This section is from the book "The Law Of Quasi Contracts", by Frederic Campbell Woodward. Also available from Amazon: The Law of Quasi Contracts.
The fact most frequently taken for granted, in the formation of contracts, is the existence of the subject matter, or the thing concerning which the parties contract. Thus, in contracts for the sale of specific personal property, its existence at the time of the sale is generally assumed. If the property has perished or been destroyed, the contract is void.3 The same view has been taken of the sale of non-existent realty;4 of the transfer of void or spurious securities;5 of the assignment of a void lease.6 And in all such cases, money paid in misreliance upon the void contract is recoverable:
1 Davison v. Von Lingen, 1884, 113 U. S. 40; 5 S. Ct. 346.
2 Couturier v. Hastie, 1856, 5 H. L. Cas. 673.
3 Strickland v. Turner, 1852, 7 Exch. 208, (annuity); Couturier v. Hastie, 1856, 5 H. L. Cas. 673, (cargo of grain); Gibson v. Pelkie, 1877, 37 Mich. 380, (judgment); Edwards p. Trinity, etc., R. Co., 1909, 54 Tex. Civ. App. 334; 118 S. W. 572, 575-6, (gravel in the land); St. Louis, etc., R. Co. v. Johnston, 1910, Tex. Civ. App. ; 125 S. W, 61, 62-3, (rock in quarry); Uniform Sales Act, Sec. 7, subsection 1. See Williston, "Sales," Sec. 161. See also Franklin v. Long, 1836, 7 Gill & J. (Md.) 407, (slave who had died).
4D'Utricht v. Melchor, 1789, 1 Dall. (Pa.) 428. See, however, Goldman v. Hadley, 1909, Tex. Civ. App. ; 122 S. W. 282, (sale of land between two surveys, where gap did not exist: no recovery in absence of fraud).
5 Young v. Cole, 1837, 3 Bing. N. C. 724, (void bonds).
6 Martin v. McCormick, 1854, 8 N. Y. 331.
Strickland v. Turner, 1852, 7 Exch. 208: Assumpsit to recover the purchase price paid for an annuity payable during the life of a third person. At the time of the purchase the third person had died, so the annuity had ceased to exist. Pollock, C. B. (p. 217): "The question between the parties is this - whether the purchase took effect during the existence of the annuity. If it did, though but for an instant, the plaintiff is not entitled to succeed; for he purchased the annuity, and cannot complain that in so doing he made a bad bargain, as the events have turned out. But if, on the contrary, the annuity has ceased to exist before his purchase, then he has got nothing for his purchase money, and is entitled to recover it back • • • "
Martin v. McCormick, 1854, 8 N. Y. 331: Action by the owner of land to recover money paid in consideration of the assignment to him of a lease given to the defendant by a third party. It appeared that the lease was void, a fact unknown to both parties at the time of the assignment. Johnson, J. (p. 334): "The parties did not deal with each other upon the footing of the compromise of a doubtful or doubted claim, but upon the ground of a conceded right in the defendant. He was assumed by both of them to have become the owner of a term for one hundred years in the premises in question, and the parties dealt with each other upon that basis for the sale and purchase of that interest. . . . Now the term which was the subject of the contract, contrary to the supposition of both parties, had no existence, and in all that class of cases where there is mutual error as to the existence of the subject matter of the contract, a recision may be had." 1
1 Accord: Jones v. Ryde, 1814, 5 Taunt, 488, (navy bill void because of alteration); Young v. Cole, 1837, 3 Bing. N. C. 724, (Guatamala bonds void because not properly stamped); Gompertz v. Bartlett, 1853, 2 El. & Bl. 849, (bill of exchange thought to be a foreign bill but in fact a domestic bill and consequently unavailable for want of a stamp); Franklin v. Long, 1836, 7 Gill & J. (Md.) 407, (slave who had died); Young v. Adams, 1810, 6 Mass. 182, (counterfeit bill); Brewster v. Burnett, 1878, 125 Mass. 68; 28 Am. Rep. 203, (counterfeit bonds); McGoren v. Avery, 1877, 37 Mich. 119, (void certificate of execution sale); Wood v. Sheldon, 1880, 42 N. J. L. 421; 36 Am. Rep. 523, (void dividend certificate); D'Utricht v. Melchor, 1789, 1 Dall. (Pa.) 428, (non-existent land); Hurd v. Hall, 1860, 12 Wis. 125, (void school land certificates); Paul v. Kenosha, 1867, 22 Wis. 256; 94 Am. Dec. 598,
Closely analogous to cases of the sale of goods which have been destroyed is that of Ketchum v. Collin,1 where in the sale of produce it was assumed that the goods were at a certain place, whereas in fact they were elsewhere. In an action to recover the amount paid upon the purchase price, the court said:
"The plaintiff, in this case, wanted the property he contracted for at Whitehall, and not at Boston; and it was upon the supposition, that he was to receive the property at Whitehall, that he entered into the contract. We think this was material; and that without it the contract would not have been made; and if so, the right of property did not pass from Catlin to the plaintiff. When it was discovered, that the parties, in making this contract, had proceeded upon a mutual mistake as to the situs of the property, they mutually had the privilege of being remitted to their original rights."