Chesapeake Homes, Inc. v. McGrath

• Decision Date: 05 April 1968
• Docket Number: No. 168,168
• Citation: 249 Md. 480,240 A.2d 245
• Parties: CHESAPEAKE HOMES, INC., et al. v. Howard J. McGRATH et ux.
• Court: Maryland Court of Appeals

Page 480

249 Md. 480

240 A.2d 245

CHESAPEAKE HOMES, INC., et al. v. Howard J. McGRATH et ux.

No. 168.

Court of Appeals of Maryland.

April 5, 1968.

Manley F. Gately, Baltimore (Cardin & Cardin, Jerome S. Cardin, Ginsberg & Ginsberg and Hyman Ginsberg, Baltimore, on the brief), for appellants.

A. Slater Clarke, Washington, D. C., for appellees.

Before HAMMOND, C. J., and HORNEY, MARBURY, McWILLIAMS and FINAN, JJ.

FINAN, Judge.

Appellants, Chesapeake Homes, Inc., et al. (Chesapeake) have taken this appeal from a decree of the lower court granting rescission of a contract of sale and a deed of conveyance of real estate to the appellees (McGraths).

Chesapeake is engaged in the promotion of real estate subdivisions and the construction and sale of homes therein. Chesapeake sold the McGraths a lot improved with a dwelling known as No. 7015 Cipriano Road, designated as Lot No. 8, Block C of Woodholme Forest Subdivision, Lanham, Prince George's County, Maryland. The contract of sale was dated April 24, 1966, the purchase price being $31,195. Settlement date was July 20, 1966, at which time the deed and the deed of trust securing the purchase money were executed. None of these written instruments contained any metes and bounds description of the property conveyed, the only description being the lot and block designation, with reference to the plat recorded among the land records of Prince George's County.

The particular home which was purchased by the McGraths had been set apart as a model home for the subdivision and Chesapeake had maintained a sales office in this home, a Mr. Speert, the sales manager of Chesapeake, usually being on location and in charge. The McGraths were attracted to the Briarwood model structure on the property and were particularly concerned about the size of Lot 8, Block C with reference to the dimension of the back yard. Inquiry was made by the McGraths as to the location of the rear property line prior to their entering into the contract of sale. At the time they first viewed the property the lot was sodded to only a short distance from the rear of the dwelling, and the McGraths inquired as to whether the lot only went that far. Speert assured them that the rear line of the lot was farther back, and escorted them to a wooden stake which was in line with a projection of the line of three utility poles then standing in the rear of five completed homes on Cipriano Road, the McGraths' property being the southernmost lot of this group. Speert walked the McGraths along this line and assured them it was the rear boundary line of the lot. This line as projected made Lot No. 8 nearly one-half again as large as it actually was. The truth of the matter was that the pole standing the farthest away from McGraths' lot was the only pole located on the rear property line of any of the lots fronting on Cipriano Road, and the second and third poles, while placed in a visual line with the first, were not on the rear property lines of any of the lots, although an unknowledgeable and imaginative individual might have obtained the erroneous impression that the rear property lines of all five lots facing Cipriano Road formed a straight line coextensive with the utility poles. The rear property line of Lot No. 8, it being an irregularly shaped lot, was completely unrelated to either an extension of the rear property lines of the other four lots, or the projection of the visual alignment of the utility poles. In fact, the rear line was so close to the house that it cut off a substantial portion of the sod already set in. Speert in his testimony at the hearing stated that he actually believed the rear line of the McGrath lot to be an extension of the visual line of the utility poles and, for the purposes of this appeal, it was conceded that this was an honest mistake of fact on the part of Speert.

Between the date of the contract and the date of settlement, a period of almost four months, the McGraths frequently visited this property, and the record reveals several occasions on which they were assured by Mr. Speert and by Mr. Davis, a salesman for Chesapeake, that the rear line of the lot was an extension of the utility pole line. Even on the date of settlement the matter was brought up again by Mr. McGrath in the presence of Mr. Gately, Vice President of Chesapeake, whom McGrath says informed him 'the lot went right back to the telephone line extended.' Also present at the settlement was Mr. Weinstein, a representative of the title company.

