Daily Development for Monday, January 26, 2004 by: Patrick A. Randolph, Jr. Elmer F. Pierson Professor of Law UMKC School of Law Of Counsel: Blackwell Sanders Peper Martin Kansas City, Missouri dirt@umkc.edu VENDOR/PURCHASER; “IN GROSS” SALES: A contract for land may be considered an “in gross” sale even though the sale contract states a specific acreage for the land; further, the fact that the stated acreage is incorrect by a significant amount does not automatically create a “mutual mistake of fact” voiding the contract, since the stated acreage is merely “descriptive” in a sale “in gross.” Perfect v. McAndrew, 798 N.E.2d 470 (Ind.App. 2003). Perfects entered negotiations to sell their tract of land (the “Property”) to McAndrew. Perfects believed that their land consisted of 81.1 acres, based upon the acreage lasted in the deed conveying the property to the them. McAndrew’s offer to purchase described the Property as “Anderson Rd, 81.1 acres owned by Perfects.” McAndrew met with Clyde Perfect and real estate agents to view the property, walking the boundary of the premises to see the tract to be bought. McAndrew walked the entire boundary of the premises, but never discussed the acreage of the premises with the Perfects after the tour of the Property. After the inspection, McAndrew accepted the Perfects’ counter-offer of $252,500. One of the conditions of closing under the contract was a survey of the land that was satisfactory to McAndrew. The survey revealed that the Property consisted of 96.2815 acres as opposed to 81.1 acres. Perfects did not want to “give away 15 acres” and attempted to renegotiate the contract with McAndrew, who refused. The Perfects then attempted to terminate the contract under a timely written notice provision (which was subsequently deemed a non-material breach by a trial court in the ensuing court case). McAndrew filed a complaint against Perfects for specific performance of the sale, and the Perfects defended claiming (1) a breach under the notice provision (discussed above), and (2) that there was no meeting of the minds for the contract due to the incorrect acreage. The trial court determined that the contract was “in gross” despite the statement of acreage, and there was a meeting of the minds because both parties intended to sell and buy the whole tract.The Indiana Court of Appeals (the “Court”) affirmed. The Court cited earlier case law, stating that in those cases, “on the question of acreage, the courts had held that “the quantity of land contained in a tract is the least important element in determining the boundary.” Further, the Court noted a case where the four sides of the tract were specifically described, and as a result, the number of acres specified in the written agreement were not the essence of the contract. The Court stated that only “if it appears that the estimated number of acres was in fact the controlling inducement,” may the contract be rescinded on the ground of gross mistake, even if payment is made in gross. Here, the Court found that the 81.1 acres was merely a manner of describing the Property for an “in gross” sale, based on the facts of McAndrew’s tour of the land and lack of discussion about the size after the inspection. The Court further determined that the mistake of fact between the parties was not a mistake “of the essence of the agreement” since the acreage was never the essence of the parties’ agreement, in the Court’s opinion. As such, the mistake does not rise to the level to allow the contract to be voided. Lastly, on appeal, the Perfects claimed that the trial court improperly added a provision to the contract by deeming it an “in gross” sale of land. The Court rejects this claim, stating that the trial court was not adding language to the four corners of the contract, but instead using extrinsic evidence to resolve language in the contract which was ambiguous – in this case, the description of the Property. The Court held that it was not clear whether the property being sold was only 81.1 acres of the Property or the entire tract on Anderson Road. As such, the trial court had merely made a determination on the meaning of the contract language – not added terms to the contract. Comment 1: This is consistent with the general approach. For an extreme example, see Cedar Lane Ranch v. Lundberg, 991 P.2d 440 (Mont. 1999). (The DIRT DD for 12/1/00) ( A sale in gross is created when words of estimation in a deed are combined with a negotiated lump sum sale price and an absence of any reference to a price per acre. When land is sold in gross, a variation in acreage from the umber that the parties contemplated is not grounds for rescission or other relief.) Comment 2: On the question of whether there is a “meeting of the minds” in such cases, compare, on a slightly different tack, the Indiana decision in Wilkin v. 1st Source Bank , 548 NE2d 170 (Ind. App. 1990), where the personal representative of the widow of a famous artist sold a house that had been the artist’s home. After closing, the buyers informed the seller that the house was cluttered with “personal property,” and the parties agreed that, to save the seller the cost of hiring a cleaning service, buyers could have the place cleaned themselves and retain anything that they found. It later turned out that they “found” eight paintings and a plaster sculpture, all by the famous artist. The court found that the parties had not had a meeting of the minds on the ownership of these items, since their agreement contemplated only that the property in the home was “junk.”