Huttegger v. Davis

HIGGINS, Judge.

Robert and Kathleen Huttegger sued Wilma R. Davis, doing business as Town N’ Country Real Estate and Dickherber Electric, Inc., Employees Retirement Trust for fraudulent misrepresentation in the sale of real estate. The jury awarded $1,178.00 actual damages against both defendants and punitive damages of $3,000.00 against defendant Davis and $7,000.00 against Dick-herber. The appeal was transferred from the court of appeals, after opinion, to review whether plaintiffs made a submissible case on their cause of action. Reversed.

The determination whether plaintiffs made their case requires the Court to view the evidence that bears upon the elements of fraud in the light most favorable to plaintiffs, and give them the benefit of all reasonable inferences to be drawn from the evidence. Ackmann v. Keeney-Toelle Real Estate Co., 401 S.W.2d 483, 488 (Mo. banc 1966). To this end the facts of this case will be taken substantially as stated by respondents.

Plaintiffs Robert Huttegger and Kathleen Huttegger live in High Country Estates near the City of Foley, Lincoln County, Missouri. In the summer of 1971 they lived in St. Louis County, Missouri, and in early August of that year they visited High Country Estates in an effort to find a home site. Defendant Davis was a real estate broker and sole proprietor of Town N’ Country Real Estate Company, which engaged “in the sale of, promotion or development of real estate projects” for various companies, including defendant Diekherber Electric Inc., Employees Retirement Trust. When the Hutteggers went to High Country Estates they observed a sign on the land containing the name, “Town N’ Country Real Estate” and the words, “Water and Electric”. Plaintiffs also saw two other signs¹ in the same area advertising lots for sale. Some time thereafter, plaintiffs called Town N’ Country Real Estate and talked to salesman, Mickey Owen. Plaintiffs were shown the lot by Mickey Owen and were advised that the purchase price was $2,460.00. Plaintiffs entered into a contract with Town N’ Country Real Estate for the purchase of this lot on August 29, 1971. Prior to buying the lot, plaintiffs inquired of Mr. Owen and defendant Davis as to the availability of water for the subdivision since they planned to build a home on the lot. Both Owen and Davis told the plaintiffs that water service was in the process of being installed and that it would be available when they were ready to build their home. On the night of closing, plaintiffs again asked defendant Davis about the water and she assured them that the water would be available. She stated that “Mr. Diekherber was taking care of this and pipes were being brought out for the lines and that they were going to be turned over and they were going to be ready to be turned over.” In May of 1973, plaintiffs entered into a contract to have the home built on the lot and made application to obtain water from the public district. At that time, plaintiffs were told by the district that no water was then available due to a lack of water supply, that the district was utilizing its full capacity, and that no new customers could be serviced. After plaintiffs’ request for water hookup was denied, they contacted defendant Davis and asked her to assist in obtaining water. She advised that she would contact Mr. Dickher-ber and see if he could remedy the situation. Plaintiffs stated they would not have purchased the lot in High Country Estates had they known that public water would not be available.

Thereafter, plaintiffs decided to build a well and agreed to go half and half with a neighbor in building the well. They contracted with Flynn Drilling Company to drill the well; the total cost to the plaintiffs was $1,178.00. Plaintiffs’ home was completed in late August, 1973 and they occupied it in September, 1973.

All witnesses called by the plaintiffs, including defendants Davis and Diekherber, testified that plaintiffs did not speak directly to any employee of the Diekherber Trust before signing the sale contract; that the first time plaintiffs ever met anyone from Diekherber Trust was at a subdivision meeting in 1974 or 1975. However, plaintiffs were aware they were purchasing the property from Diekherber Electric because defendant Davis advised plaintiffs that she would talk to Mr. Dickherber about carrying' the note on the property for a few months until they could obtain financing. Defendant Dickherber’s name also appeared on the sale contract.

Plaintiffs read into the record interrogatories to defendants Wilma R. Davis and Dickherber Electric and answers thereto. Interrogatories to defendant Wilma R. Davis:

Question No. 10: Please state whether you or any of your agents or representatives ever represented to the general public that they would be able to obtain public water supply hook ups on the real estate purchased by the public, and state the following:

a. When said representations were made.

b. Who was present when said representations were made.

c. Where said representations were made.

d. At whose directions and authority said representations were made. Answer: Yes.

a. Many times and places.

b. Many people.

c. Many places.

d. Eugene Dickherber.

