author: MATHERNE, Judge.

text:
    Frank SAWNER d/b/a Frank Sawner and Son Construction Company, Appellant, v. M. P. SMITH CONSTRUCTION COMPANY, INC., and United States Fidelity and Guaranty Company, Appellees.
    Court of Appeals of Tennessee, Western Section.
    Jan. 3, 1975.
    Certiorari Denied by Supreme Court May 12, 1975.

      John J. Ross, Jr., Savannah, for appellant.
    O. B. Hofstetter, Jr., Hofstetter & Hofs-tetter, Nashville, for appellees.
   MATHERNE, Judge.

The plaintiff sues on a bond issued in accordance with T.C.A. § 12 — 417. The claim is for machine hire, labor and materials furnished in the construction of a golf course at Pickwick Landing State Park, which park is owned and operated by the Tennessee Department of Conservation. The defendants are the contractor and the surety on the contractor’s bond.

The defendants aver the contractor had issued its check dated September 15, 1971, in the amount of $13,808.60, payable to the plaintiff, which check had written thereon “Acct. in full,” and the check having been cashed by the plaintiff constitutes a full accord and satisfaction of all amounts that might have been due the plaintiff by the contractor. The defendants further aver the contractor subcontracted the work to R. Albert Anderson and Charles J. Malone of Sarasota, Florida, and the plaintiff, having dealt with those parties, must look to them for the satisfaction of his claim.

The trial judge, sitting without a jury, held for the defendants and dismissed the plaintiffs’ lawsuit. The plaintiff appeals.

I.

We first determine the bond as required by T.C.A. § 12-417 expressly covers “any immediate or remote subcontractor” under the contractor. The only manner by which the advantages of the statute may be denied a furnisher of labor or material to a subcontractor on such project is for the contractor to give notice as set out in T.C.A. § 12-419. The record in this lawsuit does not reveal such notice by the contractor to the plaintiff. We therefore conclude the plaintiff has the right to sue on the bond. The plea of accord and satisfaction will, however, defeat the plaintiff’s lawsuit, if proven.

II.

The record establishes the plaintiff, before cashing the check, tried to contact the defendant construction company at its office in Nashville, but was unable to do so. The plaintiff then went to Charles Malone, the person with whom the plaintiff dealt, and who had approved all work performed by the plaintiff and all billings sent by the plaintiff to the general contractor, and pointed out to Malone that the check was not in sufficient amount to constitute payment in full. Malone marked through the words “Acct. in full” and initialed the correction. The plaintiff thereupon cashed the check.

The trial judge held “The plaintiff presented no proof that Malone was the agent of the defendant construction company or that he had any authority to act for this defendant in this matter.” We agree the record does not establish an express agreement or contract of agency between the defendant construction company and Malone. We conclude, however, an agreement or contract of agency need not be proved, if the acts of the parties are such as to establish that relationship. Smith v. Tennessee Coach Company (1946) 183 Tenn. 676, 194 S.W.2d 867.

The plaintiff dealt only with Malone when he hired his machinery to work on the project. The plaintiff kept daily tickets showing the hours worked by each machine and the rate per hour. The tickets, or billings were made out to M. P. Smith Construction Company, the defendant contractor, and were submitted to Malone who approved each ticket by writing across same “Malone.” The tickets were then sent to M. P. Smith Construction Company and a check in the total amount was sent to the plaintiff. Tickets were thus approved by Malone, and checks were issued by the defendant construction company in payment thereof on June 7, 1971 for $5,699.08, on June 23,1971 for $7,697.32, on July 15,1971 for $8,633.75, and on July 26, 1971 for $14,-315.23, each check payable to the plaintiff. These checks were marked payment in full of certain numbered tickets as submitted by the plaintiff and approved by Malone, or they were marked payment in full for a certain period of time covered by the tickets. In each instance the defendant construction company paid the amount as approved by Malone, except on one occasion a $10.00 error in addition was found and a correction made. There is no proof of any payment made by the defendant construction company to the plaintiff unless the amount was approved by Malone. The plaintiff charged the hire to the defendant construction company as he was told to do by Malone.

The foregoing constitutes the essence of the plaintiff’s proof. The defendants presented no proof. We therefore conclude the record establishes the defendant construction company, by its payment of the billings made to it by the plaintiff and approved by Malone, did thereby constitute Malone its agent in dealing with the plaintiff. See and compare: Drinnon v. Willis (1932) 14 Tenn.App. 483; Heywood Feed Ingredients, Inc. v. State ex rel. Moulton (1961) 49 Tenn.App. 544, 356 S.W.2d 605.

III.

Having thus established that Malone was the agent of the defendant construction company in his dealings with the plaintiff, we must now determine the effect of Malone’s marking through the words “Acct. in full.”

In Cole v. Henderson (1969) 61 Tenn.App. 380, 454 S.W.2d 374, a cashier’s check for commissions due with a notation “commission in full” was cashed by the recipient thereof even though he claimed it represented only one-half the commission due him. The court held the cashing of the cashier’s check to be a complete accord and satisfaction and full release of all amounts due. The Court in Cole pointed out with particularity the fact the payee of the check contacted the debtor before cashing the check and was told by the agent of the debtor the amount of the check was all the debtor would pay.

