Milkton v. French

• Decision Date: 02 May 1930
• Docket Number: 43.
• Citation: 150 A. 28,159 Md. 126
• Parties: MILKTON v. FRENCH ET UX.
• Court: Maryland Court of Appeals

150 A. 28

159 Md. 126

MILKTON v. FRENCH ET UX.

No. 43.

Court of Appeals of Maryland

May 2, 1930

Appeal from Circuit Court of Baltimore City; Duke Bond, Judge.

Suit by Alexander C. G. Milkton against William J. T. French and wife. From a decree for defendants, plaintiff appeals.

Affirmed.

Argued before BOND, C.J., and URNER, ADKINS, OFFUTT, DIGGES, PARKE and SLOAN, JJ.

J Wallace Bryan, of Baltimore, for appellant.

Floyd J. Kintner, of Baltimore, for appellees.

PARKE J.

The controversy on this appeal grows out of the sale on January 19, 1926, by William J. T. French and Irene L. French, his wife, the defendants, to Alexander C. G. Milkton, plaintiff of an improved lot of land in Baltimore city. The contract price was $8,000, and $300 was paid on the day of the sale which entitled the plaintiff to immediate possession of the property. The residue of $7,700 was to be paid in weekly installments of $15, accounting from February 1, 1926, and applied to the payment of taxes, water rent, and fire insurance, and, then, to the interest, and, next, on account of the purchase price, until such payments on the purchase money aggregated $1,000, when the defendants were to convey the property to the plaintiff by a good and marketable fee-simple title, subject to a first mortgage of not more than $5,000, and a second mortgage for the residue of the debt, with a provision that the plaintiff continue said weekly payments of $15 to cover all interest and expenses, and the surplus to be applied on the principal. The amount secured by the second mortgage was to become due and payable three years after its date. The agreement provided that the plaintiff should be permitted to occupy the premises until default be made in the payment and continue for a period of four weeks when the plaintiff agreed to surrender peacefully the premises; and that all payments on account of the purchase price and expenses should belong absolutely to the defendants, and be regarded as payments for the use and occupancy of the property, and as liquidated damages for its depreciation. It was further covenanted that, upon the determination of the plaintiff's right to occupy the premises, the defendants should be entitled to all the rights and remedies given by the local law of Baltimore city to landlords against tenants holding over. Rogers v. Dorrance, 140 Md. 419, 422, 117 A. 564, 32 A. L. R. 573. It should be noted that the contract, which was under seal, contained no covenant whatsoever with respect to the quality or condition of the premises sold.

Upon the signing of the contract of sale the purchaser received a key to the bungalow, and found some visible minor defects, which the defendants, after delay, corrected about the middle of June, 1926, when the plaintiff moved into the house. He was married in July and returned with his bride in August and occupied the premises until March 9, 1927, when he left. He paid the weekly installment of $15 from February 1, 1926, until March 15, 1927, when all payments stopped. After he had failed to pay for more than four weeks, the defendants re-entered; and, after doing some repainting and building a garage, sold the property on July 1, 1927, for $7,000. The defendants assert that they took possession according to the terms of the contract after the plaintiff had defaulted in the weekly payments, and that they are entitled to retain the payments for the use and occupancy of the property and as liquidated damages for its depreciation, as is explicitly covenanted by the plaintiff. The plaintiff admits his abandonment of the premises and failure to pay the weekly sum after March 15th, and justifies his acts upon the theory that it was his right to rescind the contract because of alleged fraudulent misrepresentations on the part of the defendants that induced him to purchase the property. The second amended bill of complaint prays specifically for the rescission and cancellation of the contract, an accounting to be had between the parties in respect to the several matters growing out of the contract; an injunction to prevent the defendants from asserting a forfeiture of the sums paid by the plaintiff, or from bringing any action to enforce the contract; and the awarding and enforcing a lien on the property to the extent of any sum which the court, on the accounting, may find to be due from the defendants to the plaintiff.

