Court Opinion

ID: 9702712
Source: CourtListenerOpinion
Date Created: 2023-08-25 23:21:42.523692+00
Date Added: 2024-06-11T18:21:40.745282
License: Public Domain

WUEST, Justice
(concurring in part and dissenting in part).
I concur with the majority that there was mutual mistake regarding a basic assumption — that the substructure was adequate to support the home. However, I dissent on the issue of whether the Plaintiffs’ rescission was promptly made and whether a delay, if any, was long enough to prejudice the Defendants, and thereby, dissent in the result.
The amount of time elapsed before the attempted rescission is not necessarily determinative of whether a contract has been rescinded promptly. Kane v. Schnitzler, 376 N.W.2d 337, 340 (S.D.1985). The important consideration is ‘“whether the period has been long enough to result in prejudice to the other party.’ ” Id. (quoting 17 Am.Jur.2d Contracts § 510, p. 992).
Where the facts are without dispute, the question of whether the rescinding party acted with due promptness is one of law for the court. Black on Rescission, § 547. No fixed rule can be laid down as to time in which one must rescind. What may be a prompt action in one ease would not be so in another case.
Saunders v. Farmers & Merchants Nat’l Bank, 61 S.D. 261, 265, 248 N.W. 250, 252 (1933).
In Beatty v. Depue, 78 S.D. 395, 103 N.W.2d 187 (1960), this court held that a lapse of one and one-half years was timely under the circumstances of that case involving land boundaries. The court noted that although purchasers previously had discovered they did not own a portion of the southern end of their land, it was the discovery some months later of a gap in the northern boundary that was “the important ground of their reason for rescinding.” Id. 78 S.D. at 405, 103 N.W.2d at 192.
In Halvorson v. Birkland, 84 S.D. 328, 171 N.W.2d 77 (1969), a delay of two years did not defeat purchasers’ right to rescind a contract for sale of a trailer court. See also O’Connor v. King, 479 N.W.2d 162 (S.D.1991).
I believe that the rescission here was promptly made. The majority has defined the time period between knowledge of the defect and notice of rescission as two and one-half years. However, the defect giving grounds for rescission occurred not when the “subtle slope” was first noticed by Plaintiffs, but when the mistake as to the parties’ basic assumption of an adequate substructure was discovered — in August 1989 when Plaintiffs found the eighteen to twenty-four inch void between the basement floor and the dirt underneath the floor. Discovery of this void was “the important ground of their reason for rescinding.” Beatty, 78 S.D. at 405, 103 N.W.2d at 192. At this point, Plaintiffs did not sit on their rights but acted diligently and reasonably to discover the cause by contracting engineers, geologists, contractors, and soil specialists. The Supreme Court of North Dakota, discussing Beatty, stated “once a party has the facts, the party is required to find out what legal significance results_ The party, in effect, has a twofold responsibility to find out what the facts actually are and then find out what legal rights result from those facts.... ” Berg v. Hogan, 322 N.W.2d 448, 453 (N.D.1982). Just one year passed between Plaintiffs’ discovery of the void and Plaintiffs’ offer to rescind the contract with Defendants. Following Defendants’ refusal, Plaintiffs promptly initiated this lawsuit.
As this court noted in Kane, 376 N.W.2d at 340, promptness in rescission is to be determined not necessarily by the amount of time elapsed but whether the delay has prejudiced the non-rescinding party.
*422It is a general rule ... that a right to rescind must be exercised promptly or within a reasonable time on discovery of the facts from which it arises, particularly where a party may be injured by delay, so that rescission may be accomplished at a time when the parties may still be restored, as nearly as possible to their original positions.... [Ljapse of time is not the sole consideration in determining diligence.
17A C.J.S. § 431, p. 529-30 (1963). It is not the defect giving rise to grounds for rescission which must be examined in determining prejudice to Defendants, but the delay, if any, in Plaintiffs’ noticing Defendants of an attempt to rescind following discovery of the defect. Here, no prejudice to Defendants caused by delay has been shown. Expert testimony at trial indicated there has been no change in repair costs between the time of discovery and the time of trial and that the defect, unknown to both parties and existing at the time of sale, has remained unchanged to the time of trial. Defendants have obtained employment and moved to another state but, even if this can be considered prejudice, it was not caused by any delay on Plaintiffs’ part, these plans being made by Defendants prior to closing on the sale of their home.
Plaintiffs acted promptly following discovery of the defective substructure in determining the cause and noticing Defendants of their attempt to rescind the parties’ contract. Further, even if delay is found, there is no evidence of prejudice as required by prior case law of this court. Thus, I dissent on this issue and dissent in the result.