In Hussey v. Crass (Tenn.Chanc.App.1899) 58 S.W. 986, the words “in- full” were erased by the creditor prior to cashing the check. The Court held the erasure did not prevent the cashing of the check from being a complete accord and satisfaction of the entire debt. The court noted, however, had the fact of the erasure been called to the attention of the debtor, and he consented thereto, then the amount paid by the check would have operated only as a credit against the debt. We hold that reasoning to be sound, and we conclude from both Cole and Hussey, supra, that prior to the time a check is cashed, a debtor may waive, extinguish or condition any statement thereon which would otherwise render the check a complete accord and satisfaction upon being cashed by the creditor.

What a party may do, may also be accomplished by his agent in the matter. We hold the marking through of the words “Acct. in full” by Malone has the effect of removing those words from the face of the check. The subsequent cashing of the check by the plaintiff does not amount to an accord and satisfaction of the entire debt owing to him by the defendant contractor.

IV.

The amounts claimed as due and unpaid are (1) $1,610.65 for machine hire, representing the difference between tickets to-talling $15,419.25 as approved by Malone and the check of $13,808.60 marked “Acct. in full”; (2) $1,063.77 for overtime paid by the plaintiff to his employees, but not reimbursed by Malone as promised; (3) $340.95 for gasoline bought by Malone and charged to the plaintiff. These amounts total $3,015.37, for which the plaintiff sues.

A cheek from the defendant dated July 26, 1971 (Exhibit 8) payable to the plaintiff is marked “a/c in full machine hire thru 7/21/71.” The sum of $1,610.65 is the claimed balance due for machine hire from July 22, 1971 to September 13, 1971, as billed to that defendant and approved by Malone. There is some proof that Malone, at the time he marked through the words “Acct. in full,” did list some different figures on a summary sheet prepared by Mrs. Sawner showing the amount of each ticket sent to the defendant contractor. These figures were not explained by the defendants, and Mrs. Sawner said she did not know what they meant. The only proof in this record is that the above noted balance for machine hire is due the plaintiff from the defendant contractor.

Malone agreed to reimburse the plaintiff for overtime paid by the plaintiff to his employees. Malone made these payments the first two weeks the plaintiff had his machinery on the job. No further payments were made, and the plaintiff presented evidence (Exhibit 2) of the amount of overtime paid each employee from the week ending June 12, 1971 through the week ending September 4, 1971. These figures amount to $1,063.77. The record contains two cancelled checks (Exhibits 6 and 7) issued by the defendant construction company to the plaintiff, one dated June 23, 1971 for $7,697.32, marked “Acct. in full 6/3-6/16/71” and a listing of ticket numbers, the other is dated July 15, 1971 for $8,633.75 marked “a/c in full—6/17-6/30/71.” These checks so marked constitute a complete accord and satisfaction of all amounts owing the plaintiff by the defendant contractor for machine hire, materials and labor furnished during the periods noted. Cole v. Henderson, supra.

The defendant contractor produced no other cancelled checks showing payment in full for any other period of time after June 30, 1971. We cannot determine from the record whether the $148.34 overtime paid by the plaintiff during the week ending July 3, 1971, was paid before or after June 30, 1971, and we therefore disallow that amount. We approve the following overtime payments as owing to the plaintiff from the defendant construction company:

July 4th and 5th $262.74

Week ending July 10,1971 5.00

Week ending July 17, 1971 99.48

Week ending July 24,1971 242.81

Week ending August 21,1971 8.52

Week ending August 28, 1971 20.06

Week ending September 4,1971 24.03

Total $662.64

The plaintiff, at the request of Malone, let Malone charge to the plaintiff gasoline for his station wagon and for some machines on the job. These purchases total $340.95. The only proof is that this gasoline so purchased and charged to the plaintiff was used by Malone in completing the construction of the golf course. There is no proof, however, as to how much of the gasoline was purchased between June 3, 1971 and June 30,1971, being that period of time during which a complete accord and satisfaction was effected by the cashing of the two checks heretofore mentioned. The burden in on the plaintiff to prove his lawsuit, and we must accordingly disallow the entire amount of $340.95 claimed as payment for gasoline. To do otherwise would involved the Court in rank speculation.

We therefore conclude the plaintiff is entitled to judgment against the defendant contractor in the sum of $2,273.29, representing the balance due on machine hire of $1,610.65, and overtime payments of $662.64.

V.

The defendant bonding company by answer admits it made bond for the defendant contractor as alleged in the complaint. The bonding company denies liability under its bond because the plaintiff did not prove he gave written notice of his claim within ninety days after the completion of the project as required by T.C.A. § 12-421. The main thrust of this defense is that the plaintiff failed to prove when the project was completed.

