Pearl Township v. Thorp
96 N.W. 99, 1903 S.D. LEXIS 46, 17 S.D. 288 (1903)
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Rule of Law:
When a party, through a good faith and mutual mistake of fact, erects a valuable and permanent improvement on the land of another, a court of equity may grant relief to prevent unjust enrichment by compelling the landowner to either pay for the improvement or convey the land on which it sits for valuable consideration.
Facts:
- The plaintiff township purchased a two-acre tract of land from defendant Nelson for the purpose of drilling a public artesian well.
- Township officials and a state engineer selected a spot on this tract and marked it with a stake.
- An unknown person, without the township's knowledge, moved the stake a short distance onto Nelson's adjoining property.
- Believing the stake was in the correct location, the township drilled an artesian well at a cost of approximately $2,300 at the incorrect site.
- Defendant Thorp observed the well's construction.
- Immediately after the well was completed, Thorp purchased the larger, unimproved parcel from Nelson, which unknowingly included the land where the well was mistakenly located.
- At the time of the sale, both Nelson and Thorp were also mistaken, believing the well was on the township's two-acre property.
- Upon discovering the mistake, the township offered to purchase the small portion of land where the well was located, but Thorp refused, intending to keep the well without compensation.
Procedural Posture:
- The plaintiff township brought an action in equity in a court of first instance against Nelson and Thorp.
- The action was dismissed as to defendant Nelson.
- The trial court entered a judgment in favor of the plaintiff township, requiring defendant Thorp to either reimburse the township for the cost of the well or convey the one-half acre of land upon which it is situated.
- Defendant Thorp, the appellant, appealed the trial court's judgment to the state's highest court.
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Issue:
Does a court of equity have the power to grant relief to a public corporation that, due to a mutual mistake of fact, constructed a valuable and permanent artesian well on the land of a private owner, by requiring the owner to either pay for the well or sell the small portion of land it occupies?
Opinions:
Majority - Fuller, J.
Yes. A court of equity has the power to grant relief in such a situation to prevent a party from being unjustly enriched by another's good faith mistake. The court found it manifestly repugnant to jurisprudence to allow a private person to absorb the fruits of a public expenditure made under a mutual mistake. The failure of the township officials to discover the stake had been moved was not considered negligence, given the unimproved nature of the land. The court reasoned that since all parties, including Nelson and Thorp, were mistaken about the well's true location at the time of the land sale, it would be unjust to permit Thorp to retain the benefit without compensation. Citing McKelway v. Armour, the court affirmed that equity can fashion a remedy, such as giving the landowner the option to either pay for the mistaken improvement or sell the land upon which it was built, to achieve a just outcome.
Analysis:
This case solidifies the equitable principle that courts will intervene to prevent unjust enrichment resulting from a mutual mistake of fact. It demonstrates that a party who makes a substantial, good-faith improvement on another's land is not without a remedy. The decision is significant for extending this protection to public entities and for fixtures, like a well, that are permanent and not easily moved. This precedent empowers courts to fashion flexible remedies, such as a forced sale or compensation, ensuring that a landowner cannot inequitably profit from an innocent mistake.
