Milkton v. French

Paeke, J., delivered the opinion of the Court. The controversy on this appeal grows out of the sale on January 19th, 1926, by William J. T. French and Irene L. French, his wife, the defendants, to Alexander C. G. Milkton, plaintiff, of an improved lot of land in Baltimore City. The contract price was $8,000, and $300 was paid on the day of the sale, which entitled the plaintiff to immediate possession of the property. The residue of $7,700 was to- be paid in weekly installments of $15, accounting from February 1st, 1926, and applied to the payment of taxes, water rent, and fire insurance, and then to the interest, and next on account of the purchase price, until such payments on the purchase money aggregated $1,000, when the defendants were to convey the property to the plaintiff by a good and marketable fee simple title-, subject to a first mortgage of not more than $5,000, and a second mortgage for the residue of the debt, with -a. provision that the plaintiff continue said weekly pay- ¹²⁸ merits of $15 to cover all interest and expenses, and the surplus to be applied on the principal.

The amount secured by the second mortgage was. to become due and payable three years after its date. The agreement provided that the plaintiff should be permitted to occupy the premises until default be made in the payment and continue for a period of four weeks, when the plaintiff agreed to surrender peacefully the premises; and that all payments on account of the purchase price and expenses should belong absolutely to the defendants, and be regarded as payments for the use and occupancy of the property, and as liquidated damages for its depreciation. It was further covenanted that, upon the determination of the plaintiff’s right to- occupy the premises, the defendants should be entitled to- all the rights and remedies given by the local law of Baltimore City to landlords against tenants holding over. Rogers v. Dorrance, 140 Md. 419, 422 .

It should be noted that the contract, which was under seal, contained no covenant whatsoever with respect to the quality or condition of the premises sold. Upon the signing of the contract of sale, the purchaser received a key to the bungalow, and found some visible minor defects, which the defendants, after delay, corrected about the middle of June, 1926, when the plaintiff moved into the house. He was married in July, and returned with his bride in August, and occupied the premises until March 9th, 1927, when he left. He paid the weekly installment of $15 from February 1st, 1926, until March 15th, 1927, when all payments stopped. ' After he had failed to pay for more than four weeks, the defendants re-entered, and, after doing some repainting and building a garage, sold the property, on July 1st, 1927, for $7,000.

The defendants assert that they took possession according to. the terms of the contract, after the plaintiff had defaulted in the weekly payments, and that they are entitled to' retain the payments for the use and occupancy of the property and as liquidated damages for its depreciation, as is explicitly covenanted by the plaintiff. The plaintiff admits his abandonment of the premises and failure ¹²⁹ to pay the weekly sum after March 15th, and justifies his acts upon the theory that it was his right to' rescind the contract because of alleged fraudulent misrepresentations on the part of the defendants that induced him to purchase the property. The second amended bill of complaint prays specifically for the rescission and cancellation of the contract, an accounting to he had between the parties in respect to' the several matters growing out of the contract; an injunction to prevent the defendants from asserting a forfeiture of the sums paid by the plaintiff, or from bringing any action to enforce the contract; and the awarding and enforcing a lien on the property to the extent of any sum which the court, on the accounting, may find to be due from the defendants to the plaintiff. , The alleged misrepresentations, which must he clearly established before the plaintiff will he entitled to relief, are either express or implied. 1. Taking up the testimony offered in support of the representations in the first division, it will appear that the defendants were developing and improving a parcel of land, and had placed their houses with a real estate agent for sale.

The plaintiff was looking for a home and called on the agent, who took him and his betrothed to see the property. The party entered the house, which was of the bungalow type, and looked at the first and second floors and the basement, taking about ten minutes. While there the plaintiff asked the agent “how the construction was, whether it was substantial, any leaks in the basement, or anything like that and how the roof would be.” He said, “perfect, cannot be any better, my boss works fine, does the best work can be done.” In reply to a question about the condition of the basement with respect to moisture, the reply was: “Do not be" afraid, a good floor. We sold all the rest of the houses and no complaint of any moisture ox water or anything like that.” Another inquiry brought the answer that the building was “perfectly well constructed.” The present wife of the plaintiff said to the agent: “I want very much assurance on the basement and ¹³⁰ the roof because I hear so many complaints here in Baltimore about the damp cellars and leaking roofs.

