Miller v. Tietz Construction Co.

279 P.2d 641, 46 Wash. 2d 180, 1955 Wash. LEXIS 454

• Court: Washington Supreme Court
• Decided: February 8, 1955
• Docket: 32856
• Status: Published

Opinions

Hamley, C. J.

George W. Miller, the vendee of Tacoma residence property, brought this action to recover damages for fraud. He alleged that it was falsely represented to him that all improvements then in place for which local improvement district assessments had been or would be made were paid, and that there were no local improvements in the area for which the above-described property would be assessed.

Building Center, Inc., the vendor, Harry S. Rinker, stockholder and agent of vendor, and Rinker’s wife were named defendants. Tietz Construction Company was later substituted for Building Center, Inc. Defendants’ answer was a general denial.

After a nonjury trial, judgment in the sum of $1,272.40 was entered for plaintiff. Defendants appeal.

The assignments of error present these questions: (1) Were actionable misrepresentations as to assessments made prior to the execution of the real-estate contract? (2) Were misrepresentations as to assessments made after execution of the real-estate contract and prior to acceptance of the title by Miller? (3) As to representations, if any, made after execution of the real-estate contract, was the element of reliance lacking? (4) Was there a right to rely upon representations as to assessments made after respondent had employed an attorney to assist him in closing the transaction?

Turning to the first of these questions, the trial court found that misrepresentations of the kind alleged were made and relied upon “in connection with the negotiations for the sale of the above described property. . . . ” We do not regard this as a finding of, fact to the effect that misrepresentations were made prior to the execution of the real-estate contract. Evidence had been received concerning representations made both before and after execution of the contract.

In the absence of an explicit finding of fact as to when the asserted misrepresentations were made, we have examined the evidence. Miller and Rinker were the only witnesses to testify regarding the negotiations prior to the execution of the contract. Their testimony is in direct conflict.

Miller testified that he told Rinker he did not want his total expense to exceed fifteen thousand dollars, and that, to meet this condition, the seller absorbed some costs which normally would be paid by the purchaser. He further testified that he made direct inquiry of Rinker as to whether the assessments were in, and that Rinker said everything was in, except that there would be a sewer project sometime in the future. Rinker testified that fifteen thousand dollars was mentioned as “more or less a round figure,” and that both parties agreed there were other items Miller was going to buy in the way of furniture and appliances. Rinker further testified that Miller did not ask him if the improvements were paid.

The burden was upon respondent to prove the elements of his case by clear, cogent, and convincing evidence. In view of the direct conflict in the evidence, we cannot say that respondent proved that actionable misrepresentations were made prior to the execution of the contract.

This brings us to the second question referred to above. With regard to what transpired after the contract had been executed, we believe that the trial court’s finding that representations concerning assessments were made is supported by clear, cogent, and convincing evidence. Both Miller and his attorney testified that such representations were made during the meeting called for the purpose of considering the title report. Rinker testified to the contrary, but we cannot say that the trial court erred in accepting the testimony of Miller and his attorney and rejecting that of Rinker.

The third question which confronts us is whether, as to these representations made after execution of the real-estate contract and prior to the final closing, the element of reliance was lacking. Stated differently, having already entered into the real-estate contract, is Miller in a position to predicate a fraud action on misrepresentations thereafter made?

The contract is denominated an “Earnest Money Receipt,” but it contains all of the usual provisions of a binding contract of purchase and sale. It provides that, if the purchaser fails to carry out the contract, the earnest money shall be forfeited at the option of the seller, “or the seller may demand and enforce specific performance of this contract.” The contract provides that the vendor will convey the property “free of encumbrance to date hereof ...”

Under the terms of the contract, the only circumstance under which the vendee could, without liability, decliné to complete the sale would be if the vendor could not furnish a marketable and insurable title. As to this, the contract provides:

“Title is to be shown by title insurance report furnished by the seller within 10 days. Five days shall be allowed for the examination thereof. If title is not marketable or insurable and cannot be made marketable or insurable within one hundred twenty days from receipt of written notice of any defect, this agreement shall be void, and the earnest money shall be refunded. . . . ”

A title report was thereafter obtained by appellant. It showed no assessment liens, but noted some other exceptions. These exceptions were discussed at a meeting held subsequent to the execution of the contract, and were satisfactorily disposed of.

At the time of this meeting, respondent could not have withdrawn from the real-estate contract without incurring liability. This is true, because the vendor had furnished marketable and insurable title, which was then the only open question. The local improvement district charges in question did not become a lien upon the property until several months later, when the assessment rolls were placed in the hands of the city treasurer for collection. RCW 35.50.010 [cf. Rem. Rev. Stat. §§ 9372, 9376, part]; Knowles v. Temple, 49 Wash. 595, 96 Pac. 1.

It follows that respondent was not prejudiced by any representations made at the meeting to consider the title report, for he did nothing in reliance thereon which he was not already bound to do. In this respect, the situation was unlike that which existed in Grosgebauer v. Schneider, 177 Wash. 43, 31 P. (2d) 90. In that case, the misrepresentations were made after the vendee had paid an initial sum of fifty dollars “to bind the bargain,” but before a contract had been entered into, and before the parties were bound to do anything.

Nor is the present case comparable to Petersen v. Graham, 7 Wn. (2d) 464, 110 P. (2d) 149, where the representation was held to be “but a link in the chain of events” constituting the whole transaction. Here, the transaction, except for the possibility of existing encumbrances, was complete before the representations were made. As before indicated, the assessment charges were not, at that time, encumbrances against the property.

Neither in the trial court nor in this court has respondent advanced the theory that, prior to execution of the contract, the vendor was, by reason of the existing circumstances, under a duty to disclose the existence of the unpaid local improvement district charges. We therefore have not considered whether an action for fraud could have been maintained on such a theory.

The views expressed above make it unnecessary to consider the indicated fourth question presented by the assignments of error.

The judgment is reversed.

Mallery, Hill, Donworth, Weaver, and Ott, JJ., concur.