Opinion
No. 73-106
Decided July 2, 1974. Certiorari granted August 26, 1974. Court on own motion dismissed Writ of Certiorari as improvidently granted. On motion for reconsideration, dismissal order vacated and proceedings reinstated September 30, 1974.
In sale of real property, survey furnished by seller revealed that the subject property contained only about 16.5 acres rather than 26.5 acres as stated in the contract of sale. In resulting action by buyers, trial court entered judgment awarding buyers an abatement of the purchase price based upon the reduction of acreage conveyed. Seller appealed.
Reversed
1. VENDOR AND PURCHASER — Specific Performance Action — Prior to Conveyance — Title Defect — Act of Seller — Abatement — Proper Remedy. Where an action for specific performance relative to the sale of land is initiated prior to the conveyance by deed, and where it further appears that the defect in the quantity of the land or quality of the seller's title has resulted from some act on the seller's part or on his failure to know that which he should know regarding the quality of his title, abatement of the purchase price is a proper remedy.
2. Mutual Mistake — Conditions — Sale — At Price Per Acre — Abatement — — Approved — Tract in Gross — Remedy — Recission. Under circumstances in which a mutual mistake of the parties as to the quantity of land conveyed is discovered subsequent to delivery of seller's deed, the courts first determine whether the parties mutually intended to enter into a contract for sale at a specified price per acre or for a sale of a tract in gross, and with reference to contracts for sale at a specified price per acre, the remedy of abatement has been approved; however, in contracts for sale of a tract in gross, the remedy of rescission is considered the better rule if the deficiency in acreage is substantial.
3. Conditions Described — Sale of Land — Not Classified — By the Acre — — Must be — In Gross. Where, relative to a contract for the sale of land, the circumstances are such that: (1) Neither party knows the exact number of acres in the tract of land to be sold and buyers accept seller's refusal to provide a survey; (2) the contract price is expressed in a lump sum; (3) the purchase price cannot be evenly divided by the number of acres; (4) the reference to acreage in the contract is followed by the phrase "more or less"; (5) the deed makes no reference to acreage, then the sale of that property may not be classified as a sale by the acre, and must be treated as a sale of a tract in gross.
4. CONTRACTS — Abatement — In Effect — Reformation — Mutual Agreement — Furnish Specific Standard — Required. Since abatement of the purchase price, in effect, consists of reformation of the contract between the parties, there must have been a mutual agreement between the parties that furnishes the specific standard on which the instrument can be reformed.
5. VENDOR AND PURCHASER — Sale of Land — Substantial Mutual Mistake — Number of Acres — No Mutual Agreement — Price Per Acre — Not Award — Abatement — Proper Remedy — Return to Status Quo. Where the parties entered into a contract for sale of land based upon a substantial mutual mistake as to the number of acres involved, and where it further appears that the parties did not reach mutual agreement as to a specified price per acre for the sale, the trial court may not award an abatement of the purchase price, and the proper remedy is to return the parties to the status quo.
6. APPEAL AND ERROR — Abatement — Not — Permissible Remedy — Buyer Object — — Rescission — Reversed — Complaint Dismissed. Since, under the circumstances present relative to contract for the sale of certain land, abatement of the purchase price is not a permissible remedy, and since on appeal buyers object to granting the proper remedy, namely, rescission, the judgment is reversed and the cause remanded with directions to the trial court to dismiss the buyers' complaint.
Appeal from the District Court of Jefferson County, Honorable Daniel J. Shannon, Judge.
Sonheim Helm, Dale H. Helm, for plaintiffs-appellees.
Stitt, Wittenbrink Roan, P.C., Robert J. Wittenbrink, for defendant-appellant.
The opinion announced on April 30, 1974, is withdrawn, and the following opinion is issued in its stead.
Defendant (seller) appeals from a judgment awarding plaintiffs (buyers) $5,471.90, as an abatement on the purchase price of land. We reverse.
Seller and buyers entered into a written contract for purchase of unimproved land located in Jefferson County, Colorado. The contract described the subject property as "the NW 1/4 of the NE 1/4 of section 20 T6S, R70W of the 6 P.M. consisting of 26.5 acres, more or less." As originally drafted, the contract required seller to furnish a survey. However, this provision was deleted from the contract at the insistence of seller, and buyers consented to this modification because seller's real estate agent agreed to provide a survey. The sale was closed with seller conveying by general warranty deed.
