Driver v. Melone

• Decision Date: 30 September 1970
• Court: California Court of Appeals Court of Appeals
• Parties: Bob J. DRIVER, Plaintiff and Appellant, v. Earl J. MELONE and Genevieve H. Melone, his wife, and Paul Hunter, Defendants and Respondents. Civ. 25895.

Page 98

90 Cal.Rptr. 98

11 Cal.App.3d 746

Bob J. DRIVER, Plaintiff and Appellant, v. Earl J. MELONE and Genevieve H. Melone, his wife, and Paul Hunter, Defendants and Respondents.

Civ. 25895.

Court of Appeal, First District, Division 3, California.

Sept. 30, 1970.

Cowan, Henze, Morken & Stone, Douglas G. Cowan, Walnut Creek, for plaintiff-appellant.

Miller, Starr & Regalia, Oakland, for Paul Hunter.

Hoey & Hoey, Martinez, for Earl J. and Genevieve H. Melone; Cyril Viadro, San Francisco, of counsel.

HAROLD C. BROWN, Associate Justice.

Appellant, Bob J. Driver, purchased from respondents, Earl and Genevieve Melone, a parcel of land improved with an old and dilapidated house. A few months after the sale was consummated the county fire department posted it as dangerous and declared it condemned because of defective electric wiring. Appellant instituted an action for rescission and damages and claimed at trial that respondents misrepresented the conditions of the premises and concealed their knowledge that the property was to be condemend. The trial court disagreed with these claims and rendered judgment for defendants-respondents.

Appellant contends on appeal that the evidence does not support the trial court's finding that there was no misrepresentation and, further, the trial court erred in failing to make a finding, after request, on the issue of concealment.

The parties are in essential agreement as to the facts. It is the interpretation of those facts which provoked the opposing contentions.

The respondents were the owners of a house and lot of speculative value because of its adjacency to the ramp of a Contra Costa County freeway. The house was old and cheaply constructed. It also had deteriorated by reason of its age, abuse and neglect.

In July and August of 1964 the Contra Costa County Building Department advised the Melones by letters that certain improvements were necessary, as the building was substandard, dangerous and did not conform to the building codes. The Melones thereafter listed the property for sale with real estate broker, Paul Hunter. ^* The listing provided: '* * * This property is offered As is * * *. Value is in land--near freeway on offramp.' (Emphasis added.)

In November of 1964 appellant, Bob Driver, and an associate, Gerald Mullins, evinced interest in the property and called on the broker, Paul Hunter, who testified that he told Mullins that the property is 'really a dog * * * It's really in bad shape. * * * It's sitting on mudsills. * * * The front porch is dilapidated; it's dangerous. * * * There's faulty wiring * * *'

Appellant Driver was a university graduate with a degree in engineering. During a period of five years preceding his execution of the agreement, he had made some 25 or 30 purchases of real property for investment purposes.

Mr. Mullins, who was associated with appellant in the purchase of the property, was also experienced in real estate transactions. He was a real estate mortgage loan consultant and had done appraisal work for savings and loan associations.

At the time of the negotiations between appellant and respondents, the premises were occupied by a tenant who paid $80 per month rent. Both appellant and Mullins inspected the property. On the occasion of one of the visits of inspection, appellant was told by the tenant that the property was in 'terrible shape.'

Prior to executing the agreement to purchase, appellant called upon the county building authorities and inquired as to the condition of the building. He was told by an Inspector Taylor to get a letter of authorization from the owner which would then permit the building department to furnish him with information in their records. Instead of pursuing the directions of the building inspector, appellant proceeded thereafter on November 28, 1964, to consummate the sale and to take possession of the premises.

Appellant Driver signed the deposit receipt and agreement of sale and paid the required deposit of $500. The total purchase price was $13,000. The agreement of sale provided that appellant was purchasing the property 'as is.' It also contained a provision (Item 4) that it was subject to inspection by the buyer for a period of five days following the contract date. Three days after signing the agreement appellant wrote to respondent Hunter as follows: '* * * The purpose of this letter is to remove the contingency as indicated in item (4) of my agreement dated November 28, 1964, to purchase the residence known as 1508 Cervato Drive, Alamo, California. Approval of the house is hereby acknowledged. * * *'

Several days after he executed the deposit receipt and agreement to sell, but prior to the close of the escrow, appellant requested Hunter to obtain a letter from the Melones affirming the fact That there were no condemnation proceedings pending on the property. Respondents Melone, pursuant to this request, wrote as follows: 'TO WHOM IT MAY CONCERN: As of the above date, I hereby declare that to my knowledge there is no condemnation proceedures (sic) by Contra Costa County authorities, pending or otherwise, relative to the property * * * known as 1508 Cervato Drive, Alamo, California being Parcel #03, Page #37, Contra Costa County Assessor's Map Book #188. * * *'

At the time the Melones informed appellant that there were no condemnation proceedings pending, the county building authorities had written and the Melones had received the two letters previously referred to demanding that the building code violations be remedied. Appellant argues that he would not have closed the escrow, or made the offer, had he known about the county's activities, since without income the property was worthless to him, and that appellant's associate, Mullins, would not have advised him to buy the property if he was aware of the problems with the county. Appellant claims Melone signed the letter of December 4 knowing that it would be relied upon by the buyer to close the transaction, and knowing that the 'purchasers should be aware of the abatement proceedings.'

In determining whether there was a concealment or misrepresentation, the testimony of a Mr. Taylor, a building inspector for the County of Contra Costa, is of particular importance. He testified that the defective wiring was obvious to anyone who inspected the building. Likewise the wooden foundations were unobscured and were conspicuous without the necessity of looking through the access hole under the house. He acknowledged that if a person just took a walk around the house it would become apparent that the house was sitting on wood and not concrete, and the mudsills, which rested directly on earth, also disclosed evidence of the presence of rot and termite infestation. On the question of condemnation, Inspector Taylor stated that his department had not at any time started a condemnation action on the property, and that if certain repairs were made to the property his department, under an established policy, would permit occupancy and would give the owner three years to satisfy their requirements. The procedure in a condemnation action required reporting the matter to the district attorney's office with a request for a hearing in the presence of the owner to determine if all parties could cooperate to have the building conform to the building code or to work out a solution to the problem, and, that failing, the matter would be referred to the board of supervisors to obtain a resolution to start a formal condemnation. None of these proceedings was commenced by the building department up to the time of trial some two years subsequent to appellant's...