Smith v. Zimbalist

California District Court of Appeal · 1935 · Contracts

ContractsMutual mistakeWarranty by descriptionCaveat emptormutual mistakeidentity of subject matterwarranty by descriptionbill of sale

Facts

Plaintiff, an elderly collector of rare violins, showed part of his collection to defendant, a prominent violinist and collector, after defendant visited plaintiff's home. Defendant selected two violins, identified them during the transaction as a Stradivarius and a Guarnerius, and the parties signed a receipt and bill of sale describing them as such; defendant paid $2,000 down on a total price of $8,000, with the balance to be paid monthly. Both parties honestly believed the violins were genuine works of Stradivarius and Guarnerius, and plaintiff made no fraudulent representations. The trial court found, however, that the violins were actually imitations worth no more than $300.

Issue

When both buyer and seller honestly believe goods are authentic old-master violins, but the goods are in fact imitations, may the seller recover the unpaid purchase price? More specifically, does caveat emptor control, or does mutual mistake and warranty by description prevent enforcement of the sale?

Rule

The strict rule of caveat emptor does not apply where both parties to a purported sale of personal property are honestly mistaken as to the identity of the subject matter; in that situation, no enforceable sale has taken place. Additionally, a description of the thing sold in a bill of parcels, bill of sale, or sale note amounts to a warranty by the seller that the subject matter conforms to that description.

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One of 10 multiple-choice questions for this case. Pick an answer to see why.

In Santa Fe, Elena Cruz sold Noah Benton a sculpture for $40,000 after both parties honestly believed it was an original work by a famous nineteenth-century artist. Their signed sale note identified it as "one original Mateo Rivas bronze." Experts later proved it was a twentieth-century imitation worth only $900.

Elena sues Noah for the unpaid balance. What is the strongest argument for Noah under the governing rule?

Explanation. The majority rule is that strict caveat emptor does not control when both parties are honestly mistaken about the very identity of the thing sold. In addition, a description in a sale note or bill of sale amounts to a warranty that the goods conform to that description. Here, both parties believed the sculpture was an original by the named artist, but it was actually an imitation. That defeats Elena's action for the unpaid price. (Derived from Smith v. Zimbalist (n.d.).)