after judgment; but failure so
to amend does not affect the result of the trial of these
issues. If evidence is objected to at the trial on the ground
that it is not within the issues made by the pleadings,
the court may allow the pleadings to be amended and
shall do so freely when the presentation of the merits of
the action will be subserved thereby and the objecting
party fails to satisfy the court that the admission of such
evidence would prejudice the party in maintaining the
2 Ottaco Acceptance, Inc. v. Larkin, 273 Neb. 765, 733 N.W.2d 539 (2007).
3 Erickson v. U-Haul Internat., 278 Neb. 18, 767 N.W.2d 765 (2009).
R & B FARMS v. CEDAR VALLEy ACRES 	711
Cite as 281 Neb. 706

party’s action or defense upon the merits. The court may
grant a continuance to enable the objecting party to meet
such evidence.
The key inquiry of this rule for “express or implied consent” is
whether the parties recognized that an issue not presented by
the pleadings entered the case at trial.4 Implied consent may
arise in two situations. First, the claim may be introduced out-
side of the complaint—in another pleading or document—and
then treated by the opposing party as if pleaded. Second, con-
sent may be implied if during the trial the party acquiesces or
fails to object to the introduction of evidence that relates only
to that issue.5
R and B did not expressly use the phrase “mutual mistake”
to describe a cause of action in its complaint. But in both its
complaint and amended complaint, R and B pled that “the
fence was the intended division of the two tracts of land at
the time of the sale” and that “the Subject Property was incor-
rectly, contrary to the intent of the parties, deeded to [Cedar
Valley] by its legal description, as opposed to a legal descrip-
tion based on the correct metes and bounds description of
the Fence.”
At the hearing on its motion in limine, Cedar Valley did
object to evidence presented on the issue of mutual mistake on
the basis of the parol evidence rule. It also argued that mutual
mistake was not properly pled. But previously, at the hearing
on the motion for summary judgment, Cedar Valley conceded
that R and B had raised the issue of mistake and proceeded to
address the theory of mutual mistake on the merits. In general,
a finding of implied consent depends on whether the parties
recognized that an issue not presented by the pleadings entered
the case at trial.6 During pretrial hearings, both parties argued
on the issue of mutual mistake. Cedar Valley specifically
argued in response to R and B’s theory of mistake and stated
that “it doesn’t make any sense whatsoever to take [R and B’s]
4 See Blinn v. Beatrice Community Hosp. & Health Ctr., 270 Neb. 809, 708
N.W.2d 235 (2006).
5 Id.
6 See id.
712 	281 NEBRASkA REPoRTS

position that, well, it was a mutual mistake. No, it wasn’t a
mutual mistake.”
The facts pled by R and B were sufficient to place the theory
of mutual mistake at issue. R and B did not use the words
“mutual mistake,” but this failure did not affect the substantial
rights of Cedar Valley. Cedar Valley was aware from the com-
plaint and the amended complaint that R and B sought refor-
mation on the basis that the written agreement did not reflect
the intentions of the parties—a theory of mutual mistake. And
Cedar Valley was put on notice that it would have to defend
against that theory based on the issues addressed at the hearing
on its motion for summary judgment. Cedar Valley addressed
this issue on the merits; the record thus indicates that the issue
of mutual mistake was tried by the implied consent of the par-
ties. We therefore determine that the claim of mutual mistake
was properly before the district court.
In its brief, Cedar Valley states that the court “opted to
proceed—over arduous objection from Cedar Valley . . . with-
out adequate pleadings on file and without allowing Cedar
Valley . . . time to respond thereto.”7 But nothing in the record
indicates either that Cedar Valley requested a reformation of
the pleadings to reflect the theory of mutual mistake or that
it requested a continuance. The pretrial conference makes
clear that it had notice of R and B’s intent to proceed on this
theory. Had Cedar Valley requested the pleadings be amended
and it be granted a continuance to prepare, this remedy would
clearly be allowed under § 6-1115(b). Cedar Valley’s failure
to request a continuance indicates that it was not prejudiced
when the court allowed R and B to proceed on the theory of
mutual mistake.
Because mutual mistake was properly before the court, we
also determine that parol evidence was properly admitted to
enable the trier of fact to ascertain the parties’ actual intent
at the time of entering into the contract.8 The district court
7 Brief for appellant at 19.
8 See Johnson v. Stover, 218 Neb. 250, 354 N.W.2d 142 (1984). Cf. In re
Trust Created by Isvik, 274 Neb. 525, 741 N.W.2d 638 (2007) (extrinsic
evidence properly admitted to resolve ambiguity or mistake under Uniform
Trust Code for reformation in conformity with settlor’s intent).
R & B FARMS v. CEDAR VALLEy ACRES 	713
Cite as 281 Neb. 706

