Brentwater Homes, Inc. v. Weibley

369 A.2d 1172, 471 Pa. 17

• Court: Supreme Court of Pennsylvania
• Decided: February 28, 1977
• Docket: 344
• Status: Published

Opinions

OPINION OF THE COURT

POMEROY, Justice.

This is an action in equity brought by appellant to compel specific enforcement of a contract for the sale of land to appellant by appellees. After a hearing, the chancellor entered a decree nisi declaring the contract unenforceable because of the fraud and unclean hands of plaintiff, the vendee. The decree denied specific performance and directed the vendor to return the down payment. The plaintiff’s exceptions to the adjudication were dismissed and the decree nisi made final. This appeal followed.¹ We will affirm.

The record discloses the following essentially undisputed facts. In 1969 Mr. W. R. Keeley was the president and owner of all of the capital stock of Keeley Realty Company and Brentwater Homes, Inc., corporations with offices in Camp Hill, Cumberland County, Pennsylvania. He was also president of Pennsboro Homes, Inc., a wholly owned subsidiary of Keeley Realty Company. In the spring of that year Keeley undertook to acquire land in Hampden Township, Cumberland County for the development of a planned community to be known as the “Village of Westover”. To this end he introduced himself to Richard W. Weibley, one of the appellees. Mr. Weibley and his wife, Kathryn, owned a stone farmhouse on Sky-port Road in Hampden Township built during the colonial period; his mother, Lucy G. Weibley, owned an adjacent tract of land of 109 acres. Mr. Keeley indicated to Mr. Weibley that he intended to develop the land, if acquired, as part of his projected “colonial village”, and he further indicated that the Weibleys’ colonial farmhouse would be a focal point of the proposed village. Mr. Weibley became interested in the planned colonial village, and on behalf of his mother entered into negotiations with Mr. Keeley for the sale of the 109 acre tract. The result was a written agreement, dated April 24, 1969, by which Mrs. Lucy Weibley contracted to sell her land to Pennsboro Homes, Inc.²

In late June or early July, 1969, after the closing of the transaction above described, Mr. Keeley informed Mr. Weibley that he was interested in obtaining more land for the Westover Village project, and the two entered into negotiations concerning land owned by appellees and located directly across the road from their colonial farmhouse. After two or three meetings between the parties, appellees, by written agreement dated August 2, 1969, contracted to convey on or before April 1, 1970 an unrestricted title to a 4^2 acre tract to Brentwater Homes, Inc., the appellant. It is this agreement which is the subject of this litigation.

In the meantime, on July 17, 1969, prior to the execution of this agreement of sale and without the knowledge of the Weibleys, a representative of Brentwater Homes and Mr. Keeley appeared at a public meeting of the Hampden Township Planning Commission, submitted a preliminary plan for Keeley’s proposed colonial village development, and requested that the entire area be rezoned from R-2 — single family residences — to A-0 — office and commercial uses.³ The tract involved in the present litigation appeared on the map submitted to the Planning Commission with the notations “uses such as medical center nursing home also retiree apts.” and “potential high rise site.” The Commission gave preliminary approval to Mr. Keeley’s plan at this time. In September, 1969, after the execution of the agreement of sale, the Weibleys learned for the first time of the proposed rezoning, and Mr. Weibley spoke in opposition to the rezoning in public hearings on the subject. Nevertheless, in November, 1969, the Hampden Township Commissioners rezoned the area to permit the proposed development. When, shortly prior to the date for closing the sale transaction, Mr. Keeley expressed readiness to close on behalf of Brentwater Homes, Inc., the Weibleys refused to do so except on condition that restrictions be inserted in the deed which would have limited the use of the property to single houses of a stated value and would have had the effect of maintaining in force the zoning classifications existing at the date of the contract. These conditions were unacceptable to Keeley, who also refused to rescind the sale agreement. This action was then commenced by Brentwater Homes.

The defense of the Weibleys to this action was that they had been induced by Brentwater Homes’ agent, Mr. Keeley, to sign the contract of sale by representations that the real estate to be conveyed would be developed as a single family, “high class” residential community and that these representations were in fact false and fraudulent when made. The chancellor held that this defense had been made out. The only question for determination on this appeal is whether the evidence supports the chancellor’s conclusion. We hold that it does.

