Continental Land Co. v. Investment Properties Co.

FILED
December 10, 1999
Cecil Crowson, Jr.
Appellate Court Clerk
IN THE COURT OF APPEALS OF TENNESSEE
AT NASHVILLE
CONTINENTAL LAND COMPANY, )
INC. )
Plaintiff/Appellee )
)
VS. ) Case Number:
) M1998-00431-COA-R3-CV
INVESTMENT PROPERTIES )
COMPANY, LTE CORPORATION, ) Marion Chancery
DARLENE BROWN and ROBERT L. ) No. 5860
BROWN )
)
Defendants/Appellants )
COURT OF APPEALS OF TENNESSEE
APPEAL FROM THE CHANCERY COURT
FOR MARION COUNTY
THE HONORABLE JEFFREY STEWART, PRESIDING
EDWIN Z. KELLY, JR.
KELLY & KELLY, P.C.
P.O. BOX 869
309 BETSY PARK DRIVE
JASPER, TENNESSEE 37343
ATTORNEY FOR THE PLAINTIFF/APPELLEE
SHELBY R. GRUBBS
WILLIAM P. EISELSTEIN
MILLER & MARTIN LLP
SUITE 1000 VOLUNTEER BUILDING
832 GEORGIA AVENUE
CHATTANOOGA, TENNESSEE 37402
Page 1
ATTORNEY FOR DEFENDANT/APPELLANT
AFFIRMED AND REMANDED
PATRICIA J. COTTRELL, JUDGE
CONCUR:
CANTRELL, P. J.
KOCH, J.
OPINION
This appeal arises out of a transaction for the sale of real property in Marion County, Tennessee.
The plaintiff, Continental Land Company, sued to require defendants to convey property included in a
real estate sales contract between the parties but excluded in a deed that was executed and duly filed on
March 10, 1994. After a hearing, the trial court granted judgment for the plaintiff, by order conveyed
the property, and awarded damages of $5,000. Defendants, Investment Properties Company, LTE
Corporation, Darlene Brown and Robert Brown, appeal. For the following reasons, we affirm the
order of the trial court.
Continental Land Company is owned by Joseph Godochik of Corona del Mar, California. Mr.
Godochik is a self described real estate investor. Mr. Mickey Wilson, a resident of Chattanooga,
Tennessee, is Vice-President of Continental Land Company.
Investment Properties Company is a Tennessee limited partnership. Robert Brown, a licensed
attorney whose practice was almost exclusively in real estate, and his wife were the sole shareholders of
LTE Corporation, a title insurance business. LTE Corporation and the Browns were the sole partners in
Investment Properties. Robert Kempson acted as the seller’s agent during the transaction.
In 1994, Continental Land Company (“Buyer”) and Investment Properties (“Seller”)
commenced negotiations for the sale of a sizable tract of land owned by Seller. Buyer intended to
develop the land and sell tracts. In the course of the negotiations, Mr. Godochik visited that land, and
the parties eventually determined a sales price of $315,000.
On February 17, 1994, the parties executed a Real Estate Sales Agreement drafted by Mr.
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Brown or his agent which included the negotiated terms. Buyer did not retain the services of an
attorney. The sales agreement contained the bargained for sales price and a detailed description of the
subject property. The agreement stated:
We hereby agree to purchase the lot (or acreage) legally described as Approximately
773 acres of land between Ladd’s Mtn. and Barnett Point including Graham Cove
located on Map 152 Tract 5 in Marion County, Tennessee; being the property now
encumbrance [sic] by the Nick-A-Jack Partnership Deed of Trust.
The sales agreement excluded from this tract a fifty (50) foot strip adjoining property owned by
the Haggards. According to Mr. Kempson, Seller’s agent, the parties’ understanding under the sales
agreement was that this was a sale in gross, rather than a sale of a specified number of acres and that
Buyer was purchasing all property Seller owned that had not already been sold to others. 1 Mr.