therefore did not err when it determined that parol evidence
was admissible to show that because of mutual mistake, the
written agreement did not reflect the intention of the parties.9
The district court did not abuse its discretion in admitting
extrinsic evidence relevant to the theory of mutual mistake, and
Cedar Valley’s arguments to the contrary are without merit.
mutual mIstake
An action to reform a contract sounds in equity.10 Reformation
may be granted to correct an erroneous instrument to express
the true intent of the parties to the instrument.11 In an appeal
of an equitable action, an appellate court tries factual questions
de novo on the record, provided that where credible evidence
is in conflict on a material issue of fact, the appellate court
considers and may give weight to the fact that the trial judge
heard and observed the witnesses and accepted one version of
the facts rather than another.12
[5,6] The right to reformation depends on whether the instru-
ment to be reformed reflects the intent of the parties. Where it
appears that a mistake has been made, a court will order the
cancellation or the reformation of a deed.13 To overcome the
presumption that the agreement correctly expresses the par-
ties’ intent and therefore should be reformed, the party seek-
ing reformation must offer clear, convincing, and satisfactory
evidence.14 Clear and convincing evidence means that amount
of evidence which produces in the trier of fact a firm belief or
conviction about the existence of a fact to be proved.15
[7,8] Cedar Valley argues that the district court erred in find-
ing sufficient evidence to prove that a mutual mistake occurred
9 See, Thirty and 141, L.P. v. Lowe’s Home Centers, Inc., 565 F.3d 443 (8th
Cir. 2009); Johnson v. Stover, supra note 8.
10 J. J. Schaefer Livestock Hauling v. Gretna St. Bank, supra note 1.
11 Jelsma v. Acceptance Ins. Co., 233 Neb. 556, 446 N.W.2d 725 (1989).
12 Ottaco Acceptance, Inc. v. Larkin, supra note 2.
13 Id.
14 See, Walker v. Walker Enter., 248 Neb. 120, 532 N.W.2d 324 (1995);
Records v. Christensen, 246 Neb. 912, 524 N.W.2d 757 (1994).
15 Nelson v. Nelson, 267 Neb. 362, 674 N.W.2d 473 (2004).
714 	281 NEBRASkA REPoRTS

which necessitated the reformation of the written agreement. A
mutual mistake is:
“‘[A] belief shared by the parties, which is not in accord
with the facts. . . . A mutual mistake is one common to
both parties in reference to the instrument to be reformed,
each party laboring under the same misconception about
their instrument. . . . “A mutual mistake exists where there
has been a meeting of the minds of the parties and an
agreement actually entered into, but the agreement in its
written form does not express what was really intended by
the parties.”’”16
The fact that one of the parties to a contract denies that a mis-
take was made does not prevent a finding of mutual mistake
or prevent reformation.17 However, based upon our de novo
review, we find that the record does not support a finding of
mutual mistake in the instant case.
[9] A mutual mistake is a belief shared by the parties, which
is not in accord with the facts.18 It is a mistake common to both
parties in reference to the instrument to be reformed, each party
laboring under the same misconception about its instrument.19
Mutual mistake exists where there has been a meeting of the
minds of the parties and an agreement actually entered into, but
the agreement in its written form does not express what was
really intended by the parties.20 If incorrect language or word-
ing is inserted by mistake, including a scrivener’s mistake, into
an instrument intended to reflect the agreement of the parties,
such mistake is mutual and contrary to the real intention and
agreement of the parties.21
[10] The parol evidence rule states that if negotiations
between the parties result in an integrated agreement which
16 Records v. Christensen, supra note 14, 246 Neb. at 916, 524 N.W.2d
at 761.
17 Olds v. Jamison, 195 Neb. 388, 238 N.W.2d 459 (1976).
18 Newton v. Brown, 222 Neb. 605, 386 N.W.2d 424 (1986).
19 Id.
20 Id.
21 Omaha Door Co. v. Mexican Food Manuf. of Omaha, 232 Neb. 153, 439
N.W.2d 776 (1989).
R & B FARMS v. CEDAR VALLEy ACRES 	715
Cite as 281 Neb. 706

