Mitchell v. Straith
| Decision Date | 24 April 1985 |
| Docket Number | No. 12287-8-I,12287-8-I |
| Citation | 40 Wn.App. 405,698 P.2d 609 |
| Court | Washington Court of Appeals |
| Parties | John R. MITCHELL and Cynthia Sue Vansickle, Appellants, v. William J. STRAITH, Jr. and Janice R. Straith, husband and wife, Respondents. |
Kristin Henderson, Edward T. Hilpert, Jr. Seattle, for respondents.
John R. Mitchell and Cynthia Sue VanSickle, husband and wife, (hereinafter Mitchell) appeal the dismissal with prejudice of their complaint against William J. Straith, Jr., and his wife, Janice R. Straith (hereinafter Straith). Mitchell contends the trial court erred in finding Straith did not breach an express warranty and did not commit fraud or misrepresentation in selling a residential property to Mitchell. Mitchell also challenges the amount of attorney fees awarded to Straith. We affirm the dismissal of the complaint and remand for further proceedings on the issue of attorney fees.
On December 12, 1979, Mitchell entered into a Real Estate Purchase and Sale Contract (hereinafter Contract) with Straith to purchase Straith's real property located in Bothell, Washington, for $75,000. Section 5 of the Contract provided:
5. UTILITIES. Seller warrants that the property is connected to a public water main; well; public sewer main; septic tank; none of the foregoing. (IF WELL OR SEPTIC TANK ARE CHECKED, THE WELL OR SEPTIC TANK PROVISIONS ON THE REVERSE SIDE HEREOF ARE PART OF THIS AGREEMENT.)
Section 10 of the Contract provided:
10. DEFAULT. In the event of default by Purchaser, Seller shall have the election to retain the earnest money as liquidated damages, or to institute suit to enforce any rights Seller has. In the event that either the Purchaser, Seller, or Agent, shall institute suit to enforce any rights hereunder, the successful party shall be entitled to court costs and a reasonable attorney's fees [sic ].
The property is located in a group of 10 lots on the north side of the Sammamish River. Bordering the lots on the north side are a railroad right-of-way and, next to the right-of-way, N.E. Bothell Way. An 8-inch water main owned by King County Water District 79 runs along the north side of N.E. Bothell Way. The subject property and the other lots were connected to this water main by a 2-inch galvanized iron pipe running from a meter on the water main underneath N.E. Bothell Way and the railroad right-of-way to the lot on the east end of the group of lots. From this lot, one pipe ran east to a marina and a 1-inch or 3/4-inch pipe ran west to the other lots. An easement for ingress and egress and for utilities ran along the northern edge of all of the lots.
The marina was billed for the water usage shown by the meter, and each of the owners served by the arrangement paid for a proportionate share of the water cost. Straith disclosed the nature of the water system and the billing system to Kevin Hanchett, the listing agent at the real estate brokerage of Theodore J. Kopp.
On the date he signed the Contract, Mitchell was shown the property by Theodore J. Kopp, who, with Mitchell, visited various King County administrative offices regarding the property. Inquiry was made at that time of Water District 79. In response to his inquiry, the water district advised Mitchell there were no assessments against the property. Kopp filled in the blanks in the Contract, including the boxes in section 5 regarding water service. Mitchell and Straith never met or talked to each other until after litigation commenced. Finding of fact 4. Straith had not occupied the property for approximately 1 year prior to its sale.
Mitchell moved onto the property on January 15, 1980, and the sale was closed on January 24, 1980. Approximately 1 month later, Mitchell learned that a utility local improvement district (ULID) had been formed to build a water main to service the area and that the estimated assessment for the Mitchell property was $6,000. Mitchell asked Straith to pay the assessment and, when Straith refused, filed this action. The property was ultimately assessed for $7,197.10 and Mitchell seeks recovery of that amount.
The trial court found that, although Straith was aware of neighborhood conversations that a ULID might be formed to improve water and sewer service, he never received notice of its proposed formation. The trial court also found that the property was benefited and its value increased, at least to the extent of the assessment amount, by the improvements consisting of a new water main, fire hydrants, individual water meters for each property, and an overall improved water system.
Expert testimony was offered by both sides on the meaning of the provision in paragraph 5 that "Seller warrants that the property is connected to a ... public water main; ..."
Mitchell first contends Straith breached his warranty that the property was connected to a public water main. Mitchell argues that the clear meaning of the warranty is that the property is connected directly to the public water main.
The trial court concluded that property served by water from a public water main through pipes connecting the property to the public water main was, in fact, connected to a public water main. Webster's Third New Internat'l Dictionary 480 (3d ed. 1969) defines "connected" as "joined or linked together". To add the word "directly" to the language of the warranty, as urged by Mitchell, would amount to a revision significantly changing its meaning. This we are not permitted to do. Farmers Ins. Co. v. Miller, 87 Wash.2d 70, 73, 549 P.2d 9 (1976). The evidence supports the trial court's finding and the findings support the trial court's conclusion that Straith did not breach the warranty that the subject property was "connected to a ... public water main".
Mitchell contends the facts of this case imposed upon Straith a duty to disclose the unusual water piping arrangement to him and that his failure to do so amounts to a misrepresentation of material fact rendering Straith liable for the water assessment.
Mitchell relies upon Sorrell v. Young, 6 Wash.App. 220, 491 P.2d 1312 (1971). In Sorrell, a purchaser of a lot was entitled to rescind because the vendor failed to disclose that the lot had been built up to street level by a substantial fill. The presence of the fill required soil tests and a foundation built on piling, both of which were expensive and significantly increased the construction cost of a house if, indeed, a house could be built on the lot at all. The court found this fact pattern placed a duty on the seller to disclose the fact of the fill to the purchaser, whether he asked about it or not. The court relied, in part, on the principle expressed in Restatement of Contracts § 472, comment b (1932):
A party entering into a bargain is not bound to tell everything he knows to the other party, even if he is aware that the other is ignorant of the facts; and unilateral mistake, of itself, does not make a transaction voidable (see § 503). But if a fact known by one party and not the other is so vital that if the mistake were mutual the contract would be voidable, and the party knowing the fact also knows that the other does not know it, nondisclosure is not privileged and is fraudulent.
Sorrell, at 222, 491 P.2d 1312.
The elements necessary for imposition of a duty to speak in a "land fill" case are stated in Sorrell, at 225, 491 P.2d 1312:
We conceive the essential "elements" in proof of constructive fraud by nondisclosure of the existence of a land fill to be: (1) a vendor, knowing that the land has been filled, fails to disclose that fact to a purchaser of the property, and (2) the purchaser is unaware of the existence of the fill because either he has had no opportunity to inspect the property, or the existence of the fill was not apparent or readily ascertainable, and (3) the value of the property is materially affected by the existence of the fill.
Sorrell is a case allowing rescission because the misrepresentation by silence materially affected the purpose of the transaction. The purchaser had acquired a building lot that could not be used for the purpose of constructing a house thereon without substantial unanticipated expense, if at all. Sorrell is consistent with the requirement that rescission requires a material breach of contract often defined as one that substantially defeats the purpose of the contract. 17 Am.Jur.2d Contracts § 504, at 981 (1964).
In this case, Mitchell seeks only damages. Proof of a material misrepresentation should be sufficient to allow recovery of damages, whether or not it would be sufficient to support rescission. Rest...
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