Kappelman v. Bowie

Henderson, J., delivered the opinion of the Court. This appeal is from a decree dismissing a bill for specific performance of a real estate contract repudiated by the vendors, on the ground of mistake and inadequacy of price. The facts may be briefly stated. The respondents purchased for investment the premises in question, 1917 West North Avenue, in June, 1947 for $7,000, subject to a ground rent of $90.

They spent about $2,000 in repairs and improvements, converting the dwelling into three apartments which they rented for a total of $113 per month. In April, 1951 they redeemed the ground rent for $1,500, increasing their mortgage for that purpose to $5,500. In September, 1951 they signed a standard multiple listing contract with Weaver Brothers, Inc., authorizing the sale of the property for $9,500, subject to a $90 ground rent to be created. Their reason for wishing to sell was that a strike was imminent at Mr. Bowie’s place of employment, the Bethlehem Steel Company, and he was fearful that he would be unable to keep up the mortgage payments.

After obtaining the listing, according to Mr. Jordan, the representative of Weaver Brothers, Inc., the property was advertised and several prospective purchasers expressed an interest in buying for a small down payment. They were not shown the property because Bowie insisted on cash. Jordan told him he would have to take “a great deal less money” on that basis. Kappelman, ⁸⁸ an investor whom Jordan had known previously, looked at the property and made an offer to buy it in fee for $7,500 cash.

On September 29 Jordan submitted the offer to the Bowies in the form of a standard contract which he had prepared stating the terms to be $7,500 in fee simple. They read the contract and signed it after making certain alterations by interlineation, cancelling the inclusion of screens and shades, which belonged to the tenants, and reducing the time for settlement from 90 to 60 days. They admit that they initialed these alterations and signed the contract. It was then delivered to and signed by Kappelman, who made the required down payment.

The Bowies testified that at thfe time they signed the contract they, asked Jordan, “What about the ground?” and he replied, “That will be taken care of.” Jordan denied that there was any discussion about ground rent at that time, although he admitted that at the time the listing contract was signed he had discussed the effect of their purchase of the outstanding ground rent and had told them that the steps necessary to the creation of a new rent would be taken at the time of sale. The Bowies testified that they learned of their error from their mortgagee a few days later, and notified Jordan. Jordan testified (they denied) that they told him they had received a better offer. Kappelman refused to rescind the sale, except on payment to him of $1,000.

They then consulted counsel who repudiated the contract on their behalf on October 19. Thereupon Kappelman filed suit. The chancellor expressed the view that the price was grossly inadequate. He did not make any finding on the question of mistake although he did comment that “the real estate man was incompetent or worse.” We think the case turns on the question whether there was such a unilateral mistake, under all the circumstances in the case, as would constitute a defense to specific performance.

It is clear that Kappelman was not mistaken nor is he chargeable with any mistake ⁸⁹ that may have been made by the vendors, since he dealt entirely with their agent. The appellant contends that the appellees were not mistaken because they read the contract and knew, or ought to have known, what it contained, and their repudiation was an afterthought. We think the testimony does not support this contention. The testimony of the appellees is definite that they thought the price was to be $7,500, subject to a ground rent to be created.

There is no dispute that the listing agreement called for a ground rent to be created, and it is not reasonable to suppose that they would have been willing to forego, without discussion, a ground rent worth $1,500, on top of a reduction of $2,000 in the asking price for property in which they had an investment of over $10,000. Jordan’s testimony that there was no discussion seems highly incredible. Moreover, their testimony is that they did raise the question. The appellees were negroes with little business experience.

He was a partially deaf steel worker who had only gone as far as the second grade in school; she was a domestic servant with fourth grade schooling. The purchase of 1917 West North Avenue was their first joint venture in property matters, although she had inherited another property from her former husband. In dealing with the experienced agent of an established