Mayer v. Sumergrade , 111 Ohio App. 237 ( 1960 )

This appeal on questions of law presents the following claims of error:

1st. The trial court erred in overruling defendants' demurrer to plaintiff's petition.

2nd. The trial court erred in overruling defendants' motion for summary judgment based on the petition and answer.

3rd. The trial court erred in entering a decision for the plaintiff.

The action is one based on a contract to sell real estate, it being claimed that the provisions of such contract, as to the assumption of certain special assessments for water lines by the grantor, were breached and that the defendant is indebted to the plaintiff in the sum of such unpaid assessments. The provision of the contract under consideration was: "Seller specifically warrants there are no assessments nor easements on above property." The petition alleges that subsequent to the signing of the contract (in which such quoted provision was contained) for the sale of the property described therein, a warranty deed was signed by the sellers and delivered to and accepted and recorded by the buyer, whereby the property was conveyed to the plaintiff. There are no allegations as to the covenants of the deed dealing with "assessments or easements," the action being founded entirely on the contract. That the plaintiff accepted the deed cannot be disputed. It was filed for record by the escrow agent and title is now in the plaintiff, with no attempt or allegation seeking to set it aside.

The defendants demurred to the petition, alleging that it did not state a cause of action. The court overruled the demurrer and, after an unsuccessful attempt to secure a rehearing, the defendants filed an answer in which the grounds for the claim that the petition does not state a cause of action were alleged as a defense. The judgment was entered for the plaintiff after trial to the court.

This appeal, alleging the foregoing errors, is presented without the benefit of a bill of exceptions. We are, therefore, limited in considering the defendants' claims to the extent that they can be demonstrated on the face of the record.

An examination of the petition, giving it the benefit of the most favorable construction possible in plaintiff's favor, does not state a cause of action. The allegations show clearly that the agreement upon which the action is based was merged into the deed, which the plaintiff alleges she received and recorded. No reservations are pleaded. In the case of Brumbaugh v. Chapman,45 Ohio St. 368, 13 N.E. 584, the court said, in the first paragraph of the syllabus:

"1. A stipulation in a written agreement for the sale and conveyance of a certain tract of land, described as containing a designated number of acres at a given price per acre, is executed by the delivery of a deed from the vendor to the vendee, and its acceptance by the latter as in performance of the stipulation to sell and convey the land described in the agreement; and, in the absence of fraud or mistake, no recovery can thereafter be had upon it by the vendee of the vendor for a deficiency in the land conveyed; nor, upon the deed, unless it contains an express covenant as to the number of acres."

And on page 374, the court said:

"But (2) whatever may have been the rights of the vendee, under the agreement, for a deficiency in the land, he, as we think, has none now; for the reason, that, by the execution of the deed, the contract to sell and convey the land described in it, whether it was for a definite number of acres or not, was, so far as it embraced this particular stipulation, merged in the deed, and, to use the language of the books, became executed by it. Farmers' Mechanics' Bank v. Galbraith, 10 Pa. St., 490;Haggerty v. Fagan, 2 Pen. Watts, 533; Williams v. Hathaway, 19 Pick., 387; Kreiter v. Bomberger, 82 Pa. St., 59; Ketchum v.Stout, 20 Ohio, 453."

The rule as thus stated has not since been departed from nor modified in this state, and is supported by the overwhelming weight of authority. In the case of Dependabilt Homes. Inc., v.Grant Wayne Co., 169 Ohio St. 224, 158 N.E.2d 358, the court said in the syllabus:

"Where a contract for the sale of parcels of land contains after the word, ``Remarks,' the language inserted by the purchaser, ``Contingent — that all utilities are in and paid also contingent on F. H. A. approval. If improvements are necessary for such approval grantor to pay said improvements,' such provisions are of no effect if not incorporated in a deed which is subsequently accepted by the purchaser."

In 40 Ohio Jurisprudence, 1001, Vendor and Purchaser, Section 90, citing Ohio cases as authority, it is stated:

"* * * In Ohio, when a deed is delivered and accepted without qualification, the general rule is that the contract is merged in the deed; no cause of action upon the prior agreement then exists. The rights of the parties must be determined by the deed so given in execution of the prior agreement, unless the elements of fraud or mistake are involved, or perhaps, unless the deed was accepted under protest and with a reservation of the right to insist upon a strict adherence to the terms set forth in the prior agreement. The office of the deed is to execute the contract on the part of the vendor."