Godochik described the purchase as follows:
I think the key to it, and we actually did this on purpose so there would be no question
about what we were buying and there would be nothing left out, was the property to be
conveyed as all of the property now covered by the Nickajack Partnership first
mortgage and that’s how we wanted it described so there would be no question.
Included in the tract to be purchased was a roadway and strip of property subject to Tennessee
Valley Authority (“TVA”) power line easements. Mr. Kempson admitted that both these tracts were “
sort of crucial to the development.” Mr. Godochik testified that the road was “the only way that you
could put a road that would be driveable by a vehicle” due to the hilly terrain. He indicated that access
to the power line property was also crucial, testifying:
That’s the only way to get back up into the back of the property, because Mr. Brown
had sold the properties fronting the road, so the only way to get behind the properties
that he had sold was to go around them down the power line road.
As the closing date approached, Buyer began requesting a meeting to review the documents
involved in the sale, but Mr. Brown delayed, stating he had to finish the description. Finally, a few days
prior to the March 10, 1994 closing date, a pre-closing conference was held in Mr. Brown’s office.
Mr. Wilson, Buyer’s Vice-President, represented Buyer at the meeting. Mr. Kempson was present on
Seller’s behalf, and Mr. Brown appeared for a few minutes. Mr. Kempson and Mr. Wilson reviewed a
deed prepared by Mr. Brown and compared it to a plat Mr. Brown gave them. Mr. Brown did not
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explain the description or review the documents with Mr. Kempson or Mr. Wilson. He never indicated
to them that the deed reflected any changes from the contract terms. Mr. Kempson later commented on
how very confusing the description and plat were to him and that he did not know how to read the plat
and the description. Mr. Wilson characterized the process of attempting to read the description and plat
as “a nightmare” and testified:
And the day that we got there, we both sat down, and being novice[s], obviously, we
were brought a page of the description and we started – I started reading it and Mr.
Kempson started trying to follow the lines . . . .
Mr. Wilson found a typographical error which was corrected. When asked whether he felt he needed
legal counsel to assist during this transaction, Mr. Wilson responded:
No, I really didn’t . . . I felt like a Vanderbilt graduate, an attorney, been an attorney for
many, many years, and the national exposure of Lawyer’s Title and we’ve used them in
several other occasions, I just didn’t see any need for that additional expense.
The record shows that Mr. Brown was the only attorney involved in this transaction and he issued the
title insurance policy as President of Lawyers Title and Escrow.
On March 10, 1994, the deed prepared by Mr. Brown was executed and filed with the Marion
County Register of Deeds. Mr. Wilson signed the deed as Vice-President of Continental Land; Mr.
Brown signed the deed on behalf of Investment Properties.
Some months later, while one of Buyer’s agents was showing a tract of the property at issue, it
was discovered that the deed drafted by Mr. Brown differed from the contract executed by the parties
in the following respects: (1) Seller retained ownership over an access road he was contractually
obligated to construct which adjoined a tract Seller had previously sold to the Vannettas; (2) Seller
retained ownership of a seventy-five (75) foot strip of land adjacent to a tract owned by the Haggards,
although the contract had described it as a (50) fifty foot exclusion; (3) Seller retained rights to the TVA
power transmission line easement, notwithstanding the fact that this exclusion was not in the Sales
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Agreement; (4) Seller retained a one hundred (100) foot strip adjacent to the Bullard tract, which was
not included in the contract; and (5) Seller retained a non-exclusive easement to connect to any roads
and utility lines constructed by Continental which was not included in the contract. The result of the
discrepancies was that Buyer’s property was substantially less accessible, making its plans for
development much more difficult to achieve and more expensive. In addition, the property conveyed
was less than all the property covered by the Nickajack Partnership first mortgage.
Upon learning of the discrepancies between the contract and the deed, Mr. Godochik
telephoned Mr. Brown, who informed the shocked Mr. Godochik that Mr. Godochik’s company, the
Buyer, did not own the land at issue. When Mr. Godochik inquired what it would take to own these
tracts which were necessary to develop the property, Mr. Brown purportedly agreed to accept
additional money. Mr. Godochik flew back to Tennessee with a check, believing the money was
necessary to correct the paperwork and make the deed reflect the agreement stated in the contract.
