Monarch Marking Sys. Co. v. Reed's Photo Mart, Inc. - 485 S.W.2d 905 (Tex. 1972)

Rule:

Relief from a unilateral mistake depends upon the ability of the party mistaken to put the other party into the same situation as he was prior to the transaction in question. One of the usual prerequisites to the granting of relief for a unilateral mistake is that the parties can be placed in status quo in the equity sense, i.e., rescission must not result in prejudice to the other party except for the loss of his bargain. Relief shall be denied unless the other party is put in status quo. Whatever equity there may be in favor of one who has made a unilateral mistake in the formation of a bilateral contract, the effect of it is confined to cases where the transaction is still wholly executory.

Facts:

On February 22, 1968, Alan Tromer, vice-president of Reed's, began filling out a purchase order for five different kinds of labels which Reed's desired to buy from Monarch. In handwriting he filled in the blank spaces for four different types of labels and in the quantity column he noted opposite each of the four orders "2M." At that point he was interrupted by a customer and it was not until later in the afternoon that he finished filling in the order. He described the fifth label as "Label as Attached," attached the copy of the desired label, and in the quantity column wrote "4MM." The purchase order required delivery "At Once" and that shipment be by "P.P." or parcel post.  Monarch's representative for the El Paso area Richard Cornelius received Reed's order by mail on February 26, 1968, examined it and finding no irregularity, filled out two company orders as he had been instructed to do by his company. The first four items, each for "2M," were carried in stock and could promptly be shipped so he placed them on one company order. Since the order for "4MM" other labels required special printing at Monarch's California plant, he handled it by a separate company order. He wrote out the company order as "4000M" in place of "4MM" as used in Reed's purchase order. His reason for doing this was that labels were priced at $.67 per unit of one thousand and he wanted to show the number of units to the billing department. He also changed the method of delivery from parcel post to "Best Way." In order to ship the four million labels, weighing 622 pounds, by parcel post the shipment would have to be split up into twenty pound allotments. Although shipping by parcel post was not impossible, Cornelius testified that it was more costly and "certainly impractical." After filling out the company order, Cornelius testified that he sent a short letter of thanks to Reed's to which he attached the yellow copy of the company order. Jerry Reed, the owner of Reed's, denied having ever received the letter. On April 10, 1968, the four million labels were delivered to Reed's via motor freight. Alan Tromer refused the shipment and immediately called Cornelius, claiming that "a terrible mistake had been made." Monarch sued Reed's to recover the price of the labels. Reed's defenses were that it mistakenly ordered four million instead of four thousand labels and that Monarch did not substantially comply with the terms of the purchase order. The trial court rendered judgment on the jury verdict and awarded Monarch $2,680 as the reasonable value of the labels and $750 as reasonable attorney fees. The court of civil appeals reversed the judgment of the trial court and remanded the cause for a new trial.

Issue:

Did the court of civil appeals err in reversing the judgment for damages?

Answer:

Yes.

Conclusion:

The mistake was a unilateral one; it was made by Reed's, and Monarch fully performed its part of the contract. The Texas rule has long been that relief from a unilateral mistake depends upon the ability of the party mistaken to put the other party into the same situation as he was prior to the transaction in question. This case involved a fully executed contract on the part of Monarch and the record was devoid of proof of any effort on the part of Reed's to restore Monarch to the status quo even to the extent that circumstances would permit.