Ryan v. Brady

Moore, J., delivered the opinion of the Court. This controvery arose out of the purchase for $240,000 of a small estate on the waters of Peachblossom Creek, in Talbot County. It is undisputed that the selling broker mistakenly described the western boundary of the property to the appellant purchaser, William A. K. Ryan, prior to the execution of the sales contract. 1 A little more than one year after the sale, Mr. Ryan brought suit for rescission of the deed and return of the purchase price, or, in the alternative, money damages. Joined as parties defendant were the vendors, John J. Brady and his wife, Carlyle; the selling broker, Jonathan S. Wilford, Jr., and his employer, The Latham Company; and E. Holmes Hawkins, Jr., and his firm, Walsh and Benson, Inc., with whom the vendors had listed the property on an exclusive basis.

The Bradys filed third party claims against the individual and corporate realtors and the latter filed cross-claims against each other. The gravamen of appellant’s bill of complaint was that by virtue of the misrepresentation, he understood that he would receive .986 of an acre more than was actually conveyed to him, and that had he known the true location of the westerly boundary, he would not have purchased the property. 2 The chancellor, after receiving extensive testimony and numerous exhibits, filed a comprehensive written opinion in which he found that Mr. Ryan had, by his actions, waived his right to rescission. Damages were also denied, the court sustaining the defense of imputed knowledge of the actual boundaries prior to the execution by Ryan of the sales agreement which had been prepared by his ⁴⁴ own counsel. As an additional ground for the denial of compensation, the court found appellant’s proof of damages wholly inadequate.

For the reasons stated below, we affirm. I The property involved contained between four and five acres of land, improved by a ten-year-old, three and one-half bath, five-bedroom house, with approximately 350 feet of frontage on Peachblossom Creek. It was originally listed for sale at $285,000. In late 1972, appellant contracted to sell his own home and acreage located on Leeds Creek in Talbot County for the sum of $425,000, with transfer of possession to occur on or about June 15, 1973.

He then began a search for a new residence, preferably in Talbot County, and during the early part of 1973 he was shown a number of properties by appellee, Jonathan S. Wilford, Jr. The latter was a broker with The Latham Company, the agency through which the appellant had sold his property on Leeds Creek. In early March 1973, the appellee, John J. Brady, gave an exclusive listing to the realty firm of Walsh and Benson, Inc. for the sale of approximately 50 acres owned by himself and his wife located on Plaindealing Creek. At that time, apparently upon impulse, he added to the listing the words, “Also house on Peachblossom Creek, 5 BRMS, 3-1/2 BATHS, etc. $285,000 W&B excl.” Broker Wilfordi subsequently obtained permission from E. Holmes Hawkins, Jr., a broker with Walsh and Benson and a friend of the Bradys, to show Mr. Ryan the Brady property. First, however, Wilford and Hawkins met at the property in order that Wilford could become familiar with the land and improvements.

According to Wilford, Hawkins pointed out the boundaries of the property at that time. Hawkins described the western boundary as extending, in a straight line, from an iron pipe located on the northern boundary of a private road, at the north end of the property, southward to a locust post at the southwest terminus near the banks of Peachblossom Creek. When Wilford subsequently showed the property to ⁴⁵ appellant Ryan, he related to Ryan the boundary information which he had received from Hawkins. Ryan testified, however, that Wilford told him that the western boundary ran in a straight line from a stake lying somewhere between a stump and an oak tree along the southerly edge of the private road to the southwest terminus post.

The stake, knowledge of the existence of which was denied by all other witnesses, including Brady’s neighbor, Charles Berry, was estimated at trial by appellant’s surveyor to be 137 feet west of the true location of the northwest corner of the Brady parcel, as shown by the 1957 recorded plat of survey. Although Mr. Ryan was dissatisfied with the location of the kitchen in the house and also desired more acreage, he nevertheless decided to purchase the property for $240,000, $45,000 less than the asking price. Upon the acceptance by Brady of his verbal offer, communicated to Brady by Wilford, Ryan instructed his attorney, Philip E. Nuttle, Jr. of the law firm of Nuttle and Hall, to prepare the agreement of sale. As executed, on May 7, 1973, the agreement contained the following description: “BEING the same lands or premises shown on a plat of Kastenhuber and Anderson, Surveyors, entitled ‘MAP SHOWING A PORTION OF “OAKLANDS” SURVEYED FOR DWIGHT H. LONGLEY, TALBOT COUNTY, MARYLAND, Scale 100 feet to 1 inch, March, 1957’ which plat is recorded among the Plat Records of Talbot County in Liber No. 11, folio 28.

