Haynes v. Cumberland Builders, Inc.

• Decision Date: 03 September 1976
• Citation: 546 S.W.2d 228
• Parties: William J. HAYNES, Jr., et ux., Plaintiffs-Appellees, v. CUMBERLAND BUILDERS, INC., Defendant-Appellant. 546 S.W.2d 228
• Court: Tennessee Court of Appeals

Page 228

546 S.W.2d 228

William J. HAYNES, Jr., et ux., Plaintiffs-Appellees, v. CUMBERLAND BUILDERS, INC., Defendant-Appellant.

546 S.W.2d 228

Court of Appeals of Tennessee, Middle Section.

Sept 3, 1976 Certiorari Denied by Supreme Court Jan. 17, 1977.

Thomas C. Scott and John E. Buffaloe, Jr., Hashville, for plaintiffs-appellees.

James L. Bass, Nashville, for defendant-appellant.

OPINION

DROWOTA, III, Judge.

The plaintiffs, William J. Haynes, Jr., and Carol Donaldson Haynes, filed suit against Cumberland Builders for fraudulent misrepresentation in a land sales transaction. The Chancellor rendered a judgment for the plaintiffs on the ground of misrepresentation or mutual mistake. The defendant has appealed from this judgment.

On July 24, 1974, the plaintiffs-appellees entered into a contract to purchase a house and lot, more particularly described as Lot No. 34, Gold Key Estate Subdivision, from the defendant-appellant for $35,000.00. The property was conveyed to the plaintiffs on September 6, 1974. The plaintiffs alleged that prior to the conveyance, the defendant's agent, W. A. Appleton, described their boundary line to Lot No. 35 as being straight with a telephone pole at the front of their property. This representation indicated to the plaintiffs that their driveway was wholly enclosed by their property.

Construction began on Lot No. 35 early in 1975. When the plaintiffs became concerned about the proximity of the construction to their purported boundary line, the defendant informed them that the actual boundary line with Lot No. 35 ran in the middle of their driveway.

The plaintiffs filed suit in the Chancery Court of Davidson County on January 29, 1975, against Cumberland Builders, Inc., L. Hall Hardaway, Sr. and W. A. Appleton, seeking reformation of the deed. In an amended complaint dated March 18, 1975, the plaintiffs sought the alternative remedies of rescission of the land sale contract or legal damages for misrepresentation. Mr. Appleton died on February 20, 1975, and the complaint was not revived against his estate. Upon the plaintiffs' motion, the Chancellor dismissed their complaint against Hardaway with prejudice. The case against the remaining defendant, Cumberland Builders, Inc., was heard on December 12, 1975. The Chancellor, while refusing to grant rescission, held the defendant liable to the plaintiffs for $5,000.00 in damages. The defendant has perfected an appeal to this Court.

The appellant has assigned eight errors on the part of the Chancellor. Each will be dealt with individually. This opinion will resolve the issues in the following order: (1) the admission into evidence of William J. Haynes, Jr.'s conversation with the defendant's deceased agent, W. A. Appleton; (2) the alleged fraud perpetrated upon the plaintiffs; (3) the plaintiffs' proper remedy and (4) the plaintiffs' obligation to mitigate the damages resulting from the tortious conduct.

(1)

The Chancellor admitted into evidence a conversation between William J. Haynes, Jr., plaintiff, and the defendant's deceased agent, W. A. Appleton. The appellant contends that because Appleton was a party to this lawsuit T.C.A. § 24--105, the Deadman's Statute, prohibits the admission into evidence of this conversation even though the complaint against Appleton was dismissed with prejudice. We disagree.

T.C.A. § 24--105 renders incompetent a witness who has observed a transaction involving a decedent only when that decedent's estate or administration is a party to the lawsuit. T.C.A. § 24--105; Burton v. Farmers' Building & Loan Association, 104 Tenn. 414, 58 S.W. 230 (1900). This statute cannot be extended by the courts to cases not within its terms upon the idea they fall within the evil which was intended to be guarded against. As an exception, it must be strictly construed as against the exclusion of the testimony and in favor of its admission. Newman v. Tipton, 191 Tenn. 461, 234 S.W.2d 994 (1950); Christofiel v. Johnson, 40 Tenn.App. 197, 290 S.W.2d 215 (1956).

W. A. Appleton's estate is not a party to this lawsuit. T.C.A. § 24--105 is not applicable to the case at bar.

The appellant next makes the novel argument that the dismissal of Appleton from this case was improper because it deprived him of his vested right to assert the Deadman's Statute. The appellant cites for authority Rickets v. Sexton, 533 S.W.2d 293 (Tenn.1976) and Anderson v. Smith, 521 S.W.2d 787 (Tenn.1975).

