Kleinfelter v. Northwest Builders & Developers, Inc.

261 S.E.2d 498 (1980) 44 N.C. App. 561

C. Harry KLEINFELTER and Doris L. Kleinfelter
v.
NORTHWEST BUILDERS AND DEVELOPERS, INC.

No. 7917SC177.

Court of Appeals of North Carolina.

January 15, 1980.

Pfefferkorn & Cooley by William G. Pfefferkorn and J. Wilson Parker, Winston-Salem, for plaintiffs-appellants.

Hudson, Petree, Stockton, Stockton & Robinson by Dudley Humphrey and William A. Brafford, Winston-Salem, for defendant-appellee.

CLARK, Judge.

In determining whether the trial court erred in allowing partial summary judgment with respect to plaintiffs' claims for fraud, deceptive trade practices in violation of N.C.Gen.Stat. § 75-1.1, and punitive damages, it is particularly significant that the only matter offered by defendant to support its motion for summary judgment was the affidavit of Norman Simmons to the effect that he knew plaintiffs and they appeared to have normal intelligence and awareness of business transactions. The defendant, therefore, relies entirely on the principle that the plaintiffs had no right to rely upon the representations of the defendant, because the parties were on equal terms and the plaintiffs had knowledge of the facts or means of information readily available and failed to make use of their knowledge or information. This principle is established in many North Carolina decisions. See, e. g., Peyton v. Griffin, 195 N.C. 685, 687, 143 S.E.2d 525 (1928). See, also, Keith v. Wilder, 241 N.C. 672, 86 S.E.2d 444 (1955). Our inquiry, however, does not stop with this rule.

Plaintiffs' allegations of fraud included the false representation by defendant's agent of the location of the boundary when plaintiffs were prospective buyers of the property. Plaintiffs further alleged that the lot corner and boundaries near the area in question were in the woods and on a steep hill and were thus neither visible nor accessible. Further, defendant leveled and planted a lawn, one-half of which (34 feet) was located in an adjoining lot, which tended to lend support to defendant's representation that the entire lawn area was within the boundaries of the lot offered for sale to plaintiffs.

Under these circumstances, could the plaintiffs reasonably rely on the representations of the defendant's agent as to the location of the boundary? In the sale of real estate it is usual and necessary that the seller point out to the prospective buyer the boundaries of the tract. Generally, the buyer does not have the requisite knowledge or skill to accurately determine courses and distances for the purpose of establishing the boundaries of the tract he proposes to buy; he must rely on the representations of someone, and he should have the right to rely on the boundary representations of the seller when the seller purports to know them. The extent to which the buyer may rely upon the boundary representations is dependent upon the size of the lot, the terrain and other circumstances.

The buyer of real estate is not under the duty to have an accurate survey of the lines and boundaries, Keith v. Wilder, supra, nor does the buyer necessarily have to examine the public records to ascertain the truth where the buyer reasonably relies upon representations made by the seller. Fox v. Southern Appliances, Inc., 264 N.C. 267, 141 S.E.2d 522 (1965).

In Keith, defendant, in procuring plaintiff to purchase timber, pointed out the lines and boundaries of an adjoining tract and falsely represented that it was included in the sale. The court recognized the principle of law relied on by defendant and added: "But the rule is well established that one to whom a positive and definite representation has been made is entitled to rely on such representation if the representation is of a character to induce action by a person of ordinary prudence, and is reasonably relied upon." 241 N.C. at 675, 86 S.E.2d at 447. The court held that since plaintiff had the right to rely on the positive representation the evidence was sufficient to overrule the defendant's motion for nonsuit. See also, Swinton v. Savoy Realty Company, 236 N.C. 723, 73 S.E.2d 785 (1953).

In Fox, supra, the court, in reversing a demurrer, stated that whether the purchasers of realty have the right to rely upon the representations of the seller's agent must be determined upon the basis of whether the representation is of such a character as to induce a person of ordinary prudence to reasonably rely thereon. 264 N.C. at 271, 141 S.E.2d 522. The determination of reasonable reliance involves questions of fact which ordinarily may not be determined by summary judgment.

The defendant relies primarily on Calloway v. Wyatt, 246 N.C. 129, 97 S.E.2d 881 (1957); Harding v. Insurance Co., 218 N.C. 129, 10 S.E.2d 599 (1940); and Plotkin v. Bond Co., 204 N.C. 508, 168 S.E. 820 (1933). Calloway involved a representation of the adequacy of a water supply, which could have been easily ascertained by the buyer by turning on the spigots. In Harding the seller represented the condition of a building to the buyer who made an inspection, who had ample opportunity to investigate, and who knew that the representations made by defendant's corporate president were based upon secondhand information. Also, there was no evidence in Harding that the representations were made with knowledge of their falsity or with reckless disregard for their truth. In Plotkin there was a representation of a boundary line, but the jury found there was a mutual mistake and not a false representation, and the court held that the fraud claim should have been nonsuited. We do not find these cases persuasive in support of defendant's position in the case sub judice. In contrast, it does not appear at this stage of the proceedings that plaintiffs as a matter of law had any right to rely on the misrepresentations.

It is apparent that summary judgment on the plaintiffs' Second Claim for punitive damages was allowed because the trial court had determined that summary judgment was appropriate on the First Claim for fraud; and, therefore, there was no basis for the award of punitive damages. Fraud will support an award for punitive damages. Newton v. Insurance Co., 291 N.C. 105, 229 S.E.2d 297 (1976); Oestreicher v. Stores, 290 N.C. 118, 225 S.E.2d 797 (1976), and since we reject summary judgment for defendant on the fraud claim, we also reject summary judgment on the punitive damages claim. The claim for punitive damages should not be rejected by summary judgment unless it appears that there can be no recovery even if the facts as claimed by the plaintiffs are true. W. Shuford, N.C. Civil Practice and Procedure § 56-3 (1975).

Plaintiffs should not be deprived of trial on disputed material issues of fact. We cannot forecast the evidence which the parties will offer at trial. It may appear from the evidence that plaintiffs as a matter of law could not reasonably rely on the alleged misrepresentation, or, on the other hand, it may prove to be a question for the jury.

The partial summary judgment for defendant on both plaintiffs' First and Second Claims was improvidently entered. The judgment is reversed and the cause remanded.

Reversed and Remanded.

HEDRICK and HARRY C. MARTIN, JJ., concur.