Gue v. Mitchell

Marbury, J., delivered the opinion of the Court. On November 14, 1963, James L. Gue and Willie B. Gue, his wife, appellants, filed a bill of complaint against Roy C. Mitchell and Mildred E. Mitchell, his wife, appellees, for injunctive relief, rescission of a contract of sale of a dairy farm, and an accounting and damages in the Circuit Court for Kent County. The appellants alleged that misrepresentation was practiced upon them, that they were entitled to have the contract rescinded, the monies returned and appropriate damages awarded for the misrepresentation. On September 21, 1964, after a lengthy trial Judge Rasin filed a memorandum opinion in which he found that no fraud or other unfair and unconscionable methods were proven to have been used in order to induce the Gues to purchase the Mitchell dairy farm, and ordered the bill of complaint dismissed, with costs.

The sole question involved in this appeal is whether the lower court was correct in its action. Up until the summer of 1960 James Gue was a successful dairy farmer, renting a farm located in Montgomery and Howard Counties on which he maintained a herd of one hundred dairy cattle, together with milking and other equipment. As of ³⁵⁹ June 1960 Gue’s cattle and equipment were worth approximately $60,000 and were subject to a chattel mortgage of some $13,000. At about this time Mr. Gue became interested in purchasing a farm in Kent County to which he could transfer his dairy operation.

He contracted George E. Scheeler, a Kent County realtor, who showed Gue several farms including one owned by the Mitchells. This farm was located near Kennedy-ville and comprised some three hundred and sixty-one acres, for which the owners were asking $125,000. Mr. Gue made an initial offer which was rejected. Subsequent negotiations, however, resulted in a written contract for the sale of the farm.

This contract was drawn by Mr. William Dunbar Gould, the Mitchells’ attorney, and was signed by the Mitchells and Gues in Mr. Gould’s office on August 8, 1960. The contract provided, in pertinent part, for a purchase price of $114,000 to the Mitchells, with $5,000 being paid at the time of the signing of the contract, $14,000 to be paid at the time of settlement, and the balance to be paid by way of a purchase money mortgage from the buyers to the sellers, in the amount of $95,000. Gue also agreed to pay Scheeler’s commission of $6,000. Settlement date under this contract was to be September 15, 1960.

At the time the contract was signed, Mr. Gould, representing the Mitchells, was the only attorney present. Prior to the settlement date difficulties developed for Gue because the creditors who held the chattel mortgages on his cattle and dairy equipment were not inclined to allow him to move his mortgaged property to Kent County until the chattel mortgages were paid. Adding to Gue’s difficulties was the fact that he did not have sufficient funds to make the promised down payment of $14,000. Gue made these problems known to Mitchell, and upon the suggestion of Mr. Scheeler, further negotiations were entered into and they resulted in Mr. Mitchell promising to finance the purchase of the farm by taking a chattel mortgage on Gue’s personal property in the amount of $22,300, $13,300 of which was to be used to pay off the chattel mortgages and $9,000 to be used toward the down payment under a second contract to be subsequently executed.

Mr. Gould incorporated these provisions concerning the chattel mortgages into a new contract which also contained the same provisions ³⁶⁰ as the August 8 contract. September 23, 1960, at Mr. Gould’s office was agreed upon as the time and place for the execution of the new contract. The appellants claim that this contract, like the contract of August 8, 1960, was induced by fraud, inasmuch as the signing of these contracts was based upon Mr. Mitchell’s unfulfilled promise to finance Gue’s building of a milking parlor. While no mention is made of such a promise in either of the contracts, it was allegedly orally made by Mr. Mitchell prior to the execution of the August 8 contract, and reiterated in front of Mrs. Gue after it was discovered that the Gues would not be able to go through with the original contract.

All parties agree that at the time of the sale, the farm buildings did not meet federal and state health requirements applicable to dairy farms, and that eventual compliance with such standards was necessary in order for Gue to sell milk for public consumption. On September 23, 1960, the new settlement date, all parties appeared at the appointed place, but on this occasion the Gues were accompanied by their lawyer, Mr. Calvin Sanders, of Rockville, Maryland. According to Mr. Gue’s testimony, Sanders was advised of Mr. Mitchell’s oral promise prior to the execution of the contract dated August 8. After Mr. Gould had read aloud the new contract to the assembled parties, the Gues and Sanders retired to a separate room to discuss the terms of the contract.

Having been assured by their attorney that “everything was all right,” the Gues proceeded to sign the contract. Following the settlement, Gue made monthly payments of $801.70 on the farm mortgage and $431.33 on the chattel mortgage. The sole source of income out of which the monthly payments were made was from the sale of milk by the Gues to the Greenhill Dairy of Wilmington, Delaware, which paid them $5 a hundredweight for the milk. The dairy, however, gave the Gues a total of nine months in which to erect a suitable milking parlor which would comply with the applicable federal and state health regulations.

In June of 1961 Greenhill Dairy finally stopped buying milk from Gue because of the latter’s failure to build a milking parlor. Gue was then forced to sell his milk to the Ranier Dairy of ³⁶¹ Bridgeton, New Jersey, which agreed to buy the milk albeit at a lower ($4 a hundredweight) price and on condition that a suitable milking parlor be erected immediately. As a result of the lower price he was receiving for milk, Gue’s monthly payments to Mitchell became irregular and inadequate. By December 1962 Gue’s troubles were at their apex: Mitchell was threatening to foreclose his mortgages because Gue was behind in his payments, Ranier Dairy had given advance notice that it would discontinue purchase of milk unless proper milking facilities were erected immediately, Gue had exhausted all possibilities of obtaining financing for the milking parlor, and a prospective purchaser, Charles Nau of Harford County, had informed him that he would be unable to make an immediate purchase of the property.

Finally, on December 28, 1962, the Gues and the Mitchells executed a release agreement which was prepared by Mr. Gould following Mitchell’s instructions, whereby each party released the other from any further obligation; the Mitchells repossessed the farm and retained all the money received from the Gues, pursuant to the contract of sale of September 23, 1960; and the Gues were relieved of their obligations under that contract, with the exception of the chattel mortgage on the personal property of the Gues. Before they signed the release the Gues, who were not represented by an attorney, heard Mr. Gould read the agreement and requested that one slight change be made. The requested change was made and the release was executed by all parties, part of the agreement being that the Gues were to be permitted to remain on the farm until March 31, 1963, at a rental of $461.70 per month. During the trial Mr. Mitchell emphatically denied that he had made any promises regarding the proposed milking parlor prior to the September 23, 1960, signing of the contract.

He stated that in May or June 1961 he did promise to help the Gues obtain financing but that he never promised to finance the milking parlor personally. In an effort to fulfill his promise to help the Gues find financing he testified that he contacted several lending institutions, but