The Anderson case stands for the proposition that a plaintiff's right to take a nonsuit against a defendant under Rule 41 of the Tennessee Rules of Civil Procedure is subject to the qualification that the granting of the nonsuit cannot deprive the defendant of a right which has vested during the pendency of the case. The rule of the Anderson case is not controlling here for three reasons. First, Anderson involves a plaintiff's ability to claim a nonsuit as a matter of right, whereas our case involves the dismissal of a party from the case with prejudice. Second, the rights involved in Anderson were property rights, an interest in the condemned property and the right to receive compensation for publicly condemned property. The availability of a legal defense is not a 'vested right' within the purview of Anderson. Third, if Appleton's estate were made a party to this suit, the Deadman's Statute would still not be available to the appellant. Where there are multiple parties to a lawsuit, one of whom is an estate or an administrator, that witness can still testify as to the transaction with the decedent as to the other parties to the suit, even though T.C.A. § 24--105 renders a witness incompetent to testify against the estate. Carman v. Huff, 32 Tenn.App. 687, 227 S.W.2d 780 (1949). The statute renders the witness incompetent as to the estate, it does not render the evidence wholly inadmissible. The appellant's first assignment of error is overruled.

The appellant next argues that the admission into evidence of the Haynes-Appleton conversation contravened the Parol Evidence Rule and the Statute of Frauds. This argument is meritless. This case is sounded in tort. It is an action for fraudulent misrepresentation. The Parol Evidence Rule applies to suits on a contract. It has no application to a case involving a fraudulent misrepresentation which induces the execution of a contract. Fine v. Stuart, 48 S.W. 371 (Tenn.Ch.App.1898). For the same reasons as enumerated above, the Statute of Frauds is not available to the defendant-appellant. Hampton v. Hancock, 4 Tenn.Civ.App. 419 (1914). The appellant's fourth assignment of error is overruled. We hold that the Chancellor properly admitted into evidence the conversation between Haynes and the defendant's agent, Appleton.

(2)

The next issue is the defendant's liability to the plaintiffs. The Chancellor found the defendant liable on the ground of misrepresentation or mutual mistake as to the true location of the property line. The basis of this ruling is a finding of fact that W. A. Appleton, agent for the defendant, pointed out to the plaintiff the boundaries of the property and represented that a utility pole in the northeast corner was on the property line. Appleton further represented to the plaintiff that his driveway was within the bounds of his property. This case comes before this Court upon a simple appeal. The standard of appellate review in such a case is de novo. T.C.A. § 27--303. In reviewing such a case, the Chancellor's findings of fact are accompanied by a presumption of correctness; they can be reversed only when the evidence in the record preponderates against them. T.C.A. § 27--303.

The record clearly establishes that Appleton, using a plat which described the boundaries of Lot 34, represented to Haynes that his property line was an imaginary straightline with a telephone pole which is in the right front of the property. This representation lead Haynes to believe that his driveway was within the confines of his lot. Approximately six months later, Haynes learned that Appleton's description of the property was inaccurate and that the actual boundary line ran through his driveway. All the evidence in the bill of exceptions supports the Chancellor's findings of fact, We are required to affirm these findings.

Having ruled that Haynes had his boundary lines misrepresented to him prior to purchasing that lot, the next question is what is the legal effect of that misrepresentation. We hold that Cumberland Builders, Inc., is liable for all the damages caused by this misrepresentation on the theory that this act by Appleton was a fraudulent misrepresentation.

When a party intentionally misrepresents a material fact or produces a false impression in order to mislead another or to obtain an undue advantage over him, there is a positive fraud. Rose v. Foutch, 4 Tenn.App. 495 (1926). The representation must have been made with knowledge of its falsity and with a fraudulent intent. Shwab v. Walters, 147 Tenn. 638, 251 S.W. 42 (1922); Vela v. Beard, 59 Tenn.App. 544, 442 S.W.2d 644 (1968). The representation must have been to an existing fact which is material and the plaintiff must have reasonably relied upon that representation to his injury. Whitson v. Gray, 40 Tenn. 441 (1859); Dozier v. Hawthorne Development Co.,37 Tenn.App. 279, 262 S.W.2d 705 (1953).

In commercial transactions the law has recognized a less stringent standard of liability for fraudulent misrepresentations than the common law action for deceit. One who, in the course of his business, profession, or employment, or during a transaction in which he had a pecuniary interest, supplies false information for the guidance of others in their business transactions, is subject to liability for pecuniary loss caused to them by their justifiable reliance upon such information, if he fails to exercise reasonable care or competence in obtaining or communicating the information. Jasper Aviation, Inc. v. McCollum Aviation, Inc., 497...