In 3 Williston on Contracts (Rev. Ed.), 2058, Section 723, the author states:

"* * * Whether the purchaser by accepting a deed conveying an inadequate title thereby assents to taking the deed as full satisfaction of the vendor's obligation is another matter; but unlike the rule in regard to personalty, there is here as a matter of law a discharge of the purchaser's rights in regard to the property which the deed purports to convey. The deed merges the contract and the purchaser has no redress except such as may be afforded under the covenants in the deed, unless fraud or mistake enables him to rescind the transfer or have the deed reformed. * * *"

In the case of Duncan v. McAdams, 222 Ark. 143,257 S.W.2d 568, 38 A. L. R. (2d), 1307, the second A. L. R. headnote reads:

"In the absence of mistake, misrepresentation, or fraud a contract for the conveyance of lands is deemed merged in a deed subsequently executed under the terms of the contract."

See, also, 38 A. L. R. (2d), 1315, Section 3 under the heading, "II. General Principles. A. Presumption that deed is final contract."

It is clear from the foregoing authorities that whatever action the plaintiff has must be upon the deed, and, if fraud or mistake has intervened, reformation must be sought as a prerequisite to the action pleaded by the plaintiff.

Even if the cases could be said to support the claim of the plaintiff that his action is on the contract because of mistake or fraud in not including the reservation of special assessments in the deed, such claim is not pleaded in the petition, nor by amendment after all the evidence was submitted on trial. (Section2309.58, Revised Code.)

The plaintiff's claim that the provisions of the contract dealing with special assessments are collateral and need not be incorporated in the deed is likewise without legal foundation. Provision for the apportionment of the liability of the vendor and vendee for taxes and special assessments is traditionally a necessary part of the covenants of a deed, and in this case, where covenants dealing with assessments in the contract are said to be inconsistent with the covenants of the deed dealing with that question, there can be no question about it. In the case ofDuncan v. McAdams, supra, the court said in its opinion, quoting from 55 American Jurisprudence, 756, Section 327:

"``In the absence of fraud or mistake, and in the absence of contractual provisions or agreements which are not intended to be merged in the deed, upon the acceptance of a deed tendered in performance of an agreement to convey, the written or oral agreement to convey is merged in the deed, the agreement to convey is discharged or is modified as indicated by the deed, the deed regulates the rights and liabilities of the parties * * *.'

"Again in 55 Am. Jur., 758, the rule is stated:

"``Although the lands embraced in the deed are not the identical lands described in the agreement, yet in the absence of evidence of mistake, misrepresentation, or fraud, if the purchaser accepts the conveyance, the agreement to convey is discharged.'"

The conclusion must be that the plaintiff's petition does not state a cause of action. This fact is determined by examining the allegations of the petition, for which determination a bill of exceptions is not necessary.

It seems to be claimed by the plaintiff that the defendants, having filed an answer and participated in the trial, waived the insufficiency of the allegations of the petition, and that if a bill of exceptions had been filed it would show that the evidence established the necessary facts to entitle the plaintiff to recover, whereby substantial justice has been done. Plaintiff also questions whether defendants' appeal is from a final order.

As to the last of these claims, the final order appealed from in this case was the judgment entered by the court upon the trial of the issues presented by the pleadings. The appeal being from the judgment is therefore based on a final order. The first of these claims, that the defendants did not rest their case on the claimed error presented by the court's ruling on the demurrer and that by pleading to the issues they waived the right thereafter to challenge such ruling, is not supported by the law. A defendant who at his first opportunity (or at any other time during trial) challenges the jurisdiction of a trial court by demurrer, based either on the claim that the court is without jurisdiction of the subject matter or that it is without jurisdiction because the petition does not state a cause of action, and where the court overrules such demurrer, does not waive either of such claims by then pleading to the issues seeking his just or legal rights against the claim by answer and trial of the alleged cause of action, particularly where, as here, the defendants, as a defense, continue to assert their claim that the petition does not state a cause of action.

