Reilley v. Richards

dissenting. For the reasons stated below, I respectfully dissent.

I am convinced that the majority has misstated the issue before us and consequently has misapplied to the facts of this case the rule of law the court adopts. I agree that rescission of a real estate contract is proper when the parties mutually mistake the character of the real estate subject to the contract and the complaining party was not negligent in failing to discover the mistake. I do not believe that in the case before us the record discloses that the claimed mistake is mutual, that the mistake is one of fact, or that the complaining party is free of negligence in the failure to timely discover the character of the land.

If appellant purchased the real estate for a special purpose, that purpose must have been disclosed; otherwise, it is not part of the bargain. The standard for rescission in cases of mutual mistake is set forth in 1 Restatement of the Law 2d, Contracts (1981) 385, Mistake, Section 152(1), which provides:

“(1) Where a mistake of both parties at the time a contract was made as to a basic assumption on which the contract was made has a material effect on the agreed exchange of performances, the contract is voidable by the adversely affected party unless he bears the risk of the mistake under the rule stated in § 154.”

*355Section 154 sets forth the circumstances under which a party bears the risk of a mistake:

“A party bears the risk of a mistake when

“(a) the risk is allocated to him by agreement of the parties, or

“(b) he is aware, at the time the contract is made, that he has only limited knowledge with respect to the facts to which the mistake relates but treats his limited knowledge as sufficient, or

“(c) the risk is allocated to him by the court on the ground that it is reasonable in the circumstances to do so.”

Courts of appeals in Ohio have recognized this standard for rescission based on mutual mistake. See Moore v. Nichol (Oct. 30, 1991), Summit App. No. 15062, unreported, 1991 WL 228373; Ptacek v. Wartimes (Feb. 6, 1987), Sandusky App. No. S-86-20, unreported, 1987 WL 6191; and Henderson v. Asebrook (May 9, 1983), Clark App. No. 1735, unreported, 1983 WL 2427. The court below also correctly applied this section of the Restatement to the facts of this case.

Appellant independently came to the conclusion that he could not build a particular house on the lot. Appellant testified that he had not applied for a building or development permit because he did not want to pay the administrative costs of doing so. The majority even recognizes that a building might be permitted elsewhere on the subject lot. Since there has been no showing that a building could not be constructed on the lót, I do not believe there has been any mutual mistake as to a material fact.

I agree with the court of appeals that the only mistake here is one of law, not fact. A mistake of law is not grounds for rescission or cancellation. Zeek v. Cecere (App.1932), 12 Ohio Law Abs. 636.

I am also troubled by the majority’s holding that appellant, a lawyer, has no obligation to use all his knowledge if the matter at issue is not within his area of practice. This holding does nothing to enhance the professional reputation of lawyers. The appellant in this case was not unsophisticated simply because he has no experience in real estate law. This court has always considered licensed lawyers to be competent enough to know those things which lawyers are required to know. State v. Lytle (1976), 48 Ohio St.2d 391, 397, 2 O.O.3d 495, 498, 358 N. E.2d 623, 627, vacated as to death penalty only (1978), 438 U.S. 910, 98 S.Ct. 3135, 57 L.Ed.2d 1154, citing Vaughn v. Maxwell (1965), 2 Ohio St.2d 299, 31 O.O.2d 567, 209 N.E.2d 164, and State v. Williams (1969), 19 Ohio App.2d 234, 48 O.O.2d 364, 250 N.E.2d 907. An applicant’s knowledge of the law of real property is tested on the Ohio bar examination; accordingly, attorneys are presumed to know the law applicable to real estate. Ordinary citizens are not excused for *356their failure to know the law applicable to such matters and attorneys certainly should not be so excused.

I also disagree with the majority’s conclusion, as I believe the appellant assumed the risk of the property being situated in the floodplain since he drafted a contract containing a sixty-day escape clause to satisfy himself that “all soil, engineering, utility and other site related considerations” were acceptable. Having voiced no objection within the sixty-day tíme period, appellant has waived any such objection.