LEROY RITCHEY AND DOROTHY RITCHEY, APPELLANTS,
v.
MERRILL LYNCH, PIERCE, FENNER & SMITH, INC., A DELAWARE CORPORATION, APPELLEE
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The Ritcheys agreed to sell 500 shares of United Utilities of Kentucky stock through Merrill Lynch, but Merrill Lynch mistakenly believed it was selling Kentucky Utilities stock instead. When Merrill Lynch discovered the error over a month later and sought rescission, the trial court granted summary judgment for Merrill Lynch. The appellate court reversed, holding that genuine issues of material fact existed regarding whether the mistake was unilateral and whether Merrill Lynch's negligence precluded the equitable remedy of rescission.
The trial court erred in granting summary judgment for Merrill Lynch because genuine issues of material fact remain regarding whether the mistake was unilateral and whether it resulted from Merrill Lynch's inexcusable negligence. If the Ritcheys were unaware of the error and the mistake was fully due to Merrill Lynch's negligence, such negligence may preclude the equitable remedy of rescission.
[1] A genuine issue of material fact requires a case to be referred for a proper determination of issues of fact and credibility, precluding summary judgment.
[2] A unilateral mistake, if fully attributable to the inexcusable negligence of one party and unknown to the other, may preclude the equitable remedy of rescission.
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Join FLexlaw to unlock all legal intelligence“Where the existence of a genuine issue of material fact appears in the record, the case must be referred for a proper determination of issues of fact and credibility.”
Establishes the standard that summary judgment is inappropriate when factual disputes exist
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Join FLexlaw to unlock all legal intelligenceThe Ritcheys contacted Merrill Lynch to sell 500 shares of United Utilities of Kentucky common stock to pay medical expenses. Mrs. Ritchey read the st…
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RYDER, Judge.
Appellants Leroy and Dorothy Ritchey decided to sell 500 shares of United Utilities of Kentucky common stock owned by Mr. Ritchey to pay medical expenses. As they were uncertain of the exact value of the stock, Mrs. Ritchey telephoned an employee of appellee, Merrill Lynch, a stock brokerage firm, and inquired whether Merrill Lynch could arrange a sale of the stock. Mrs. Ritchey described the shares to be sold and read the name and type of stock from the certificates to the employee. The employee informed the Ritcheys he would call back the next day on the stock, which he did, and quoted to the Ritcheys the selling price. After a short conference, the Rit-cheys agreed to sell at the quoted price and were told by the employee to deliver the certificate to the Merrill Lynch office.
Three days later Mr. Ritchey delivered the certificate to the employee who handed it over to a secretary who, in turn, executed a receipt for the certificate and gave that to Mr. Ritchey. Shortly thereáfter, he received a check in the amount of $11,229.74, representing the proceeds of the sale less a broker’s commission and tax.
A little over a month passed and the Ritcheys were contacted by a representative of Merrill Lynch seeking a refund of the sale proceeds and offering to return the Ritcheys’ stock. Merrill Lynch had contemplated a transaction in Kentucky Utilities common stock instead of one involving the United Utilities of Kentucky common stock delivered by the Ritcheys. The Ritcheys refused.
Thereafter, Merrill Lynch filed suit seeking rescission of the transaction. After answer and affirmative defenses by the Rit-cheys, Merrill Lynch moved for a summary judgment. The court granted the motion and ordered rescission of the transaction involved, less an amount in favor of the Ritcheys to offset their expenses.
The Ritcheys appeal contending that a genuine issue of material fact remains to be resolved: viz. whether the mistake was unilateral and a result of lack of due care by Merrill Lynch’s employees, thus precluding rescission.
We find that the appellants’ contention has merit. Where the existence of a genuine issue of material fact appears in the record, the case must be referred for a proper determination of issues of fact and credibility. Williams v. Caterpillar Tractor Co., 149 So. 2d 898 (Fla.2d DCA 1963). A finding that the Ritcheys were not aware of the error and that the mistake was fully due to the inexcusable negligence of Merrill Lynch may preclude the equitable remedy of repayment. Maryland Casualty Co. v. Krasnek, 174 So. 2d 541 (Fla.1965).
The Ritcheys are entitled to an opportunity to present evidence on this issue. Accordingly, the summary judgment is reversed and the case is remanded to the trial court for further proceedings consistent herewith.
GRIMES, C. J., and SCHEB, J., concur.
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Cheek v. McGOWAN Elec. Supply Co., 404 So. 2d 834 (Fla. 1st DCA 1981)…ef. See 9 Fla.Jur.2d, Cancellation, § 29 (1979). This is especially true where the maker seeks not only cancellation and rescission but recovery of amounts paid in the excess of the obligation. Ritchey v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 361 So. 2d 438 (Fla. 2nd DCA 1978). But the existence of these equitable issues does not obviate the right to jury trial upon the legal issues presented. Hightower v. Bigoney, supra. Padgett v. First Federal Savings & Loan Association, supra. It is equally clear t…
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Merrill Lynch v. Ritchey, 394 So. 2d 1057 (Fla. 2d DCA 1981)…n which granted the setoff is reversed. AFFIRMED IN PART; REVERSED IN PART. GRIMES, J., and BUCK, MORISON, Associate Judge, concur. . A more complete statement of the facts may be found in Ritchey v. Merrill Lynch, Pierce, Fenner and Smith, Inc., 361 So. 2d 438 (Fla.2d DCA 1978). . Attorney fees may be recoverable in the absence of contract or statute when a fund has been created or brought into court; in actions for wrongful attachment, false imprisonment, malicious prosecution and slander of title. Glus…
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Join FLexlaw to unlock all legal intelligenceAuthorities Cited
- Md. Cas. Co. v. Krasnek, 174 So. 2d 541 (Fla. 1965)
- Williams v. Caterpillar Tractor Co., Inc., 149 So. 2d 898 (Fla. 2d DCA 1963)