Lenawee County Board of Health v. Messerly Case Brief Summary | Law Case Explained
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Lenawee County Board of Health v. Messerly | 331 N.W.2d 203 (1982)
In the famous 1887 case of Sherwood versus Walker, the Michigan Supreme Court first defined what constituted a mutual mistake, in a case involving the famous cow, Rose the Second of Aberlone. Nearly a century later, the same court considered how contractual allocation of losses can impact an agreement if a mutual mistake occurs.
William and Martha Messerly bought an apartment building and surrounding land as an investment to generate rental income. The Messerlys didn’t know that the prior owner had installed a septic system on the property without a permit and in violation of the health code. Five years later, the Messerlys sold the parcel and apartment building to buyers Carl and Nancy Pickles, who also bought it as an investment to generate rental income. The land contract specifically stated that the buyers examined the property and agreed to accept the property in its current condition.
Less than a week later, the buyers discovered raw sewage seeping out of the ground. No economically feasible solution to the problem presented itself.
The Lenawee County Board of Health condemned the property. The board sued the sellers and the buyers, seeking an injunction prohibiting human occupancy of the apartment building until the property was brought up to code. Once the Lenawee County Circuit Court granted the injunction, the board of health withdrew from the litigation. In the meantime, the buyers made no payments on the land contract, so the sellers cross-claimed against the buyers, seeking foreclosure and a monetary judgment. The buyers countersued the sellers, seeking rescission of the land contract.
The trial court found that neither the sellers nor the buyers knew of the nonconforming septic system until after the parties concluded the sale. The buyers bought the property as is following an inspection, so the court held that the buyers had assumed the risk of hidden problems and found for the sellers.
The Michigan Court of Appeals reversed. That court held that a mutual mistake had occurred. Therefore, rescission of the land contract was a proper remedy. The sellers sought leave to appeal to the Michigan Supreme Court.
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