Melms v. Mitchell

Facts

D agreed to sell P his wood business, including a dump truck, a jeep, two saws, a trailer, a grader and 20 cords of wood for $2,000. The contract further provided that D was to sell P hardwood stumpage at $2.50 per cord payable 'in 100 cord increments (in advance) based on estimated production of 1,000 cords per year.' P paid the $2,000 in full and also paid D $100 for a gas tank containing some gasoline and $250 for the first 100 cords of wood to be cut. From the beginning, P encountered difficulties and were never able to cut and sell enough wood to make a profit. Prior to the execution of the contract, D stated to P that his property contained 'a large number of cords of dry wood suitable for immediate cutting and sale.' Ps were thus led to believe that Ds property contained enough dry wood to enable them to cut, for immediate sale, wood in a marketable mixture. Ps had to clear access roads into the new areas, and the quantities of dry wood they found were not great enough to justify the time spent in developing access into these areas. When Ps complained to D about the lack of dry wood, he assured them that the wood was there if they would just go and get it. Ps had to purchase wood to supply their customer base. D became dissatisfied with the way Ps were cutting wood and with their failure to account, to his satisfaction, for the wood as they cut it. D suspended Ps' cutting rights and stated that the cutting rights would be terminated as of February 18 unless certain conditions specified in the letter were met. P called on D and notified him that they were rescinding the contract. D refused. P sued and alleged material misrepresentations. The trial court specifically found that defendant made no material misrepresentations but decreed rescission on the ground that D had committed a material breach by his suspension and threatened termination of P's cutting rights.

Issues

Rule of Law

Holding and Decision

Legal Analysis

© 2007-2024 ABN Study Partner.