The plaintiff in his complaint averred the defendant bonding company was surety on the contractor’s bond as required by T.C.A. § 12-417. The plaintiff further averred: Plaintiff by registered mail gave notice on November 15, 1972, to all defendants of his claim on said contractor’s bond, as required by T.C.A. Section 12-421. A copy of this notice is attached as Exhibit A.” Neither defendant denied the foregoing allegation of notice.

Under Rule 8.02 the answer must set forth defenses to each claim asserted by the plaintiff; and it must admit or deny the averments upon which the adverse party relies. The failure to deny admits the averment. We conclude the failure to deny notice as required by T.C.A. § 12-421, admits the averment that notice was given “as required by T.C.A. Section 12-421.” See and compare: Sinclair Refining Company v. Howell (Ala.1955) 222 F.2d 637; Consolidated Packaging Machinery Corp. v. Kelly (Ill.1958) 253 F.2d 49, cert. denied 357 U.S. 906, 78 S.Ct. 1151, 2 L.Ed.2d 1156; Fontes v. Porter (Cal.1946) 156 F.2d 956.

The defendant bonding company further insists the plaintiff has not'proved he brought this lawsuit within six months of the completion of the project, or of the furnishing of work and materials, and his cause of action is thus barred by T.C.A. § 12-422. Mrs. Sawner testified the last work performed by the plaintiff on the golf course was September 13, 1971, and the billings made to the defendant confirm this date. Neither defendant pled the statute of limitations as set out in T.C.A. § 12-422; the failure to so plead, denied the defendants the right to rely thereon. Rule 8.03.

It results the judgment of the trial court is reversed, and judgment shall be entered in this Court in favor of the plaintiff against the defendant construction company and the surety on its bond in the amount of $2,273.29, with interest thereon from the date of the judgment in the trial court. The costs in the trial court and in this court are adjudged against the two named defendants.

The Honorable William W. O’Hearn, by appointment of the Chief Justice of the Supreme Court of Tennessee, sat on this lawsuit in the place of Presiding Judge C. S. Carney.

NEARN, J., and O’HEARN, Special Judge, concur.

      . 12 — 417. Contractor’s bond to pay for labor and materials. — No contract shall be let for any public work in this state, by any city, county or state authority, until the contractor shall have first executed a good and solvent bond to the effect that he will pay for all the labor and materials used by said contractor, or any immediate or remote subcontractor under him, in said contract, in lawful money of the United States. The bond to be so given shall be for one-half (⅛) of the contract price on all contracts of two thousand dollars ($2,000) or under; one-half (V2) of the first two thousand dollars ($2,000) and thirty-five per cent (35%) of all over that amount on all contracts between two thousand dolars ($2,000) and five thousand doUars ($5,000); and one-half (V2) of the first two thousand dollars ($2,000), thirty-five per cent (35%) on the balance on the next three thousand dollars ($3,000) and twenty-five per cent (25%) on the balance on all contracts over five thousand dollars ($5,000). Where advertisement is made, the condition of the bond shall be stated in the advertisement; provided, that §§ 12-417— 12-422 shall not apply to contracts under one hundred dollars ($100). [Acts 1925, ch. 121, § 1; Shan.Supp., § 3546a4; mod. Code .1932, § 7955.]

      . 12^119. Contractor disclaiming subcontractor’s liability. — In the event the contractor who has executed the bond gives notice, in writing, by return-receipt registered mail, to any laborer or furnisher of material or to any such immediate or remote subcontractor, that he will not be responsible therefor, then, such person who thereafter furnishes such material or labor shall not secure advantage of the provisions of §§ 12-417 — 12-422, for materials furnished or labor done after the receipt of such notice. [Acts 1925, ch. 121, § 1; Shan.Supp., § 3546a4; mod. Code 1932, § 7955.]


source: Caselaw Access Project

author: NEARN, Judge. MATHERNE, Judge

license: Public Domain

text:
    COUSINS PROPERTIES OF TENNESSEE, INC., Appellee, v. Maurice KARR, etc., Appellant.
    Court of Appeals of Tennessee, Western Section.
    Feb. 28, 1975.
    Certiorari Denied by Supreme Court Aug. 11, 1975.

      Gordon & Malone, Nashville, for appellant.
    Robert P. Thomas, Boult, Cummings, Conners & Berry, Nashville, for appellee.
   NEARN, Judge.

Cousins Properties of Tennessee brought suit against Maurice Karr for the recovery of sewer tap fees. Karr, a builder, had tapped onto plaintiff’s sewer line and refused to pay plaintiff for its use. There was no contract between plaintiff and defendant and plaintiff’s suit was based solely on the- theory of unjust enrichment. The Chancellor found for the plaintiff and awarded plaintiff the sum of $200 for each tap made by Karr. The defendant has appealed.

The facts are relatively undisputed.

Plaintiff, formerly known as Larchwood, Inc., purchased an 800 acre tract of land for development, which area it designated as Hickory Bend Subdivision. As part of the development plan, plaintiff constructed a sewer treatment plant and mains connecting thereto at a cost in excess of $300,000. Plaintiff then contracted with a subsidiary corporation, Hickory Bend Development Company to operate and maintain the entire system.

