Hagar v. Mobley, s. 5550

• Decision Date: 17 December 1981
• Docket Number: Nos. 5550,5551,s. 5550
• Citation: 638 P.2d 127
• Parties: John G. HAGAR and Geraldine Hagar, husband and wife, Appellants (Defendants), Bobby Dean Clark and Eldonna Clark, husband and wife; United Farm Agency of Wyoming, Inc., a Wyoming corporation; RLC Investments, Inc., a Missouri corporation; Scarlett Ebersberger; Roberta L. "Bert" Milton, and Rick Wilder (Defendants), v. William M. MOBLEY and Joyce T. Mobley, husband and wife, Appellees(Plaintiffs). William M. MOBLEY and Joyce T. Mobley, husband and wife, Appellants(Plaintiffs), John G. Hagar and Geraldine Hagar, husband and wife; RLC Investments, Inc., a Missouri corporation; Rick Wilder; Bobby Dean Clark and Eldonna Clark, husband and wife (Defendants), v. UNITED FARM AGENCY OF WYOMING, INC., a Wyoming Corporation; Scarlett Ebersberger; and Roberta L. "Bert" Milton, Appellees (Defendants).
• Court: Wyoming Supreme Court

Page 127

638 P.2d 127

John G. HAGAR and Geraldine Hagar, husband and wife, Appellants (Defendants), Bobby Dean Clark and Eldonna Clark, husband and wife; United Farm Agency of Wyoming, Inc., a Wyoming corporation; RLC Investments, Inc., a Missouri corporation; Scarlett Ebersberger; Roberta L. "Bert" Milton, and Rick Wilder (Defendants), v. William M. MOBLEY and Joyce T. Mobley, husband and wife, Appellees(Plaintiffs).

William M. MOBLEY and Joyce T. Mobley, husband and wife, Appellants(Plaintiffs), John G. Hagar and Geraldine Hagar, husband and wife; RLC Investments, Inc., a Missouri corporation; Rick Wilder; Bobby Dean Clark and Eldonna Clark, husband and wife (Defendants), v. UNITED FARM AGENCY OF WYOMING, INC., a Wyoming Corporation; Scarlett Ebersberger; and Roberta L. "Bert" Milton, Appellees (Defendants).

Nos. 5550, 5551.

Supreme Court of Wyoming.

Dec. 17, 1981.

F. M. Andrews, Jr., Andrews & Anderson, P. C., Riverton, for the hagars.

David B. Hooper, Hooper & Hall, P. C., Riverton, for the Mobleys.

Robert M. Seipt and Timothy J. Judson, Seipt & Judson, Riverton, for United, Milton and Ebersberger.

Before ROSE, C. J., RAPER, THOMAS and ROONEY, JJ., and JOHNSON, District Judge.

RAPER, Justice.

This appeal arises from a district court's judgment ending a complex piece of litigation which had at its core an action to rescind a contract for the sale of a lakeside resort on the basis of fraudulent misrepresentation. The trial judge rescinded the contract and awarded damages of $94,849.96 representing a down payment and installments with interest to restore the buyers (Mobleys) to status quo. The parties to this appeal have raised, in effect, three distinct issues that require resolution. First, a challenge is made by sellers, John and Geraldine Hagar (Hagars), to the district court's decision to rescind the purchase contract; the charge is made that the decision was erroneous in light of both prior case law and the record in this particular appeal. Second, we are called upon by the Mobleys as cross-appellants to determine whether the district court correctly dismissed the Mobleys' claim for damages against a real estate agency, United Farm Agency (United) and its broker and salesperson as a result of misrepresentations concerning the resort made by its real estate broker manager, Roberta Milton (Milton), and salesperson, Scarlett Ebersberger (Ebersberger). And finally, also at the instance of the Mobleys, we must review the district court's decision to award the Hagars, to the benefit of their predecessors in interest to whom a balance of their selling price was still owing, the proceeds of a fire insurance policy purchased by the Mobleys, which became payable during the pendency of the lawsuit following a fire at the resort.

We will affirm in part, reverse in part and remand for further proceedings with respect to the liability of United, Milton and Ebersberger, the realtors.

I

On June 21, 1960, the Wyoming State Parks Commission, as lessor, executed a lease agreement with the S. J. Stanbury Company, lessee. The property covered by the lease consisted of approximately eighteen acres of land on Boysen Reservoir located in Fremont County near Shoshoni. The term of the lease was set at twenty-three years though an option to renew for an additional thirty years was provided Stanbury. In addition, the lease was expressly subject to the lease between the Parks Commission and the United States Government.

Further, Stanbury by the terms of the lease with the Parks Commission, amongst other provisions, promised and agreed:

"A. To assume responsibility for the prevention, control, and suppression of fires, and the preservation of law and order within the premises.

"D. To keep and maintain the lands affected by this lease, including all improvements erected thereon, in a good and reasonable state of repair, reasonable wear and tear excepted, and, at its own expense, to make all necessary repairs to preserve said improvements.

