Jim Whitney |
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Case name: |
Theodore C. Sherwood v. Hiram Walker et al. |
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Court: |
SUPREME COURT OF MICHIGAN |
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Citation; Date: |
July 7, 1887, Decided |
PROCEDURAL HISTORY |
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Trial court: |
Appeal court (if
relevant): |
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Plaintiff: |
Sherwood |
Appellant: |
Sherwood |
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Defendant: |
Walker |
Respondent: |
Walker |
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Facts of the case: |
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Sherwood wanted to buy a cow from
Walker. Both parties were under the
impression that the cow was barren.
Both parties agreed to terms to sell the cow at 5.5 cents per pound
(this was agreed upon in writing).
Sherwood was to buy the cow for approximately $80. Sherwood was to pick up the cow from a
person by the name of Graham. [On the twenty-first of the same month the
plaintiff went to defendants' farm at Greenfield, and presented the order and
letter to Graham, who informed him that the defendants had instructed him not
to deliver the cow. Soon after, the plaintiff tendered to Hiram Walker, one
of the defendants, $ 80, and demanded the cow. Walker refused to take the
money or deliver the cow. The plaintiff then instituted this suit.] In other words, Walker discovers that the
cow is not barren and is thus able to have babies, making her worth much
more. She is actually worth between
$750 and $800, so Walker tells Graham to not sell the cow (Rose 2d of
Aberlone) to Sherwood. The defendants
believe that the contract was executory, and by its terms no title to the
animal was acquired by the plaintiff.
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Remedy sought: |
Plaintiff
is filing suit for the cow after being refused the title, after having agreed
to terms on a contract with the defendant. |
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Court opinion (including key issues and
arguments): |
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The
dilemma lies in the construction of a contract for the cow’s sale. The value and condition of the cow has
changed from when the contract was drafted.
The cow is no longer barren, and is thus worth substantially more
money. This is a problem because the
plaintiff did not possess any part of the cow, nor did the plaintiff give any
exchange of payment. Following these
points, “if the thing actually delivered or received is different in substance
from the thing bargained for and intended to be sold, then there is no
contract; but if it be only a difference in some quality or accident, even
though the mistake may have been the actuating motive to the purchaser or
seller, or both of them, yet the contract remains binding”. |
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Disposition of case: |
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[The judgment of the court below must be
reversed (reverse the judgment of the previous court), and a new trial
granted, with costs of this Court to defendants.] The defendant can keep the cow and cancel the sale. |
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ECONOMIC ANALYSIS OF THE CASE |
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In
order to factor in the risk that the cow might be fertile instead of barren,
the seller could have priced the cow with a weighted average of the price of
a fertile or barren cow. This would
compensate for the fact that there is sometimes uncertainty in whether or not
a cow is capable of reproducing. A
barren cow and a fertile cow are fundamentally different items, so this needs
to be taken into account. As this was
a mutual mistake on the part of both parties (they were both thinking that
the cow was something other than what it was) it makes sense that the
contract should be invalidated. However,
the court should make their decision in a way that increases incentives for
both parties to research the product and draft the contract accordingly. In this case, the ruling does not provide
this incentive. When drafting the
contract, it was the seller’s responsibility to know what he was selling and
how much the product was worth. This
ruling does not set a precedent to motivate efficient behavior in the future. |