On February 9,1962, plaintiff had recorded certain restrictive covenants on Hickory Bend Subdivision. The recorded restrictive covenants were attached to and made a part of the complaint.

Among other things, these 1962 restrictions recited that plaintiff had constructed a sewerage disposal system and had entered into a contract with Hickory Bend to operate and maintain the system and also to provide for collection and disposition of garbage and waste from the subdivision. The restrictions also provide that all dwellings are to be connected to the sanitary sewerage system and all connections must, be approved by a representative of Hickory Bend.

The restrictions do not specifically mention any tap fee or charge therefor.

Later plaintiff sold Section IY of said subdivision to a now bankrupt corporation known as Waterfalls Developers, Inc. Waterfalls then contracted with plaintiff for a sewer tap fee of $200 per lot for each tap when made. This contract was unrecorded.

On September 25, 1968, Waterfalls executed certain restrictive covenants applicable to the land purchased. This instrument was recorded in Book 4175, page 84 of the Register’s Office of Davidson County and was attached to and made a part of the complaint.

These additional restrictive covenants were placed of record solely by Waterfalls and were not executed by plaintiff nor its subsidiary Hickory Bend. To a large extent the additional covenants are repetitious of those placed of record by plaintiff. However, the instrument also provides:

“Waterfalls Developers, Inc. has constructed sewer lines and tapped onto a sewerage disposal system built and owned by Larchwood, Inc._”

The instrument also provides that there shall be a reasonable monthly service charge to each lot owner to be paid to Hickory Bend for furnishing sewerage disposal services.

On September 19, 1969, Karr purchased from Waterfalls 30 lots in Section IY of the subdivision with no mention of any tap fee by Waterfalls.

Waterfalls never made any sewer taps or paid plaintiff any tap fees.

The defendant Karr has tapped 27 lots onto plaintiff’s sewer system over plaintiff’s protest and has refused to pay.

The defendant testified that when he purchased the lots from Waterfalls, it was his understanding that the sewer tap fees were “thrown in” with the deal and that there was nothing of record to advise him otherwise.

The appellant has not filed Assignments of Error as required by Rule 12 of this Court. The lawsuit was heard by the Chancellor on oral testimony, without a jury, and we are more lenient in the enforcement of Rule 12 in that situation than on an appeal from a jury trial. This difference in approach is justified by reason of T.C.A. § 27-303, which provides that on appeals of this nature the review is de novo upon the record in the Trial Court, with a presumption of the correctness of the Trial Court’s finding unless the evidence preponderates to the contrary. We also note the appellant has by brief and argument clearly placed before this Court those areas wherein he claims the Chancellor erred. We therefore conclude, under the record as presented, a refusal to review the action of the Trial Court would be extremely harsh, if not unjust.

No exhibit introduced and identified at the oral hearing is authenticated by the Chancellor. Admittedly, the exhibits introduced at the oral hearing had been-previously filed in the lawsuit as exhibits to the complaint, or as exhibits to an affidavit previously filed by the defendant in response to a show cause order why he should not be enjoined from making additional taps onto the sewer system pending this litigation. We further note, however, that neither the affidavit of the defendant, nor the exhibits thereto, are authenticated by the Chancellor. We conclude this Court cannot consider the affidavit of the defendant nor the exhibits attached thereto, neither can we consider the exhibits which depend solely upon their having been introduced at the oral hearing, because of the lack of authentication by the Chancellor. We hold those documents which are made exhibits to the complaint are a part of the technical record in this lawsuit, Rule 10.03, and may be considered by this Court.

The defendant-appellant insists he is a bona fide purchaser for value of the 30 lots; he had no actual knowledge of the $200 per lot tap fee, and that fee is not mentioned or referred to in any recorded instrument which would place the defendant on constructive notice. The defendant argues he is not to be held liable on a contract between the plaintiff and Waterfalls of which he had no knowledge, from which he gained no benefit, and of which he had no reason to inquire.

The plaintiff insists the defendant is being unjustly enriched by using the plaintiff’s property, the sewerage system, without making the proper payment for the right to so use. The plaintiff argues the defendant is an experienced builder and should have known a tap fee was required, or at least should have informed himself concerning that possibility.

The proof of the defendant admits that tap fees are customarily charged to someone. However, it is argued that since it was his understanding with Waterfalls that they had been paid or would not now be charged, he does not owe plaintiff a tap fee. Further, it was plaintiff’s obligation to place some instrument of record to show that tap fees would be owed to plaintiff as all he thought he had to pay was the monthly service charge mentioned in the Waterfalls restrictions.

We cannot agree with this position.

Arguendo, if we assume that Waterfalls misled defendant to induce him to purchase the 30 lots, such fact would not render plaintiff answerable for Waterfalls’ misconduct. Waterfalls is not the agent of plaintiff but simply a vendee of plaintiff and the record reveals no connection between the two other than vendor-vendee. We need cite no authority for the proposition that the misstatement or fraud of a subsequent vendee does not bind a previous vendor.

