Hinson v. Jefferson

• Decision Date: 06 June 1975
• Docket Number: No. 75,75
• Citation: 215 S.E.2d 102,287 N.C. 422
• Court: North Carolina Supreme Court
• Parties: Barbara H. HINSON v. William W. JEFFERSON et al.

Page 102

215 S.E.2d 102

287 N.C. 422

Barbara H. HINSON v. William W. JEFFERSON et al.

No. 75.

Supreme Court of North Carolina.

June 6, 1975.

Gaylord & Singleton by L. W. Gaylord, Jr., Greenville, for defendants-appellants.

Everett & Cheatham by C. W. Everett, Sr., Bethel, for plaintiff-appellee.

COPELAND, Justice.

Plaintiff excepted to the signing and entry of the foregoing judgment and this constitutes her only assignment of error on appeal. An exception to a judgment rendered by the trial court, without an exception to the evidence or to the court's findings of fact, presents for appellate review the sole question of whether the facts found support the judgment. See, e.g., St. George v. Hanson, 239 N.C. 259, 78 S.E.2d 885 (1954); Best v. Garris, 211 N.C. 305, 190 S.E. 221 (1937). See also Parker v. Insurance Co., 259 N.C. 115, 130 S.E.2d 36 (1963); Putnam v. Triangle Publications, Inc., 245 N.C. 432, 96 S.E.2d 445 (1957).

G.S. § 1A--1, Rule 52(a)(1) provides that '(i)n all actions tried upon the facts without a jury or with an advisory jury, the court shall find the facts specially and State separately its conclusions of law thereon and direct the entry of the appropriate judgment.' (Emphasis supplied.) This rule has been interpreted by this Court to require the trial judge to do the following three things in writing: '(1) To find the facts on all issues of fact joined on the pleadings; (2) to declare the conclusions of law arising on the facts found; and (3) to enter judgment accordingly.' Coggins v. City of Asheville, 278 N.C. 428, 434, 180 S.E.2d 149, 153 (1971). This was also the rule under former G.S. § 1--185. See, e.g., Morehead v. Harris, 255 N.C. 130, 120 S.E.2d 425 (1961); City of Goldsboro v. Atlantic Coast Line Ry. Co., 246 N.C. 101, 97 S.E.2d 486 (1957).

In the instant case the court found the facts to be as stipulated and thereafter directed entry of judgment in favor of defendants. However, the court failed to state separately its conclusions of law. The mere assertion that 'plaintiff is not entitled to the relief prayed for by her,' without stating the grounds for such a bare legal conclusion, does not comply with the requirements of Rule 52(a)(1). The purpose for requiring the conclusions of law to be stated separately is to enable appellate courts to determine what law the trial court applied in directing the entry of judgment in favor of one of the parties. See, e.g., Morehead v. Harris, Supra; Jamison v. City of Charlotte, 239 N.C. 423, 79 S.E.2d 797 (1954).

The problems engendered by non-compliance with Rule 52(a)(1) are readily apparent in the instant case. We do not know what law or legal theory the trial court applied to the facts in denying plaintiff the relief prayed for. We can only assume that the trial court found none of plaintiff's legal theories to be persuasive. Plaintiff states in her sole assignment of error that she relies on the following legal points in support of her exception to the judgment:

'1. That the stipulated facts show that there was a mutual mistake of an existing material fact, common to both parties, and by reason thereof each has done what neither intended, coupled with a failure of consideration.

'2. That in a conveyance of land by deed containing restrictions therein which restrict the use of the property for a certain purpose, the grantor thereby warrants that the property so conveyed and restricted can be used for the specific purpose to which its use is restricted by the deed of conveyance.'

In general, we are bound by the findings of fact unless such facts are not supported by any competent evidence. See, e.g., Blackwell v. Butts, 278 N.C. 615, 180 S.E.2d 835 (1971); Knutton v. Cofield, 273 N.C. 355, 160 S.E.2d 29 (1968). Here the facts are conclusive since no exception was taken by either party to the court's findings. On the other hand, we are not precluded from reviewing the trial court's view of the applicable law arising on the facts. See generally 1 McIntosh N.C. Practice and Procedure §§ 1372--74 (1956) (Phillips' 1970 Supp.); 5A Moore's Federal Practice § 52.03(2) (1974); Wright & Miller, Federal Practice and Procedure: Civil § 2588 (1971). Hence, in the interest of justice, we deem it appropriate to proceed to determine the proper legal conclusions to be drawn from the trial court's findings.