After he arrived at Mr. Brown’s office, Mr. Godochik asserted that he already owned the
property, which Mr. Brown disputed. Upon determining that he could not resolve the controversy, Mr.
Godochik commenced this action alleging fraud, misrepresentation, and breach of contract. The
complaint sought compensatory and punitive damages and requested that the Seller be required to
convey to Buyer the property excluded from the deed but included in the sales contract.
At trial, Mr. Brown admitted that exclusions for the road, the power line and the 25 extra feet
adjoining the Haggard property had not been included in the parties’ written contract. He also admitted
that no adjustment in the contract price had been made to compensate Buyer for the reduction in
acreage in the deed. He conceded that he had intended, at the time of the contract, to transfer all the
property that was encumbered by the Nickajack deed of trust, but stated, “that’s what the deed
covered, with these three minor exceptions.” In essence, Mr. Brown admitted that he intentionally
prepared the deed to convey less property than he promised to convey in the contract.
At the close of the evidence, the trial court made the following findings:
Now what happened, essentially, is, and there really doesn’t seem to be
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any dispute about this at all, at some point in time, Mr. Brown altered
the terms [of the contract] and he placed his alterations in the documents
and he furnished those documents to Mr. Wilson and Mr. . . Kempson
prior to the closing, at what he called a pre-closing. At this point in time,
the case sort of reminded me of one of those pictures that we used to
see when we were younger that they passed out to children. And it’s a
picture and in it are hidden other pictures and you try to identify all of
those figures identified within the big picture. Some people do that real
well, they have a creative mind and they can pick those pictures out, and
some people can’t do it for the life of them. And that’s sort of the way
real estate descriptions are for some people. Some people who are
trained in reading them and being careful about understanding them can
read them and project them mentally in a visual way. Other people just
aren’t able to do that. While Mr. Wilson may have had some
experience as a banker and had begun doing some real estate
development work with Mr. Godochik, there’s no indication that he had
any special training or experience in reading or looking at descriptions.
There’s no question that Mr. Brown had the superior position, number
one, of having drawn those documents, and number two, having a lot
more experience as a real estate lawyer in understanding those kinds of
things. So it sort of leaves us in a position where Mr. Brown drew these
documents, made these changes and they were different from what was
in the contract and he just sort of threw them out on the table and said, “
Mr. Kempson, you and Mr. Wilson read these over.” Mr. Kempson
was still his agent. And they tried to plot them on a plat that was
introduced here as an exhibit . . . But from that exhibit there were no
particular calls or directions, it was just sort of an overlay that I think
had been prepared by Mr. Hopkins when he was doing some other
work in earlier years for Mr. Brown. I think in view of the
circumstances and the changes that were made and the acts that Mr.
Brown acknowledges, that he did not specifically address these but just
handed it to them and let them see if they could find them and hopes
then to rely on the Doctrine of Merger in support of his position, [and]
should not be permitted to do that. I find in favor of the plaintiffs, that
the acts of Mr. Brown were intentional in changing these and that they
did not intend to accept these changes and that the transaction should be
made according to what was originally done. And that is, that the
properties that had been retained by Mr. Brown should then be deeded
over and made a part of the overall transaction and should be part of the
description transferred to the plaintiff in this case.
The trial court granted a $5,000 judgment against Seller as compensatory damages and ordered the
property at issue conveyed to Buyer. 2
I.
Seller argues that the doctrine of merger precluded reformation of the deed and precluded the
court’s order conveying the property excluded from the deed but included in the contract. We disagree.
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As a matter of law, the doctrine of merger gives priority to a later conveyance of real property
over an earlier, executory contract to sell the property. See City of Memphis v. Moore, 818 S.W.2d
13, 16 (Tenn. Ct. App. 1991).
