Aree III Corp. v. Berger

395 N.E.2d 1350, 60 Ohio App. 2d 109, 14 Ohio Op. 3d 90, 1978 Ohio App. LEXIS 7616

• Court: Ohio Court of Appeals
• Decided: November 2, 1978
• Docket: 37723
• Status: Published

Opinions

Day, J.

This is an appeal by Aree III Corp., et al. (plaintiffs), from a judgment entry by the Court of Common Pleas, Cuyahoga County, ruling against plaintiffs and for Joseph M. Berger, et al. (defendants), on plaintiffs’ motion for partial declaratory judgment. Other judgments were entered but only that on the motion for partial declaratory judgment was appealed.

The facts crucial to decision on appeal can be briefly summarized:

(1) August 6, 1971 - Purchase agreement entered. Appellants (buyers) agreed to purchase premises at 2713 Hampshire Road, Cleveland Heights, Ohio, from appellees (sellers) with the warranty: “Seller warrants and represents there are no code violations against said premises, said warranty to survive filing of deed for record.”

(2) September 22, 1971 - Title transfered to appellants from appellees.

(3) October 5, 1971 - October 22, 1971 - Inspection of premises by the city of Cleveland Heights for Housing Code violations.

(4) October 25, 1971 - Notice of Housing Code violations existing on the instant premises issued by the city of Cleveland Heights.

I.

The judgment entry from which appeal is taken is dated February 28, 1977, and recites in relevant part: 1

“Language of warranty herein does not entitle plaintiff (appellants) to damages resulting from the existence of conditions which failed to comply with the housing code of the city of Cleveland Hts. Ohio, where no code violation citation was issued by the City prior to the transfer of the title of the property.***”

II.

The plaintiff challenges the judgment assigning two errors:

Assignments of error Nos. I and II:

“I. The trial court committed error by holding that the appellee was not in breach of the warranty contained in the purchase contract.

“A. The trial court committed error by holding that the warranty in question was not breached so long as no written notice of violation was issued by the city of Cleveland Heights prior to the date of transfer.

“B. The warranty contained in the purchase contract remained binding on the appellee even after the transfer of title. ”

“II. The trial court committed error by issuing a final judgment without having a hearing or taking any evidence where the intent of the parties at the time of contracting was in dispute and was not readily discernible on the fact of the contract. ”

The assignments are interrelated and are treated together.

III.

The survival clause in (1) prevents the doctrine of merger from wiping out the warranty. 2 And the majority of this court finds one tenable interpretation of the warranty clause to be that it gives assurance that the property, on the date of sale, was in such condition that there were, in fact, no building code violations whether charged or not. In effect, the warrantor may be saying “the property is ‘free and clear' of all defects which are or could be code violations.”

This interpretation gives the prevention of merger a special meaning. That is, it credits the survival language with an intent to save a remedy for defects which are obscure or latent. There might be no remedy for any defects if merger occurred. Without the survival language the merger doctrine would also defeat a remedy for both charged and uncharged violations after title passed. 3 But the difference is that what is charged can be discovered before the contract is consummated and the buyer can protect his rights without warranty survival if he chooses not to contract. Hence, a discernible purpose of the clause] “***[s]aid warranty to survive filing of deed for record” may well have been to protect against violations which were not obvious at the time of contracting (nor afterward) in addition to protection against those known to exist.

Whether this interpretation reflects the intent of the parties cannot be determined without taking evidence. This was not done in the court below.

IV.

Should it be determined upon the taking of evidence that the language of survival intended the result explored in this opinion, then the buyer has the burden of proving violations and that process will require the taking of further evidence.

V.

Both assignments of error are well taken. The judgment is reversed and the cause remanded for further proceedings in accordance with this opinion.

Judgment reversed.

Pryatel, P. J. concurs. Krupansky, J., dissents.

1 A welter of pleading maneuvers are ignored because not relevant to the issue now on appeal.

2 Generally, the provisions of a contract for sale of land are merged in a deed made in execution of the contract. See 26 Corpus Juris Secundum 842 et seq., Deeds, Sec tion 91. For a discussion of exception to the rule see Richmond Homes, Inc. v. Lee-Mar, Inc. (1969), 20 Ohio App. 2d 27, 31-21.

3 P.E., absent an exceptional circumstance such as fraud.