Nordstrom v. Miller

• Decision Date: 19 January 1980
• Docket Number: No. 50101,50101
• Parties: Carl NORDSTROM and Cleo Nordstrom, Appellees and Cross-Appellants, v. John Lee MILLER and Marilee Miller, Appellants, Legere Real Estate & Auction Co., Inc. and Robert Legere, Personally, Cross-Appellees.
• Court: Kansas Supreme Court

Page 545

605 P.2d 545

227 Kan. 59

Carl NORDSTROM and Cleo Nordstrom, Appellees and Cross-Appellants, v. John Lee MILLER and Marilee Miller, Appellants,

Legere Real Estate & Auction Co., Inc. and Robert Legere,

Personally, Cross-Appellees.

No. 50101.

Supreme Court of Kansas.

Jan. 19, 1980.

Syllabus by the Court

1. Where the owner of land, by misrepresentation as to its character, effects a sale, agents who have acted for him in the matter are not rendered personally liable to the buyer for the fraud merely by reason of their having innocently and in good faith repeated to him the false statements concerning the property made to them by the seller.

2. If an agent makes false representations on behalf of his principal honestly believing them to be true, the mental element of fraud is lacking and he is not guilty of fraud and not liable for such, although his principal may have known that such representations were false.

3. Summary judgment is authorized if the pleadings, depositions, answers to interrogatories and affidavits, if any, show no genuine issue of material fact remains and a party is entitled to judgment as a matter of law.

4. A party cannot escape summary judgment, if otherwise proper, on the hope further discovery might reveal evidence favorable to his case after he has reported discovery completed.

5. An appellate court should read the record in the light most favorable to the party who defended against the motion for summary judgment. It should take such party's allegations as true, and it should give him the benefit of the doubt when his assertions conflict with those of the movant.

6. Actionable fraud includes an untrue statement of fact, known to be untrue by the party making it, made with the intent to deceive or recklessly made with disregard for the truth, where another party justifiably relies on the statement and acts to his injury.

7. Fraud is never presumed and must be proven by clear and convincing evidence.

8. The term "clear and convincing evidence" means: The witnesses to a fact must be found to be credible; the facts to which the witnesses testify must be distinctly remembered; the details in connection with the contract must be narrated exactly and in order; the testimony must be clear, direct and weighty, and the witnesses must be lacking in confusion as to the facts at issue.

9. The existence of fraud is ordinarily a question of fact. An appellate court's review is limited to determining whether the trial court's finding is supported by competent evidence when that evidence is weighed in a manner most favorable to supporting the trial court's determination. This court is not concerned with the credibility of witnesses or the weight of their testimony, and the trier of facts, not the court of appellate review, has the responsibility of determining what testimony should be believed.

10. Rescission is an equitable remedy designed to afford relief from contracts entered into through mistake, fraud or duress. Ordinarily, the nature of relief asked in such cases must be such as to place the parties in their original situation. Where one with knowledge of the facts entitling him to rescission of the contract, afterwards without duress ratifies it, he is not entitled to have it cancelled. Ordinarily an express ratification is not necessary in order to defeat the remedy of rescission. Acts or conduct inconsistent with an intention to avoid it, or in recognition of the contract, have the effect of an election to affirm it.

11. A person fraudulently induced to buy and pay for property delivered to him has two remedies, one legal and one equitable. He may affirm the contract and sue for damages, or he may disaffirm and sue for rescission. Because the remedy by way of damages rests on affirmance, and the remedy by way of rescission rests upon disaffirmance, the two are inconsistent and incompatible. Resort to one excludes resort to the other, and in choosing a remedy it is the first decisive step which counts.

12. Punitive damages are permitted whenever the elements of fraud, malice, gross negligence or oppression mingle in the controversy. Such damages are allowed not because of any special merit in the injured party's case, but are imposed by way of punishing the wrongdoer for malicious, vindictive or a willful and wanton invasion of the injured party's rights, the purpose being to restrain and deter others from the commission of like wrongs.

13. Punitive damages are not an automatic, mandatory result even when recklessness is shown, but are awarded in the discretion of the trial court.

14. In a civil action seeking rescission of a contract based on fraudulent misrepresentations, the record is examined and it is Held, the trial court did not err: 1) in finding defendant Miller guilty of making fraudulent misrepresentations; 2) in granting summary judgment as to defendants Robert Legere and Legere Real Estate & Auction Co., Inc.; 3) in denying plaintiffs' request for punitive damages.

R. H. Calihan, Jr., of Calihan, Green, Calihan & Loyd, Garden City, argued the cause and was on the brief for appellants.