Tennessee recognizes the doctrine of merger whereby when "an executory contract has
been entered into between the parties for the sale and purchase of real estate, and
subsequently the property is conveyed by a deed to the purchaser named in the
contract, that the contract of sale being merely an executory contract merges into the
deed and the deed, therefore, becomes the final contract which governs and controls.”
Id. at 15-16 (quoting Fuller v. McCallum & Robinson, Inc., 22 Tenn. App. 143, 159, 118 S.W.2d
1028, 1037 (1937)).
In this State, fraud and mutual mistake are the two recognized exceptions to the doctrine of
merger. See City of Memphis, 818 S.W.2d at 16. Reformation of a deed is appropriate only when
one of these exceptions is evident. See id. The parties do not dispute the fact that the contract and
deed were both duly executed. Therefore, the issue before this court is whether the trial court properly
ruled that Mr. Brown’s conduct caused a mutual mistake or rose to the level of fraud.
Under Tennessee Rule of Appellate Procedure 13(d), the trial court’s findings of fact are
reviewed de novo upon the record of the trial court, accompanied by a presumption of the correctness
of the findings, unless the preponderance of the evidence is otherwise. However, in the instant case, the
trial court made no specific findings of fact on the ultimate issue of fraud to which the presumption of
correctness may attach. Therefore, our review shall be de novo based upon the record on that issue.
However, the court made a number of findings of fact relative to the ultimate issues of fraud and whether
the doctrine of merger precludes the relief requested. We review these findings with a presumption of
correctness. Having reviewed the entire record, we are convinced the trial court’s findings of fact are
fully supported by the evidence.
Buyer argues that this is a case of mutual mistake because the agents for both parties present at
the closing, namely Mr. Kempson and Mr. Wilson, were unaware that the terms of the deed did not
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comport with the terms of the contract. In determining whether a mutual mistake exists, the court will
take into consideration the surrounding circumstances and any factors which tend to shed light on the
parties' intentions. See City of Memphis, 818 S.W.2d at 16 (quoting 76 C.J.S. Reformation of
Instruments § 28 (1972)).
In reviewing the circumstances surrounding the execution of the deed in this case, we cannot
hold that the evidence in the record supports a finding of mutual mistake. Mr. Brown’s signature
appears on the deed, not Mr. Kempson’s. Therefore, the fact that Mr. Kempson may not have known
about the discrepancies between the contract and the deed is irrelevant. We cannot dispute Seller’s
argument that this is not a case of mutual mistake because Mr. Brown admitted that he drafted the deed
and deliberately made the changes at issue. The trial court’s order, which made a specific finding that
Seller “intentionally” drafted the deed to retain the disputed property rights, supports that argument.
Under these circumstances, we are unable to find a mutual mistake. Therefore, the only remaining issue
is whether Mr. Brown’s actions rose to the level of fraud.
Under Tennessee law the elements of fraud are: (1) the defendant made a representation of an
existing or past fact; (2) the representation was false when made; (3) the representation related to a
material fact; (4) the false representation was made either knowingly or without belief in its truth or
recklessly; (5) plaintiff reasonably relied on the misrepresented material facts; and (6) plaintiff suffered
damage as a result of the misrepresentation. See Metropolitan Government of Nashville and
Davidson County v. McKinney, 852 S.W.2d 233, 237 (Tenn. Ct. App. 1992). It is undisputed that
Mr. Brown never made any affirmative misrepresentations to Buyer during the parties’ course of dealing.
That fact does not end our analysis, however, because Tennessee law recognizes that under
certain circumstances a claim for fraud can arise from concealment of material facts. See Macon
County Livestock Mkt., Inc. v. Kentucky State Bank, Inc., 724 S.W.2d 343, 349 (Tenn. Ct. App.
1986). This court has addressed the meaning of concealment:
As a general rule to constitute fraud by concealment or suppression of the truth there
must be something more than mere silence, or a mere failure to disclose known facts.
