Clay v. Brand

Decision Date04 March 1963
Docket NumberNo. 5-2911,5-2911
Citation236 Ark. 236,365 S.W.2d 256
PartiesGertrude CLAY, Appellant, v. Paul K. BRAND and Edith L. Brand, Appellees.
CourtArkansas Supreme Court

Ralph Robinson, Van Buren, Hardin, Barton & Hardin, Ft. Smith, for appellant.

Theron Agee, Van Buren, for appellees.

HOLT, Justice.

This is an action to rescind a written contract of sale. By said contract, the appellees, Mr. and Mrs. Brand, purchased from the appellant, Mrs. Clay, a tourist court (Wedgewood) which is located south of Mountainburg, Arkansas. As the basis for rescission, the appellees allege that appellant frauduently misrepresented to them the adequacy of the water supply and sewage system at the Court. The appellees claim that they reasonably relied upon appellant's assurances of adequacy. Appellant denies making any such representations and asserts the water supply and sewage system are adequate if properly operated. The written contract is silent with reference to the water supply or the sewage system. The trial court granted rescission of the contract and this appeal follows.

The appellant and her former husband, Mr. Houck, now deceased, had owned and operated the Wedgewood Court for about 18 years before the sale to appellees. Originally the court consisted of six units and the appellant later added two units. She also operated a beauty shop at the Court. The water need was supplied from a 'bored well' and a 500-gallon storage tank operated by an automatic pump system. The storage tank was added to the supply system by the appellant several years ago.

The appellees, at the time of the purchase, resided in Texas where he was employed as a store manager and she operated a beauty shop. While visiting relatives in Fort Smith in June, 1961, the appellees contacted Mr. Don Roderick, a local realtor, about purchasing a motel or tourist court. Mr. Roderick showed them the Wedgewood Court and appellees (buyers) claim that on June 7, 1961, the day they made the inspection tour of the Court, the appellant (seller) made the alleged misrepresentations.

On July 14, 1961, the contract of sale was signed by the parties and the appellees took possession of the Court the next day. They occupied and operated the Court until early January, 1962. By the terms of the contract the purchase price was $35,000.00. The appellees paid the required $2,500.00 initial payment, the balance to be paid in installments of $310.00 per month. These payments were made on August 15, September 15, and October 15, 1961. Following the last payment appellees claim they became convinced the water supply and sewage facilities were inadequate and they made no further payments. On December 22, 1961, the appellant, through her attorney, wrote the appellees demanding that they vacate the Court and return possession to appellant pursuant to the terms of their sale agreement.

On December 28, 1961, the appellees filed their complaint in equity seeking rescission of the contract. They also asked for the recovery of the down payment of $2,500.00, the three monthly payments totaling $930.00, the value of the improvements to the property to the extent of $613.75, and cost of repairs to the water and sewage system totaling $250.00.

In granting rescission the court found that the appellant: '* * * made representations, amounting to fraudulent representations, that there was an adequate supply of water in the well on said premises and connected with the water lines and system in the cabins and buildings thereto belonging for the operation of a motel and beauty shop when in truth and in fact there was no such adequate supply of water, which fact was known to the defendant at the time of such representations; that the plaintiffs have met the burden of proof as to fraud by a preponderance of the evidence which is clear and convincing and that they are entitled to a rescission of the contract * * *.' In granting rescission the chancellor awarded recovery only for the $2,500.00 down payment and gave to appellant the choice of paying the $613.75 or allowing the improvements to be removed. There is no cross-appeal.

For reversal appellant urges that the chancellor's findings that the appellant, seller, made fraudulent misrepresentations to the appellees and that the water supply is inadequate are against the clear preponderance of the evidence.

The appellee, Mrs. Brand, testified that the appellant, Mrs. Clay, told her when she inspected the tourist court there was 'plenty of water here' and that Mrs. Clay brought the matter up several times; that Mrs. Clay assured her there was an adequate water supply for the needs of the house, the court and the beauty shop. Mr. and Mrs. Brand testified that the problem of a water shortage began about two weeks after they took possession of the Court and that they made their complaint to the real estate agent, Mr. Roderick, who testified he relayed this complaint to Mrs. Clay. Mrs. Brand testified that: '* * * after we had protested to Mr. Roderick and he acted more or less as embassy for us, that she and Mr. Clay came up there one Sunday afternoon and brought some linens back to the motel, and she told me--she walked out in the back with us, and she walked over there, and she said, 'Now, I will tell you what. We used to buy water from Henry. 1 We got water from him and paid him so much, but you may be smarter. I don't know who owns that property over there that is standing vacant. Just drill you a well right here and try to tap their vein, because it is an everlasting well.'' The appellee, Mr. Brand, testified that during their inspection tour Mrs. Clay represented to him, his wife, and her father, Sam Turner, that there was 'enough water to run a beauty shop, do the motel linens, and an adequate water supply.' Mr. Turner testified that he was present during the inspection of the Court and heard Mrs. Clay on two occasions represent that there was an adequate supply of water.