Norbert R. Dreiling, of Dreiling, Bieker & Kelley, Hays, argued the cause and was on the brief for cross-appellees.

Lelyn J. Braun, of Braun & Nyswonger, Garden City, argued the cause and was on the brief for appellees and cross-appellants.

HERD, Justice:

This is an action to rescind a contract for the purchase of real estate on the grounds of fraud and misrepresentation and to recover punitive damages. The defendants countersued to foreclose the purchase contract. The trial court rendered judgment for the plaintiffs. We affirm.

Carl and Cleo Nordstrom, plaintiffs entered into a contract with John Lee and Marilee Miller, defendants, for the purchase of 480 acres of farm land located two miles west and ten miles north of Holcomb in Finney County. The land was described as follows: the Southeast Quarter (SE/4) of Section Three (3), the East Half (E/2) of Section Ten (10), all in Township Twenty-two (22) South, Range Thirty-four (34), West of the 6th P.M., Finney County, Kansas. The purchase price was $480,000.00. Defendants first offered their land for sale during February, 1975. They placed advertisements in the Garden City Telegram and The High Plains Journal, newspapers of wide circulation in the area. Both advertisements represented the land to be irrigated with 14,000 feet of underground pipe. Later, defendants listed the land for sale with Legere Real Estate & Auction Co., Inc. of Hays. Legere described the irrigation potential of the land in its brochure as follows:

"Cropland : There are 480 acres of good irrigated land. Out of this, there is approximately 130 acres of wheat, approximately 50 acres of alfalfa, approximately 50 acres of summer fallow. Going to plant 170 acres to milo and 50 acres to corn.

"Soil Type : This soil is a Richfield silt loam and Ulysses silt loam. Very deep, nearly level, upland soils with medium and moderately fine textured, surfaces and subsoils. These soils are well drained; permeability is moderate to moderately slow. They have few limitations that restrict their use.

"Irrigation : The well located in the Southeast Quarter (SE/4) of Section Three (3), the north well, is 120 ft. deep and pumps 800 G.P.M. This well was drilled in 1971. It has a Layne & Bowler pump on it. The south well located in the East Half (E/2) of Section Ten (10) is 130 ft. deep and pumps 1500 G.P.M. This well was drilled in 1969 and has a Hydro pump. All irrigation motors are on natural gas. One of these is a 428 Ford motor and one is a 262 Allis Chalmers. U.S. gear heads on both wells and the pumps are 8 . High Plains Drilling and Supply of Garden City drilled both of the wells. There is 14000 feet of underground 10 PVC pipe. All of this is layed so as to connect both wells, if need be. "All of the land is watered from the west side and the water runs to the east. Good slope to the land and it takes approximately 12 hours per run. A run is 120 ft. wide and 1/2 mile long."

Its newspaper ad read as follows:

"480 acres of Prime Developed irrigated land located northwest of Garden City in Finney County, Kansas. Two irrigation wells and approximately 14,000 ft. of underground pipe. This land is flood irrigated and all runs are one-half mile long. New Brick 3 bedroom home, 2,000 sq. ft. with double car garage, also 50' X 70' Machine Shed, new.

POSSESSION: To be worked out between buyer and seller.

TERMS: Excellent on this Prime Irrigated Farm.

"THIS IS ONE THAT YOU HAVE TO SEE TO BELIEVE."

Robert Legere, real estate broker with the company, contacted the plaintiffs and showed Carl Nordstrom the farm on November 23, 1975. Nordstrom, in the company of defendants, inspected the buildings, the land and the two irrigation wells. Plaintiffs again viewed the farm on December 15, 1975 with their family, and paid Legere a $15,000.00 downpayment on the land. Thereafter, plaintiffs sold their home and store in Colorado and moved their belongings and a few pieces of farm machinery to the Millers' farm. The transaction was closed on March 2, 1976, by the signing of a formal contract and the payment of an additional $75,000.00.

Plaintiff purchased necessary farm machinery and some gated pipe for use in the irrigation operations on the farm. On March 7, 1976, defendant assisted plaintiff in starting the two pump engines to commence irrigating the land. During the spring of 1976, Nordstrom watered 120 acres of wheat, 50 acres of alfalfa on three different occasions, pre-irrigated 200 acres of milo, and on two later occasions irrigated the growing milo. Norstrom harvested 6,000 bushels of milo, 5,640 bushels of wheat and 100 tons of alfalfa hay from the farm during 1976.

During the second application of irrigation water to the milo in the summer of 1976, one of the two irrigation wells went dry. Upon further investigation, Nordstrom found there was insufficient...