Further, we think it unnecessary to cite any authority for the proposition that the owner of property does not have to place anything of record stating he is not giving his property away or suffer a presumption that he has given it away.

After reading the subdivision restrictions placed of record by the plaintiff we are unable to find anything therein which would, in our mind, constitute a giving away of sewer taps by the plaintiff. And it is not argued that they do; or that reliance was made by the defendant to any supposed gift or waiver contained therein. Appellant complains of the restrictions placed of record by Waterfalls.

The prime argument for reversal is that the defendant had no knowledge of the tap fee contract between plaintiff and Waterfalls; that such was not a matter of public record and the Chancellor should not have bound the defendant to the Waterfalls contract.

The Chancellor did not bind the defendant to the Waterfalls contract. The suit was for unjust enrichment and not to enforce a contract. After hearing all the proof the Chancellor came to the conclusion that a tap fee of $200 was reasonable and was the reasonable amount of which plaintiff had been deprived and the defendant had been unjustly enriched by the use of the system.

Had the contract been recorded it would not have applied to defendant for he was not a party to it. Had he contacted plaintiff about a tap fee the parties would have been free to negotiate the tap fee. Neither was bound to the other by the Waterfalls contract.

We therefore conclude that the evidence does not preponderate against the finding of the Chancellor and his decree is affirmed at the cost of appellant and surety.

Honorable Roy A. Miles, by designation of the Supreme Court of Tennessee, took part in the hearing of this appeal in the absence of Presiding Judge C. S. Carney.

MILES, Special Judge, concurs.

MATHERNE, Judge

(dissenting).

The opinion of the majority rests upon the fact the defendant Karr did not pay the plaintiff for the right to tap 27 lots in Section IV, Hickory Bend Subdivision, onto the plaintiff’s sewerage disposal system. With that fact established, the majority holds the defendant was thereby unjustly enriched at the expense of the plaintiff, and affirms a judgment against the defendant.

This dissent is based upon the propositions the doctrine of unjust enrichment, under the facts, is not available to the plaintiff; and, under the facts, the equities of the defendant outweigh the equities of the plaintiff.

At the expense of making this dissent longer than might otherwise be necessary, it is important that facts be stated in more detail so that the equities of the parties may be more accurately weighed.

It appears the plaintiff, then known as Larchwood, Inc., owned several hundred acres of land which it proposed to develop into a residential area to be known as Hickory Bend Subdivision. The plaintiff constructed a sewerage disposal system to serve the entire area. On February 9,1962, the plaintiff recorded restrictive covenants for the entire area which contains the following requirements insofar as the plaintiff’s sewerage system is concerned:

“13. SEWAGE DISPOSAL. All dwellings shall be connected to the sanitary sewerage system provided by the developer. All sewer connections must be approved by a representative of the company operating said sewage disposal system.
⅞ ⅜ * ⅜ * ⅜
“17. SEWERAGE SERVICE CHARGES. In addition to the foregoing restrictive covenants, the following provisions are specifically declared to be applicable to each and every parcel of land in Hickory Bend Subdivision and are further declared to be covenants running with the land and shall be binding on every subsequent purchaser or holder of land therein except as hereafter provided:
“Larchwood, Inc. has constructed a sewage disposal system to service said subdivision and has entered into a contract with Hickory Bend Development Company to operate and maintain said system and also to provide for the collection and disposition of garbage and waste from said subdivision.
“NOW, THEREFORE, To secure the payment of funds necessary to operate and maintain said sewage disposal system and to furnish said services for the mutual benefit of those owning or holding land in said subdivision, all purchasers thereof agree for themselves, their heirs, executors, successors and assigns that each lot or parcel of land in said subdivision which they acquire or in which they have an interest is hereby impressed with a lien to Hickory Bend Development Company for said sewage charges and charges for the collection and disposition of waste. Such lien shall be accumulative and shall continue in full force and effect irrespective of any Statute of Limitations for the institution of suit until all such charges are paid in full and shall continue and be binding upon any subsequent purchaser of property and be enforceful in any court of law or equity, and any unpaid balance shall bear interest at the rate of 6% per annum from the date due.”

By regular conveyance Waterfalls Developers, Inc., now a bankrupt, purchased Section IV of the subdivision, which area included approximately 60 lots. Waterfalls entered other restrictive covenants applicable to Section IV, which did not purport to change the foregoing restrictions, but which did contain the following explanatory paragraph added to (17) Sewer Service Charge :

“Waterfalls Developers, Inc. has constructed sewer lines and tapped onto a sewerage disposal system built and owned by Larchwood, Inc. to serve said subdivision . . . .”

Waterfalls entered into a contract with the plaintiff that it would pay to the plaintiff $200 for each lot in Section IV which it connected to the plaintiff’s sewerage system. That contract was not recorded.

By warranty deeds dated March 12, 1969 and September 19, 1969, Waterfalls sold 30 lots in Section IV to the defendant Karr. There was no mention of a tap fee in either deed. The deeds were made subject to the restrictions placed on Section IV by Waterfalls. Of course, the deeds were also subject to the prior restrictions recorded by the plaintiff, even though no mention thereof was made.