The survey disclosed that the subject property contained only about 16.5 acres. Buyers then filed the present suit, seeking to recover an abatement of the purchase price based upon the reduction in acreage. Seller answered, denying that the property contained only 16.5 acres and alleging that he conveyed the same title received from his grantor and that he did not guarantee the amount of acreage involved in the sale.
Trial was to the court, and the court found that there was a mutual mistake of fact by the parties as to the amount of acreage in that both parties believed the property contained 26.5 acres, when, in fact, the acreage was approximately 16.5. The court also found that the discrepancy in acreage resulted from the fact that in surveying and platting Oehlmann Park in 1926, the north quarter corner of section 20 had been moved approximately 300 feet west from the point it was originally located in the United States Government survey of 1873, and that seller's deed was based upon the Oehlmann Park map.
The court concluded that the buyers had purchased the property on a per acre basis. The court therefore determined that buyers were entitled to equitable relief and awarded buyers an abatement on the purchase price.
I.
Validity of the Survey
Seller initially contends that buyers' complaint should have been dismissed because the government survey conclusively fixes and controls the boundaries of a quarter section, and by using the north quarter corner of the government survey, the subject property contains in excess of 26 acres. Therefore, seller reasons that the court erred as a matter of law in its finding that the deed was based upon the Oehlmann Park plat map, especially when it was not shown that either party was aware of the map until after the closing. We disagree.
The record reflects that tracts under various ownerships in Oehlmann Park lie adjacent to both the south and west boundaries of the subject property. In addition, it was apparent to a surveyor who testified as an expert that surveys of all the properties in this area since the platting of Oehlmann Park had been based upon the north quarter corner of section 20 as determined in the survey of Oehlmann Park. Hence, the record supports the trial court's finding that survey of the subject property must have been based upon the survey of Oehlmann Park, and this finding is therefore binding on review. Linley v. Hanson, 173 Colo. 239, 477 P.2d 453.
II.
The Proper Remedy
Seller asserts alternatively that the court erred in granting an abatement of the purchase price because the proper remedy was rescission of the contract. We agree with seller's contention.
[1] A review of the Colorado appellate decisions reveals that abatement of the purchase price has been approved where an action for specific performance is initiated prior to conveyance by deed, and where it further appears that the defect in the quantity of land or quality of seller's title has resulted from some act on the seller's part on or his failure to know that which he should know regarding the quality of his title. See, e.g., Emery v. Medal Building Corp., 164 Colo. 515, 436 P.2d 661; Murdock v. Pope, 156 Colo. 7, 396 P.2d 841; Kuper v. Scroggins, 127 Colo. 416, 257 P.2d 412. Conversely, there are no Colorado decisions where the remedy of abatement has been utilized under circumstances in which a mutual mistake of the parties as to quantity of land was discovered subsequent to delivery of seller's deed. Instead, the remedy has been one of rescission. See e.g., Tilbury v. Osmundson, 143 Colo. 12, 352 P.2d 102; Barth v. Deuel, 11 Colo. 494, 19 P. 471. However, neither the cases approving abatement nor the cases authorizing rescission based upon a mutual mistake have involved sales where the sole problem relates to a substantial deficiency in the acreage of unimproved land.
[2] We turn then to the authorities in other jurisdictions for assistance. This research discloses that the courts have first determined whether the parties mutually intended to enter into a contract for sale at a specified price per acre or for sale of a tract in gross. See Annot., 1 A.L.R.2d 9. With reference to contracts for sale at a specified price per acre, courts in other jurisdictions have approved the remedy of abatement; see Annot., 153 A.L.R. 4; however, in contracts for sale of a tract in gross, the remedy of rescission is considered the better rule if the deficiency in acreage is substantial. See 3 A. Corbin, Contracts § 604. Applying these principles here, the question becomes one of determining the proper relief under the record established at trial.
Plaintiffs' complaint requested abatement of the purchase price on the basis that the conveyance from seller contained only 16.77 acres and was therefore deficient to the extent of 9.73 acres. Plaintiffs therefore requested abatement of the purchase price in the amount of $6,318.55, at the rate of approximately $640 per acre.
In contrast to the allegations of the complaint, the only testimony relating to a per acre sale for the property was the testimony of plaintiff Patricia L. Dlug that she understood plaintiffs were paying approximately $550 per acre. Based on her investigation of other properties in the area, she testified as to her conclusion that $550 an acre was a fair price at the time the contract was signed.
