Jackson Co. v. Faulkner

• Decision Date: 09 July 1975
• Parties: JACKSON COMPANY, a corporation v. Gordon F. FAULKNER and Maureen P. Faulkner. Civ. 388.
• Court: Alabama Court of Civil Appeals

Page 591

315 So.2d 591

55 Ala.App. 354

JACKSON COMPANY, a corporation v. Gordon F. FAULKNER and Maureen P. Faulkner.

Civ. 388.

Court of Civil Appeals of Alabama.

July 9, 1975.

Laurence D. Vinson, Jr., Birmingham, for appellant.

J. Wm. Thomason, and James R. Shaw, Bessemer, for appellees.

HOLMES, Judge

Appellant-real estate company appeals from a jury verdict and judgment thereon of $5,644 in favor of appellees-purchasers. Appellees' complaint alleged that a lot sold by apellant to appellees 'was not suitable for construction of a dwelling house.'

The evidence as revealed by the record indicates the following.

Appellee-husband testified that he telephoned Mrs. Catherine Hare Ellis who was working with appellant corporation in February 1972, and told her he was looking for a lot in the Rocky Ridge-Bluff Park area to build a home on. The price range purchaser was interested in was from $2,500 to $4,000. At some point Mrs. Ellis showed appellee the lot he subsequently purchased. On the first showing appellee testified he was unable to walk the lot due to inclement weather. No mention was made at this time of the need for a percolation test or any discussion as to septic tank approval.

On the second trip to the lot taken by the two parties, appellee testified that Mrs. Ellis made the following statement to him. 'If you tell anybody I told you this I won't admit it, but be sure and have a percolation test run on the property.' Mrs. Ellis denied making the statement to appellee and also claims she was unaware appellee wanted to build a house on the lot. The lot was located in a residential subdivision and was surrounded by houses.

Appellee also made several other visits to the lot with various friends to inspect the lot and ask their opinion. In total he made about five or six trips.

On April 23, 1972, appellee had a percolation test run and the lot did 'perk.' Appellee informed Mrs. Ellis of this fact. Appellee testified that Mrs. Ellis made several comments to him to the effect that inasmuch as the lot had perked he was 'O.K.' for a septic tank. Mrs. Ellis has denied these statements.

On April 25, 1972, appellee entered into a contract purchasing the land from appellant for $2,500.

During or about October of the same year, appellee contracted with Hensley Septic Tank Service to have a septic tank installed. The original estimate for cost was approximately $2,500, or from $1,800 to $2,600. About three weeks into the job, however, Hensley informed purchaser that he had encountered problems and that it would cost additional money, or approximately $3,500. The final bill submitted to appellees was for $5,050. The septic tank is still not completed and has not been approved by the department of health. Mr. Hensley testified he could complete the work and get a septic tank approved but it would cost more money.

Mr. Paul Pate, employee of Jefferson County Department of Health, testified that the lot in question was originally approved for septic tanks but that this approval was later withdrawn. A letter was sent in 1959 to interested parties, including appellant-real estate company who also is the owner of the lot, informing them of the withdrawal of approval and problems with the lots. The problem, according to Mr. Pate, is the existence of a large amount of ground water. Mr. Pate described it as similar to an artesian well or spring situation. He testified that in its present condition putting a septic tank in it would be like putting a septic tank into a 'dozen or so springs.' Mr. Pate testified that in his opinion a satisfactory system could not be put in and approved.

The 1959 letter sent to appellant corporation is as follows:

'November 17, 1959

'Mr. George O. Wright, Jr.

1021 South 20th Street

Birmingham, Alabama

'Re: Skyline Estates Subdivision

Located N. 1/4 SE. 1/4 Sect. 34, Tp 18S, R3W Jefferson County, Alabama

'Dear Sir'

'After careful study of the abovementioned subdivision, this is to advise that this Department cannot give approval of septic tank systems within the subdivision on the lots as outlined below.

'Lots 2, 3, 4, 7, 8, 11, 14, 24, 25, 26, 28, 36, 40, and 41. The reason that these lots cannot have our approval is due to rock and ground water problems existant at the present time, also inadequate areas for field line construction. It will be necessary to provide adequate subsurface drainage and sufficient areas for field line construction for the abovenamed lots before approval can be given by this department.

