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Burggraff v. Baum
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MAINE SUPREME JUDICIAL COURT  				       	 Reporter of Decisions
Decision:	1998 ME 262
Docket:	Kno-98-202
Argued:	November 3, 1998	
Decided:	December 10, 1998

Panel:		WATHEN, C.J., and CLIFFORD, RUDMAN, DANA, SAUFLEY, ALEXANDER, and
		CALKINS, JJ.



DAVID T. BURGGRAFF and ROBERTA RUBLY-BURGGRAFF v. VERNA W. BAUM and JOSEPH T. BAUM


RUDMAN, J.

	[¶1]  Verna and Joseph Baum appeal from the judgment entered after
a bench trial in the Superior Court (Knox County, Marsano, J.) rescinding a
contract for the purchase of land.  They argue the trial court erred by
applying the doctrine of mutual mistake of fact to rescind their contract.  We
agree and vacate the judgment.
	[¶2]  This case arises from an installment contract to purchase roughly
eight-and-a-half acres of undeveloped shorefront property at Mill Cove in St.
George.  Verna Baum and her husband, Joseph Baum, agreed to sell the lot
to David Burggraff and his wife, Roberta Rubly-Burggraff, in July 1994. 
Roberta drafted the contract, which did not include a contingency clause,
and the parties signed it without the advice of counsel.
	[¶3]  The parties originally became acquainted in April 1993 when the
Burggraffs began renting the Baums' house on nearby Patten Point.  The
couples became close friends, "almost like family."  During the summer or
fall of 1993, the Burggraffs offered to buy a portion of the Baums' land at Mill
Cove after Verna joked that she would gladly sell the property if she could
get the amount of the town's latest tax assessment.  The Burggraffs wanted
the lot because it had an ocean view and a potential building site near the
water.  Negotiations proceeded slowly because the land had been in Verna
Baum's family for generations and had sentimental value to her.  During this
time, the parties discussed in detail their plans for the land, both
emphasizing potential building sites and the importance of limiting
development that could detract from its natural beauty.  
	[¶4]  The Burggraffs planned to build both a primary residence and a
cabin on the lot.  They desired (and the Burggraffs understood) that the
cabin be located within seventy-five feet of the water, with the residence up
the hill from the water in the woods.  Throughout negotiations, the parties
continued their close relationship, and discussed the Burggraffs' building
plans frequently.  Verna Baum testified that she understood the cabin was to
be a building near the water for meditation and to store kayaks.  Joseph
Baum walked the property with the Burggraffs, pointing out at least two
possible building sites and discussing percolation tests of the soil. 
Eventually, David Burggraff began to gather stones for the foundation near
the water, and Joseph Baum cut six or seven trees for him near the same
site.  
	[¶5]  Roberta Rubly-Burggraff researched some of the zoning statutes
that applied to the land.  She determined that the general state setback was
100 feet, while the St. George setback was only seventy-five feet.  Both
parties believed, based on her efforts and what they called "common
knowledge," that those were the only relevant zoning ordinances that
applied to the lot.  In April 1995, after the contract was signed, the
Burggraffs hired a civil engineer to discuss improving an access road that led
to the building site of the primary residence.  He informed the Burggraffs
that the land was in the town's Resource Protection District (RPD), which
generally extends 250 feet from the water's edge.{1}  While the site chosen
for the main residence would not be affected, neither the access road nor
the cabin could be built in the RPD without permits from various local
authorities.
	[¶6]  When the Burggraffs informed the Baums that the lot was in the
RPD, they asked for a price reduction.  The Baums responded by saying they
would consider it, but first wanted to see if the town would reduce the
property tax assessment.  In light of the zoning restrictions, the Baums were
able to convince the town to reduce the assessment.  When the parties
returned to negotiate a reduction in price, they were unable to come to an
agreement, and in October 1995, the Burggraffs stopped making payments
and demanded a refund. 
	[¶7]  In June 1996, the Burggraffs filed a complaint seeking rescission
of the contract.  After a bench trial, the court found that neither party knew
the land was in the RPD, and granted rescission based on the doctrine of
mutual mistake of fact.  It is well-settled that a contract is not legally binding
if both parties have entered into it laboring under a good-faith mistake of
fact.  Interstate Indus. Unif. Rental Serv., Inc. v. Couri Pontiac, Inc., 355 A.2d
913, 918 (Me. 1976).  A mistake of fact, however, differs from a mistake of
law.  When, as here, both parties know the facts, yet have an erroneous
conclusion as to their legal effect, the misconception is a mistake of law. 
Stewart v. Ticonic Nat'l Bank, 104 Me. 578, 586, 72 A. 741, 745 (1908).  
	[¶8]  Both the Burggraffs and the Baums were aware that the property
was subject to at least some land use restrictions.  As evidenced by Rubly-
Burggraff's attempt to research the zoning ordinances that applied to the
property, the parties could have informed themselves accurately of what
could be built at Mill Cove.  Her research, however, failed to uncover the
existence of the RPD, and therefore the parties interpreted the local land
use regulations to permit their proposed building plans.  They were not
mistaken about the fact that restrictions applied to the lot, but rather about
what those restrictions were and what legal effect they had.  That is a
mistake of law, and not a basis to rescind a contract.  See Moulton v.
Moulton, 1998 ME 31, ¶ 10, 707 A.2d 74, 76 (vacating decision granting
rescission where mistake related to law, not fact).  The rationale behind this
rule is that the parties are presumed to know the law, or at least capable of
verifying it, whereas they cannot be expected to be acquainted with all
factual matters, regardless of their diligence.  Webb v. Webb, 301 S.E.2d
570, 574 (W. Va. 1983); see also Letter from Thomas Jefferson to André
Limozin (Dec. 22, 1787), in Papers of Thomas Jefferson, at 451
(Julian P. Boyd ed., 1955) ("Ignorance of the law is no excuse in any country. 
If it were, the laws would lose their effect, because it can always be
pretended.").  We therefore conclude that the parties labored under a
mistake of law, and that rescission of the contract is inappropriate.
	The entry is:
Judgment vacated.  Remanded for entry of judgment
in favor of defendant.

Attorneys for the Plaintiffs: James W. Strong, Esq. (orally) Allison A. Stone, Esq. 5 Water St. P.O. Box 56 Thomaston, Maine 04861 Attorney for the Defendants: Frederick M. Newcomb, Esq. (orally) 166 Main St. P.O. Box 1115 Rockland, Maine 04841
FOOTNOTES******************************** {1} . The ordinance applies: to all land areas within 250 feet, horizontal distance, of the normal high- water line of any great pond, river or saltwater body; within 250 feet, horizontal distance, of the upland edge of a coastal or non-forested freshwater wetland; and within 75 feet, horizontal distance, of the normal high-water line of a stream. This Ordinance also applies to any structure built on, over or abutting a dock, wharf or pier, or other structure extending beyond the normal high-water line of a water body or within a wetland. St. George, Me., Shoreland Zoning Ordinance § 3 (Oct. 6, 1997).