The defendant began to build on the lots, and in September or October, 1969, the management company knew the defendant had connected one or more lots to the sewerage system. At that time the representative of the management company told the defendant a tap fee was owing on each lot. The defendant denied he owed a tap fee, refused to pay, and continued to construct houses and connect them to the sewerage system. The defendant, or the parties to whom he sold the houses paid the monthly service charge on each lot as same became due.

Finally, on May 2,1973, at which time the defendant had connected 27 of the 30 lots to the sewerage system, the plaintiff filed this lawsuit seeking an injunction from further taps onto the sewerage system, and asking $200 per lot for the 27 lots connected to the system, on the theory the defendant was to that extent unjustly enriched at the expense of the plaintiff.

The plaintiff gave no explanation for this unreasonable delay of three and one-half years before bringing its lawsuit. The president of the plaintiff testified he could not say the defendant had actual knowledge of a tap fee on the lots. This witness further stated the tap fee was entirely different from the monthly service charge, and had the defendant gone to the management company and obtained permission to tap, he would have learned of the $200 tap fee. The later insistence is of little value in a determination of this lawsuit, because the management company came to the defendant and informed him of the tap fee as soon as the defendant connected a lot onto the system. There is no insistence the taps by the defendant were improperly made, and the “approval” requirement as stated in the pláintiff’s restrictions is not at all determinative of this lawsuit. The plaintiff’s president further testified that as a custom in the trade tap fees are normally paid, but he admitted in some instances the tap fee might be included in the purchase price of a lot.

Plaintiff’s counsel stipulated in open court there was no instrument of record of any nature which placed a tap fee on any lot in Hickory Bend Subdivision. The defendant’s counsel accepted that stipulation.

The defendant Karr testified there were no side agreements between him and Waterfalls relative to a tap fee. He testified the matter of payment for sewer taps vary with the particular deal or sale. Sometimes the sewer tap fee is free, sometimes a charge is made, and at times the amount is negotiated. The defendant stated his understanding of his contract with Waterfalls was that the water and sewer tap fees were included in the purchase price of the 30 lots. The defendant stated he had no knowledge of the contract between the plaintiff and Waterfalls concérning a $200 per lot tap fee. No representative of Waterfalls testified.

The defendant’s testimony is uncontra-dicted insofar as his deal with Waterfalls is concerned. That testimony is reasonable under the circumstances and is supported by the other acts of the defendant; there are no circumstances shown which are inconsistent with that testimony. Under this record where the defendant’s testimony stands uncontradicted, and he stands unim-peached, the testimony should be given full weight. See and compare: Bank of Hendersonville v. Dozier (1940) 24 Tenn.App. 178, 142 S.W.2d 191; Ray Carter, Inc. v. Edwards (1969) 222 Tenn. 465, 436 S.W.2d 864.

The argument that a $200 tap fee has been paid on all other 'lots connected to the sewerage system merely begs the question. We do not know the contracts and circumstances under which those tap fees were charged and collected.

A recent opinion on unjust enrichment is Paschall’s, Inc. v. Dozier (1966) 219 Tenn. 45, 407 S.W.2d 150, wherein the Court held a furnisher of materials and labor for improvements to a house, under a contract with one other than the owner of the house, could sue the owner under the doctrine of unjust enrichment, the owner- not having paid the value of the improvement to another, even though the time for filing a materialmen’s lien had expired.

In Paschall’s, Inc. the Court stated each lawsuit based upon the doctrine of unjust enrichment must be decided upon: (1) a benefit conferred upon the defendant by the plaintiff; (2) appreciation by the defendant of the benefit, and (3) acceptance of that benefit under such circumstances that it would be inequitable for the defendant to retain the benefit without payment of the value thereof to the plaintiff.

It is not every enrichment that will justify a lawsuit based upon the doctrine of unjust enrichment. To justify the action the enrichment must be “unjust.” Paschall’s, Inc., supra; 17 C.J.S. Contracts § 6, pp. 572-573. The right to recover does not arise from consent as in the case of a contract, but from the law of natural equity. First National Bank v. Matlock (1924) 99 Okl. 150, 226 P. 328.

In considering the equity in each party, the defendant must be held responsible for all matters of which he had constructive notice. The recorded restrictions by the plaintiff, and by Waterfalls, make no mention of a sewer tap fee. Generally, restrictive covenants will be strictly construed, and will not be extended by implication to anything not clearly and expressly prohibited or required by the plain terms of the restriction. Turnley v. Garfinkel (1962) 211 Tenn. 125, 362 S.W.2d 921; Shea v. Sargent (Tenn.1973) 499 S.W.2d 871. There is certainly no requirement of a tap fee in the restrictions as herein quoted. If the language be deemed ambiguous on that point, which it is not, the recording of the restrictions is not constructive notice of the requirement of a tap fee; and absent actual knowledge a vendee takes free of that requirement. Maxwell v. Land Developers, Inc. (Tenn.App.1972) 485 S.W.2d 869.