There must be a concealment, and the silence must amount to fraud. Concealment in this
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sense may consist in withholding information asked for, or in making use of some device
to mislead, thus involving act and intention. The term generally infers that the person is in
some way called upon to make a disclosure. It may be said, therefore, that, in addition
to a failure to disclose known facts, there must be some trick or contrivance intended to
exclude suspicion and prevent inquiry, or else there must be a legal or equitable duty on
the party knowing such facts to disclose them.
Hall v. DeSaussure, 41 Tenn. App. 572, 583-84, 297 S.W.2d 81, 87 (1956) (emphasis supplied).
Thus, under this definition, concealment may be actionable when it constitutes a trick or contrivance or
when there is a duty to disclose. See id. In the case before us, we find both.
The material fact which Mr. Brown failed to disclose and which he concealed was that the deed
did not conform to the contract. Here, the record clearly supports a finding of trick or contrivance. See
id. As the trial court found, Mr. Brown intentionally altered the legal description of the property in the
deed to Buyer’s detriment so that it no longer reflected the written agreement all parties had previously
executed. As the trial court found, Mr. Brown’s immersion in the legal details of the transaction in his
capacity as the sole real estate lawyer and title expert gave him the opportunity to exploit his position as
the seller, and he clearly did so. On its first page, the warranty deed Mr. Brown prepared listed five
limitations on the conveyance, including four easements, none of which are at issue here. Instead of
including the changes at issue which he unilaterally made, most of which were also easements, on this
first page of the deed along with the other easements, Mr. Brown hid them in an almost
incomprehensible, three page single spaced description containing only four sentences, three of which
are on one page. An experienced real estate attorney would have no easy time comprehending Mr.
Brown’s description, and Mr. Brown was well aware that Buyer was unrepresented. Both Mr. Wilson
and Mr. Kemper testified to their lack of understanding of the description. The surveyor who later
surveyed the property also testified to the difficulty in following the description. These circumstances
support a finding of trick or contrivance.
Furthermore, where there is a duty to disclose a material fact, failure to make such disclosure
can constitute concealment and, consequently, fraud by concealment. The duty to disclose arises when
(1) there is a fiduciary relationship between the parties; (2) one of the parties has expressly reposed trust
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and confidence in the other; or (3) the contract is intrinsically fiduciary and calls for perfect good faith.
See Justice v. Anderson County, 955 S.W.2d 613, 616-17 (Tenn. Ct. App. 1997); see also
Domestic Sewing Mach. Co. v. Jackson, 83 Tenn. 418, 424-25 (1885).
In Tennessee, an implied duty of good faith is imposed in the performance of contracts. See
Wallace v. National Bank of Commerce, 938 S.W.2d 684, 686 (Tenn. 1996). In determining
whether a party has acted in good faith in the performance of a contract, courts must judge the
performance against the intent of the parties “as determined by a reasonable and fair construction of the
language of the instrument.” Id. Thus, the common law duty to perform a contract in good faith includes
the duty to perform consistently with the objective and reasonable expectations of the parties. Mr.
Kempson, Seller’s agent, assumed the deed conformed to the sales contract. Mr. Wilson, Buyer’s
agent, testified he had no reason to believe the deed did not conform to the sales contract because the
deed was merely consummating the deal. Mr. Godochik testified he had no reason to think Mr. Brown
would do otherwise than draft the deed in accordance with the sales contract.
We have no problem finding that Buyer’s expectations that Seller would actually convey the real
property agreed to were reasonable. The essence of Seller’s performance of the contract was to
convey the land described therein. As Seller, Mr. Brown promised in the contract of sale to convey to
Buyer the land described therein for the purchase price also set out therein. Instead, he intentionally and
unilaterally prepared the deed to convey less than the property he promised. We think Buyer
reasonably expected Seller to perform his fundamental undertaking to convey the property as agreed to.