I want to be perfectly sure.” The agent responded: “Madam, be perfectly sure there is nothing the matter.” The next day, at the plaintiff’s request, the agent took the blank contract of sale to the plaintiff in order to let him examine it, but the plaintiff did not sign. He testified: “I said I want a little bit more assurance on this particular fact, well constructed. I want to be perfectly sure that the construction is fight. He said, ‘we will go down to the lawyer’s office and have that fixed up right away.’ ” The plaintiff and the agent went to the office of the attorney for the owners and submitted the request.

The attorney was unwilling to incorporate the desired covenant in the prepared contract, but called French by telephone to inquire if he would be willing to put the proposed terms in the contract, and the agent informed him in the presence of the attorney that French refused to give any assurance of heating the house to 70 degrees, but the purchaser “was perfectly safe on the concrete, roof and everything else of the construction because” French “had built it himself.” ' The plaintiff also testified that the attorney “wanted me to have a perfect assurance that it was fine and in perfect shape, and not put it in the contract, and we discussed about. I said: ‘What do you want me to do, do you want me to accept your verbal assurance that everything is honest?’ He said, ‘You will never regret it,’ and I said ‘All right.’ ” The real estate agent is dead, and the attorney, who also conducted the defense, did not testify. Plaintiff’s testimony of what occurred between him and the agent at the first meetihg is corroborated by the plaintiff’s wife, who was present during that conversation. The defendant, William J. T. French, testified that the real estate man was the agent of the defendants for the sale of the property, and that the attorney had no authority to make any representations in reference to the property.

This defendant further swore that he had been called by the attorney and asked if he would agree to the insertion of certain representations in the con ¹³¹ tract of sale, and that he had declined. The attorney for the defendants, who was trying the case, did not testify to what he had said to plaintiff, and this leaves wholly uncontradieted the evidence of the plaintiff with respect to what the attorney advised him was the owner’s statement by telephone. Under the circumstances, the defendants were bound by what the atttorney reported, as he was their agent for that purpose. In the absence of his testimony, the court cannot find the representations to have been other than the plaintiff testified. 2 Mechem on Agency (2nd Ed.), sec. 1981.

It is a fundamental condition for the right to rescind a contract on the ground of misrepresentation that the party aggrieved relied upon the misrepresentation, which must have been in respect of a material matter. Whatever may have been the scope of the real estate agent’s authority in making, the sale, the purchaser was not satisfied with the statements made by him, nor did he rely upon them in making the purchase. He demanded the blank contract of sale for his information and consideration. It was given him, and he informed the agent that the contract did not meet with his .approval, as he wanted an assurance that the house was well constructed.

At the agent’s suggestion, the two went to the lawyer, who declined to incorporate the desired covenants, and called French to know if he would consent. According to French’s testimony, he declined, and the plaintiff admits he was informed by the attorney, but asserts that the attorney stated to him that French had said over the telephone the purchaser “was perfectly safe on the concrete, roof and everything’ else of the construction because he built it himself.” In the natural sequence of the transaction, it was then that the plaintiff said to the attorney: “ ‘What do you want me to do, do you want me to accept your verbal assurance that everything is honest?’ He said, ‘You will never regret it,’ and I said, ‘all right.’ ” There is nothing in the ordinary relation of attorney and client which would induce the belief that the attorney would have.any authority to make for his client representations as to the condition of the premises about to be sold. In fact, ¹³² the refusal of the attorney to incorporate the desired terms in the prepared contract and his request of the seller for authority negative any such inference. And the plaintiff testified that he was finally induced to sign by the attorney’s reply, “You will never regret it,” which, when taken in connection with the plaintiff’s precedent question, was an expression of belief or opinion and not a representation.

Even if it be granted that the action of the plaintiff was also motivated by the report made by the attorney that the purchaser “was perfectly safe on the concrete, roof and everything else of the construction, because he built it himself,” nevertheless this did not amount to a misrepresentation. In the first place, the use of the term “perfectly safe” in connection with every detail of construction was so extravagant in scope and measure, and so indefinite and elusive in meaning, that the statement would fall within the category of a puff instead of a representation, and the plaintiff, who was an architect of experience, could not have been misled or influenced. Nobody places trust in a representation based upon self-praise so general and comprehensive as to cover every detail of a subject matter, which common experience has established never attains that degree of perfection in all its numerous parts. The exaggeration of the statement is so plain that it can not be supposed to