Again, considering the equities of the parties, we nóte the plaintiff had three opportunities to give notice to the world of its claim of a tap fee: (1) the claim could have been included in the recorded restrictions on the entire subdivision; (2) the claim could have been included in the recorded deed of sale of Section IV of the subdivision; (3) the contract with Waterfalls for a $200 tap^ fee could have been recorded.

The plaintiff was not required by law to do any of these things. And, the plaintiff chose to not give notice to the world of its claim to a tap fee. The plaintiff sold Section IV of the subdivision under such circumstances as left Waterfalls free to deal with the public in such manner as could, under the plaintiff’s claim of unjust enrichment, result in considerable damage to any innocent purchaser of a lot from Waterfalls; that is what happened to the defendant. There is no natural equity here, except in the defendant. The policy of the law is against upholding secret liens, encumbrances and charges to the injury of innocent subsequent purchasers and encum-brancers. T.C.A. §§ 64-2601, 2602, 2603.

A weighing of equities should also result in a denial of the plaintiff’s recovery where, as here, the plaintiff has given a third party (Waterfalls) the apparent authority to pass the enrichment on to another, and the defendant in his dealings with the third party, without knowledge, has relied upon the enrichment to his detriment. See and compare: Hibbs v. Alexandria First Nat’l. Bank (1922) 133 Va. 94, 112 S.E. 669. Here, the defendant has parted with his payment for the 30 lots based upon the inclusion of the tap fee in the purchase price.

The foregoing, coupled with the long delay by the plaintiff in bringing its lawsuit, could easily have resulted in denying the defendant the opportunity to recoup from the parties to whom the 27 lots were sold, all or a part of the amount owing the plaintiff, if any. This unexplained and unwarranted delay in bringing suit must weigh against the equity in the plaintiff.

Finally, in weighing the equities, it should be noted the course of action followed by the plaintiff in its dealings with Waterfalls, coupled with this present demand against the defendant based upon the doctrine of unjust enrichment, sets the stage for quite a bit of chicanery between the plaintiff and Waterfalls. To say the least, the wrongful act of Waterfalls in not advising the defendant of the contract requiring a $200 tap fee [which act was admitted to be wrong by the president of the plaintiff] was the result of the acts of the plaintiff in dealing with Waterfalls, coupled with the plaintiff’s failure to record its claim for a tap fee.

Chancellor Gibson dealt with this type situation as follows: “Where one of two persons must suffer loss (plaintiff or defendant) by the acts or fraud of a third party (Waterfalls), he who enabled that third party to occasion the loss, or to commit the fraud, ought to be the sufferer.” (Parentheses added) The reason given for the rule “consists in the fact that the equity of the one, whose act caused the loss, is less than the equity of the other party.” Gibson’s Suits in Chancery, 5th Ed., Vol. I, § 61, p. 75; see also, Tennessee Hospital Service Assn. v. Strang (1961) 49 Tenn.App. 263, 354. S.W.2d 488.

Considering the acts and the failure to act of both parties, this Court should hold the equity in the plaintiff is far less than the equity in the defendant, and the acts of the plaintiff enabled the third party Waterfalls to commit the wrong.

Under the record the plaintiff has no standing to assert the doctrine of unjust enrichment against the defendant. The elements of unjust enrichment as set out in Paschall’s, Inc. are not present in this lawsuit.

The decree of the Chancellor should be reversed, and this lawsuit dismissed at the cost of the plaintiff.


author: SANDERS, Judge.

text:
    Bruce HARRELL et al., v. HAMBLEN COUNTY QUARTERLY COURT and Hamblen County Planning Commission.
    Court of Appeals of Tennessee, Eastern Section.
    March 26, 1975.
    Certiorari Denied by Supreme Court Aug. 18, 1975.

      John F. Dugger, Morristown, for appellant.
    A. Benjamin Strand, Jr., Dandridge, for intervening petitioners.
    Anderson & Anderson, and William 0. Foutch, Jr., Morristown, for appellees.
   OPINION

SANDERS, Judge.

The Hamblen County Quarterly Court and the Hamblen County Planning Commission have appealed from a decree of the Chancery Court holding that they acted arbitrarily in denying the Petitioners a permit to construct a mobile home park.

The Petitioners, Bruce Harrell, Frank Harrell, Johnny McCrary and Ralph P. Ma-sengill, Sr., are the owners of a tract of land containing approximately 20 acres, most of which is located in the Second Civil District of Hamblen County, with a small portion located in Jefferson County.

In October, 1973, the Petitioners submitted a preliminary plan to the Hamblen County Planning Commission to develop the property into a mobile home park. At this meeting the Planning Commission voted to preliminarily approve the plan but advised the_ Petitioners that before_final approval could be given they must comply with the provisions of an ordinance which had been recently passed by the Hamblen County Quarterly Court governing mobile home parks.