Based on these uncontroverted facts, the Court of Appeals held that plaintiff was entitled to rescind the contract on the grounds of 'mutual mistake of material fact' coupled with a 'total failure of consideration.' 24 N.C.App. at 238--39, 210 S.E.2d at 502--03. Assuming, Arguendo, that the Court of Appeals was correct, and that this is a true mistake case, then it is one that must necessarily involve a mistaken Assumption of the parties in the formation of the contract of purchase. In these mistaken assumption cases, unlike other kinds of mistake cases, the parties communicate their desires to each other perfectly; they intend to complete a sale, or a contract of sale, and their objective acts are in accord with their intent. Difficulties subsequently arise because at least one of the parties has, either consciously or unconsciously, mistaken beliefs concerning facts that make the sale appear more attractive to him than it actually is. For many cases See, e.g., J. Wade, Cases on Restitution (1966); J. Dawson & J. Palmer, Cases on Restitution (1958). See generally 3 A. Corbin, Contracts §§ 579-to-621 (2d ed. 1960); Restatement of Contracts § 502 (1962); Restatement of Restitution (1937); 6 S. Williston, Contracts (rev. ed. 1937); Annot., Vendor and Purchaser: Mutual Mistake as to Physical Condition of Realty as Ground for Rescission, 50 A.L.R.3d 1188 (1973); Atiyah & Bennion, Mistake in the Construction of Contracts, 24 Modern L.Rev. 421 (1961); Foulke, Mistake in the Formation and Performance of a Contract, 11 Colum.L.Rev. 197 (1911).

In attempting to determine whether the aggrieved party is entitled to some kind of relief in these mistaken assumption cases, courts and commentators have suggested a number of factors as relevant. E.g., was the mistake bilateral or unilateral; was it palpable or impalpable; was one of the parties unjustly enriched; was the other party unjustly impoverished; was the risk assumed by one of the parties (i.e., subjective ignorance); was the mistake fundamental or collateral; was the mistake related to present facts or to future expectations; etc. See Rabin, A Proposed Black-Letter Rule Concerning Mistaken Assumptions in Bargain Transactions, 45 Tex.L.Rev. 1273 (1967) (hereinafter cited as Rabin). See also D. Dobbs, Remedies 716--84 (West 1973).

Our research has failed to disclose a prior North Carolina case applying the doctrine of mutual mistake pertaining to a physical condition of real property as a ground for rescission. But see MacKay v. McIntosh, 270 N.C. 69, 153 S.E.2d 800 (1967). However, we have found a few cases from other jurisdictions.

In Blythe v. Coney, 228 Ark. 824, 310 S.W.2d 485 (1958), the court allowed rescission where the vendor and purchaser of a residence were mistaken as to the adequacy of water pressure. The court declared that a contract may be rescinded for a mutual mistake regarding a material fact and that the mistaken assumption of the parties could be characterized as such a mistake in view of the evidence that the water meter in the home was unconnected at the time it was shown to the purchasers so that neither party was aware of the water shortage until after the sale.

Likewise, in Davey v. Brownson, 3 Wash.App. 820, 478 P.2d 258 (1970), cert. denied, 78 Wash.2d 997 (1971), the court relied on the doctrine of mutual mistake of a material fact in rescinding the sale of, inter alia, a 26-unit motel that, unknown to either party at the time of signing the contract, was infested with termites, a condition that could only be corrected by substantial structural repair. The court, quoting from Lindeberg v. Murray, 117 Wash. 483, 495, 201 P. 759, 763 (1921), stated: 'We think it is elementary that, where there is a clear Bona fide mistake regarding material facts, without culpable negligence on the part of the person complaining, the contract may be avoided, and equity will decree a rescission. We take it that the true test in cases involving mutual mistake of fact is whether the contract would have been entered into had there been no mistake. . . .' Id. at 824, 478 P.2d at 260.

One court has held that there were sufficient grounds for rescission of a sale of realty where both the vendor and the vendee were mistaken as to the suitability of the soil or the terrain for agricultural purposes. See, e.g., Binkholder v. Carpenter, 260 Iowa 1297, 152 N.W.2d 593 (1967); McDonald v. Benge, 138 Iowa 591, 116 N.W. 602 (1908); Smith v. Bricker, 86 Iowa 285, 53 N.W. 250 (1892); Hood v. Smith, 79 Iowa 621, 44 N.W. 903 (1890). Suffice it to say, all four decisions appear to be contra to the traditional doctrine of Caveat emptor.

The closest mistaken assumption case we have found to our fact situation is A & M Land Development Co. v. Miller, 354 Mich. 681, 94 N.W.2d 197 (1959). In that case, the court held that the trial judge was correct in refusing to rescind the sale of 42 building lots slated for subdivision and development, because of mutual mistake regarding the poor absorptive qualities of the soil that resulted in a Tentative refusal of septic tank permits to the subdivider. The court concluded that assuming there was a mutual mistake, to grant rescission would be improper since the purchaser received the property for which he contracted, notwithstanding that it was less attractive and less valuable to him than he had anticipated.

There are, however, several important distinguishing factors between the Miller case and our case. First, the purchaser in Miller was a developer-speculator; in our case the purchaser is a consumer-widow. Second, the property in Miller was not rendered...