The only reasons for rescinding a sale and revesting the title in the vendor so that he may maintain an action at law for the recovery of the possession against his vendee are (1) that the vendee was guilty of some fraud in procuring a sale to be made to him; (2) that there was a mistake made by the vendor in delivering an article which was not the article sold,--a mistake in fact as to the identity of the thing sold with the thing delivered upon the sale. This last is not in realty a rescission of the sale made, as the thing delivered was not the thing sold, and no title ever passed to the vendee by such delivery.
The seller sold a stone to the buyers, partners in a jewelry business, for one dollar. Neither the seller nor the buyers knew what the stone was or what its value was. The seller later determined that the stone was a diamond worth about $ 700 and tendered to the buyers one dollar plus interest, but they refused to return the diamond. The seller filed an action to recover possession of the diamond. The trial court directed verdict for the buyers, holding that the only reasons for rescinding a sale was fraud or mistake in that the article delivered was not the article sold. The case was appealed.
Is rescinding the sale of the stone valid for the reason that the assessed value was higher than the selling price?
The court found no mistake of fact and established that both parties during the sale were ignorant to the value of the stone. The court determined that the seller failed to make out a case for either reason for rescinding the sale. The only reasons for rescinding a sale were fraud or mistake in that the article delivered was not the article sold.