The Brands testified that because of the water shortage it was necessary to buy water and have it hauled to the Court on many occasions. Mrs. Brand estimated they had bought approximately twenty loads of water from Everett Tucker. Mr. Tucker testified that he had hauled and sold water to the Brands 'quite a few times.' According to him, the capacity of the tanks in which he hauled water was 720 gallons.

The Brands testified that they had employed Frank Parker, a plumber, in an effort to correct the shortage. Mr. Parker testified: 'Well, I know the last time I was up there I got a call on the well pump, to check the water pump, and I told them that evidently they just didn't have enough water to furnish the whole court.' The Brands fixed this date as the latter part of October and thereafter made no further payments. There were other witnesses whose testimony tends to corroborate that of the appellees.

The appellant emphatically denies that the subject of a water supply was ever discussed during the negotiations; that the appellees made any inquiry with reference to this subject, and that she, or anyone in her behalf, ever made any representations with reference to the water supply. She asserts that during the 18 years that she operated the Court and since taking possession again on January 4, 1962, she has never experienced any shortage of the water supply. Appellant claims that the water supply problem was due to the appellees' inability to understand and properly operate the water supply system rather than an actual shortage in the water supply. Several witnesses appearing in behalf of Mrs. Clay corroborated her version of this dispute.

Of course fraud is never presumed and appellant contends that the quantum or degree of proof required to prove fraud is not found in this case. She relies on the case of Biddle v. Biddle, 206 Ark. 623, 177 S.W.2d 32, from which we quote:

'* * * There is no rule more firmly established than the one that fraud will not be presumed, and the burden is on the party alleging it to prove it by a preponderance of the evidence which is clear and convincing. Irons v. Reyburn, 11 Ark. 378; Home Mutual Benefit Ass'n v. Rowland, 155 Ark. 450, 244 S.W. 719, 28 A.L.R. 86; United States Ozone Co. v. Morrilton Ice Co., 186 Ark. 485, 54 S.W.2d 282; Russell v. Brooks, 92 Ark. 509, 122 S.W. 649; Crider v. Simmons, 192 Ark. 1075, 96 S.W.2d 471.' (Emphasis added)

The cases cited by the Biddle case in support of the quoted rule are not authority for the rule in its entirety. The Irons case and Home Mutual Benefit case are authority only for the proposition that fraud will not be presumed. The United States Ozone case states the same rule and goes on to say that the findings of fact by the chancellor will not be set aside unless against the preponderance of the evidence. The Russell case states:

'* * * While fraud will not be presumed, and while the burden is on him who alleges it to prove same by clear and satisfactory evidence, still it need not be shown by direct or positive evidence, but...

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24 cases
  • Ray Dodge, Inc. v. Moore
    • United States
    • Arkansas Supreme Court
    • February 21, 1972
    ...to cancel or reform a solemn writing, but not to establish fraud in obtaining a contract by fraudulent misrepresentation. Clay v. Brand, 236 Ark. 236, 365 S.W.2d 256; Parker v. Johnston, 244 Ark. 355, 426 S.W.2d 155. The instruction given was correct since the written instrument involved co......
  • Henry v. Mitchell
    • United States
    • Arkansas Supreme Court
    • June 6, 2013
    ...preponderance of the evidence which is clear and convincing.”Beatty, 87 Ark.App. at 83, 184 S.W.3d at 484 (quoting Clay v. Brand, 236 Ark. 236, 241, 365 S.W.2d 256, 259 (1963)). This court went on to explain in Clay that the “ ‘clear and convincing’ language seems to have evolved from that ......
  • Williams v. Campbell
    • United States
    • Arkansas Supreme Court
    • May 28, 1973
    ...evidence, since he would contradict the clear terms of the written deed. Belew v. Griffis, 249 Ark. 589, 460 S.W.2d 80; Clay v. Brand, 236 Ark. 236, 365 S.W.2d 256. This he did not do and the chancellor evaluated the evidence on this subject as showing that the affidavits upon which the dee......
  • INVESTORS THRIFT CORPORATION v. Sexton
    • United States
    • U.S. Court of Appeals — Eighth Circuit
    • February 4, 1974
    ...1036, 479 S.W.2d 518, 521 (1972); Killian v. Hayes Bros. Lbr. Co., Inc., 251 Ark. 121, 470 S.W.2d 939, 940 (1971); Clay v. Brand, 236 Ark. 236, 365 S.W.2d 256, 259-260 (1963). The defendants in this case have filed a cross-appeal, claiming essentially that ITC failed to adduce sufficient pr......
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