Story Case

Mr. Gerald Candler, who lived in Chicago, owned a farm in the state of Indiana. He was the owner of a fine racing horse, which he kept on his farm. Mr. Maxwell, a friend of Mr. Candler, had often requested Mr. Candler to sell the horse to him. At length, Mr. Candler agreed to sell the horse. On September 28 he notified Mr. Maxwell that he would sell him the horse for a certain price, if the latter still wished to purchase at that price. The following day, Mr. Maxwell agreed to purchase the horse and to pay for him within thirty days from that date. It appeared that the horse had died on the 27th and notice of this fact did not reach Mr. Chandler until the 1st of October. Mr. Maxwell then sued Mr. Candler for breach of his contract to sell the horse. What should be the decision in the case?

Ruling Court Case. Gibson Vs. Pelkie, Volume 37 Michigan Reports, Page 380

Pelkie had recovered a judgment against a certain person, but was unable to collect the same. He, therefore, entered into an agreement with Gibson, by the terms of which Gibson was to have half of the judgment, in case he could collect it. Gibson then set out to collect the judgment. Before he had made any progress the Court, which rendered the judgment, declared that it was void. Gibson then sued Pelkie for damages for a breach of the contract for failure to furnish the judgment.

Pelkie contended: That he was not liable, because there was a mutual mistake as to the existence of the thing concerning which they had contracted; that he thought that he had a valid judgment, and had good reason to believe that he had; but since he had not, there was no real consent between the parties.

Mr. Justice Graves said in the course of his opinion: "If then there was a proceeding which was meant to be a judgment, but which was void, there was nothing to which the actual bargaining could attach. There was no subject matter. The parties supposed there was a judgment, and negotiated and agreed on that basis, but there was none. Where they assumed there was substance, there was no substance. They made no contract because the thing they supposed to exist, and the existence of which was indispensable to the institution of the contract, had no existence".

Judgment was, therefore, given for Pelkie in this action.

Ruling Law. Story Case Answer

If parties contract in reference to subject matter, which they believe exists, but which in fact does not exist, or if the subject matter in the meantime has been destroyed without knowledge to either, no contract results. It is said that there is here a lack of mutual consent. But a better explanation is that the parties contracted in reference to a certain subject matter, and it is impliedly agreed that the contract is binding only in case that subject matter does exist. In the Story Case, the parties contracted in reference to a specific horse. They both believed that the horse was in existence when they entered into the contract. However, about the existence of the horse they were mistaken. Consequently, no contract resulted, and Mr. Maxwell cannot recover anything from Mr. Candler.