In the case of Morgenstern v. Austin, 170 Ohio St. 113,162 N.E.2d 849, the court said, at page 114:

"The principal question raised by this appeal is whether the trial court erred in overruling defendant's motion for a directed verdict made at the close of all the evidence.

"This raises the question as to whether plaintiff alleges and proved a cause of action against defendant. Plaintiff contends that defendant waived any question as to the sufficiency of the petition by failing to demur thereto. In this she is in error. The question as to whether the petition states a cause of action is not waived by failure to demur thereto but may be raised at any time during the trial of the action. * * *"

In that case, the action was based solely on the ground of an attractive nuisance, which doctrine has been repudiated in Ohio. It was claimed, however, that the proof established trespass by the defendant, upon which grounds the plaintiff, without amending her petition, was allowed to recover. The Supreme Court, in reversing plaintiff's judgment, said on page 116:

"This section [referring to Section 2309.58, Revised Code], however, requires an amendment to the pleading upon which the party relies. It is not self-executing or a cure-all. If a party wishes to take advantage of it the burden is on him to so amend. Where a party pleads one cause of action but proves another, he must amend his pleading to conform to the proof, and, if he fails to so amend, there is a failure of proof and a verdict must be directed against him.

"Thus, in the present case, plaintiff pleads a cause of action based on attractive nuisance, a theory upon which she cannot recover in Ohio, while the proof, according to plaintiff, established trespass by the defendant. Since plaintiff failed to amend her pleading to conform to the proof, she has failed to establish grounds upon which she can recover, and it was the duty of the trial court on proper motion by the defendant to direct a verdict in his favor."

See, also, Gibson v. Summers Construction Co., 163 Ohio St. 220, 126 N.E.2d 326, and State, ex rel. Rhodes, Aud., v.Solether, Judge, 162 Ohio St. 559, 124 N.E.2d 411.

This principle of law is supported by the overwhelming weight of authority. To cite but a few of the many authorities, attention is called first to Davis, Admr., v. Rhodes,231 N.C. 71, 56 S.E.2d 43, where, in the third paragraph of the syllabus, the following is stated:

"Right to demur where the complaint contains a defective statement of a good cause of action is waived by filing answer, but demurrer to a statement of a defective cause of action is not waived by answer, but may be made at any time before final judgment."

The first clause of this paragraph would apply to the cases relied on by the plaintiff hereafter considered, while the second clause is a good statement of the law of this case.

In the case of Rivers v. Pastro, 11 Alaska 491, the first paragraph of the syllabus provides:

"A demurrer on the ground that the complaint does not state facts sufficient to constitute a cause of action is available at any time and is never waived."

In the case of Eklund v. Elwell, 116 Utah 521,211 P.2d 849, the third paragraph of the syllabus provides:

"A failure to allege a cause of action is an objection that may be raised at any time."

And in the case of Penaat v. Guasco, Admx., 84 Cal. App. 2d 445, 191 P.2d 564, the third paragraph of the syllabus provides:

"The failure of a complaint to state a cause of action may be raised at any time, even on appeal, because the question is jurisdictional."

The case of Bozzelli v. Industrial Commission, 122 Ohio St. 201,171 N.E. 108, is an appeal from the refusal of the Industrial Commission to permit the claimant to participate in the insurance fund, which decision was appealed to the Court of Common Pleas. Pending the appeal, the claimant died and the cause was revived in the name of his administratrix. Under the Workmen's Compensation Act, an administratrix of a deceased employee could not maintain an action to recover disability benefits. Under the Constitution and laws enacted pursuant thereto, compensation is payable to two classes: (1) The living employee and (2) his dependents after death. His estate has no interest therein. No objection was interposed before or during trial. The court held, in the fourth paragraph of the syllabus:

"Failure to object to a petition by demurrer, on the ground that it does not state facts showing a cause of action, does not waive the objection, which may be asserted at any stage of the case — by a motion for directed verdict or by a motion for a new trial containing an assignment that the verdict is contrary to law."