When Mr. Brown prepared the deed contrary to that expectation, he, at the least, was under a duty to
disclose to Buyer the discrepancy between the deed and the contract. 3 Moreover,
[w]e think it should be remembered that, according to custom and practice, it was the
duty of the sellers to furnish the buyers a deed conveying a good title to all of the
property agreed on.
Town of McMinnville v. Rhea, 44 Tenn. App. 612, 621-22, 316 S.W.2d 46 (1958). This duty exists
unless common observation or ordinary diligence would have furnished the information. See Simmons
v. Evans, 185 Tenn. 282, 285-86, 206 S.W.2d 295, 296 (1947).
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Under the limited circumstances of this case, we find that Mr. Brown was under a duty to
specifically disclose the changes he unilaterally made to the deed in contravention of the bargain he
struck in the contract. In Simmons v. Evans, our Supreme Court imposed a “duty to speak” on sellers
who withhold information materially affecting the subject of the agreement from buyers, unless common
observation or ordinary diligence would have furnished the information. See id., 206 S.W.2d at 296. In
Simmons, the buyers unknowingly purchased a house that had no water from 7 p.m. to 7 a.m. After
discovering the situation, they confronted the sellers who stated that they did not inform the buyers “
because we knew that you would not buy the property if we told you.” Id. at 286. After the trial court
refused to reform the deed, the Supreme Court reversed, holding that because the sellers “knew
complainants to be unaware of this very material fact . . . [t]hey were, therefore, duty bound to disclose
this fact unless common observation or such inquiry as the exercise of ordinary prudence required would
have furnished such information.” Id. The Court concluded that the condition would not have been
discovered through the exercise of ordinary prudence. That same reasoning applies here. Mr. Brown’s
own agent testified that the road adjoining the Vannetta property and the TVA power line easement
were “crucial” to Buyer’s development plans. Mr. Brown purposefully wrote the deed so that he
retained ownership of those material tracts and crafted its language to make the changes unintelligible to
all but the most experienced real estate experts. He did so knowing full well that the document would
be reviewed only by lay persons and not by a lawyer. He provided them with a map on which, as the
trial court observed, “there were no particular calls or directions.” At trial, Mr. Brown admitted that
this map was not complete and he had to refer to other separate drawings in order to prepare the deed.
Neither the roads nor sections identified in the deed nor the starting point of the description were
included on the map. The surveyor who drew a new map to show the differences between the contract
and Mr. Brown’s deed testified that the deed was not easy to follow. Having reviewed the deed Mr.
Brown wrote, we have no problem concluding that the changes he made would not have been
discovered by lay persons through the exercise of ordinary diligence. Under these circumstances, we
believe the rule in Simmons applies. Mr. Brown’s provision of the description and the plat were not
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sufficient to constitute disclosure.
The prior discussion focuses on Mr. Brown’s duty as Seller of the property. In view of the
previously-cited holding of this court in Justice v. Anderson County that a duty to disclose may arise
where one of the parties has expressly reposed trust and confidence in the other, we are constrained to
discuss Mr. Brown’s actions in light of his role as the only attorney in this transaction. See Justice, 955
S.W.2d at 616-17. Mr. Wilson testified that he saw no reason to employ additional counsel in view of
Mr. Brown’s education and experience in real estate law. Mr. Godochick stated that in choosing to let
Mr. Brown prepare the documents necessary for closing, he primarily relied on Mr. Brown’s status as
an agent for Lawyer’s Title. He stated that he had used Lawyer’s Title to do paperwork for closings in
the past and the deed had always been prepared “the way it’s supposed to.”4
When Mr. Brown undertook to prepare the deed, having held himself out as an experienced real
estate lawyer whose company performed many real estate closings, he also undertook to perform those
responsibilities in accordance with standards expected of attorneys. 5 An attorney, acting in the course
of his or her profession or in a transaction in which he or she has a pecuniary interest, has a duty to use
reasonable care in obtaining or communicating information meant to guide others in their business
transactions. See Robinson v. Omer, 952 S.W.2d 423, 427 (Tenn. 1997). Tennessee courts have
held that attorneys can be liable to non-clients for negligent misrepresentation under certain
circumstances, a holding which necessarily implies a duty of care to the non-client. See Stinson v. Brand,
738 S.W.2d 186 (Tenn. 1987) (attorneys, like other professionals such as land surveyors, accountants,
or title companies, may be liable for negligently supplying false information for the guidance of others in
their business transactions); see also RESTATEMENT (THIRD) OF THE LAW GOVERNING
LAWYERS § 73(2) (Tentative Draft No. 8, March 21, 1997); 6
In Collins v. Binkley, 750 S.W.2d 737 (Tenn. 1988), the Supreme Court considered an action
by purchasers of real estate against the seller’s attorney for negligently omitting required language from
the acknowledgment. The court noted that:
it is undisputed that the attorney was employed by the seller to prepare the deeds and
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that no privity of contract existed between plaintiffs and the attorney. However, there
was evidence that the attorney knew that plaintiffs would rely upon him and that it was
his professional responsibility to prepare a valid warranty deed entitled to registration...
