Can a seller rescind a contract for the sale of a cow priced as barren beef stock when both parties mistakenly believed the cow was barren but she was in fact with calf and a valuable breeder?

Hiram Walker & Sons (defendants), importers and breeders of polled Angus cattle, kept cattle at a Greenfield, Michigan farm, including a cow named Rose 2d of Aberlone that they believed was barren. T.C. Sherwood (plaintiff), a banker and farmer, sought to buy breeding stock. Defendants told him the cattle at Greenfield were probably barren and would not breed, and invited him to look at them. After inspecting the cattle, Sherwood agreed by telephone to buy Rose 2d at five and one-half cents per pound live weight, less fifty pounds shrinkage, an amount around $80. Defendants confirmed the sale in a May 15, 1886 letter and sent an order directing their employee Graham to deliver the cow to Sherwood at King's cattle-yard. Before delivery, Graham concluded the cow was with calf, and defendants instructed him not to deliver her and telegraphed Sherwood that they could not sell her. If a breeder, the cow was worth $750 to $1,000; as a barren cow she was worth no more than $80. When Sherwood tendered $80 and demanded the cow, defendants refused. The cow calved in October 1886. Sherwood sued in replevin to recover the cow.

Sherwood commenced a replevin action in justice's court and obtained judgment. Defendants appealed to the circuit court of Wayne County, which tried the case before a jury and entered a verdict and judgment for Sherwood. The trial judge instructed the jury that it was immaterial whether the cow was with calf. Defendants brought error to the Michigan Supreme Court, asserting twenty-five assignments of error.

(Morse, J.)

Yes. A seller may rescind a sale when both parties were mistaken about a fact going to the substance of the thing bargained for.

A party who gave apparent assent to a sale may refuse to perform, or avoid the contract afterward, if the assent rested on a mutual mistake of a material fact, such as the subject matter, the price, or a collateral fact materially inducing the agreement. If the thing delivered differs in substance from the thing bargained for and intended to be sold, there is no contract. If the difference concerns only some quality or accident, the contract remains binding even though the mistake motivated one or both parties.

The mistake here went to the substance of the agreement, not a mere quality. A breeding cow was worth at least $750, while a barren cow was worth no more than $80, and neither party would have contracted on these terms had they known the truth. The cow was the same identifiable animal, so there was no mistake of identity. But a barren cow is substantially a different creature from a breeding one, as different for purposes of use as an ox is from a cow capable of breeding and giving milk. The mistake affected the animal's character for all time and her ultimate use, not merely whether she was with calf for one season. She was sold as a beef creature, and the thing actually sold and bought had no existence in the form the parties believed.

The trial court therefore erred in instructing that it did not matter whether the cow was with calf. The jury should have been told that if both parties understood the cow to be barren and useless for breeding, and she was in fact capable of breeding, defendants could rescind and refuse delivery. The judgment is reversed and a new trial granted, with costs to defendants.

Dissent (Sherwood, J.) No mistake of material fact existed that would permit rescission. There was no warranty, and a mistaken fact justifying rescission must exist at the time of contracting and be known to at least one party. Neither party knew whether the cow was with calf or would breed. Defendants told Sherwood the cow was probably sterile, and Sherwood believed she might be made to breed. Each party took his chances on a quality that neither could know. The sale was absolute and carried no condition; courts should not interpolate a condition permitting annulment if the seller proves mistaken. The dissent compares the case to a seller of a horse believed capable of only a three-minute mile who later proves far faster, in which rescission would not be allowed. The cow sold was the cow delivered, and the later discovery of her condition did not change the substance of the bargain. Allowing rescission would leave no safety in purchasing livestock of this kind. The judgment for plaintiff should be affirmed.