In 1 Gardner's Bates Ohio Civil Practice, 257, Section 9.15, it is said, under the title, "Failure to object by demurrer or answer waives defect; exceptions":

"If the defendant fails to object to the petition either by specific demurrer or by answer, on account of the defects which are given as grounds for specific demurrer, he waives them; but he does not thereby waive the grounds given for general demurrer, namely, that the court has no jurisdiction of the subject of the action or that the petition does not state facts which show a cause of action.

"If the court has not been empowered by law to entertain and decide an action involving the subject matter of a particular case, its judgment would, in general, be void. Likewise, if the petition does not state facts constituting a cause of action, no valid judgment could be rendered thereon. A petition which does not state facts constituting a cause of action is equivalent to no petition at all. The parties cannot, therefore, ordinarily waive either requirement."

This statement of the law is supported by the fourth paragraph of the syllabus of the case of Spoors v. Coen, 44 Ohio St. 497,9 N.E. 132, where it is said:

"The judgment of a court upon a subject of litigation within its jurisdiction, but not brought before it by any statement or claim of the parties, is null and void, and may be collaterally impeached."

The cases cited by the plaintiff are easily distinguished and are not authority in support of the law based on the undisputed facts of the case here presented. The first paragraph of the syllabus of the case of Dayton Ins. Co. v. Kelly, 24 Ohio St. 345, 15 Am. Rep., 612, provides:

"Where the defect in a petition to which a demurrer has been overruled consists in the omission to aver the performance of a condition precedent in the contract sued on, and it appears from the subsequent pleadings and record, that the defendant was not prejudiced thereby, the judgment will not be reversed."

In explanation of the above conclusion, the court says in its opinion, on page 357:

"* * * Now, we are all agreed that the defects in the petition, whatever they be, were supplied by averments in the answer and reply: so that, upon the whole record, we find that the defects in the petition did not affect any substantial right of the defendant below. Thus, if the plaintiff should have averred in the petition that a regular policy had not been issued, etc., the want of such averment was supplied by an allegation to that effect in the answer, which was not denied in the reply. And again: if the petition was defective in not averring the performance of conditions precedent, the defect was cured by the averment in the answer, that such conditions (naming them) had not been performed by the plaintiff, followed by averments in the reply, that they had been performed, or that the performance had been waived by the defendant. 8 Ohio St. 293. "

From these observations, it must be concluded that the court held that the shortcomings of the petition (which did not include the failure to state a cause of action) were supplied by the answer as admitted by the reply, so that, in taking the pleadings as a whole, a good cause of action was stated. If this is not so, then the case is in direct conflict with later pronouncements of the Supreme Court above cited on the legal effect of the complete failure of a petition to state facts sufficient to make out a good cause of action.

In the case of Yocum, Admr., v. Allen, 58 Ohio St. 280,50 N.E. 909, the court said, in the first paragraph of the syllabus:

"Where, in a cause pending in the Court of Common Pleas a demurrer to a petition has been overruled, and upon issues made by answer and reply, the case has been tried to a jury and a verdict and judgment for plaintiff rendered, this court will not reverse the judgment, even though satisfied that the demurrer ought to have been sustained, provided it also appears, upon a consideration of the whole record, that the overruling of the demurrer was an error which was not prejudicial to the adverse party."

That was an action by the administrator of the deceased wife of the defendant for money "had and received," claiming the wife had loaned the defendant husband $1,119, with interest from January 11, 1879. A demurrer was filed to the petition which was overruled and an answer of the husband was then filed, which admitted receiving the money but claimed a gift. Two questions were presented: (1) That the attempted statement of indebtedness is so defective as not to amount to a statement of a cause of action; and (2) on the face of the petition the action is barred by the statute of limitations. The latter contention was found not to be true under the statutes then in effect. The first question was based entirely on the claim that a legal indebtedness is not disclosed because the word "indebted" will not answer for the word "due." Under such circumstances, where the answer admitted receiving the money and the controversy is only as to the use of the right word where no misunderstanding could possibly result, a court would be compelled to hold no prejudice resulted. This is quite different from the case now before us, where the action is founded on a non-existent contract having merged by the almost universal law of the land into a more formal instrument by the consent of the plaintiff and as contemplated by its provisions and purposes with no claim pleaded of any reservations or facts that would revitalize its existence.