It is well settled that an appellate court is bound by the chancellor’s findings of fact, approved by a court en banc, to the same extent as it would be bound by the findings of a jury. The test in either case is whether the findings are adequately supported by the record and whether the factual inferences and legal conclusions based on the findings are correct. Charles v. Henry, 460 Pa. 673, 679, 334 A.2d 289, 292 (1975). Where credibility of the witnesses is important, the chancellor’s findings are entitled to particular weight because of the opportunity which was his to observe the demeanor of witnesses on the stand. Charles v. Henry, supra. See also Dozor Agency, Inc. v. Rosenberg, 431 Pa. 321, 323, 246 A.2d 330, 331 (1968).

The chancellor found as facts that throughout the negotiations for the sale of Mrs. Lucy Weibley’s 109 acre tract, the Richard Weibleys evidenced a substantial interest in the developer’s plans for Mrs. Weibley Sr.’s property and in preserving the value of their own colonial farm house; that Mr. Keeley assured the Weibleys that “he was not interested in erecting multi-family units, and further, that his expansion of the adjacent tract, the village of Westover, would be of colonial, single family homes designed to highlight the farmhouse”; that the appellant’s plans relating to the appellees’ own property, as submitted to and approved by the Hampden Township Planning Commission, in fact “required development of structures other than single family dwellings, e. g., a medical center, a nursing home, apartments, and a highrise structure”; that the approval of these plans required a change in zoning of the area from single family dwellings, which was accomplished, over appellees’ objections ; that the Weibleys would not have entered into the agreement with Brentwater Homes had they known of such plans, and that this was the reason they refused to consummate the agreement and demanded rescission. In his adjudication the chancellor characterized Richard Weibley’s testimony concerning Mr. Keeley’s assurances as “credible, convincing, distinct and detailed,” and concluded as a matter of law that Keeley had induced the appellees to enter into the contract of sale “by fraudulently assuring them that he had plans to erect only single family homes on the tract”, and that the contract was therefore voidable by the Weibleys.⁴

This Court has defined the nature of the parol evidence which is sufficient to render a written agreement invalid because of fraud in these terms:

“Fraud is composed of a misrepresentation fraudulently uttered with the intent to induce the action undertaken in reliance upon it, to the damage of its victim. Edelson v. Bernstein, 382 Pa. 392, 115 A.2d 382 (1955); Neuman v. Corn Exchange National Bank & Trust Co., 356 Pa. 442, 51 A.2d 759 (1947). To sustain the conclusion of the court below, evidence of . fraud must be clear, precise and convincing. Aliquippa National Bank v. Harvey, 340 Pa. 223, 16 A.2d 409 (1940); Pennsylvania R.R. Co. v. Shay, 82 Pa. 198 (1876). The test is met where the witnesses depended upon to prove fraud distinctly remember the facts to which they testify and narrate the details with specificity. Broida v. Travelers Insurance Co., 316 Pa. 444, 447, 448, 175 A. 492, 494 (1934); Ralston v. Philadelphia Rapid Transit Co., 267 Pa. 257, 269, 110 A. 329, 333 (1920).” Thomas v. Seaman, 451 Pa. 347, 350-51, 304 A.2d 134, 137 (1973).

A statement of present intention which is false when uttered may constitute a fraudulent misrepresentation of a fact. See, e. g., Thomas v. Seaman, supra. Furthermore, it is well settled that a material misrepresentation of the use to which property will be put by the buyer, even if the consideration given is otherwise fair, may be ground for rescinding a contract for the sale of land as fraudulent. Williams v. Kerr, 152 Pa. 560, 25 A. 618 (1893). See generally Annotation, “Purchaser’s Misrepresentations as to Intended Use of Real Property as Ground for Vendor’s Equitable Relief from Contract and Deed,” 35 A.L.R.3d 1369 (1971).

Our review of the record in the case at bar satisfies us that appellees met their burden of establishing fraud with evidence that was sufficiently clear, precise and convincing. The following testimony by Richard Weibley adequately supports the finding that Mr. Keeley intentionally misled the Weibleys as to the uses he intended to make of their property:

“Q. Now when you initially started negotiating with Mr. Keeley for the purchase of this tract of land from your mother, did you ask him what he intended to do with the land ?