Two of the five owners of houses facing on Cipriano Road near the McGraths testified they too had been shown the extension of the utility line as the rear property line of the lots, including the lot purchased by the McGraths. Actually, after the settlement, Chesapeake did sod back to the projection of the utility pole lines. Debris was also removed from this area, and the McGraths incorporated it into their rear yard.

The memorandum of settlement, which is a printed form type of settlement sheet and is filed as an exhibit, contains an item for a survey charge to be paid by the seller. However, no charge was made for a survey, no survey was produced by anyone or requested by anyone at the time of settlement and apparently no survey had been made of this specific lot with reference to this transaction. Some months later, after litigation was instituted, the McGraths had a survey made of the property. Mr. McGrath also testified that although he had frequently observed the plat of the Woodholme Forest Subdivision on the wall of Chesapeake's office, he had not paid any attention to it because Mr. Speert had advised him: '* * * there is a little plat that is on the wall, but there is no need to look at it because it is confusing.' On cross-examination McGrath further testified that Mr. Speert, with reference to this plat, had told him that '* * * it was so small you can't tell the true lot line.'

On or about September 1, 1966 the appellees, who for some weeks had been in possession and occupancy, noticed that workmen appeared near their dwelling and were apparently preparing to build a house on the land which had been continuously represented, recognized and utilized as the McGraths' back yard. Upon inquiry they learned that the proposed structure would be situated about 18 feet from the sun deck of their home and approximately 28 feet from their picture window. The McGraths protested against the proposed construction of this dwelling and when it appeared they were being ignored, filed a bill of complaint in equity to restrain Chesapeake from further construction or conveyance of the property to anyone else and asked the court to impose a constructive trust in their favor on the 3,000 square feet which Chesapeake represented as being part of the McGrath lot. It was later ascertained that exactly 3,290 sq. feet in dispute was not part of Lot 8, Block C but was rather part of the adjoining Lot 7, Block C.

Chesapeake, although admitting to an innocent misrepresentation of fact concerning the boundary, argued that the McGraths were not entitled to relief because Mr. McGrath, a practicing attorney who had some experience in this field and represented himself as being a general practitioner of the law, did not exercise reasonable diligence on his own behalf. Chesapeake contended that McGrath knew of the subdivision plat hanging on the wall of the sales office, which they presumed he had the opportunity to examine, and was also aware that a plat of the subdivision was on file among the land records of Prince George's County, which plat would show precisely the dimensions, courses, distances and area of each lot. Chesapeake also emphasized that for a nominal sum the McGraths could have obtained a survey of the property showing the location of the dwelling on the property and the corners of the lot. It was also established that if a trust were to be imposed in favor of the McGraths on the 3,290 feet of Lot No. 7, Block C in dispute, the area remaining in Lot 7, Block C would not be sufficient to permit the construction of a dwelling in conformity with the zoning regulations of Prince George's County. Chesapeake argued that its representation involved an innocent mistake, that the McGraths failed to prove that the deficiency in the quantity of land was material and that the court should not attempt to reform the deed or the original contract between the parties. It also argues on appeal that it was error for the lower court to rescind the contract because the equities of the situation did not warrant rescission nor did the McGraths specifically ask for such relief in their bill. Finally, Chesapeake urges upon this Court that if any relief is in order it should be by way of some abatement of the purchase price.

The threshold argument to be resolved in this case is whether the facts give rise to a circumstance which warrants relief for the McGraths.

In Glendale Corp. v. Crawford, 207 Md. 148, 114 A.2d 33 (1955) this Court in denying a bill for a specific performance referred to Pomeroy, Equity Juris. (5th Ed.):

'In Sec. 891 of the same work, the author points out that where statements of fact which are essentially connected with the subject of the transaction (and are not mere expressions of opinion, hope or expectation, or mere general commendations), 'and especially where they are concerning matters which, from their nature or situation, may be assumed to be within the knowledge or under the power of the party making the representation the party to whom it is made has a right to rely on them, he is justified in relying on them, and in the absence of any knowledge of his own, or of any facts which should arouse suspicion and cast doubt upon the truth of the statements, he is not bound to make inquiries and examination for himself.' This rule has been applied in many cases in other jurisdictions, even though the truth could have been ascertained by an examination of the...