The case of Putnam v. Board of Commissioners of PauldingCounty, 102 Ohio St. 45, 130 N.E. 165, involved the sufficiency of the petition seeking recovery for balance due for constructing an improvement under a contract with the commissioners. The defendant moved that the court require the plaintiff to make his petition more definite and certain in the respects set out in the motion. The motion was overruled. A demurrer was not involved, as none was filed. The court said, in the first paragraph of the syllabus:

"Where a defect in a petition, to which a motion or a demurrer has been erroneously overruled, consists in the omission to plead the performance of a condition precedent in a contract sued on, or that such performance was prevented by the defendant, and it appears from the record that the omitted facts were properly put in issue by the answer and reply, and that the defendant has not been prejudiced, the judgment will not be reversed on error."

The court said, on page 54:

"The rule is well settled that where such a defect in a petition has been cured by the subsequent pleadings, and it appears from the record that the overruling of a motion or demurrer touching such defect was not prejudicial to the adverse party, the judgment rendered on the pleadings and evidence will not be reversed on error. Dayton Ins. Co. v. Kelly, 24 Ohio St. 345; Yocum, Admr., v. Allen, 58 Ohio St. 280, and Union Ins.Co. v. McGookey Moore, 33 Ohio St. 555."

That case follows those above considered, and for like reasons is not in point on the questions presented in the present proceedings.

The case of Schaefer v. First National Bank of Findlay,134 Ohio St. 511, 18 N.E.2d 263, does not disclose the basis of previous rulings on the pleadings. All that is said is found in the opinion, at pages 514 and 515, where the court said:

"Many questions were raised on the pleadings, and rulings thereon were assigned as error. When a decision is made by the trial court on the evidence, and judgment entered accordingly, errors previously committed in passing upon demurrers to pleadings are unavailing unless prejudicial. Putnam v. Board ofCommrs. of Paulding County, 102 Ohio St. 45, 130 N.E. 165; Yocum, Admr., v. Allen, 58 Ohio St. 280,50 N.E. 909; Dayton Ins. Co. v. Kelley, 24 Ohio St. 345, 15 Am. Rep., 612."

The cases cited in the Schaefer case have already been distinguished from the case now before us and there is nothing presented that goes beyond the cases ruled on by the court. The questions involving the pleadings are not referred to in the syllabus.

As only a portion of the allegations of the pleadings in the instant case have been analyzed above, it will be helpful to present a complete statement of their provisions.

The petition alleges that defendants were owners of property therein described until the execution of an agreement for its sale to the plaintiff. It is alleged that the city of Westlake levied certain special assessments against the property for water lines in the sum of $91.76 per year for the tax years of 1952 to 1961, inclusive. That the purchaser agreed to pay $6,250, and the defendant, by the agreement (which is the basis of this action), "specifically warranted that there are no assessments upon said premises." The plaintiff alleges that the consideration was paid and that the defendants conveyed said real property to the plaintiff (the present owners) by deed, filed for record July 8, 1958, as Cuyahoga County Recorder's instrument No. 227372. The action is for $367.04, the total of the assessments for the years 1958 to 1961, inclusive.

The answer admits ownership of the property until it was conveyed to plaintiff by deed executed by the defendants and accepted by the plaintiff.

By answer, the defendants admit that the city of Westlake levied special assessments for a water line of $91.76 per year from 1952 to 1961, inclusive. Defendants allege that the plaintiff's agent, Roger E. Clingman, brought the offer of the plaintiff to purchase said property for $6,000 but that, after negotiations, the price was changed to $6,250 upon authority vested in him by the plaintiff. It is further alleged that Clingman, as agent of the plaintiff, knew of the special assessments but that defendants had no knowledge thereof and did not believe that special assessments had been certified against the property and that said Clingman (plaintiff's agent) changed the contract to include a warranty against special assessments and induced the defendants to sign the contract without informing the defendants of such assessment.

Defendants further allege that the transaction was put in escrow with an agent of plaintiff's choosing, plaintiff depositing $6,250; and defendants the deed executed by them, it having been prepared by plaintiff's attorney; which deed was recorded by plaintiff and accepted by her as full and complete execution of the contract without reservations. The defendants then set forth the warranties of the deed, which do not include a covenant against special assessments.