Question No. 11: State whether or not you knew if public water supply hookups were available to the lots on High Country Estates, Lincoln County, Missouri, in August, 1971, and if you knew water hookups were available state:

a. From whom you learned this.

b. The exact date learned.

c. In what manner this information was conveyed to you.

Answer: I thought I knew it.

a. Mr. Dickherber.

b. Late 1970 or early 1971.

c. Verbally and later on a listing.

Interrogatories directed to Defendant Dickherber:

Question No. 9: Please state whether Dickherber Electric, Inc., or any of its agents or representatives has ever represented to Plaintiffs herein that they would be able to obtain public water supply hookups on the real estate purchased by Plaintiffs as set forth in Plaintiffs’ Petition, and state the following:

a. When said representations were made.

b. By whom said representations were made.

c. Who was present when said representations were made.

d. Where said representations were made.

e. At whose direction and authority said representations were made.

Answer: No agent or employee of

Dickherber Electric, Inc.’s Retirement Trust ever met or talked with Plaintiffs prior to their purchase of real estate.

Question No. 12: Please state the names and present addresses of the owners of High Country Estate development as of August, 1971.

Answer: Dickherber Electric, Inc., Employees Retirement Trust, 1708 South Fifth Street, St. Charles, Missouri 68301, as to those platted lots not sold.

Eugene Dickherber, called as plaintiffs’ witness, stated that in 1971 the Dickherber Trust owned a certain piece of real estate in Lincoln County known as High Country Estates and that Lot 15 which was purchased by plaintiff was a part of the property developed there. He did not recognize the sign depicted in Plaintiffs’ Exhibit No. 1 which advertised lots for sale in High Country Estates. He did not recall having a sign erected at High Country Estates advertising the sale of lots. However, after having his memory refreshed by his answer to Plaintiff’s Interrogatory No. 10, he admitted placing a sign advertising High Country Estates at its entrance, caused a sign to be installed advertising High Country Estates and also stating that there would be water and electric. In the winter of 1970, Dickherber met with the Board of Trustees of Water District No. 1 to present plans and specifications concerning the supply of water for the Sand Hill Road area in High Country Estates. At the time he appeared before the board, the District supplied water for a distance of 80 miles (of pipe). However, Eugene Chapman, manager of the public water supply district, stated that at the time Dickherber appeared before the board, the district serviced approximately 100 miles of pipe. It was Dick-herber’s understanding that the total capacity at the time he appeared before the board was approximately 400 or 500 hookups for the whole district. At the time that he applied for hookups for High Country Estates, it was his understanding that there were approximately 100 more hookups available for the total water district and not just for High Country Estates. Additional testimony by Dickherber in plaintiffs’ case showed that in January or February of 1971 he received a letter from the Department of Health which stated that the capacity of the water supply was approximately another 100 hookups and that expansion was planned. After the summer of 1971, Dickherber did not check with the water district to ascertain what capacity the district had remaining or the number of hookups available. However, Dickherber testified that prior to August 29th, he knew that there was a limit to the number of people who could get hookups on the line. Dickherber did not indicate on his advertising sign at High Country Estates that the number of water hookups was limited.

Defendant Wilma Davis, called by plaintiffs, testified that she told them that public water would be installed because she had contacted Eugene Dickherber and he told her that he had contacted the water district and he was installing lines for water. She was aware of the fact that the plaintiffs were buying the property to build a house on and assured plaintiffs that they would be able to obtain public hookup when their house was built. She was aware that plaintiffs were purchasing the property with the intention of building a home on the property, and was aware that plaintiffs would not be building a home immediately because they had to pay off the property to establish equity for the purposes of getting a loan to build the house. She did not know how many hookups would be available for High Country Estates nor did she make any inquiries as to the number of hookups available.

