Anderson Brothers Corp. v. O’meara

306 F.2d 672 (5th Cir. 1962)

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Nature of the Case

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Facts

Anderson (D) manufactured a dredge for use in submarine trenching. The dredge was not completed on time and D sought another buyer. O’Meara (P) answered an ad for the dredge and offered $35,000 subject to inspection. The employee that P sent was an expert on engines and knew nothing about dredges. The engines were in excellent condition, and P made the deal with D to buy the unit. The terms were half down and the balance over 17 months. After seven payments, P notified D that the dredge could not be used effectively for its purposes. P wrote D demanding full restitution of the purchase price. P sued D and alleged that the parties had been mistaken in their belief and that this mutual mistake prevented contract formation. P sought damages of $29,000. P also asked for rescission and restitution of all monies expended in reliance on the contract. D counterclaimed for the unpaid balance. The lower court found that the dredge was not capable of sweep dredging and that none of D’s officers of employees knew that P intended to use the dredge for shallow sweep dredging. The court found that D mistakenly assumed that P intended to use the dredge within its designed capabilities. The court also found that at the time P purchased the unit he mistakenly believed that it was capable without modification of performing sweep dredging in shallow water. The court found the market value of the unit at $24,500 on the date of sale and that unpaid balance on the note was $10,500. The court then found that a mistake existed on the part of both P and D with respect to the capabilities of the dredge and that this mutual mistake meant that P was entitled to recover the damages he suffered. The court then found damages to be the balance due on the purchase price plus interest and the note was canceled with title vesting to P. The court also concluded that P was not entitled to rescission of the contract. D appealed.