The defendants then restate their claim that the deed was accepted by the plaintiff in full satisfaction of the contract upon which plaintiff's action is based, and pray that plaintiff's petition be dismissed.

The plaintiff's reply admits that by negotiation her offer to buy the property was modified to $6,250; that the specific warranty against special assessments was inserted in the contract prior to its execution by the defendants. The plaintiff denies any knowledge of the assessments for water lines and denies that Clingman had knowledge thereof. It is alleged that plaintiff is without knowledge of defendants' information as to such assessments and alleged that the covenant against such assessments was put in the contract as a consideration for the increase in price. Plaintiff denies that the escrow agent was of plaintiff's sole choosing or that plaintiff's attorney drew the deed but alleges that the escrow agent was chosen by the consent of the parties; that the deed was prepared and executed by the defendants and delivered by them to the escrow agent and then the escrow agent filed the deed for record as conforming to the terms of the purchase agreement. The plaintiff alleges that she was without knowledge of the terms of the deed until it was returned to her by the escrow agent, and that she did not accept the deed as a merger or variation of the terms of said agreement specifically warranting against special assessments.

Giving the plaintiff's reply its most favorable interpretation in her favor, the most that can be said for it is that she claims she did not intend to merge the terms of her contract to purchase into the deed. Certainly her secret intention could not be binding on the defendants. No claim of fraud or mistake is set out and the petition was not amended to make available a cause of action to reform the deed because of fraud or mistake.

The filing of a reply in our system of pleading is set out in Section 2309.24, Revised Code, which provides:

"When an answer contains new matter, the plaintiff may reply to it, denying generally or specifically each allegation controverted by him. He also may allege, in ordinary and concise language, new matter, not inconsistent with the petition, constituting an answer to such new matter."

It was held in the case of Durbin v. Fisk, 16 Ohio St. 533, that it is not the province of a reply to introduce a new cause of action, as this can only be done by petition. It is also stated in this case that a new cause of action in a reply is a departure and will be stricken out on motion, and the plaintiff is entitled to recover only on the cause of action set up in his petition. See, also, Middleport Woolen Mills Co. v. Titus,35 Ohio St. 253.

In the case of Defiance Water Co. v. City of Defiance,68 Ohio St. 520, 67 N.E. 1052, the court said, on page 522:

"There are averments in the reply of unfitness of the water supplied and of the mains, pipes and hydrants being stopped with mud; but these cannot be considered as a ground for injunction in this case because the plaintiff can only recover on the cause of action stated in the petition. Durbin v. Fisk, 16 Ohio St. 533. "

The office of a reply is to put in issue new matter set out in the answer not to restate the cause of action, if one is stated in the petition, or to supply necessary allegations to make a petition good where otherwise it is subject to demurrer for failure to state facts sufficient to make out a cause of action.

In the case of Mehurin v. Stone, 37 Ohio St. 49, at page 58, Chief Justice Boynton said:

"An exception to this rule is said to prevail in actions by an indorsee against the indorser of a promissory note, where evidence of a waiver of demand and notice is held admissible and sufficient to support an allegation that demand was made, and notice given. Harrison v. Baily, 99 Mass. 620; Pugh v.McCormick, 14 Wall., 374; 2 Greenl. Ev., Section 197. SeeMyers v. Standart, 11 Ohio St. 29. Also, Burgh v. Legge, 5 M. W., 418. But in other cases the rule prevails requiring the plaintiff to plead the facts necessary to establish the right to recover. And it is no answer to a failure to plead the necessary facts to say that evidence tending to show a waiver was admitted, without objection; for let this be so, and still it was not the right of the plaintiff under the issue to have the effect of such evidence determined by the jury. To entitle a party in such case to have the evidence considered as a matter of legal right, he should amend his petition. * * *"

The conclusion must follow from the record before us that the petition does not state a cause of action, that having unsuccessfully objected to its sufficiency, the defendants were clearly within their rights to answer to the supposed issues and participate in the trial, and in so doing, did not waive the right to test that question after judgment by motion for new trial or on appeal. The entry should be, therefore, judgment reversed as contrary to law for overruling demurrer and cause remanded with instructions to sustain such demurrer, and for further proceedings according to law.