Wallis v. Thomas
| Decision Date | 02 June 1981 |
| Docket Number | No. 17051,17051 |
| Citation | 632 P.2d 39 |
| Court | Utah Supreme Court |
| Parties | Walter WALLIS and Marlene Wallis, Plaintiffs and Respondents, v. H. E. THOMAS, International Equities, Inc., National Fund, Inc., and American Savings & Loan Association, Defendants and Appellants. Walter WALLIS and Marlene Wallis, Plaintiffs and Respondents, v. H. E. THOMAS, International Equities, Inc., National Fund, Inc., American Savings & Loan Association, and Glen Justice Mortgage Company, Inc., Defendants and Appellants. |
Wayne G. Petty, Salt Lake City, for defendants and appellants.
Ronald C. Barker, Salt Lake City, for plaintiffs and respondents.
Plaintiffs initiated this action alleging that defendants had committed fraud and violated the Utah Uniform Land Sales Practices Act, Section 57-11-1, et seq., Utah Code Annotated, 1953, as amended, which is hereafter referred to as the Act. The matter was tried by the court, and plaintiffs were awarded judgment, providing the relief set forth in Section 57-11-17(2). Defendants appeal therefrom. The judgment of the trial court is affirmed. All statutory references are to Utah Code Annotated, 1953, as amended, unless otherwise specified.
Plaintiffs were the owners of a home, located in Salt Lake County, upon which they had two loans secured by mortgages. Plaintiffs had suffered certain financial reverses and had been unable to remain current on their loans, under these circumstances they felt great apprehension of an impending foreclosure action. In an attempt to resolve their financial crisis and preserve their equity in the home, plaintiffs listed the property for sale.
In July 1975, when a sale of the home had not been effected, plaintiffs responded to a newspaper advertisement of defendant, International Equities, Inc., (I.E.I.), wherein it represented it was purchasing equities in homes for cash. Initially, the home was inspected by an employee of I.E.I., thereafter the President, H. E. Thomas, defendant, met with the plaintiffs. The parties negotiated and then entered into a transaction in which plaintiffs conveyed their property to I.E.I., which assumed their two mortgages, and I.E.I. conveyed to plaintiffs ten acres of land situated in Iron County.
The trial court found that defendant Thomas, both individually and acting on behalf of I.E.I., made certain representations concerning the real property in Iron County. Defendant, Thomas, represented that the property was located within a five-minute drive from Brian Head Ski Resort; that the property was contiguous to agricultural property under cultivation; that the property was worth $15,000 ($1500 per acre); that the property was within one mile of utilities, water, and other services; that a subdivision was being developed which would be the equivalent of the Bell Canyon Acres Development in Salt Lake County; that the streets in the subdivision were in and white fencing was being placed on lots in the subdivision. The trial court found each of these representations involved a material fact concerning the real property, and each was false.
In connection with the transaction defendant, Thomas, had a plat or subdivision map delivered to plaintiffs. Mr. Thomas showed plaintiffs the location of the two lots they were to receive in this subdivision of 192 lots. These two lots were identified by Mr. Thomas as being located on Cedar Avenue. Mr. Thomas further identified certain lots, which he represented were being reserved for commercial purposes, such as, shopping malls.
The trial court further found that defendant, I.E.I., had acquired 300 acres of property in Iron County in 1973. Defendant, I.E.I., had made four conveyances of a portion of this 300 acres between January 31, 1975 and July 8, 1975, the date of plaintiffs' conveyance. Defendant Thomas, was found to have directly controlled I.E.I. at all material times, and that he materially aided in the disposition of the Iron County property to plaintiffs.
The trial court specifically found that the 300-acre tract in Iron County owned by I.E.I. and shown to plaintiffs as a subdivision of 192 lots, was proposed by I.E.I. to be divided for the purpose of disposition into ten or more units. Defendants had not registered the subdivided lands pursuant to the Utah Uniform Land Sales Practices Act, Section 57-11-1, et seq. Defendants had not delivered a current public offering statement to plaintiffs as required under Section 57-11-5(2). Plaintiffs had not given defendants a receipt for the public offering statement as required by Section 57-11-5(3). Defendants were found to have participated in, promoted, and received the benefits resulting from the misrepresentations made to plaintiffs.
The trial court found that the consideration paid by plaintiffs for the subdivided land was the difference in the value of their home on July 8, 1975, and the amount of the indebtedness owed on the mortgages assumed by I.E.I. Such difference was $15,000, which was found to be the amount of plaintiffs' damages and for which defendants were jointly and severally liable. Plaintiffs were found to have incurred a reasonable attorney's fee in the sum of $5,000. Plaintiffs were awarded judgment for the damages, interest of 7% and attorney's fees as provided in Section 57-11-17(2).
The trial court ruled that the property conveyed by defendants to plaintiffs was a "subdivision" or "subdivided land" within the meaning of Section 57-11-2(6). The offer and conveyance of the property by defendants was in violation of Section 57-11-5, and defendants' untrue statements of material facts in disposing of the subdivided lands to plaintiffs violated Section 57-11-17(1)(b). The trial court did not make any findings in regard to the fraud action because of the disposition under the Act.
On appeal defendants concede the property in Iron County was not registered, and there was no current public offering statement delivered to plaintiffs, but they vigorously urge that the disposition to plaintiffs was not an interest in subdivided lands, a requisite to invoke the sanctions of the Act. According to defendants, there was preparation to subdivide the land, and the plat presented to plaintiffs was a preliminary subdivision map. However, after additional investigation of the expense involved, defendants claimed they abandoned their intent to subdivide sometime in February 1975, approximately five months prior to the conveyance to plaintiffs. The findings of the trial court indicate that defendants did not reveal their intent to abandon the subdivision project, and their offer and disposition to plaintiffs was of an interest in subdivided lands.
In construing this Act, the focus should be on its objective, i. e., the regulation of subdivided lands was designed for the prevention of fraud and sharp practices in a type of real estate transaction peculiarly open to such abuses. 1
Section 57-11-5 provides:
Section 57-11-2(6), provides:
" 'Subdivision' and 'subdivided lands' means any land which is divided or is proposed to be divided for the purpose of disposition into ten or more units .... " (Emphasis supplied.)
Section 57-11-21 provides:
"This act shall be so construed as to effectuate its general purpose to make uniform the law of those states which enact it."
The Utah Act with certain modifications follows the 1966 Uniform Land Sales Practices Act. Section 1(6) therein provides:
" 'Subdivision' and 'subdivided lands' mean any land which is divided or is proposed to be divided for the purpose of disposition into (25) or more lots, parcels, units or interests ... " 2
The comment following this subsection states:
3
The act clearly indicates that the land need not be presently subdivided but only be proposed to be divided for purpose of disposition to constitute "subdivided lands." The term "propose" connotes to form or declare a plan or intention. 4 The actions of defendants, in displaying the subdivision map and indicating the location of the streets, the lots which plaintiffs were offered, and the parcels which defendant...
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