and that plaintiffs would suffer loss if the acknowledgment was defective. Further, there
was evidence that the omission in the acknowledgment was below the standard of care
required of an attorney preparing instruments for conveyance of real property. Those are
the elements that give rise to the duty of an attorney to non-clients and may result in
liability for the damages sustained by non-clients.
Id. at 739.
These principles establish a duty on the part of a lawyer who allows a third party to rely on that
lawyer’s professional services which is sufficient to constitute a duty to disclose under Justice v.
Anderson County. They also suggest that Mr. Brown might be subject to liability to Buyer if he had
accidentally or negligently failed to include all the property covered by the sales contract in the deed he
prepared. In order to avoid the mutual mistake exception to the merger doctrine, Mr. Brown has
adamantly asserted that the exclusions were not accidental, negligent, or mistaken on his part. Rather,
they were intentional, and Mr. Brown used his expertise in real property law to draft a deed he knew
was inconsistent with the sales contract. We will not condone his further attempts to use his expertise to
the Buyer’s disadvantage by approving his assertion that the doctrine of merger precludes the equitable
relief Buyer seeks. We agree with the sentiments of the trial court:
I think in view of the circumstances and the changes that were made and the acts that
Mr. Brown acknowledges, that he did not specifically address these but just handed it to
them and let them see if they could find them and hopes then to rely on the Doctrine of
Merger in support of his position, [and] should not be permitted to do that.
The trial court did not err in providing the equitable relief requested. See Gray v. Boyle
Investment Co., 803 S.W.2d 678 (Tenn. Ct. App. 1990) (defendants held liable for failure to disclose
to the purchaser prior to a real estate closing the fact that foreclosure proceedings had been instituted on
the subject property). Whether that relief is more properly characterized as reformation of the deed or
as specific performance of the contract to convey land, 7 the trial court’s order divesting Seller of
ownership in the land excluded from the deed and conveying such ownership to the Buyer is affirmed.
II.
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Seller argues that the trial court erred in awarding Buyer $5,000 in damages for one-half an acre
retained by Seller which was sold to an innocent purchaser before trial.
Under the parties’ original contract, Seller was to retain a fifty (50) foot strip adjacent to the
Haggard tract. It is undisputed, however, that Seller retained a seventy-five foot strip, which was then
sold to the Haggards. The surveyor testified that the improperly retained strip was approximately
one-half acre. Mr. Godochik’s testimony at trial set the value of this strip at $5,000. In light of this
evidence, we cannot say the award of damages was error.
III.
The judgment of the trial court is hereby affirmed and this case is remanded to the trial court for
such further proceedings as may be necessary. The costs of this appeal are taxed to the Appellants for
which execution may issue if necessary.
________________________________
PATRICIA J. COTTRELL, JUDGE
CONCUR:
_______________________________
BEN H. CANTRELL,
PRESIDING JUDGE, (M. S.)
_______________________________
WILLIAM C. KOCH, JR., JUDGE
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