Eugene Chapman, manager of the water supply district, testified that the Public Water Supply District No. 1 in Lincoln County, Missouri serviced approximately 100 miles of pipe in 1971 and that there were around 400 hookups available for the whole system at that time. This water supply was serviced by one deep well and that in September of 1973 a second well was added. He stated that Mr. Dickherber appeared before the board and sought permission to connect High Country Estates subdivision onto the public water system. According to Chapman, Dickherber sought approximately 70 hookups for his subdivision. In May of 1973 the district had to reject applications for hookups to the High Country Estates subdivision due to a lack of capacity² and at that time approximately 20 or 25 hookups of the requested 70 hookups had been made to the area. Applications for hookups were refused beginning in May of 1973 due to the lack of capacity by the district to supply additional hookups and this situation endured throughout the summer of 1973 until some time in October of 1973 when a second well was put into use in the district. Mr. Chapman stated that in 1971 there was a ceiling or capacity as to the number of hookups that would be available to users of the public water system.

Plaintiffs alleged in Count I of their amended petition:

that they relied on the advertisements and representations made by the Defendants regarding the availability of public water supply hook-up and did in fact construct a home on the aforementioned property in reliance thereon; That upon application for public water supply hookup, the Plaintiffs found that Defendants’ advertisement and representations to be completely and wholly false and that such service was not available to Plaintiffs. Plaintiffs further state that at the time the Defendants advertised and represented that the public water supply hook-up would be available to Plaintiffs; Defendants knew that such advertisements and representations were false .

. Plaintiffs further state that as a result of the fraudulent advertising and false representations made by the Defendants regarding the availability of public water supply hook-up, the Plaintiffs were compelled to have their own well drilled in order to make their newly constructed home habitable; that Plaintiffs experienced extreme personal inconvenience and incurred personal expenses in the amount of $1,178.00 as a direct result of the fraudulent advertising and false representations made by the Defendants.

and in Count II (for punitive damages):

that the advertisements and representations heretofore mentioned in Count I were made by the Defendants with willful, wanton and reckless disregard for their truth or falsity and were made in an effort to defraud Plaintiffs.

Plaintiffs submitted their theory of recovery in form MAI 23.05 and 19.01 (fraudulent misrepresentation by joint tort-feasors):

Instruction No. 2

Your verdict must be for Plaintiffs and against Defendant Davis if you believe:

First, Defendant Davis represented to Plaintiffs that a public water supply hookup would be available to Plaintiffs, intending that Plaintiffs relied upon such representation in purchasing the real estate and,

Second, the representation was false and,

Third, Defendant did not know whether the representation was true or false and,

Fourth, the representation was material to the purchase by Plaintiffs of the real estate and,

Fifth, Plaintiffs relied upon the representation in making the purchase and in so relying, Plaintiffs were using ordinary care and,

Sixth, such representation either directly caused damage to Plaintiffs or contributed with the acts of Defendant Dick-herber Electric Inc., Employees Retirement Trust to directly cause damage to Plaintiffs.;³

and by Instruction 8, in form MAI 10.03:

If you find the issues in favor of Plaintiffs, and if you believe the conduct of one or more of the Defendants as submitted in Instruction No. 2 or 4 was willful, wanton or malicious, you may assess punitive damages in addition to any damages assessed under Instruction No. 7.

Appellants contend the court should have directed a verdict for defendants because plaintiffs failed to establish the requisite elements of a case of fraudulent misrepresentation. Respondents take the position that the court did not err in its submission of this case and assert that plaintiffs adduced evidence “satisfying all elements of fraud.”

To prevail on their claim of fraudulent misrepresentation, plaintiffs were obliged to prove:

(1) a false, material representation;

(2) the speaker’s knowledge of its falsity or his ignorance of its truth;

(3) the speaker’s intent that it should be acted upon by the hearer in the manner reasonably contemplated;

(4) the hearer’s ignorance of falsity of the statement;

(5) the hearer’s reliance on its truth and the right to rely thereon; and

(6) proximate injury.

See Ackmann v. Keeney-Toelle Real Estate Co., supra. Or, as stated, Latta v. Robinson Erection Co., 363 Mo. 47, 248 S.W.2d 569 (banc 1952), to make a cause of action for fraud, plaintiffs must plead and prove:

that a representation was made as a statement of fact, which was untrue and known to be untrue by the party making it, or else recklessly made; that it was made with intent to deceive and for the purpose of inducing the other party to act upon it; and that he did in fact rely on it and was induced thereby to act to his injury and damage.

