## Facts

- Michael and Lori Cummings purchased a log “kit” home from Liph and Patricia Dusenbury in 1982.
- The Dusenburys had built the home in 1973–1974; it had a log interior and relatively thin log walls (about 2.5 inches).
- Before closing, the Cummings (through their real estate agent) asked the Dusenburys several questions about the property, including whether it was a “year-round” house.
- The agent documented that the Dusenburys represented the home was a year-round house.
- The Cummings moved in during August 1982 and soon experienced substantial moisture and weather problems: leaks at the roof and windows during rain, and condensation that caused the walls to drip.
- Evidence showed that, measured against industry standards at the time of construction, the home was not suitable for full-time, year-round occupancy in the local climate.
- The Cummings sued seeking rescission and damages, alleging fraud and breach of the implied warranty of habitability (among other theories).
- After a bench trial in the circuit court, the court granted rescission and awarded damages, with an offset for the fair rental value for the period the Cummings occupied the home.
- The Dusenburys appealed the rescission judgment; the Cummings cross-appealed, arguing the court should have awarded punitive damages and addressed the implied-warranty claim.

## Issues

1. Whether a buyer may obtain rescission of a real-estate sale based on a unilateral mistake of material fact when enforcement would be unconscionable and the seller knew or had reason to know of the buyer’s mistaken belief.
2. Whether the buyers exercised reasonable care in determining whether the home was suitable for year-round living.
3. Whether the rescission order sufficiently restored the sellers to status quo through restitution and offsets (including a credit for rental value during occupancy).
4. Whether rescission was barred by a variance between the pleadings and proof where the complaint did not expressly label the theory as “unilateral mistake.”
5. On cross-appeal, whether the buyers were entitled to punitive damages and a ruling on breach of the implied warranty of habitability.

## Decision

- The Appellate Court of Illinois, Second District, affirmed the judgment granting rescission and damages (with a rental-value offset).
- The court held that rescission may be available for unilateral mistake in a real-estate transaction when the mistake is material, enforcement would be unconscionable, and the non-mistaken party knew or had reason to know of the mistake or contributed to it.
- The court upheld the trial court’s finding that the buyers were mistaken about year-round suitability and that enforcing the sale would be unconscionable under the circumstances.
- The court found no reversible error in the determination that the Cummings acted with reasonable care, given their pre-sale inquiries and reliance on the sellers’ representation.
- The court concluded the rescission remedy adequately returned the parties to a substantially pre-contract position because the judgment included appropriate restitution and an occupancy/rent offset.
- The court rejected the claim of a fatal pleadings-to-proof variance, reasoning that the pleaded facts and tried issues supported rescission even if the complaint did not use the precise doctrinal label.
- On cross-appeal, the court left intact the denial of punitive damages and did not require a separate ruling on implied warranty of habitability where rescission already provided complete relief.

## Legal Principles

- A unilateral mistake of material fact can support rescission when enforcing the contract would be unconscionable and the other party knew or had reason to know of the mistake, or the other party’s conduct helped cause it.
- A party seeking rescission for unilateral mistake must show reasonable care in forming the mistaken belief; reliance may be reasonable where the other party gives assurances on a matter not readily apparent to a lay purchaser.
- Rescission is an equitable remedy aimed at restoring the parties, as nearly as practicable, to their pre-contract positions; courts may order restitution and apply offsets (such as fair rental value for time in possession).
- Relief is not defeated merely because the complaint does not name the exact legal theory, so long as the operative facts are pleaded and the opposing party is not unfairly surprised at trial.
- When rescission fully addresses the injury, a court may decline to decide alternative theories (such as implied warranty) that would not change the practical relief, and punitive damages are not automatic absent proof justifying such an award.

## Conclusion

Cummings v. Dusenbury affirmed rescission of a log-home sale where the buyers reasonably relied on the sellers’ representation that the house was suitable for year-round living, but the home was not constructed to industry standards for full-time occupancy; the appellate court approved rescission based on unilateral mistake and unconscionability, found the restitution order (including a rent offset) sufficient to restore the sellers to substantial status quo, rejected technical pleading objections, and left undisturbed the denial of punitive damages and the decision not to reach implied-warranty claims once rescission provided complete relief.


Cummings v. Dusenbury, 129 Ill.App.3d 338, 472 N.E.2d 575 (1984)