Opinion ID: 1429037
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Heading: rescission under wyoming law

Text: In Wyoming, the law imposes the following conditions for a successful rescission action based on misrepresentation:    [B]efore a buyer may have a contract rescinded and restitution made, he must prove in a clear and convincing fashion that one, the seller misrepresented the interest in land which was being sold, in a material and substantial aspect; two, the buyer relied upon the false representation; and three, as a result the buyer suffered injury. Hagar v. Mobley, Wyo., 638 P.2d 127, 132 (1981). That three-part misrepresentation analysis also supports the right to rescission in this case. First, the breach of the covenant of merchantability and the breach of the covenant of compliance with the city ordinance amount to a misrepresentation of the interest in the realty being sold, in a material and substantial aspect. Second, Buyers relied on that misrepresentation. We note that these representations were included in the contractual documents and were a constituent part of the written undertaking which both parties signed. Furthermore, it is difficult to imagine that Buyers would have been willing to purchase the property had they known that the encroachments existed, raising the marketability problems. The third and final criterion under Hagar v. Mobley, supra, is that Buyers suffered injury as a result of Sellers' false representations. There can be no doubt of injury where, as here, the false representation would subject Buyers to the expense to remove the encroachments for legal property usage. Dukas v. Tolmach, supra. Furthermore, the fact that the buyers came to be in possession of property by purchase as now subject to difficulty of resale also constitutes injury and monetary damage. The facts of Hagar are comparable to this case to the extent that that decision was reasoned from an analogy of misdescription cases to its facts, involving the term of an underlying state lease form from which possession was derived by the vendor. See Chesapeake Homes, Inc. v. McGrath, supra, 240 A.2d 245; E.H. Dreifus Lumber Co. of Oregon v. Werner, 221 Or. 467, 351 P.2d 684 (1960); and Dugan v. Jones, Utah, 615 P.2d 1239 (1980). This kind of an encroachment is a boundary problem in reality. We conclude that Buyers meet the three-part Mobley test for entitlement to rescission on the ground that they were injured by their reliance on the false representations that (1) title to the property was marketable, and (2) the property was in compliance with all applicable laws, including city ordinances. The right to rescind exists for various reasons. Among them are enumerated want of title   . Hawkins v. Stoffers, 40 Wyo. 226, 276 P. 452, 456 (1929). Since Sellers have regained the property, rescission only invokes repayment. Twing v. Schott, 80 Wyo. 100, 338 P.2d 839 (1959). See Flygare v. Brundage, 76 Wyo. 350, 302 P.2d 759 (1956), where the remedy of rescission was recognized, although the facts are dissimilar.