'Yours truly,

'/s/ Paul Pate

'Assistant Director

Bureau of Sanitation

'PP:md

'cc--Mr. C. R. Rew

Alabama Home Builders

1201--3d Avenue, North

Birmingham, Alabama

'cc--Mr. Ervin Jackson

Jackson Securities

213 North 21st Street

Birmingham, Alabama' (Emphasis added to show lot in question)

On several of these numbered lots septic tanks have indeed been approved. However, Mr. Pate testified that in his opinion no other lots were in the same condition as Lot 3 and Lot 2; all others being superior.

In any event, it is undisputed that appellees did not receive a copy of the letter, nor were they informed of the existence of the letter, nor were they informed of the contents of the letter prior to entering into the contract, nor did they learn for several months thereafter.

It is this failure to inform by appellant-corporation and the statements made to appellees by Mrs. Ellis which gave rise to appellees' complaint.

The issue was submitted to the jury under the following possible theories of recovery as defined in the judge's oral charge to the jury:

'Now this case is what we call a case charging legal fraud by the Plaintiffs against the Defendant. That legal fraud is charged in three separate respects: First, the Plaintiff is charging that the Defendant, acting by and through one of his agents who was acting within the line and scope of her authority, either willfully and intentionally made a misrepresentation of a material fact leading up to the execution of the contract or that she made willful--first let me add to that. She made a willful and intentional misstatement or misrepresentation knowing that it was false or that she, in alternative, made a willful misrepresentation of a material fact not knowing whether it was true or false, and that the Plaintiffs relied upon her misrepresentation to their detriment; and as a direct consequence of their reliance upon said misrepresentation they suffered damages.

'The next contention is that the Defendants innocently or by mistake misrepresented a material fact to the Plaintiff which induced the Plaintiff to enter into the contract, and as a proximate consequence thereof the Plaintiffs received and suffered injuries and damages.

'The next contention is that the Defendants were acting in what we call a fiduciary relationship with the Plaintiffs, and that the Defendants were in possession of information or knowledge that was material to the subject of the contract, and that they were under the duty to disclose to the Plaintiffs all of the information that they were in possession of, and that they failed to do that, and as a proximate consequence thereof the Plaintiffs relied upon the conduct of the Defendants to execute the contract to their detriment.'

Appellant's argued assignments of error present five contentions to this court. These alleged errors result from the trial court's denial of motions made by appellant relating to a directed verdict; judgment notwithstanding the verdict or in the alternative new trial; and error in the court's charge to the jury.

At the outset, we note the time honored principles that a jury's determination of factual issues will not be disturbed on appeal unless plainly and palpably wrong. Merchants Bank v. Cotton, 289 Ala. 606, 269 So.2d 875. Failure by a trial judge to grant a new trial strengthens the presumptions as to the correctness of the verdict. Ditsch v. Baggett Transp. Co., 258 Ala. 26, 61 So.2d 98.

The first contention of appellant is that the evidence failed to establish any material misrepresentation by appellant with respect to the purchase of the real estate.

The contract between the parties included the following provisions:

'The sale of this lot is not contingent on percolation test.

'It is understood and agreed that this lot has not been approved by the county health department for a septic tank.'

Appellant apparently contends that the above provisions are a sufficient disclosure of the contents of the 1959 letter so as to put appellees on notice and to charge them with knowledge of everything to which an inquiry would lead.

We do not find that the inclusion of these clauses were enough to put purchaser on notice of any facts relating to the unsuitability of the lot sold.

We note a difference in the interpretation to be given the contract clauses as opposed to the 1959 letter. The contract clauses relate simply to terms concerned with the sale of the lot. Such terms are not in dispute. The 1959 letter relates to the suitability of the lot for construction of a home, the purpose for which purchaser testified he bought the lot, and the basis of his complaint. Additionally, we note appellee testified that Mrs. Ellis told him these words were included because it was just a standard form contract.

Tit. 7, § 108, Code of Ala.1940 (Recomp.1958), reads as follows:

'Misrepresentations of a material fact, made wilfully to deceive, or recklessly without knowledge, and acted on by the opposite party, or if made by mistake and innocently, and acted on by the opposite party, constitute legal fraud.'

Material facts are of such nature as to induce action on the part of the complaining party. Cooper v. Rowe, 208 Ala. 494, 94 So. 725. In this case appellee testified that had he known of the existence of the letter he would not have purchased the lot. This adequately describes a material fact. Shafer v. Timmons, 51 Ala.App. 157, 283 So.2d 609.

The evidence in this case shows...