Facts
- Clarissa Wood owned a small stone of unknown character and value and brought it to Boynton, a jeweler, asking what it was; both believed it was probably topaz.
- Boynton offered $1 to buy the stone; Wood initially refused but later returned and sold him the stone for $1.
- The stone was later identified as an uncut diamond worth about $700.
- Wood tendered $1 plus interest and demanded return of the stone; Boynton refused.
- There was no evidence Boynton knew the stone was a diamond, misrepresented facts, concealed information, or otherwise dealt unfairly.
- Wood sued in replevin to recover the stone; the trial court directed a verdict for defendants, denied a new trial, and entered judgment for defendants.
Issues
- Whether the seller could rescind the sale and recover the chattel in replevin based on the extreme disparity between the $1 price and the stone’s true value.
- Whether rescission was available for mutual mistake where both parties were mistaken about the stone’s nature and value, but not about the specific physical item transferred.
- Whether gross inadequacy of consideration, without more, permits an inference of fraud in an action at law when value was equally open to investigation by both parties.
Decision
- The Wisconsin Supreme Court affirmed the judgment for the defendants.
- The court held the seller could not rescind and recover the stone in replevin absent (1) fraud by the buyer in procuring the sale or (2) a mistake of fact as to the identity of the thing sold.
- The court found no evidence of fraud or superior knowledge by Boynton at the time of purchase.
- The court found no mistake as to identity because the parties intended to buy and sell, and did buy and sell, the identical stone delivered; the mistake concerned only quality/value.
Legal Principles
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A completed sale may be undone and title revested in the vendor only if:
- the buyer committed fraud in procuring the sale; or
- the seller delivered an item different from the one actually sold (mistake as to identity of the thing sold).
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A mutual mistake about quality or value, without fraud or warranty, does not permit rescission when the parties knowingly contracted under uncertainty about value.
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Where value is open to investigation by both parties and both believed the agreed price was fair at the time, no disparity—however great—between price and actual value is admissible in an action at law as evidence of fraud.
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In a replevin action, rescission-based recovery of the chattel is unavailable without fraud or identity-based mistake.
Conclusion
Because the parties knowingly exchanged the same physical stone and were merely mistaken about its value, and because no fraud or unfair dealing by the buyer was shown, the seller could not rescind the bargain or recover the stone through replevin despite the large price-value disparity.