AND being the same lands which were conveyed unto John J. Brady and Carlyle P. Brady, his wife, both of Talbot County, Maryland by deed dated December 20, 1961 and recorded among the Land Records of Talbot County in Liber 375, folio 341, and subject to the conditions and restrictions contained therein.” Settlement under the contract took place on June 20,1973 at the offices of the attorneys, none of the principals being ⁴⁶ present. The deed, executed by the Bradys on June 15, 1973, was also prepared by appellant’s attorneys and contained a metes and bounds description, and a specific reference to the plat of survey specified in the agreement of sale. The trial testimony discloses that the actual drafting of the sales agreement and the deed was handled by John F. Hall, Esq., Mr. Nuttle’s partner. Mr. Hall conceded that he must have seen a copy of the survey before the sales agreement was executed.

Shortly after Mr. Ryan took possession of the Brady property, in the latter part of July, 1973, he was mowing the grass along what he believed to be the westerly boundary of his property. His neighbor to the west, Charles H. Berry, approached him and good-naturedly thanked him for mowing the Berry property. A friendly conversation ensued concerning the location of the dividing line between the lots of the two neighbors. One or two days thereafter, Berry delivered to Ryan a copy of the plat of the Berry property and they attempted to locate the four monuments designating the eastern boundary of the Berry property (the same being the western boundary of the Ryan property), but were able to locate only the locust post marking the southeast extremity, and a concrete marker at the northeast corner.

Neither Berry nor Ryan could ascertain with precision the location of their common boundary. Mr. Ryan thereafter went on vacation in South Carolina and had no further discussions on the subject with Mr. Berry. Neither, it appears, did Ryan communicate with Mr. Brady nor with his own counsel. In September 1973, at Berry’s request, appellee Brady assisted his former neighbor Berry in an endeavor to discover the west boundary markers of the Ryan property.

They found the first and fourth and although they were unable to locate markers two and three, they drove two stakes into the ground at points which they believed represented the dividing line between the two properties. According to Berry, the two stakes were clearly visible from the Ryan home. Things remained dormant until late March 1974, when ⁴⁷ Ryan received the results of a survey of his property following the execution by him, on March 16, 1974, of a contract for the construction of a swimming pool. The survey was ordered by him to assure the pool’s compliance with zoning setback requirements and also to ascertain the correct boundary lines of the property.

Ralph A. Porter of Trappe, Maryland, who performed the survey, confirmed that the western boundary was as delineated on Mr. Berry’s plat and, perhaps more significantly, that it precisely coincided with the recorded plat of March 1957, referred to in the agreement of sale and the deed between appellee Brady and appellant Ryan. Indeed, Mr. Porter was able to discover all but one of the four markers on the western boundary of the Ryan property. 3 Mr. Porter testified that the acreage of the parcel was 4.270 acres and that the quantity of land between the western line, as Ryan thought it to be, and the actual location of the westerly line was 0.986 acres. The distance from the side door of the Ryan house to the actual western boundary line was 53.39 feet, whereas the distance to Mr. Ryan’s imaginary western boundary line was 180 feet. The witness was not asked if he had determined the difference between the acreage conveyed and that which would have been conveyed had the western boundary been as described to Ryan by Wilford, according to Wilford’s testimony.

The chancellor in the course of his opinion stated, however, that this difference was four tenths of an acre. 4 According to Ryan, he was outraged when he received the results of the survey on or about March 27, 1974, and immediately contacted Wilford by telephone. Wilford, in turn, contacted Hawkins and both of them expressed surprise about the discrepancy. James C. Latham, president ⁴⁸ of The Latham Company, appellee, was also summoned by Mr. Ryan, and Ryan informed him that the matter should be adjusted “amicably.” There was no meeting between Ryan and Brady. No solution was reached and suit was filed by Ryan on May 30,1974.

He had proceeded, however, with the construction of the swimming pool which was completed in early June, 1974, at a cost of $7,018. At the trial, appellant’s case was presented through his own testimony, that of Mr. Porter, the surveyor, and Frank S. Dudley, Jr., a qualified real estate appraiser. With respect to the misrepresentation of the western boundary, Mr. Ryan placed the northwest terminus at the point to which we have already referred and which is shown on the plat attached to this opinion. He also stated his understanding, obtained from Wilford, that the boundary line then ran southward in a straight line to a locust post at the southwest terminus. 5 Wilford emphatically denied that he ever represented to Ryan that the northwest corner of the property was located at the point claimed by Ryan.

