Evergreen Nat. Corp. v. Carr, 25621.
Decision Date | 30 March 2004 |
Docket Number | No. 25621.,25621. |
Parties | EVERGREEN NATIONAL CORPORATION, Plaintiff-Appellant, v. Phillip W. CARR and Alice M. Carr, Husband and Wife, and Kirk Manion, Defendants-Respondents. |
Court | Missouri Court of Appeals |
Gary W. Allman, Allman, Ingrum, Wilson & Akers, LLC., Hollister, for appellant.
William L. Carr, Kansas City, for respondents.
Before SHRUM, J., RAHMEYER, C.J.-P.J., BATES, J.
Evergreen National Corporation ("Evergreen") filed an "Action For Rescission" against Defendants. Evergreen sought rescission of a deed for five lots by alleging Defendants' fraudulent representations about the lots induced Evergreen to buy them. The court refused to rescind the sale. Evergreen appeals. This court affirms.
In the fall of 1992, Defendants owned land in Stone County, Missouri, which they divided and platted into a nine-lot subdivision known as Hawthorne Ridge Subdivision. A plat thereof was filed in the recorder's office on November 13, 1992. It depicted Lot 5 as a triangular lot with the "hypotenuse" side of the lot abutting the south side of county road DD for a distance of 302.83 feet.
Later, in June 1993, Defendants filed with the recorder's office a plat entitled "Hawthorne Ridge, Amended Plat of Lot 5." This amended plat reduced the size of Lot 5 by severing from its east end a tract designated, "well lot." By the amended plat, Lot 5 had fifty feet less frontage on county road DD, was 69.10 feet shorter on the south side, and did not include a water well that had been drilled on the east point of Lot 5. As Defendant Phillip Carr explained it, "we amended that plat to carve out the well so that it would not be a part of lot 5." He also testified the well lot was used to provide water to other lots in "both subdivisions."
In September 1997, Defendants listed certain lots in the Hawthorn Ridge subdivision for sale through Aux Arcs Real Estate ("Aux Arcs"). In September 1999, they still owned Lots 6, 7, 8, and 9 of the Hawthorne Ridge subdivision, Lot 5 of the Hawthorn Ridge Subdivision per the amended plat thereof, and the "well lot" as depicted on the amended plat of Lot 5.
In late summer or early fall of 1999, Don R. Reed learned that Aux Arcs was offering some of Defendants' lots for sale. He told Jennifer Busen ("Busen"), a real estate agent associated with Kimberling Hills Real Estate, that he had some interest in the lots. Busen then used a multi-listing service to procure price and description information. Thereafter, Don and Lisa Reed ("the Reeds") signed a contract (prepared by Busen) in which the Reeds offered to buy "all of Lots 5, 6, 7, 8 and 9 Hawthorn Ridge" located in Reeds Spring, Stone County, Missouri, for $75,000. The contract did not contain a reference to Lot 5 per an amended plat. It did, however, have this notation in the "description" paragraph: "(legal description on updated abstract or title insurance commitment to govern)." The legal description paragraph also recited: "The following items are also included in the sale: water to each lot."
As required by the contract, Defendants, acting through Aux Arcs, procured a title insurance commitment. This commitment described the subject property as "Lot 5, Hawthorn Ridge Subdivision, as per the amended plat thereof; also lots 6, 7, 8 and 9 Hawthorn Ridge Subdivision, per the recorded plat thereof." (Emphasis supplied.) Likewise, the deed that was prepared and used at the Defendants/Reed closing described the property being conveyed as "Lot 5, Hawthorn Ridge Subdivision, as per the amended plat thereof; also Lots 6, 7, 8, and 9 Hawthorn Ridge Subdivision, per the recorded plat thereof."
In acquiring this property, the Reeds acted as undisclosed agents for Evergreen. Consequently, once the Reeds closed with Defendants on January 7, 2000, they immediately conveyed the property to Evergreen. Their deed to Evergreen contained the same legal description by which the Reeds acquired the property.1
Ultimately, a dispute arose between Evergreen and the Homeowners of Hawthorn Property Association, Inc., over association dues and ownership of the water well lot, i.e., the tract severed from Lot 5 via the amended plat. On September 14, 2001, Defendants conveyed the "water well lot" to the corporate homeowners' association. Evergreen then filed this suit on October 16, 2001, seeking rescission of its purchase (through the Reeds) of the five lots from Defendants. Evergreen's petition alleged, inter alia, that "Lot 5, Hawthorn Ridge Subdivision, as per the amended plat, was not the complete and entirety of Lot 5, Hawthorn Ridge Subdivision, as contracted for, or as represented by the Defendants."
Following trial, the trial court ruled for Defendants. It found, inter alia, that Evergreen:
This appeal by Evergreen followed.
STANDARD OF REVIEW
Appellate review of a court-tried claim for rescission is governed by the rules stated in Murphy v. Carron, 536 S.W.2d 30, 32 (Mo.banc 1976). Droz v. Trump, 965 S.W.2d 436, 440 (Mo.App. 1998). Specifically, the trial court's judgment will be sustained unless there is no substantial evidence to support it; it is against the weight of the evidence; or it erroneously declares or applies the law. Id. at 440[1].
Evergreen asserts it was induced to buy the lots because of fraudulent misrepresentations regarding the lots. "When fraud is alleged the burden of proof as to each element falls on the party asserting the fraud and fraud is never presumed." Magna Bank of Madison County v. W.P. Foods, Inc., 926 S.W.2d 157, 162[14] (Mo.App.1996).
Comprehensively stated, the elements of a fraud action are, "`(1) a representation, (2) its falsity, (3) its materiality, (4) the speaker's knowledge of its falsity or his ignorance of its truth, (5) the speaker's intent that it should be acted on by the person and in the manner reasonably contemplated, (6) the hearer's ignorance of the falsity of the representation, (7) the hearer's reliance on the representation being true, (8) the right to rely thereon, and (9) the hearer's consequent and proximately caused injury.'" Cottonhill Inv. v. Boatmen's Nat. Bank, 887 S.W.2d 742, 744[9] (Mo.App.1994) (quoting Heberer v. Shell Oil Co., 744 S.W.2d 441, 443 (Mo. banc 1988)).
When fraudulent misrepresentations are alleged, "a party may seek to affirm the contract and sue for damages or may disaffirm the contract, including a deed and sue for rescission." Cottonhill, 887 S.W.2d at 744[10]. A party who affirms the contract and sues for damages must prove "actual fraud," i.e., must prove "the speaker's knowledge of its falsity" as required by the first prong of the fourth element of a fraudulent misrepresentation case. See Ellenburg v. Edward K. Love Realty Co., 332 Mo. 766, 59 S.W.2d 625, 627 (1933).
On the other hand, when a party opts to disaffirm the contract and sue for rescission, such party can prevail by proving either actual fraud or constructive fraud. See Droz, 965 S.W.2d at 440-41. This follows because rescission can be based upon a false representation, "which, although described or labeled as fraudulent, is in reality a misrepresentation or concealment made innocently as...
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