A. Yes, I never knew Mr. Keeley in, person until the day he entered my office and introduced himself, we greeted each other and he said he was there to talk to me. about the purchase’of the ground across from the airport which was owned by my mother. I asked him, I said are you interested in building apartments and he said no, I am interested in building a colonial type village. Well, myself being interested in colonialism [sic] I was interested in talking to him about such a village.

Q. Then you asked him specifically if he were interested in building apartments ?

A. That is right.”

Continuing his testimony, Weibley stated that when Mr. Keeley opened negotiations with Mr. and Mrs. Weibley for the purchase of the land owned by them, “he would like to continue the building of the Westover planned village, planned homes in that area, he knew of my objection to any apartments from the very time he started talking.” Mr. Weibley was then asked, “did you again ask him if he planned to build apartments or anything other than single family homes?” and gave the following answer: “Yes, I asked him about the apartments and he said he was going to continue building single family homes." It is clear, furthermore, and the chancellor found, that during the time the agreement for the sale of the appellees’ land was being negotiated but before it was executed, Mr. Keeley entertained definite plans to use the land for such structures as a medical center, a nursing home, apartments and a high-rise structure; in July of 1969, a planner employed by Brentwater Homes appeared before the local Planning Commission with proposals to rezone the land in that area to permit such uses. Accepting the Weibley version of the above conversations, as the trial court did, these plans and proposals by appellant were duplicitous.

Although some testimony in the record arguably supports Brentwater Home’s argument that Mr. Keeley did not, at least during the negotiations for this parcel of land, represent to the Weibleys that he would build only single homes on their property, there was sufficient evidence for the chancellor to find that misrepresentations were made by the appellant, that they were fraudulent in the circumstances and that they were the inducement to the contract. The two purchases of land, one by appellant Brentwater Homes and the other by its affiliate Pennsboro Homes, from members of the Weibley family were essentially a continuum, the negotiations for both being handled by the same two persons — Mr. Keeley for the vendees and Mr. Weibley for the vendors. The statements made in connection with the first transaction were germane to the second. Resolution of the conflicts which undeniably were present in the testimony depended on the chancellor’s assessment of the credibility of the witnesses before him. Having found fraudulent misrepresentation to have been made, the trial judge properly concluded that the contract was voidable and unenforceable as against appellees. We find neither abuse of discretion nor error of law in his decision.

Decree affirmed. Costs on appellant.

EAGEN, J., filed a concurring and dissenting opinion. MANDERINO, J., filed a dissenting opinion.

1 . See Appellate Court Jurisdiction Act, Act of July 31, 1970, P.L. 673, No. 223, Art. II, § 202, 17 P.S. § 211.202. This appeal was filed March 13, 1975, prior to transfer of appellate jurisdiction in equity cases to the Superior Court. See Pa.R.A.P. 702 (superseding Supreme Court Rule 73, effective April 17, 1975).

2 . Richard W. Weibley and his wife Kathryn S. Weibley were also parties to this agreement for the purpose of granting to the purchaser a right of first refusal to adjacent property owned by Mrs. Weibley, Sr. and in which the Richard Weibleys owned an undivided interest.

3 . The minutes of the Planning Commission, admitted into evidence, indicate that Mr. Keeley had earlier appeared at a May 15 meeting of the Commission “for an informal discussion of planned development,” but there is no indication of precisely what was discussed at this earlier meeting. Contrary to the plan submitted on July 17, the chancellor erroneously found that “only that portion of the plans relating to Defendants’ tract required [sic] development of structures other than single family dwellings.” Such other uses were indicated on other portions of the development as well.

4 . As an alternative ground, the chancellor also found that the appellant’s petition to the Hampden Township Planning Commission was “in effect a misrepresentation of interest with respect to that portion of the petition relating to defendants’ tract” and that, therefore, the appellant had “unclean hands, making this an inappropriate case for equitable relief.” Because we are affirming the chancellor’s holding that the contract is unenforceable against the Weibleys because of fraud, we need not deal with the unclean hands aspect of the case.