Bailey v Ewing
Ct of App ID 671 P 2d 1099[1983]
Author:- Sam Biers

Avoidance of the K : Mutual Mistake

Relevant Facts: An estate representative conducted an auction sale of decedent’s property, but decided it would sell more quickly if broken into two pieces.  One was i/d as lot 5 the other 6; 6 had a 20' strip of land adjoining it on the east side, five had the house thereupon.  Df Ewing bought lot five but no satisfactory bid was received for lot 6 that day.  The representative had indicated that the boundary was near the lilac bushes, but in fact was unknown and that nobody knew exactly where the boundary was. A week after the auction Pl bought the remaining lot. 2 yrs later Df began constructing a fence alongside the house.  Pl had a survey completed and learned the property line was located w/i a foot of the house’s foundation, the eaves were on the Pl’s property.

Legal Issue(s): Whether the tr ct erred in ruling that any mistake concerning the location of the boundary line was unilateral mistake?

Court’s Holding: Yes, mutual mistake.

Procedure: Tr ct found for Pl to quiet title, Df appealed; Ct of App Reversed and remanded.

Law or Rule(s): A mistake is an unintentional act or omission arising from ignorance, surprise, or misplaced confidence.  The mistake must be material or so substantial and fundamental as to defeat the object of the parties.  A unilateral mistake is not normally grounds for the mistaken party.

Court Rationale:   A mutual mistake occurs when both parties, at the time of signing, share a misconception about a basic assumption or vital fact upon which they based their bargain.  Some cts require the parties to have the same misconception about the same vital fact or assumption.  MM also includes situations in which the parties labor under differing misconceptions as to the same basic assumption or vital fact.   The assumption of fact must be the same; otherwise two unilateral mistakes, instead of one, would result.  Both Erhardt and Ewing mistakenly believed the boundary line was further east than it was.  Neither intended that the property sold as lot 5 would fail to include the whole house.  There was an unintentional act arising from ignorance, Ewing and Erhardt made a MM regarding the location of the boundary line.

The mere presence of a MM does not always afford relief. IF a party is aware that he has limited knowledge in respect to the facts related to the mistake, but treats his limited knowledge as sufficient, ~MM, but conscious ignorance and this bars relief. The extent of conscious ignorance depends upon the scope of the risk assumed.  Neither party consciously assumed a risk that the line would run beneath the eaves of the house. 

PER may be admitted to show by reason of MM the parties’ intent was not expressed in K. PER can be used to show true intent.

Plaintiff’s Argument: Df had knowledge at the time of sale that the boundary was unknown, and after Pl had a survey Df had encroached upon Pl’s property.

Defendant’s Argument: Df and representative Ked under MM that the boundary was located other than where it was.