Glasgow v. Greenfield
| Decision Date | 05 October 1983 |
| Docket Number | No. CA,CA |
| Citation | 657 S.W.2d 578,9 Ark.App. 224 |
| Parties | Bryan E. GLASGOW and Margaret Glasgow, Appellants, v. Faye E. GREENFIELD, Appellee. 82-456. |
| Court | Arkansas Court of Appeals |
L.D. Gibson, Trumann, for appellants.
McDaniel, Gott & Wells, P.A. by Phillip Wells, Jonesboro, for appellee.
This is an appeal from a chancery court decree which canceled and rescinded a written contract for the sale of certain described real property and the improvements, fixtures, and equipment located thereon.
The appellants, Bryan and Margaret Glasgow, owned the property and operated a retail liquor store on it. The sale price was $160,000.00. The appellee, Faye Greenfield, made a down payment of $10,000.00 and agreed to make other payments at specified periods. In addition, appellee purchased the inventory for a cash payment of $4,709.80.
Evidence was introduced to show that the appellee lived in Arizona and made the contract to purchase the property while on vacation in Arkansas. She testified the contract was signed on November 14, 1980, and that appellant Bryan Glasgow said she could get a license to operate the store in about 90 days and could operate on his license until the next June when his license expired. In December, after she had begun to operate the business, she was told by an enforcement officer of the Alcoholic Beverage Control Board that she had to have a license in her own name. She said the enforcement officer called the ABC office and had them send her an application for a license.
The appellee testified that the application arrived in January but it contained a statement that an applicant must be a resident of Arkansas for two years before a license may be obtained. She then contacted Mr. Glasgow and they went to his attorney's office and the attorney suggested they could circumvent the law by forming a corporation with Glasgow serving as president. She told Glasgow and his attorney at that time that she wanted her money back if she could not get a license in her own name. Glasgow tried to lease the building but nothing came of that and in March she moved out and left the keys with an employee who gave them to Glasgow.
Suit was filed by appellee in April, after she had moved out in March. After trial, the chancellor issued a decree canceling and rescinding the contract and granting appellee judgment for the $10,000.00 down payment made by her. The decree contained the following finding of fact:
That the contract was predicated upon mistake of fact and law; that the plaintiff entered into the contract relying upon the representations of defendants that she would have no problems getting her State licenses; that these representations were material and substantial; that plaintiff is neither estopped nor barred by laches; and, plaintiff did not waive her cause of action.
On appeal the appellants first argue that the court erred in rescinding the contract as the alleged misrepresentations were not established by clear, unequivocal, and decisive evidence; they also argue that the misrepresentations alleged to have been made by them were about matters of law, not fact, and that a contract cannot be rescinded for misrepresentations of law.
We think the appellants' argument misses the force of the chancellor's finding that "the contract was predicated upon mistake of fact and law." Appellants cite Adkins v. Hoskins, 176 Ark. 565, 3 S.W.2d 322 (1928), for the proposition that fraud cannot be predicated upon misrepresentations of matters of law. The court's finding in the instant case, however, is based upon the finding of mutual mistake and appellee cites Foster v. Dierks Lumber and Coal Company, 175 Ark. 73, 298 S.W. 495 (1927), which states:
It is well settled under the former decisions of this court that equity has jurisdiction to cancel or reform written instruments, either where there is a mutual mistake or where there has been a mistake of one party, accompanied by fraud or other inequitable conduct of the other party ....
In appellants' reply brief they do not deny that a contract may be canceled for mutual mistake but argue that there was no mutual mistake in this case. We think otherwise.
Bryan Glasgow admitted that he told appellee she could operate on his license until she got one and that it would take about 60 to 90 days after application for her to do that. This testimony appears on pages 100-102 of the transcript and although there are other places where he seems to equivocate, the chancellor was free to accept Glasgow's testimony as above indicated. The same is true as to when these statements were made. On pages 92-93 Glasgow makes it very clear that at the very first meeting with appellee, in September before the contract was signed in November, he told her she could operate on his license while her application was pending and that she would have no trouble getting a license. He also admitted that he sold appellee a liquor store and assumed she was going to run it as a liquor store, and both of them testified that they knew that a license was required to operate a liquor store.
It is perfectly obvious from the testimony of both Glasgow and the appellee that they entered into the contract upon the assumption that appellee would be able to obtain a license to operate the liquor store. The chancellor was clearly justified in finding that the contract was predicated upon a mistake and certainly the mistake was mutual. Foster also required that proof to cancel a written instrument must be clear, unequivocal and convincing, but it has been explained that "it is not necessary that evidence be undisputed in order to be clear and convincing" and that "it is simply that degree of proof which will produce in the trier of fact a firm conviction as to the allegation sought to be established." Kelly v. Kelly, 264 Ark. 865, 870, 575 S.W.2d 672 (1979). See also Ballard v. Carroll, 2 Ark.App. 283, 290, 621 S.W.2d 484 (1981). We think the evidence of mutual mistake is sufficient to support the chancellor's finding.
The question remains, however, whether the mistake was one of law which would have prevented the chancellor from canceling the contract. In the Adkins v. Hoskins case, cited by appellants, Hoskins told Adkins what property, in his judgment as a lawyer, Adkins' wife would be entitled to receive if they divorced. The court said this was a representation of law, not fact, and held "as a general rule, fraud cannot be predicated upon misrepresentations as to matters of law." This rule is sharply criticized in D. Dobbs, Handbook on the Law of Remedies § 11.8 (1975), in these words:
The rule originated in a mistake of law in 1802, but was widely, even, in the words of Dean Wade, "promiscuously" used by courts in the ensuing years. The reasons for it are virtually nonexistent. The usual argument is that everyone ought to know the law, or be presumed to know it. It is of course true that no man ought to escape the charge of murder on the ground that he believed it was permitted by law, and the maxim that one is presumed to know the law has good application in such a case. It can hardly be said to carry any similar weight when the issue is not obedience of law but unjust enrichment arising out of misunderstanding of it.
Dobbs points out that "perhaps in recognition that the general rule against relief is an unjust one, courts have created several special exceptions to it," and explains one such exception as follows:
A similar idea, also applicable only in cases where parties have a contract or attempted contract between themselves, is that restitution may be granted for a mistake of law that has led to a failure of the contract's purpose. The Restatement of Restitution illustrates this idea with the case of the landowner who contracts with a builder to erect a building 100 feet high, and makes an initial payment to the builder. Thereafter the landowner discovers that an ordinance prohibits structures over 75...
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Lofton v. Lofton, CA
...to the allegation sought to be established." Kelly v. Kelly, 264 Ark. 865, 870, 575 S.W.2d 672 (1979). See also Glasgow v. Greenfield, 9 Ark.App. 224, 228, 657 S.W.2d 578 (1983). It is, therefore, our opinion that the addition of the other adjectives in Ramsey does not raise the required qu......
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...to enable the fact finder to come to a clear conviction, without hesitance, of the matter asserted. Id. See also Glasgow v. Greenfield, 9 Ark.App. 224, 657 S.W.2d 578 (1983). Because we review chancery cases de novo and reverse the chancellor's findings only if they are clearly erroneous or......
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Carter v. Matthews, 85-192
...before us the question whether the mistake was one of law rather than fact and thus perhaps irremediable. But see Glasgow v. Greenfield, 9 Ark.App. 224, 657 S.W.2d 578 (1983). While the chancellor mentions these items, his basis for rescission was the mutual lack of knowledge about the exte......
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Woolsey v. Nationwide Ins. Co., Civ. No. 86-2243.
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