Id. 248 S.W.2d at 576. See also Wilson v. Murch, 354 S.W.2d 332 (Mo.App.1962); Kreutz v. Wolff, 560 S.W.2d 271 (Mo.App.1977); Yeager v. Wittels, 517 S.W.2d 457 (Mo.App.1974).

Plaintiffs concede they did not plead or try their case on the theory that defendants knew their representations to be false thereby intentionally misrepresenting availability of water hookups. Rather, they contend that defendants did not know if their representations were true or false when made. When viewed in the light most favorable to their case, Ackmann v. Keeney-Toelle Real Estate Co., supra, plaintiffs’ evidence is insufficient to sustain a verdict of fraud on the theory they advance.

As of late 1970 Dickherber received permission from the water district board for 70 hookups, approximately the number of lots for sale in its subdivision. In January or February of 1971, Dickherber was advised by the Department of Health that the capacity of the water supply was approximately another 100 hookups and that expansion was planned. Dickherber was also made aware of the 100 hookup limitation by the water district board sometime in 1971 prior to the August 29, 1971 contract with plaintiffs. The representations alleged in this suit were made by billboard and word of mouth in August of 1971.

Consequently, at the time the representations were made, Dickherber: (a) knew that in late 1970 it had been guaranteed 70 hookups by the board; (b) knew there were 100 hookups remaining from which the 70 could be taken; (c) had been advised that future expansion was planned; and (d) had no reason to foresee (nor did the water district board) that the first well would not adequately provide for the 70 hookups promised. No one had any idea or any reason to suspect that water would not be available to plaintiffs two years later; no additional amount of investigation by Dick-herber or Davis at or prior to the time of the representations would have revealed otherwise.

Thus, plaintiffs’ contention that defendants did not know whether the representations were true or false when made is not sustained by the record. Dickherber had full knowledge that its promise as to the availability of public water was based on statements by the only two authorities available, the water district and the Department of Health.

In its opinion the court of appeals denominated plaintiffs’ case as one “essentially for negligent misrepresentation.”⁴ Plaintiffs did not plead or submit such theory in the trial court, and did not urge that theory in the court of appeals. In this Court, by supplemental brief, plaintiffs specifically eschew negligent misrepresentation as their theory of recovery. Their disclaimer asserts that:

Appellants, (Defendants) in their additional brief, have engaged in an exercise in semantics by arguing that Respondents (Plaintiffs) pled and tried their case on the theory of fraudulent misrepresentation and submitted it to the jury under Missouri Approved Instruction 23.05, but that now Respondents have changed horses in the middle of the stream and argue their case to this Court on a negligent misrepresentation theory. Respondents submit that Appellants have also been confused by the Appellate Court’s “negligent misrepresentation” language. This case was, and always has been, a case based on the fraudulent misrepresentation by the Appellants in representing to Respondents that water hookups would be available to Respondents when Appellants did not know whether such representations were true or false. The case was submitted to the jury under Missouri Approved Instruction 23.05 and recovery under this type of fraudulent misrepresentation entitled Respondents to punitive damages.

Plaintiffs have thus limited their lawsuit to a theory of fraudulent misrepresentation, understandably in an attempt to preserve their verdict for punitive damages, the bulk of their award. In these circumstances, discussion of negligent misrepresentation is not required.

The judgment is reversed.

BARDGETT, C. J., and DONNELLY, SEILER, and MORGAN, JJ., concur. WELLIVER, J., dissents in separate dissenting opinion filed. RENDLEN, J., dissents and concurs in separate dissenting opinion of WELLIVER, J.

1 . More than one party erected signs to advertise High Country Estates, and there is conflict as to which sign was actually seen. Dickher-ber admitted erecting a sign similar to the one described by plaintiff but denied ownership of the particular sign represented in plaintiffs’ exhibits.

2 . There was testimony that a flood occurred in the area which apparently affected the well’s supply capacity, but the specific reason for the water shortage was not clearly presented.

3 . Instruction No. 4 submitted Dickherber’s liability on the same theory.

4 . For a case of negligent misrepresentation, as distinguished from fraudulent misrepresentation, see Ligon Specialized Hauler, Inc. v. Inland Container Corp., 581 S.W.2d 906 (Mo.App.1979), and its reliance on Restatement (Second) of Torts, Negligent Misrepresentation, § 55.