Stong v. Lane
1896 Minn. LEXIS 379, 66 Minn. 94, 68 N.W. 765 (1896)
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Rule of Law:
Where parties to a contract are mutually mistaken about the identity of the contract's subject matter due to an ambiguous or informal description, there is no meeting of the minds, and thus no enforceable contract is formed.
Facts:
- A mutual acquaintance pointed out a lot fronting east on Third Avenue South to Plaintiff, stating that Defendant had it for sale.
- Plaintiff approached Defendant to purchase the lot he had been shown.
- Defendant, however, was acting as an agent to sell a different lot located directly across the street, which fronted west on Third Avenue South.
- Defendant described the lot he was selling as being on Third Avenue South, the second lot north of Franklin Avenue, and 'on the same side of the street that Judge Jones’ house was on.'
- This description was technically correct for the lot Defendant was selling, but Plaintiff, believing it referred to the lot he had seen, did not catch the distinction.
- The parties verbally agreed to a price of $2,500, and Plaintiff paid Defendant a $100 down payment.
- Defendant then used the $100 to purchase the lot he was selling from its owner, taking a deed in Plaintiff's name.
- Upon reviewing the title abstract, Plaintiff discovered the property was not the one he intended to buy, demanded his $100 back, and Defendant refused.
Procedural Posture:
- Plaintiff sued Defendant in a trial court to recover a $100 down payment.
- The case was tried before a jury, which found in favor of the Plaintiff.
- The trial judge had instructed the jury that no contract is formed if the minds of the parties do not meet on the subject matter.
- Defendant, the appellant, appealed the trial court's order to the appellate court.
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Issue:
Does an enforceable contract for the sale of land exist when both the buyer and seller are honestly and mutually mistaken as to the specific parcel of land being sold, and the verbal description used is ambiguous enough to apply to two different properties?
Opinions:
Majority - Mitchell, J.
No. An enforceable contract for the sale of land does not exist under these circumstances. To form a binding contract, there must be a 'meeting of the minds,' meaning the parties must agree on the same essential terms in the same sense. Here, both parties were honestly mistaken about the identity of the subject matter; the Plaintiff intended to buy one lot, and the Defendant intended to sell another. The court distinguished this situation from a unilateral mistake, where only one party is mistaken and the terms are clear, which generally does not provide a basis for rescission. The court found that the informal and ambiguous verbal description, particularly the reference to 'Judge Jones' house,' was insufficient to clarify the subject matter and prevent the misunderstanding. Because the parties' minds never met on the essential term of which lot was being sold, no contract was formed. The court also rejected the defendant's estoppel argument, reasoning that when the defendant purchased the property himself, he ceased being an agent and became a principal, using the plaintiff's money for his own transaction, thereby negating any claim that he had changed his position in reliance on the agreement.
Analysis:
This case serves as a foundational example of the contract law principle of mutual mistake and the requirement of mutual assent. It clarifies that a contract can be voided if there is a mutual misunderstanding about a core, material term, such as the identity of the subject matter. The decision distinguishes a mutual mistake caused by a latent ambiguity from a mere unilateral mistake, establishing that the former prevents the formation of a contract while the latter typically does not. This precedent reinforces the importance of using clear, unambiguous terms in contracts, particularly in real estate, and shows that courts may be more willing to grant rescission when the agreement is informal and falls under the Statute of Frauds.
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