The alleged misrepresentations, which must be clearly established before the plaintiff will be entitled to relief, are either express or implied.

1. Taking up the testimony offered in support of the representations in the first division, it will appear that the defendants were developing and improving a parcel of land, and had placed their houses with a real estate agent, for sale. The plaintiff was looking for a home and called on the agent, who took him and his betrothed to see the property. The party entered the house which was of the bungalow type, and looked at the first and second floors and the basement, taking about ten minutes. While there the plaintiff asked the agent "how the construction was, whether it was substantial, any leaks in the basement, or anything like that and how the roof would be. He said, perfect, cannot be any better, my boss works fine, does the best work can be done." In reply to a question about the condition of the basement with respect to moisture, the reply was: "Do not be afraid, a good floor. We sold all the rest of the houses and no complaint of any moisture or water or anything like that." Another inquiry brought the answer that the building was "perfectly well constructed." The present wife of the plaintiff said to the agent: "I want very much assurance on the basement and the roof because I hear so many complaints here in Baltimore about the damp cellars and leaking roofs. I want to be perfectly sure." The agent responded: "Madam be perfectly sure there is nothing the matter." The next day, at the plaintiff's request, the agent took the blank contract of sale to the plaintiff in order to let him examine it, but the plaintiff did not sign. He testified: "I said I want a little bit more assurance on this particular fact, well constructed. I want to be perfectly sure that the construction is right. He said, we will go down to the lawyer's office and have that fixed up right away."

The plaintiff and the agent went to the office of the attorney for the owners and submitted the request. The attorney was unwilling to incorporate the desired covenant in the prepared contract, but called French by telephone to inquire if he would be willing to put the proposed terms in the contract and that the agent informed him in the presence of the attorney that French refused to give any assurance of heating the house to 70 degrees, but the purchaser "was perfectly safe on the concrete, roof and everything else of the construction because" French had "built it himself." The plaintiff, also, testified that the attorney "wanted me to have a perfect assurance that it was fine and in perfect shape, and not put it in the contract, and we discussed about. I said: 'What do you want me to do, do you want me to accept your verbal assurance that everything is honest?' He said, 'You will never regret it,' and I said, 'All right.' "

The real estate agent is dead, and the attorney, who, also, conducted the defense, did not testify. Plaintiff's testimony of what occurred between him and the agent at the first meeting is corroborated by the plaintiff's wife who was present during that conversation. The defendant William J. T. French testified that the real estate man was the agent of the defendants for the sale of the property, and that the attorney had no authority to make any representations in reference to the property. This defendant further swore that he had been called by the attorney and asked if he would agree to the insertion of certain representations in the contract of sale, and that he had declined. The attorney for the defendants, who was trying the case, did not testify to what he had said to plaintiff, and this leaves wholly uncontradicted the evidence of the plaintiff with respect to what the attorney advised him was the owner's statement by telephone. Under the circumstances, the defendants were bound by what the attorney reported, as he was their agent for that purpose. In the absence of his testimony, the court cannot find the representations to have been other than the plaintiff testified. 2 Mechem on Agency (2d Ed.) § 1987.

It is a fundamental condition for the right to rescind a contract on the ground of misrepresentation that the party aggrieved relied upon the misrepresentation, which must have been in respect of a material matter. Whatever may have been the scope of the real estate agent's authority in making the sale, the purchaser was not satisfied with the statements made by him, nor did he rely upon them in making the purchase. He demanded the blank contract of sale for his information and consideration. It was given him, and he informed the agent that the contract did not meet with his approval, as he wanted an assurance that the house was well constructed. At the agent's suggestion, the two went to the lawyer, who declined to incorporate the desired covenants, and called French to know if he would consent. According to French's testimony he declined, and the plaintiff admits he was informed by the attorney, but asserts that the attorney stated to him that French had said over the telephone the purchaser "was perfectly safe on the concrete, roof and everything else of the construction because he built it himself." In the natural sequence of the transaction, it was then that the plaintiff said to the attorney: " 'What do you want me to do, do you want me to...