Brown v. Village of Deming, 5458

• Decision Date: 23 April 1952
• Docket Number: No. 5458,5458
• Citation: 56 N.M. 302,1952 NMSC 42,243 P.2d 609
• Parties: BROWN v. VILLAGE OF DEMING.
• Court: New Mexico Supreme Court

Page 609

243 P.2d 609

56 N.M. 302

BROWN v. VILLAGE OF DEMING.

No. 5458.

Supreme Court of New Mexico.

April 23, 1952.

Bert E. Newland, John F. Schaber, Deming, J. R. Wrinkle, Silver City, for appellant and cross-appellee.

Sherman & Hughes, Deming, Garland & Sanders, Las Cruces, for appellee and cross-appellant.

McGHEE, Justice.

This is the first case we have had where a plaintiff has availed himsef of the provisions of Rule 18(a), 1941 Comp. Sec. 19-101, and joined in a complaint a count for damages occasioned by a breach of warranty and another for tort. May the repose of the souls of Blackstone, Kent, Chitty, Sutherland and Bliss be not too long disturbed by what has happened here.

The Count for Breach of Warranty

In 1948 the defendant purchased a large amount of pipe from the War Assets Administration then in the ground at the United States Army Air Base at Deming, under rules and regulations of such agency allowing a 40% discount of the approved price to municipalities when such materials were to be used in the furtherance of the public health. The pipe was used in the operation of water and gas systems at the air base. The defendant represented such material would be used in extending its municipally owned water and gas systems and that it would not be sold for a period of five years. The material parts of the bill of sale from the War Assets Administration read:

'Know All Men By These Presents, That United States of America, acting by and through War Assets Administrator, under and pursuant to Reorganization Plan One of 1947 (12 Fed. Reg. 4534) and the powers and authority contained in the provisions of the Surplus Property Act of 1944 (58 Stat. 765) as amended [50 U.S.C.A.Appendix, Sec. 1611 et seq.], and War Assets Administration Regulation No. 1, as amended, and applicable rules, regulations and orders, in consideration of the sum of Eighty-seven Hundred Three and 24/100 ($8,703.24) Dollars, to the War Assets Administrator paid by Village of Deming, New Mexico, a municipality, the receipt of which is hereby acknowledged, does by these presents bargain, sell, grant and convey without warranty, express or implied, unto the said Village of Deming, New Mexico, its successors and assigns, the described property in Schedule 'A' hereto attached and by this reference made a part hereof.

'The aforesaid property was duly declared surplus and was assigned to the War Assets Administrator for disposal acting pursuant to the Surplus Property Act of 1944, as amended, and applicable rules, regulations and orders.

'The Purchaser, by the acceptance of this Bill of Sale, agrees as follows:

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'Sixth: The property applied for will be used solely for health purposes in connection with the further extension and development of the present municipally owned and operated water and gas systems of said municipality, and said applied uses are more fully set forth in Schedule 'A', hereto attached and by this reference made a part hereof.

'Seventh: The property will not be sold or otherwise conveyed for a period of five (5) years, except that it may be replaced by permanent facilities serving the same purpose.

'Eighth: Semi-annual reports certifying compliance with the program for which discount was allowed will be filed with the War Assets Administration, or its successor in function, during the five-year period following conveyance.

'Ninth: That all of said extensions of water and gas systems will be installed within the corporate limits of said Village of Deming, New Mexico.

'Tenth: The revenue derived from the sale of water and gas will be used solely for the maintenance and operation of the systems, and for normal reserves for cost retirement.

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'Thirteenth: The Purchaser warrants that no person has been employed to solicit or secure this Bill of Sale upon any agreement for a commission, percentage, brokerage or contingent fee. Breach of this warranty shall give the Government the right to annul the Bill of Sale, or at its option to recover from the Purchaser the amount of such commission, percentage, brokerage or contingent fee in addition to the consideration herein set forth. This warranty shall not apply to commissions payable by the Purchaser upon the Bill of Sale secured or made by bona fide established commercial agencies maintained by the Purchaser for the purpose of doing business. 'Bona fide established commercial agencies' have been construed to include licensed real estate brokers engaged in the business generally.'