is reduced to writing, then, in the absence of fraud, mistake,
or ambiguity, the written agreement is the only competent
evidence of the contract between them.22 This rule gives legal
effect to the contracting parties’ intention to make their writing
a complete expression of the agreement that they reached, to
the exclusion of all prior or contemporaneous negotiations.23
The written agreement executed by the parties contained an
“Entire Agreement” provision and a “Prior Negotiations” pro-
vision, which specifically provided that all prior negotiations
were merged into the written agreement and that the written
agreement represented the entire agreement of the parties.
R and B does not contend that the legal description contained
in the written agreement granted R and B ownership of the
cropland. Under the legal description, Cedar Valley is the legal
owner of the parcel.
It appears that no witness unequivocally knew what prop-
erty boundaries the legal description in the written agreement
provided. But R and B did not present any testimony or other
evidence that the parties mistakenly believed that the legal
description in the written agreement separated the parcels
at the fence line. In fact, Reginald Jr. testified that though a
survey was not conducted, they “[f]igured the fenceline was
close enough” and that “[e]verybody [gave] their word [the]
fenceline would be the boundary.” This fails to demonstrate
that the legal description in the written agreement was tran-
scribed or included by mistake or that either party believed that
it described the fence line as a boundary.
It is understandable that laypersons could read a legal
description of realty and not know whether the property was
accurately described. However, R and B did not produce clear
and convincing evidence that the parties mistakenly believed
the contract to mean one thing when in reality it did not. The
record does not indicate that the legal description at issue
was inserted by mistake or that the parties intended the legal
22 Podraza v. New Century Physicians of Neb., 280 Neb. 678, 789 N.W.2d
260 (2010).
23 Id.
716 	281 NEBRASkA REPoRTS

description to reflect the fence line as the property boundary.
The record therefore does not support a finding of mutual mis-
take. In the absence of such mistake, the four corners of the
written agreement must control.24
A court may reform a written agreement only when there
has been either a mutual mistake or a unilateral mistake caused
by fraud or inequitable conduct on the part of the party against
whom reformation is sought.25 Because the record does not
support a finding of mutual mistake, we find that the district
court erred in reforming the contract.
CoNCLUSIoN
For the foregoing reasons, the district court erred in find-
ing that the evidence established a mutual mistake, because
there was not clear and convincing evidence that the parties
had a mistaken understanding of the term at issue. As such,
reformation on the basis of mutual mistake was also erroneous.
Accordingly, we reverse the judgment and remand the cause
with directions to the district court to enter judgment consistent
with this opinion, reinstating and upholding the January 25,
1993, written agreement with respect to all parties.
R eveRsed and Remanded wIth dIRectIons.
wRIGht, J., not participating.
24 See id.
25 In re Estate of Dueck, 274 Neb. 89, 736 N.W.2d 720 (2007).
STATE v. oCEgUERA 	717
Cite as 281 Neb. 717
state oF neBRaska , appellee , v.
eleazaR oceGueRa , JR., appellant.
798 N.W.2d 392
Filed June 10, 2011. 	No. S-10-605.
1. Judgments: Appeal and Error. When dispositive issues on appeal present ques-
tions of law, an appellate court has an obligation to reach an independent conclu-
sion irrespective of the decision of the court below.
2. Constitutional Law: Double Jeopardy: Sentences: Appeal and Error. The
Double Jeopardy Clause of the federal Constitution is not offended if an appellate
court remands a cause for resentencing.