"E. To permit no activity which will interfere with the safety, protection, and efficient operations of the Boysen Reservoir."

Finally, the lease authorized Stanbury to sell, assign, or set over the lease to another only if the written consent of the Parks Commission was first obtained.

Pursuant to this latter authorization, the lease changed hands several times within the next six years. Then, in April 1967 an assignment to Bobby Dean and Eldonna Clark was approved by the Wyoming State Parks Commission. They retained their interest until July 28, 1975, at which time they executed an agreement to sell to the Hagars.

The Hagars took possession and operated the business establishment located on the property known as the Lakeside Resort until the summer of 1978. In May of that year the Hagars, after receiving an inquiry concerning the possibility of listing the leasehold for sale, met with real estate broker Milton, representing a branch office of United located in Dubois. At that meeting, the Hagars indicated that the lease would not expire until the year 2022 and that the net profit for the previous year had run around $50,000 to $60,000. They also promised to open their books for inspection "to a bona fide buyer." The meeting concluded with the Hagars having listed the resort for sale, with United as real estate agent.

In June, United sent out letters to those on a list of people interested in buying a resort. Mr. Mobley, as a prospect named on the list, received the following letter on the letterhead of United:

"Dear Mr. Mobley,

"Your name came to us from our customer service center in Kansas City as being interested in resorts for sale in our area. We currently have a fantastic business for sale in which you may be interested.

"This listing consists of 18 acres of land leased from the State of Wyoming for just $600 per yezr (sic) and doesn't expire until 2022, at which time the lease may be renewed for 25 year periods. The land borders Boyson (Boysen) Resevoir (sic).

"The business consists of a 57 unit trailer park, four units of which are for permanent trailers, the other 53 for smaller trailers with electricity and water hook-ups. Trailer park also has two restroom facilities, one with showers. There is also a 4-unit motel with very attractive attached living quarters.

"The main building houses a bar, liquor store, bait shop, private office area, lounge, dining room and coffee shop. There are also three self-serve gas pumps and a large storage building on the property.

"There is all electric heat, an artesian water well and two septic tanks on the property. The owners have a live-bait permit allowing them to sell minnows to fisherman. All equipment is in good condition and a complete inventory goes with the business.

"The owners yielded a very substantial net income, and books are open to a bona-fide buyer. The selling price is just $230,000 with possible owner financing. If you would like more information, or would like to make arrangements to see this property, please let us know at your earliest convenience.

"Sincerely,

/s/ Scarlett Ebersberger

Scarlett Ebersberger

Associate"

The Mobleys contacted United and expressed interest in the resort. Arrangements were made for the Mobleys to tour the property. On June 11, 1978, the Mobleys met the two United agents, Milton and Ebersberger, as well as Mr. Hagar, at the resort and went over the premises.

On June 25, 1978, the Mobleys again met with United's agents, Milton and Ebersberger. Though that meeting was primarily held to discuss the listing of property owned by the Mobleys, mention was made of the Hagars' Lakeside Resort. As to the content of that conversation, the evidence is in conflict. In her testimony, Milton claimed that she had a copy of the Stanbury lease with her at the June 25 meeting and that she offered to let the Mobleys read it. However, Mr. Mobley testified that at that meeting Milton indicated that she had not yet received a copy of the lease though she had heard from the Wyoming State Parks Commission that it was unreadable.

In reliance upon the representations made to them concerning the resort, the Mobleys submitted a purchase offer on June 27, 1978. Following some negotiations, the deal was closed July 13, 1978. On June 15, 1978, the Hagars had received a letter from the Wyoming Recreation Commission (successor to the State Parks Commission ¹ iterating that the lease was due to expire on June 20, 1983. The Hagars thus knew or should have known from their experience with the lease and the June 15, 1978 notice from the Commission prior to consummation of the sale, the true expiration date of the lease. The Hagars' income tax records in evidence reflect that for each of the years that they operated the Lakeside Resort, the business lost money.

In June 1979 the Clarks received a communication from the Wyoming Recreation Commission concerning the Lakeside Resort "Dear Mr. and Mrs. Clark:

"Because the lease fee for this Concession Lease was not paid on time, we had cause to inspect our file on this lease.

"We find the lease is being held in escrow by the First National Bank of Riverton and cannot be assigned. However you executed a Sales Contract to Mr. and Mrs. John Hagar in July, 1975. Written permission was given to you to execute the Sales Contract with Mr. and Mrs. Hagar; however, no lease assignment could be executed to show change of lessee. In July, 1978, we received from a real estate broker an almost unreadable copy of a Sales Contract from Mr. and Mrs. Hagar to William and Joyce Mobley. Perhaps because of lack of knowledge of the contents of the Lease, the Hagars sold their interest but the Wyoming Recreation Commission issued no written permission for this transfer and no assignment forms could be executed.

"As far as the Wyoming Recreation Commission is concerned, you are the Lessee for this area-the Lessee of Record-and ultimately you are financially responsible for the lease fee and for...