Shortly after the purchase of the pipe the defendant advertised it for sale, and the plaintiff, on December 16, 1948, purchased it for the sum of $30,000 and was given a bill of sale therefor which it is agreed warranted the title.

On or about December 23, 1948, the plaintiff began removing the pipe from the air base and one week later he was told by someone connected with the defendant it did not have the right to sell the pipe under its agreement with the War Assets Administration. He then sent the following telegram to such administration:

'Wire collect whether the Village of Deming owns all of the pipe at the Deming Air Base and whether said pipe is eligible to resale to private concern.'

In response to this inquiry he received the following telegram:

'Answering your wire of December 30. Materials composing underground water facilities and gas distribution system at Deming Air Base are not eligible for resale to private concern. See our air mail letter to you of even date. (Sgd) Stansbury Thompson Dep Reg Dir Real property.'

The plaintiff then received the following letter from the War Assets Administration dated December 31, 1948:

'Dear Mr. Brown:

'Answering your wire of December 30, 1948, regarding the Village of Deming's ownership of the underground water facilities and gas distribution system at the Deming Army Air Base.

'The Village of Deming purchased the materials in the two systems at public benefit discount under a contract providing that all of the material should be incorporated into their municipal systems. These materials cannot be sold by the Village of Deming without specific permission, and to date such permission has not been granted.

'The Mayor has been asked to provide us with additional information as to this proposed sale so that a determination can be made as to the present status of these materials. After receipt of the information requested from the Mayor, a report will be made to our Washington office and a determination will then be made.

'Yours very truly,

'(sd) Stansbury Thompson

'Office of Real Property Disposal'

Upon receipt of the above letter the plaintiff gave the defendant written notice he was shutting down his removal operation of the pipe until the War Assets Administration gave him authority to continue his work, and that he would bill the defendant for the expense of the shutdown time. The plaintiff later appeared before the Board of Trustees of the defendant village on several occasions and advised its members he would hold the defendant accountable for all loss or damage sustained by him pending an adjustment with the War Assets Administration. Each time the plaintiff was told by the board members they had sold him the pipe in good faith, that he should go ahead with his removal operations and they would stand behind him.

Representatives of the War Assets Administration met with the defendant's Board of Trustees and other officials and the plaintiff on January 19, 1949, for the purpose of discussing the sale of the pipe by the defendant to the plaintiff. The Regional Director of the War Assets Administration offered to sanction the sale provided sufficient advertising of the sale could be shown by the defendant and that it would return all profits from the sale to the Treasury of the United States. The defendant accepted the proposition and paid the United States the difference between what had already been paid and the sale price to the plaintiff of $30,000, or an additional sum of approximately $22,000, so that the War Assets Administration received the full sum of $30,000 for the pipe.

This offer which the defendant accepted was one of three made to it by the Regional Director, and it was required that a supplemental agreement be entered into. The defendant was advised by wire the supplemental agreement would be mailed to Deming about February 15, 1949, and it was finally signed by the Regional Director on February 24, 1949. In it the defendant was required to make the following admissions:

'1. That the pipe purchased was to be used solely for the further extension and development of the Village's municipally-owned and operated water and gas systems;

'2. That the Offer to Purchase was submitted by the municipality and was accepted subject to certain terms and conditions set forth in said acceptance;

'3. That a public benefit allowance for health purposes was made of 40 percent, and that the Bill of Sale was executed under certain terms and conditions as set forth in the Bill of Sale '4. That the municipality was specifically forbidden to transfer or use said property for any purpose other than the extension and development of the water and gas systems;

'5. That the procedure followed by the municipality was contrary to both the spirit and the letter of the Surplus Property Act of 1944, as amended, and to pertinent rules and regulations of the War Assets Administration;

'6. That the Government was required under the law to declare the sale by the municipality to H. P. Brown as null and void unless the mone received therefrom, over and above the money already paid by the municipality be remitted to the Treasurer of the United States; * * *.'

The plaintiff resumed his work of removing the pipe about March 1, 1949. He testified at the trial and submitted other evidence that the value of the pipe as of December, 1948, was $66,721; that the used pipe market had dropped 40% from December, 1948, to March, 1949;...