Millikin v. Green

• Jurisdiction: Oregon
• Parties: Harry L. MILLIKIN and Naomi T. Millikin, Respondents, v. Joseph W. GREEN and Sari B. Green, a/k/a Sarita B. Green, and Transland Real Estate, Inc., an Oregon Corporation, Appellants. Joseph W. GREEN and Sari B. Green, a/k/a Sarita B. Green, and Transland Real Estate, Inc., an Oregon Corporation, Plaintiffs, v. Robert J. HILL and Mildred I. Hill, d/b/a Imperial Roofing, Defendants. Robert J. HILL and Mildred I. Hill, Plaintiffs, v. Louis E. WINTERSTEIN, Defendant. ; SC 25418.
• Citation: 583 P.2d 548,283 Or. 283
• Docket Number: No. 76-3987,76-3987
• Court: Oregon Supreme Court
• Decision Date: 12 September 1978

Page 548

583 P.2d 548

283 Or. 283

Harry L. MILLIKIN and Naomi T. Millikin, Respondents, v.Joseph W. GREEN and Sari B. Green, a/k/a Sarita B. Green, and Transland Real Estate, Inc., an Oregon

Corporation, Appellants.

Joseph W. GREEN and Sari B. Green, a/k/a Sarita B. Green,

and Transland Real Estate, Inc., an Oregon

Corporation, Plaintiffs, v.Robert J. HILL and Mildred I. Hill, d/b/a Imperial Roofing,

Defendants.

Robert J. HILL and Mildred I. Hill, Plaintiffs, v.Louis E. WINTERSTEIN, Defendant.

No. 76-3987; SC 25418.

Supreme Court of Oregon.

Argued and Submitted July 10, 1978.

Decided Sept. 12, 1978.

Robert Scholl, Eugene, argued the cause and filed briefs for appellants.

H. Thomas Evans, of Evans & Armstrong, Eugene, argued the cause and filed a brief for respondents.

Before HOLMAN, P. J., and TONGUE, HOWELL, BRYSON, LENT and LINDE, JJ.

HOLMAN, Justice.

This is an action by the purchasers for damages arising out of the sale of a residence.Insofar as this appeal is concerned there were two causes of action one for fraud and the other for breach of covenant of title in the warranty deed purporting to pass title.The case was tried to the court without a jury and a judgment was rendered for compensatory and punitive damages on both causes of action.Defendants appeal.The litigation involved third party claims but we are not concerned with them in this appeal.

We shall take up the fraud cause of action first.Defendants built and sold to plaintiffs a new residence.The parties signed the earnest money agreement on September 8, 1975.On November 12, 1975, the City of Eugene advised defendants that the roof of the residence would have to be removed and replaced to comply with the city's building code.On December 1, 1975, the parties closed the sale without defendants' telling plaintiffs that the roof would have to be replaced.Plaintiffs subsequently replaced the roof more than seven months later.

Concealment of a known fact that is material to the transaction amounts to actionable fraud.Defendants contend there is no evidence of materiality and the trial court erred in entering a judgment for plaintiffs.A misrepresentation is material where it would be likely to affect the conduct of a reasonable man with reference to a transaction with another person.Heverly v. Kirkendall, 257 Or. 232, 237, 478 P.2d 381(1970).A roof that must be replaced is certainly material to the sale of a newly built dwelling.In addition, plaintiffs testified that they would not have purchased the dwelling had they known the roof needed to be replaced.

Defendants contend that because they did not know at the time the earnest money agreement was signed that the roof had to be removed, they committed no fraud.The answer to this is that they completed the transaction after they had such knowledge.They knew also that there was a question about the roof before the earnest money agreement was signed, but they said nothing.

Defendants also contend there was insufficient evidence of aggravating factors demonstrating a disregard of social obligations sufficient to justify punitive damages.Defendants argue that the bad roof was not their fault but was the fault of the subcontractor; that they sued the subcontractor and out of that suit came an agreement by the subcontractor to replace the roof, but plaintiffs would not permit the work to be done.This offer to plaintiff to replace the roof was not made until seven months after the consummation of the sale, and there is no reason plaintiffs were obliged to accept the work of someone whose skills had already produced one substandard roof.Punitive damages are awarded in those instances where the violations of societal norms are (1) of an aggravated nature and (2) of the kind that sanctions would tend to prevent.Noe v. Kaiser Foundation Hosp., 248 Or. 420, 425, 435 P.2d 306, 27 A.L.R.3d 1268(1967).Defendants never explain why, knowing the facts, they completed the transaction with plaintiffs without telling them of the defective roof.If punitive damages can ever be justified it is in a fraudulent situation such as this.

There were no errors attendant the cause of action for fraud.

The second count concerns defendants' failure of title to part of the land which they transferred by warranty deed to plaintiffs.Defendants assign as error the entry of a judgment against them on this count.Defendants had previously sold the land adjacent that which was sold to plaintiffs to a purchaser by the name of Huling.At the time of the sale to plaintiffs, a dispute existed between defendants and Huling concerning the boundary between the land sold to Huling and that subsequently sold to plaintiffs.Defendants did not advise plaintiffs of this dispute.When selling the property to plaintiffs, defendants pointed out a fence which was then in place between the Huling property and that offered to plaintiffs.It is conceded that defendants told plaintiffs that the fence was the boundary line.After purchasing the property, plaintiffs discovered that their deed description extended beyond the fence and included the disputed property to which Huling...