Earnest v. Merck

• Court: Georgia Court of Appeals
• Writing for the Court: BIRDSONG; DEEN, P.J., and POPE
• Citation: Earnest v. Merck, 183 Ga.App. 271, 358 S.E.2d 661 (Ga. App. 1987)
• Decision Date: 10 June 1987
• Docket Number: No. 74560,74560
• Parties: EARNEST v. MERCK.

Page 661

358 S.E.2d 661

183 Ga.App. 271

EARNEST v. MERCK.

No. 74560.

Court of Appeals of Georgia.

June 10, 1987.

Donald W. Huskins, Eatonton, for appellant.

George D. Lawrence, Eatonton, for appellee.

BIRDSONG, Chief Judge.

Summary Judgment--Corporate Veil. On October 31, 1985, Charles Earnest purchased a home from Executive Builders, Inc. The home was located near Lake Sinclair. Its source of water was a deep well. Earnest apparently dealt with his sister-in-law, Kathy Earnest, in the negotiations for the sale of the house. Kathy Earnest was an agent for Merck Realty. The home was built and owned by Executive Builders, and John Merck was the corporation's president. Executive Builders used Merck Realty as the selling agent. John Merck was the president of Merck Realty. John Merck also was the broker sponsoring Merck Realty. During the negotiations for the sale of the house and land, Charles Earnest asked his sister-in-law about the water supply and Kathy referred Charles Earnest to John Merck. Merck informed Earnest that the well should supply approximately four gallons of water per minute which should be sufficient to supply domestic needs. Charles Earnest decided to purchase the house. The real estate sales contract was signed by Earnest as purchaser and reflected the selling agency as Merck Realty. The agent was shown as Kathy Earnest and the seller was shown as Executive Builders, Inc. with John Merck signing as president. The warranty deed from Executive Builders was signed by John Merck, as president. Also the record contains a copy of the contract between the well digger and Merck. That contract shows the well digger as the one party and the other as John Merck on behalf of Merck Realty. The well contract shows that the services were rendered on behalf of Merck Realty Company.

After Earnest accepted delivery of the house, in just a few days, it became apparent the well would not deliver even 2 or 3 gallons a minute and as a result the water supply for the house was wholly inadequate. Extended negotiations for an adequate water supply did not result in an acceptable compromise. Merck sued the well digger for breach of contract and recovered almost $5,000 in damages. However, none of that money has been credited to Earnest. It is uncontested that the funds for payment of the well came from Executive Builders and the recovery from the well digger was deposited to the account of Executive Builders.

Because of the inability of Merck and Earnest to reach an acceptable agreement as to the source of an adequate water supply, Earnest brought this complaint against Executive Builders Inc., Merck Realty, and John Merck individually, seeking to rescind the contract and recover damages. Each of the defendants moved for summary judgment. The trial court denied summary judgment to the two corporate defendants but granted summary judgment to John Merck in his individual capacity. Earnest brings this appeal asserting as his lone enumeration of error the grant of summary judgment to John Merck individually. Held:

Earnest contends there are material issues of fact as to whether John Merck acted in his individual capacity so as to make the grant of summary judgment to Merck as an individual an erroneous ruling. Earnest contends that when he talked with Merck about the well and water capacity prior to the sale of the house he was not aware of whether he was accepting assurances from Merck in his individual capacity or as an officer of Executive Builders or Merck Realty. Earnest also points out in his brief that Merck sued the well digger in his own name and not that of Executive Builders or Merck Realty. The recovery was in Merck's name. Lastly, Earnest points out that Merck was the only person involved in each of the corporate actions in the sale of the house and the promises and actions involved in the furnishing of the well water.

In contradiction thereto, the trial court was made aware that Executive Builders is a corporation composed of four stockholders, not a sole proprietorship. Merck Realty is a corporation composed of two stockholders. It was made clear that Executive Builders built, owned and sold the house in question. The offer to purchase the home was made by Earnest through his sister-in-law to Merck Realtors, not Merck individually. The offer to purchase was accepted by Executive Builders. The warranty deed was...