There is no testimony that the per acre formula used by buyers was ever discussed with or communicated to the seller or that he otherwise established a sales price on a per acre basis. In fact, there was no contact between buyers and seller until the date the sale was closed. On the other hand, the seller testified, without contradiction, that he purchased the subject property by the same description as contained in the contract to buyers, and that he did not purchase the property on a per acre basis. According to seller, he paid $12,500 for the subject property, and after owning the property approximately one and one-half years determined to sell. In addition, because he felt he was losing money on the property at the agreed sales price, seller testified that he was not anxious to close the sale and refused to pay for a survey of the property. Buyers then agreed to proceed without the survey.
As to documentary evidence, the contract recites:
"Received from Leon Dlug the sum of $200 (note) as part payment, for the following described real estate situate in the county of Jefferson:
"The NW 1/4 of the NE 1/4 of section 20 T6S, R70W of the 6 P.M. consisting of 26.5 acres, more or less.
"With all improvements thereon, if any . . . which property purchaser agrees to buy upon the following terms and conditions for the purchase price of $14,500 . . . . "
In addition to the contract, the closing statement referred to the property as consisting of 26.5 acres, more or less. The promissory note tendered by buyers in lieu of an earnest money deposit referred to the property as containing 26.5 acres. However, the warranty deed from seller to buyers contained no reference to acreage.
On this state of the record, the trial court found, inter alia, that:
"The property was purchased on a per acre basis of $547.19 per acre ($14,500 divided by 26.5). Ten acres less were actually conveyed, thus the plaintiff is entitled to recover $5,471.90."
The abated purchase price of approximately $9,000 thus required seller to absorb an out-of-pocket loss in excess of $3,000 from the original purchase price he had paid.
[3] The evidence in this case totally fails to support and we do not interpret the trial court's findings to be that the parties reached mutual agreement as to a specified price per acre. Where, as here: (1) Neither party knows the exact number of acres in the tract and buyers accept seller's refusal to provide a survey; (2) the contract price is expressed in a lump sum; (3) the purchase price cannot be evenly divided by the number of acres; (4) the reference to acreage in the contract is followed by the phrase "more or less"; and (5) the deed makes no reference to acreage, the sale may not be classified as a sale by the acre. See Annot., 1 A.L.R.2d 9 at 30 and 52. Hence, the sale must be treated as a sale of a tract in gross.
Conversely, the evidence supports the conclusion, and we interpret the trial court's findings to be that the buyers purchased the subject property on the basis that it contained 26.5 acres and that buyers would not have proceeded with the sale had they known the correct acreage of the tract.
[4] Since abatement, in effect, consists of reformation of the contract between the parties, there must have been a mutual agreement between the parties that furnishes the specific standard on which the instrument can be reformed. See Segelke v. Kilmer, 145 Colo. 538, 360 P.2d 423; 13 S. Williston, Contracts § 1548 (3rd ed. W. Jaeger). The basis for this well established rule is that the court may not make a contract for the parties. See Tilbury v. Osmundson, supra.
[5] Accordingly, where, as here, the parties enter into a contract for sale of land based upon a substantial mutual mistake as to the number of acres involved, and where it further appears that the parties did not reach mutual agreement as to a specified price per acre for the sale, the court may not award an abatement of the purchase price. See Tilbury v. Osmundson, supra. The proper remedy is to return the parties to the status quo.
[6] Buyers contend that the remedy of abatement should be affirmed because seller failed to assert during the trial that buyers were entitled only to rescission. This issue was first raised in seller's motion for new trial. We disagree with buyers' contention. For the reasons given above, abatement is not a permissible remedy here. Conversely, while the trial court was obligated to grant the relief to which buyers were entitled, even though such relief was not specifically requested in the prayer of their complaint, C.R.C.P. 54(c); Spears Free Clinic Hospital v. State Board, 122 Colo. 147, 220 P.2d 872, see Garland v. Garland, 165 F.2d 131 (10th Cir.), since buyers object to granting rescission in connection with this appeal, see Berryman v. Berryman, 115 Colo. 281, 172 P.2d 446, the judgment is reversed and the cause remanded with directions to the trial court to dismiss the buyers' complaint.
JUDGE ENOCH concurs.
JUDGE PIERCE dissents.