ESTATE OF NELSON V. RICE
12 P.3d 238 (2000)
NATURE OF THE CASE: In an action seeking rescission or reformation of the sale of two
paintings to Rice (D), Nelson's (P) estate, through its personal representatives, appealed a
summary judgment entered by the Pima County Superior Court (Arizona) in favor of Ds.
FACTS: Martha Nelson (P) died in February 1996, Newman and Franz, the copersonal
representatives of her estate, employed Judith McKenzie-Larson to appraise the Estate's
personal property in preparation for an estate sale. McKenzie told them that she did not
appraise fine art and that, if she saw any, they would need to hire an additional appraiser.
McKenzie-Larson did not report finding any fine art, and relying on her silence and her
appraisal, Newman and Franz priced and sold the Estate's personal property. D attended the
public estate sale and paid the asking price of $60 for two oil paintings. D was not an
educated purchaser, had never made more than $55 on any single piece, and had bought many
pieces that had turned out to be frauds, forgeries. D assumed the paintings were not
originals given their price and the fact that the Estate was managed by professionals, but
was attracted to the subject matter of one of the paintings and the frame of the other. At
home, he found the signatures on the paintings to those in a book of artists' signatures,
noticing they 'appeared to be similar' to that of Martin Johnson Heade. D sent pictures of
the paintings to Christie's in New York, hoping they might be Heade's work. Christie's
authenticated the paintings, Magnolia Blossoms on Blue Velvet and Cherokee Roses, as
paintings by Heade and offered to sell them on consignment. Christie's sold the paintings at
auction for $1,072,000. D realized $911,780 from the sale. D learned about the sale in
February 1997 and thereafter sued McKenzie-Larson on behalf of the Estate, believing she was
entirely responsible for the Estate's loss. McKenzie-Larson had no assets with which to pay
damages. D paid income taxes of $337,000 on the profit from the sale of the paintings,
purchased a home, created a family trust, and spent some of the funds on living expenses. P
sued D in late January 1998, alleging the sale contract should be rescinded or reformed on
grounds of mutual mistake and unconscionability. D argued that P bore the risk of mistake,
the doctrine of laches precluded reformation of the contract, and unconscionability was not
a basis for rescission. The court held that although the parties had been mistaken about the
value of the paintings, P bore the risk of that mistake. The court ruled the contract was
not unconscionable, finding the parties had not negotiated D's paying the prices the Estate
had set. P eventually appealed.
ISSUE:
RULE OF LAW:
HOLDING AND DECISION:
LEGAL ANALYSIS:
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