Title: Armijo v. Nuchols
Citation: 253 P.2d 317, 57 N.M. 30
Docket Number: 5552
State: new-mexico
Issuer: new-mexico Supreme Court
Date: January 30, 1953

253 P.2d 317 (1953) 57 N.M. 30 ARMIJO v. NUCHOLS. No. 5552. Supreme Court of New Mexico. January 30, 1953. *318 Iden &amp; Johnson, Albuquerque, for appellant. A. T. Hannett, G. W. Hannett and W. S. Lindamood, Albuquerque, for appellee. COMPTON, Justice. This is an action by appellee, plaintiff below, to cancel a contract. On June 5, 1951, the parties entered into a contract for the sale of appellant's ranch in Torrance County to appellee for a consideration of $47,500, payable $17,500 cash, $10,000 and interest on or before November 1, 1951, and the balance payable in annual installments. The ranch consists of fee land, State leases, and land located within the National Forest upon which appellant holds grazing permits for 101 head of cattle. The complaint, in separate causes of action, charges fraud, failure of consideration, and mutual mistake. The answer denies all material allegations. By counterclaim, appellant seeks judgment for the amount due under the terms of the contract. The trial was before the court which found that due to mutual mistake of material fact, there was a failure of consideration and accordingly rendered judgment decreeing rescission. Within appellant's ranch one Felipe Sanchez owns a small tract of 160 acres and in connection therewith has a permit from the Forest Service to graze 12 or 14 head of cattle. Appellant's permits and the Sanchez permit constitute a community allotment for cattle only and under rules and regulations promulgated by the Department of Agriculture relating to the use of the National Forests, when forest lands and private lands are used jointly, the entire area is treated as a unit and the department retains the exclusive authority to determine the number of livestock, whether of cattle or sheep, that may graze thereon. The rules and regulations also provide that community allotments cannot be changed from cattle allotments to sheep allotments without the consent of all parties composing the community allotment, and with the consent of the Forest Service. The parties at the time did not know of the Sanchez permit or of the community allotment, nor were they aware of such departmental rules and regulations. The substance of the findings was that the ranch was to be used as a sheep ranch; that the parties were laboring under a mutual mistake in the belief that sheep could be run upon the ranch, particularly so, on a ratio of 5 head of sheep to 1 head of cattle; and that upon a transfer of appellant's forest permits, grazing right would not be reduced in excess of 10%, whereas, grazing rights were to be reduced 55%. The findings are not challenged. Appellant contends, however, that appellee with full knowledge of facts and circumstances entitling him to rescission, ratified the contract. He also asserts that appellee is charged with notice of all rules and regulations of the Department of Agriculture, pertaining to the grazing of the National Forest. The trial court having found adversely to him, appellant is here seeking a review of the judgment. Appellee took possession of the ranch on June 17, 1951, and immediately placed thereon 2,000 ewes and lambs. On July 26th, or 25th, the discrepancy in dates being immaterial, he went to the office of the grazing supervisor with a view of having the Nuchols permits transferred to him. At the time he was informed by the supervisor "that there was to be a 55% cut on all transfers of forest permit, and that it *319 could not be used for sheep or changed to a sheep allotment without the consent of Sanchez, the other person having an interest in the community allotment; that * * * placing * * * sheep on said allotment was a trespass, and that unless arrangements were made satisfactory to the Forest Service, he would be held in trespass * * *". The supervisor also advised appellee to get in touch with Sanchez and acquire his interest but in any event he would not be permitted to graze more than 230 head of sheep upon the ranch. At this point, clearly, appellee was entitled to avoid the contract but he did not elect to do so. In the face of the facts just related, subsequently, on July 28, 1951, the parties entered into a supplemental agreement which they denominate "Amendment to Agreement", relating to the renewal and payment of annual rentals on certain State leases which might expire during the tenure of the original contract. The supplemental agreement reads: It is obvious that the supplemental agreement expressly confirms the validity of the original contract. Its effect as we view it was to treat the original contract as in all respects in full force, except as to the handling of State leases, notwithstanding any previous mutual mistake. Equally significant is the fact that on August 10, 1951, the supervisor wrote appellee calling his attention to the fact that he held no permit and unless he concluded negotiations for the Sanchez permit by August 24th following, he would be held in trespass and action would be taken forceably to remove his sheep. Appellee was unable to acquire the Sanchez permit, nevertheless, continued to use the ranch as his own until August 30th thereafter, at which time he called at the office of the supervisor and was given a special grazing permit for his sheep covering the period July 20th to August 30, 1951. On or about the latter date he moved his sheep from the ranch and notified appellant of his election to rescind. Appellee's conduct is further expressed by his own testimony, we quote: We conclude that the contract was ratified expressly as well as by conduct. The principle is well established that voidable contracts may be rescinded at the election of an injured party; but, if with full knowledge of facts entitling him to rescission, he ratifies the transaction, he is conclusively bound thereby. This is the conclusion of such outstanding authorities as Williston and Thompson; Pomeroy; Am.Jur.; C.J.S.; and Restatement. We quote from some of the texts: Also see Terry v. Humphreys, 27 N.M. 564, 203 P. 539; Grymes v. Sanders, 93 U.S. 55, 23 L. Ed. 798; Bardwell v. Albertson, 120 Fla. 106, 162 So. 321; Bowman v. Schatzinger, 14 Ohio Cir.Ct.R.,N.S., 513, Id., 81 Ohio St. 565, 91 N.E. 1124. The judgment will be reversed with directions to the trial court to enter judgment for appellant on his counterclaim, and it is so ordered. SADLER, C. J., and McGHEE, J., concur. COORS and LUJAN, JJ., not participating.