(The court in its findings concluded that Ryan’s recollection of what Wilford told him concerning the location of the westerly line was not accurate and adopted Wilford’s version.) The real estate appraiser, Mr. Dudley, testified that the value of the .986 acres, based on Ryan’s version of the misrepresentation, was $20,730 upon an average value of $21,034 per acre. In addition, he assessed a ten per cent loss factor because the .986 of an acre was “crucial to the privacy of the property,” which amounted to $21,927. Mr. Dudley’s estimated total damages were rounded to $42,500. In his memorandum opinion the chancellor found, inter alia: (1) at no time did Mr. or Mrs. Brady make any representation to any person concerning the location or length of the boundary lines of the property or quantity of land contained within them; (2) that prior to the acquisition of the property, Ryan never discussed with anyone other than Wilford the boundary lines of the property; (3) Wilford ⁴⁹ freely admitted that he unintentionally, and through mistake of fact, misrepresented the location of the northwest marker and this misrepresentation was “significant and material;” (4) as for a conflict in the testimony of Wilford and Hawkins — the latter having denied ever discussing the location of the westerly boundary line with Wilford or anyone else prior to the passage of title to Ryan — the court concluded that Wilford’s testimony concerning the extent of the misrepresentation and his reliance upon Hawkins was more credible; and (5) there was no evidence of fraudulent misconduct on the part of any of the individuals involved. “This is simply a case of negligent misrepresentation originating with Hawkins and passed on to Ryan by Wilford, who, we believe, under all the circumstances, had a right to rely on it as being true and accurate.” Upon a careful review of the entire record we find that the aforegoing conclusions are amply supported.

II As previously indicated, we also conclude that the chancellor’s findings that appellant was disentitled to the relief of rescission, or, in the alternative, money damages, was without error. Rescission of a contract is the abrogation or unmaking of the agreement and the placing of the parties to it in statu quo. It is well established in Maryland that to be entitled to this somewhat extraordinary relief there must be proof of justifiable reliance on a material misrepresentation. Chesapeake Homes, Inc. v. McGrath, 249 Md. 480, 488 , 240 A. 2d 245, 249 (1968).

Maryland law also recognizes that an innocent misrepresentation may be sufficient to warrant rescission. The Glendale Corporation v. Crawford, 207 Md. 148, 158 , 114 A. 2d 33, 38 (1955); Clark v. Kirsner, 196 Md. 52, 56 , 74 A. 2d 830, 832 (1950). With respect to contracts for the purchase and sale of realty, it is clear that any misdescription of the estate, interest or extent of the property, in a material and substantial aspect, is sufficient to avoid the contract, but the plaintiff must show that he ⁵⁰ purchased the property without knowledge of the true state of the land, and that he suffered an injury or loss. Chesapeake Homes, Inc., supra, 249 Md. at 488 , 240 A. 2d at 249 .

The Glendale Corporation, supra, 207 Md. at 158 , 114 A. 2d at 38 . It is also fundamental law that the right to rescission is not unqualified. The right of the purchaser to rescind a contract for the sale of realty must be exercised promptly or within a reasonable time after the discovery of the facts upon which the right is invoked. Wolin v. Zenith Homes, Inc., 219 Md. 242, 250 , 146 A. 2d 197, 202 (1959).

As the Supreme Court stated in Grymes v. Sanders, 93 U. S. 55, 62 (1876), “Delay and vacillation are fatal. . . .” The Court of Appeals quoted this statement in Latrobe v. Dietrich, 114 Md. 8, 21 , 78 A. 983, 988 (1910), wherein the observation of Judge Alvey in the earlier case of Foley v. Crow, 37 Md. 51, 62 (1872) was also set forth: “It is well settled that applications for rescission must be made without delay, and that the party seeking to rescind must come to his election as soon as the cause for rescission is discovered, so that the parties to the contract may be placed as nearly in statu quo as possible. This requirement is founded upon an obvious principle of justice.” 114 Md. at 21 , 78 A. at 988 . The right to rescind such an agreement after discovery of the facts warranting the exercise of such right may be waived for failure to act within a reasonable time. As Judge Horney stated for the Court of Appeals in Wolin , the plaintiff is “put to a prompt election to rescind the contract or to ratify it and claim damages.” (Citations omitted.) 219 Md. at 250 , 146 A. 2d at 202 .

Again, once the election is made, it is forever determined. In Telma v. Gingell, 157 Md. 411 , 146 A. 221 (1929), the Court declared: “The right which accrued to the grantee upon the discovery of the real facts was a right of choice or election only. This right when exercised is exhausted, and there is no locus poenitentiae; and, ⁵¹ consequently, if the grantee elects to affirm or to repudiate the conveyance, he can never after repudiate what he has once affirmed or affirm what he has previously disaffirmed.” (Citations omitted.) 157 Md. at 415 . Or, as the Court expressed it in Wolin, supra, 219 Md. at 250-51 , 146 A. 2d at 202 : “Acts by a purchaser which constitute acquiescence, ratification or estoppel will preclude him from rescinding the contract.” Assuming for the moment that appellant Ryan had been in a position to invoke the right to rescission, it seems abundantly