Perfect v. McAndrew

Indiana Court of Appeals
2003 WL 22662447, 2003 Ind. App. LEXIS 2098, 798 N.E.2d 470 (2003)
ELI5:

Rule of Law:

When a real estate contract describes property with an approximate acreage but specifies clear boundaries and is sold for a lump sum, it is generally considered an "in gross" sale, where the stated acreage is descriptive rather than an essential term, and a significant discrepancy in actual acreage does not constitute a mutual mistake of fact sufficient to void the contract.


Facts:

  • In the spring of 1999, Michael McAndrew became interested in purchasing real estate from Clyde and Ella Mae Perfect (the "Perfects") in Dearborn County, Indiana.
  • Based on their deed and a plat book, the Perfects believed their property consisted of approximately 81.1 acres.
  • On April 20, 1999, McAndrew offered to purchase the real estate for $250,000, describing the property as "Anderson Rd, 81.1 acres owned by Perfects."
  • On April 21, 1999, the Perfects countered with a purchase price of $252,500.
  • On April 23, 1999, McAndrew, his wife, and real estate agents met Clyde Perfect to view and discuss the property's boundaries; Clyde pointed out the boundaries, and McAndrew never discussed acreage with the Perfects.
  • After inspecting the property, McAndrew accepted the Perfects' counteroffer of $252,500.
  • The contract included contingencies such as a satisfactory survey, to be paid equally by both parties, satisfactory septic approval, verification of easements, and the Perfects' removal of debris.
  • A survey completed on June 24, 1999, indicated that the property contained 96.2815 acres, rather than the estimated 81.1 acres, which surprised Clyde Perfect.
  • On July 8, 1999, the Perfects attempted to renegotiate the contract, offering three new proposals based on the increased acreage, which McAndrew rejected.

Procedural Posture:

  • Michael McAndrew filed a complaint against Clyde and Ella Mae Perfect in a trial court (court of first instance) for specific performance of a real estate contract.
  • McAndrew also filed a motion for findings of fact and conclusions thereon pursuant to Ind. Trial Rule 52.
  • After a bench trial, the trial court entered a judgment granting specific performance in favor of McAndrew, ordering the Perfects to convey the real estate described in a survey upon McAndrew tendering $252,500.
  • The Perfects (appellants) appealed the trial court's judgment to the Court of Appeals of Indiana (intermediate appellate court).

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Issue:

1. Does a significant discrepancy between the stated acreage and the actual acreage of a property sold for a lump sum, where boundaries were inspected and described, necessarily indicate that the parties did not intend an "in gross" sale of the entire tract? 2. Does a substantial difference in actual acreage from the estimated acreage, even if surprising to the seller, constitute a mutual mistake of fact that renders a real estate contract voidable, when the exact acreage was not the essence of the agreement? 3. Did the trial court improperly add a provision to the contract by ordering the sale of the actual acreage (96.2815 acres) when the contract described the property as "81.1 acres owned by Perfects"?


Opinions:

Majority - Sharpnack, Judge

1. No, the trial court's finding that the parties intended an "in gross" sale of real estate was not clearly erroneous. The court affirmed that an "in gross" sale involves the sale of a specific tract of land for a stipulated lump sum, where the stated quantity of acres is generally a "mere matter of description and not of the essence of the contract," as established in Tyler v. Anderson and Cravens v. Kiser. The presence or absence of terms like "more or less" is not determinative, according to Hays v. Hays. Here, the contract described the land by its location and the parties physically inspected the boundaries. McAndrew never discussed a per-acre price, and the estimated acreage was not found to be the "controlling inducement" for the contract. Citing Bowling v. Poole, the court reiterated that quantity of land is the least important element in determining boundaries when a specific tract is identified. Therefore, the evidence supported the conclusion that the sale was for the entire tract, regardless of the exact acreage. 2. No, the trial court's finding that there was no mutual mistake of fact was not clearly erroneous. For a mutual mistake to void a contract, both parties must share a common false assumption about a "vital fact" that is "of the essence of the agreement, the sine qua non, or...the efficient cause of the agreement," and that fact must "animate and control the conduct of the parties," as held in Bowling v. Poole. While both parties were mistaken about the exact acreage, there was no mistake about the actual tract of land intended to be bought and sold. Clyde Perfect himself testified that "[t]here wasn't any question about which piece of property [they] were dealing for. The only question [was] how many acres it really [was]." Since the exact acreage was not the "essence of the agreement" or what controlled the parties' conduct, the discrepancy did not constitute a mutual mistake of fact. 3. No, the trial court's judgment did not improperly add a provision to the contract. The court found that the contract's description of the property as "Anderson Rd, 81.1 acres owned by Perfects" was ambiguous because it could be interpreted to mean only 81.1 acres or the entire tract of land owned by the Perfects on Anderson Road. Because the language was ambiguous, the trial court appropriately considered extrinsic evidence, which consistently showed that the parties intended to sell and buy the entire tract for a lump sum, consistent with an "in gross" sale. Thus, the trial court properly interpreted an ambiguous contract rather than adding new terms, ensuring specific enforcement of the parties' original intent. The court also noted that McAndrew's slight delay in providing written loan commitment was not a material breach, as other contingencies were still pending and the Perfects did not object until after the survey revealed the increased acreage.



Analysis:

This case significantly clarifies and reinforces Indiana's legal stance on "in gross" real estate sales, emphasizing that specific boundary descriptions and a lump-sum price generally outweigh minor acreage variations. It establishes that a seller's post-contract surprise regarding greater actual acreage, even if substantial, is insufficient to prove mutual mistake unless the exact quantity was explicitly the "essence" of the agreement. The ruling provides crucial guidance for interpreting ambiguous property descriptions in contracts, allowing courts to consider extrinsic evidence to discern the parties' true intent for a lump-sum sale of a defined parcel. This promotes contractual certainty in real estate transactions, making it difficult for parties to back out due to perceived 'bad bargains' arising from acreage discrepancies not central to the initial agreement.

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