Dissent in Lenawee County Board of Health v. Messerly
417 Mich. 17, 331 N.W.2d 203 (1982) (1982) · Supreme Court of Michigan
Lenawee County v. Messerly modernized Michigan's approach to mutual mistake by departing from the substance-versus-quality distinction of Sherwood v. Walker and adopting a more flexible analysis based on the Restatement (Second) of Contracts. The court emphasized that the allocation of risk is the critical inquiry in mutual mistake cases, holding that rescission is unavailable when the risk of the mistake was allocated to one of the parties by the contract or by the circumstances.
What was the dissent in Lenawee County Board of Health v. Messerly?
Justice Fitzgerald dissented, arguing that the 'as is' clause should not be read to cover a defect as fundamental as an illegally installed sewage system that rendered the entire property uninhabitable. He contended that the 'as is' clause was intended to cover minor defects visible upon inspection, not hidden violations that destroyed the essential purpose of the purchase.
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Case Overview
Facts
The Messerlys sold a three-unit apartment building to the Pickles. Neither party knew that the building's septic system had been illegally installed by a previous owner and was in violation of the county health code. After the sale, the Lenawee County Board of Health condemned the property and ordered that it could not be used as a dwelling, rendering the building essentially worthless. The Pickles sought to rescind the contract on the ground of mutual mistake.
Majority Holding
The court held that the contract could not be rescinded despite the mutual mistake about the property's condition. Applying the Restatement (Second) of Contracts framework, the court found that the 'as is' clause in the contract allocated the risk of unknown defects to the buyers. Even though both parties shared the mistaken belief that the property was habitable, the buyers assumed the risk by purchasing the property in its existing condition.
Majority Reasoning
Justice Ryan, writing for the court, declined to apply the Sherwood v. Walker substance-versus-quality distinction, finding it an inadequate analytical framework. Instead, the court adopted the approach of the Restatement (Second) of Contracts Section 154, which focuses on risk allocation. Under this framework, a party bears the risk of a mistake when: (a) the risk is allocated by the agreement, (b) the party is aware of limited knowledge but treats it as sufficient, or (c) the court allocates the risk on grounds of reasonableness. Here, the 'as is' clause manifested the parties' intent to allocate the risk of defects to the buyers. The court acknowledged that the mistake was mutual and material but concluded that rescission was inappropriate because the buyers had assumed the very risk that materialized.
The Dissenting Opinion
Justice Fitzgerald dissented, arguing that the 'as is' clause should not be read to cover a defect as fundamental as an illegally installed sewage system that rendered the entire property uninhabitable. He contended that the 'as is' clause was intended to cover minor defects visible upon inspection, not hidden violations that destroyed the essential purpose of the purchase.
Key Quotes
“Rescission is not available to relieve a party who has assumed the risk of loss in connection with the mistake.”
“The 'as is' clause... is an agreement that shifts the risk of a defective condition to the buyer, thereby precluding rescission for mutual mistake.”
“We find that the inexact and confusing distinction between contractual mistakes running to value and those touching the substance of the consideration serves only as an unproductive and unnecessary hindrance to analysis.”
Impact and Legacy
Lenawee County v. Messerly significantly influenced the modern approach to mutual mistake by shifting the focus from the nature of the mistake to the allocation of risk. The case has been widely cited for the proposition that courts should look to contractual provisions, the parties' knowledge, and equitable considerations to determine who bears the risk of a shared mistake. It effectively supplanted the Sherwood v. Walker substance-versus-quality test in many jurisdictions.
Exam Relevance
Lenawee County v. Messerly is tested alongside Sherwood v. Walker to evaluate whether students understand the modern risk-allocation approach to mutual mistake. Professors may present fact patterns with 'as is' clauses or other risk-shifting language and ask whether rescission is available. Students should be prepared to apply the Restatement factors for risk allocation and to compare the Lenawee approach with the older Sherwood framework.
Study Tips
- Master the three-part risk allocation test from Restatement Section 154: (a) allocated by the agreement, (b) conscious ignorance, or (c) reasonable allocation by the court.
- Understand why the 'as is' clause was dispositive: it manifested the parties' intent to allocate the risk of unknown defects to the buyer.
- Compare the Lenawee approach with Sherwood v. Walker: note that Lenawee shifts the focus from the nature of the mistake to who bears the risk, which is more practical and predictable.
- Consider the dissent's limiting argument: should 'as is' clauses cover fundamental defects that destroy the entire purpose of the transaction, or only minor visible defects?
Read the Full Case Analysis
View the complete brief for Lenawee County Board of Health v. Messerly including full reasoning, doctrine, and study resources.
More Contracts Dissents
Jacob & Youngs, Inc. v. Kent
230 N.Y. 239, 129 N.E. 889 (1921) (1921)
Justice McLaughlin dissented, arguing that the builder contracted to use Reading pipe and failed to do so. He maintained that the express terms of the contract should be enforced as written, and the builder should not be excused from full performance simply because the deviation was unintentional. The dissent viewed the majority's approach as undermining the certainty of contractual obligations.
Peevyhouse v. Garland Coal & Mining Co.
382 P.2d 109 (Okla. 1962) (1962)
Justice Irwin dissented vigorously, arguing that the restoration promise was not incidental but was a central part of the bargain and a significant inducement for the Peevyhouses to lease their land. The dissent maintained that the mining company had received the full benefit of the lease and should not be permitted to escape its explicit obligations. Justice Irwin argued that applying the diminution-in-value measure effectively allowed the mining company to breach with impunity and denied the landowners the benefit of their bargain.
Williams v. Walker-Thomas Furniture Co.
350 F.2d 445 (D.C. Cir. 1965) (1965)
Judge Danaher dissented, arguing that the court should not remake contracts for the parties and that the legislature, not the judiciary, was the proper body to address concerns about oppressive consumer contracts. He expressed concern that the majority's approach would create uncertainty in commercial transactions and undermine freedom of contract.
Sherwood v. Walker
66 Mich. 568, 33 N.W. 919 (1887) (1887)
Justice Sherwood (no relation to the plaintiff) dissented, arguing that the parties contracted for a specific, identified cow and that the mistake about her breeding capacity was a mistake about quality or value, not substance. The dissent maintained that the cow was the same animal regardless of whether she was pregnant, and that allowing rescission based on the seller's buyer's remorse after discovering the cow was more valuable than expected would undermine the certainty of contracts.