DiPerri v. Tothill

• Decision Date: 19 August 1987
• Docket Number: No. 85-472,85-472
• Citation: DiPerri v. Tothill, 531 A.2d 342, 129 N.H. 676 (N.H. 1987)
• Parties: Ronald DiPERRI et al. v. David N. TOTHILL et al. Ronald DiPERRI et al. v. William R. TOTHILL.
• Court: New Hampshire Supreme Court

Page 342

531 A.2d 342

129 N.H. 676

Ronald DiPERRI et al. v.David N. TOTHILL et al.

Ronald DiPERRI et al. v.William R. TOTHILL.

No. 85-472.

Supreme Court of New Hampshire.

Aug. 19, 1987.

Charles A. Russell, Concord, by briefs and orally, for plaintiffs.

Shaines & McEachern, Portsmouth (Paul McEachern, on briefs, and Matthew T. Brock, on briefs and orally), for defendants.

BROCK, Chief Justice.

This is an appeal from a decision of the Superior Court(Wyman, J.) in a negligent misrepresentation and breach of contract case.We reverse.

In April 1980, the plaintiffs, Ronald and Marie DiPerri, as buyers, entered into a purchase and sale agreement with the defendants, Dorothy and David Tothill, for the sale of the real estate, equipment and inventory of Mountain's General Store, in Center Barnstead.The ultimate purchase price was $92,677.72.The Bank of New Hampshire (Bank) held a note secured by a mortgage from the Tothills on the property.The defendants represented to the plaintiffs that the 1976 note was for a fixed term with a fixed interest rate of ten percent.The plaintiffs' purchase of the property was financed through a wrap-around mortgage under which the plaintiffs did not assume the defendants' obligation to the Bank, but, rather, paid the mortgage payments directly to the defendants, who remained liable on the original note.At no time did the plaintiffs or their counsel contact the Bank directly to learn the exact contents of the underlying documents.Further, the defendants did not disclose an agreement to renegotiate the interest rate on the 1976 note after five years, or that the note was in fact a demand note, although they had represented it to be for a fixed term.

After the consummation of the sale, the Bank, through its counsel, notified the plaintiffs' counsel that it held two mortgages on the real estate and a security interest in accounts receivable, inventory, and store fixtures.Paragraph seven of the security agreement regarding store fixtures provided that "DEBTOR will not sell or offer to sell or otherwise transfer the Collateral or any interest therein without the written consent of BANK[.]"Relying on this paragraph, the Bank stated that it did not consent to the sale.Stating that it had the right to accelerate the debt, the Bank posed two alternatives to the DiPerris to allow them to avoid foreclosure: (1) refinance the debt to the Bank at an interest rate not less than three percent above the Bank's prime rate; or (2) get financing with another institution in order to pay off the debt owed to the Bank.The DiPerris initially chose the first option, which resulted in a significantly higher interest rate.The defendants agreed to discharge the underlying mortgage.The plaintiffs brought these suits in March 1981, and in May 1981, refinanced the debt with another bank.At no time, however, did the monthly payment by the DiPerris drop below the monthly payment figure under the original agreement.

The DiPerris brought two suits in the superior court stating identical causes of action, one against Dorothy Tothill and her son David, and the other against William R. Tothill, her husband, who had acted as agent for the Tothills in making the sale.The two claims presented by the writs were for negligent misrepresentation and unjust enrichment.

After a two-day bench trial, the trial court found

"from the evidence by a balance of probabilities that defendants' agreement with plaintiffs was that if plaintiffs purchased their store and inventory at a designated price that plaintiffs would not have to pay more than 10 percent per annum on the mortgage balance for 16 and a half years, and that, whatever the subsequent turn of events, plaintiffs, shortly after the sale, were required to pay substantially in excess of 10 percent for the last five years and until May, 1987.The Court finds that the defendants executed an undisclosed independent renegotiation of interest rate agreement with the mortgagee bank."

The court found that the defendants negligently misrepresented the fixed-interest-rate nature of their note and mortgage to the Bank of New Hampshire, but did not find fraud.

The court noted that the property was more valuable at the time of the decree than at the time of sale, but stated that this had no effect on the defendants' liability.The court rendered a verdict for the plaintiffs in the amount of $13,810, apparently arriving at that figure by taking the difference between the payments under the original note and the increased payments required of the plaintiffs after the Bank discovered the sale and demanded refinancing, decreased by taking into account the fact that the interest payments were tax deductible.The defendants' motion to set aside the verdict was denied by order dated October 4, 1985.

The defendants appeal on five separate grounds: (1) that the trial court applied an incorrect standard of proof in rendering its decision; (2) that all representations made by the defendants to the plaintiffs were true; (3) that there was no reasonable reliance by the plaintiffs on any representations made by the defendants; (4) that the plaintiffs did not suffer any cognizable damage arising out of the...