Continental Oil Co. v. Mulich, 979.

• Decision Date: 15 May 1934
• Docket Number: No. 979.,979.
• Citation: 70 F.2d 521
• Parties: CONTINENTAL OIL CO. v. MULICH et al.
• Court: U.S. Court of Appeals — Tenth Circuit

70 F.2d 521 (1934)

CONTINENTAL OIL CO. v. MULICH et al.

No. 979.

Circuit Court of Appeals, Tenth Circuit.

April 11, 1934.

Rehearing Denied May 15, 1934.

Samuel D. Newkirk, of Kansas City, Mo. (Chas. M. Blackmar and Meservey, Michaels, Blackmar, Newkirk & Eager, all of Kansas City, Mo., on the brief), for appellant.

A. L. Berger and Blake A. Williamson, both of Kansas City, Kan. (James K. Cubbison, of Kansas City, Kan., on the brief), for appellees.

Before PHILLIPS, McDERMOTT, and BRATTON, Circuit Judges.

PHILLIPS, Circuit Judge.

This is an appeal by the Continental Oil Company from a decree for reformation and specific performance of an option contract.

The cause was referred to the Honorable Clifford Histed as special master. He filed a report evidencing thoroughness and ability, which was approved and confirmed in all matters by the trial court.

The material facts are not in dispute and are these: In the latter part of 1929 the Continental Company requested the J. C. Nichols Real Estate Company to submit tracts of land in Kansas City, Kansas, suitable for filling station sites. In December, 1929, the Nichols Company submitted to the Continental Company a booklet describing a number of tracts (including the Mulich tract here involved), which the Nichols Company deemed suitable for filling station sites. With respect to the Mulich tract, the booklet stated:

"21st and State Avenue (or Hoel Avenue). This tract opposite and east of the Phillips Service Station is probably the most outstanding location along the route of U. S. #40, coming into the city.

"The next attached plat shows the dimensions of the two lots, which is ample. The parking owned by the city and shown on the plat as 20 feet, can be secured, we understand, by deed from the city with little or no cost, which would greatly enhance the value for station purposes.

"Under Ordinance #25052 State Street is to become a traffic way, repaved and widened from 3rd Street west to the City limits. The street is to be known as State Avenue Trafficway, and will no doubt carry much of U. S. #40 traffic."

Dawson, the agent of the Nichols Company, and Cowden, assistant division manager of the Continental Company, inspected the tract on two occasions in January, 1930. They had with them the plat referred to above, and on one of such inspections Dawson stepped off the ground.

Thereafter Cowden advised Dawson that the Continental Company desired to purchase the Mulich tract. At Cowden's request, Dawson prepared the option contract; he erroneously described the Mulich tract therein as follows:

"All of Lots 36 & 37, Block 3, Kerr's Park, an addition in and to the city of Kansas City, Kansas."

The contract gave the Continental Company an option to purchase the property within ten days for $17,500. It was conditioned on the Continental Company's being able to secure a permit to erect a filling station thereon. It provided that the Mulichs should furnish a merchantable abstract of title, showing merchantable title in them free from all liens and encumbrances, and should convey to the Continental Company by warranty deed a merchantable title to the property free and clear of all encumbrances. On May 8, 1930, the Continental Company informed the Mulichs that it had elected to exercise the option, and requested them to furnish the abstract of title. Shortly thereafter the Mulichs delivered to the Continental Company an abstract of title certified by a duly licensed abstractor.

In transmitting the abstract to its attorneys for a title opinion, the Continental Company referred to the lots as "lots 36 and 37, Block 3, Kerr's Park, less part taken by the city." On June 20, 1930, the Continental Company received the title opinion which called attention to the fact that a portion of the lots had been condemned by the city for the opening of 21st Street and deeds therefor had been given to the city. It stated that the abstract showed an unreleased mortgage for $4,000, a personal judgment against the Mulichs for $450, and unpaid taxes for 1927, 1928, and 1929. It recommended that the lots be surveyed. The Continental Company had such survey made and paid the cost thereof.

Dawson testified that due to mistake he had failed to exclude from the description in the option the portion of lots 36 and 37 conveyed to the city; that all the maps and plats submitted to Cowden showed that a portion of the lots had been taken by the city for street purposes; and that Cowden and he had knowledge of that fact when the option was prepared.

Cowden testified that he had inspected the property; that he knew the Continental Company was buying only those portions of lots 36 and 37 shown on the plat, knew the dimensions thereof, and advised the home office of the Continental Company of such dimensions.

The title opinion stated that the following should be furnished: A certificate of the clerk of the United States District Court for the District of Kansas with respect to judgments in that court; a certificate of the county treasurer of Wyandotte County, Kansas, and of the city treasurer of Kansas City, Kansas, as to the unpaid taxes against the property; a recertification of those parts of the abstract where the certificate was more than five years old; and a recertification of the abstract down to date.

The requirements set forth in the title opinion were complied with, and the abstract was extended and recertified February 4, 1931.

Shortly after the acceptance of the option, it was discovered that the property was zoned for residential purposes. Representatives of the Nichols Company assured the Continental Company that it would be a simple matter to have the property rezoned for business purposes. The Mulichs employed Williamson, an attorney, to procure a rezoning of the property. Petitions to rezone were secured from owners of adjoining property and presented to the planning commission on January 5, 1931. The planning commission recommended that the property be rezoned as business property, and certified its finding and recommendation to the board of city commissioners.

On February 17, 1931, the city commission rejected the recommendation of the planning commission and refused to rezone the property. The Mulichs then filed a suit in the district court of Wyandotte County, Kansas, to set aside the zoning ordinance. On April 21, 1931, the state court held that the zoning ordinance was illegal and void in so far as it affected the Mulich tract, and that the city should issue permits for the construction of commercial buildings thereon, and ordered that judgment should be entered for the Mulichs.

On April 27, 1931, Cowden and Williamson secured a permit to build a filling station on the property. The permit required a compliance with the zoning ordinance, but the ordinance had been adjudged invalid as to that property. When the permit was secured, arrangements were made to close the deal the following week.

On May 7, 1931, the city commission directed the city attorney to appeal from the decree of the state court. On May 26, 1931, Mr. Cowden sought the aid of W. C. Rickel, an attorney and business man of Kansas City, to aid in securing a rescission of the order directing the appeal. On June 30, 1931, the Mulichs filed a claim against the city for damages by reason of its action in directing an appeal. The city attorney advised the city commission that an appeal would be useless, and that the city might be liable for damages for oppressive delay. At a meeting of the city commission held on July 14, 1931, it...