The ordinance in. question is an ordinance passed by the Quarterly Court in pursuance of Chapter 350 of the Private Acts of 1968 as amended by Chapter 38 of the Private Acts of 1973. The ordinance provides regulations and standards for mobile home parks located in Hamblen County outside the city limits of Morristown. The ordinance outlines some 15 provisions which must be met in order to qualify for a mobile home park permit. These items .include size of lots, width of streets, setback requirements, garbage facilities, availability of water supply, sewage and septic tank requirements, parking space for automobiles, etc.

On November 20, 1973, the Petitioners appeared before the Planning Commission with their final plans for the mobile home park and requested a permit. The record indicates that the Petitioners had met or exceeded the minimum requirements set forth in the ordinance. However, there were in attendance at this meeting a large number of people who owned homes in subdivisions adjacent to or in the vicinity of the proposed mobile home park who were opposed to the Planning Commission’s issuing a permit. Although those appearing in opposition to the issuance of the permit advanced several theories for their opposition, such as overcrowding the schools in the area, increasing traffic congestion, increase in crime, possible sanitation hazards, etc., no competent proof was offered to support any of these theories. The main thrust of the opponents was that they lived in good-class, highly restricted subdivisions and the location of a mobile home park nearby would substantially decrease the valúe of their properties.

At the conclusion of the hearing the Commission, by a vote of four to two, denied Petitioners’ permit. Each member of the Commission was asked to give the reason for his vote before voting. The following appears in the minutes of that meeting:

“Mr. Duggan Bradley stated, we do not have zoning in the county, though we have taken some action tonight hopefully giving the County Court a chance to zone the county. Mr. Bradley then stated, that if the property was zoned residential and the developers ask for rezoning for a trailer park he would have to vote no, but as Mr. Dugger said, the Planning Commission’s power is to regulate subdivisions and mobile home parks, and it is not for the Planning Commission to decide whether the mobile home park would create a nuisance, that is a court action. The Planning Commission determines whether the developer meets the regulations, and if the developer does not meet the regulations the Planning Commission still has action, but the developers do have a plan that is more then adequate, it has surpassed the regulations in every area and because they have met and passed the regulations, Mr. Bradley stated he must vote yes.

“Mr. James Helton voted yes for the same reasons. Mr. Helton stated the people in this district in question were the people who elected him. They elected him to do what he thought was right and he had studied the plan and it meets all the requirements. Mr. Helton stated he did not like the proposed park either and if he lived in the area in question he would not like the proposal but he would still have to vote yes because the plan meets all the regulations.

“Mr. Wilbur Purkey voted no for the residents present at the meeting. Mr. Pur-key stated he was sure Mr. Harrell and his people would do exactly as they say but his vote was still no.

“Mr. Ayers Porter, Jr. voted no. Mr. Porter stated that he represented the County Quarterly Court and he did not have any apologies for any one. He was voting the way he saw fit.

“Mr. Willis Foshie voted no. Mr. Foshie stated that not knowing the effect on the safety, morals, and convience [sic] of the residents this plan is going to have, his vote was no.

“Mr. William South stated the Commissioners were not computers and if they were, they could be programmed for regulations. Mr. South stated the regulations were not to be broken but he based Ms vote on the statement in the regulations, that the purpose of the ordinance which the Planning Commission goes by is to promote public health, safety, morals, convenience, order, prosperity, and general welfare of the public, by regulation of location and development of mobile home parks.

“Mr. South stated he found no fault with Mr. Harrell’s development but he feels if he voted for the plan he would not be promoting the health, safety, etc. so he also voted no.”

Following the action of the Planning Commission, the Petitioners appealed to the Quarterly County Court sitting as a zoning board of appeals. In substance, the same proof was offered before the Quarterly Court as had been offered before the Planning Commission. The record indicates that there were approximately 150 residents of the county present at the hearing in opposition to the issuance of the permit.

At the conclusion of the hearing the members of the Quarterly Court voted seven to six in favor of upholding the ruling of the Planning Commission. No reason was given by any of the members for voting against the issuance of the permit, but a statement made by one of the members immediately before the vote was taken we think is pertinent. “Mr. Thompson: If we don’t consider these people down there, how is the state going to consider us when we are against the prison?”

This court will take judicial notice of the fact that the State of Tennessee had proposed the construction of a state prison in Hamblen County which had been strongly opposed by many citizens of that county, resulting in extensive litigation.

Following the action of the Quarterly Court, the Petitioners filed a petition for a writ of certiorari in the Chancery Court of Hamblen County. The case was heard by The Honorable Thomas G. Hull, Chancellor, sitting by interchange for Chancellor William H. Inman.

A number of home owners and residents living in the vicinity of the proposed mobile home park were permitted by the Chancellor to file intervening petitions in opposition to the issuance of the permit. The Chancellor considered the evidence presented before the Planning Commission and the Hamblen County Quarterly Court but heard testimony of additional witnesses, most of which was cumulative.

He found the issues in favor of tne Petitioners and found that the Planning Commission and the Quarterly Court had acted arbitrarily in denying the permit and directed the Planning Commission to issue one.

The Planning Commission and the Quarterly Court have appealed and assigned the action of the Court as error.

The Chancellor filed a memorandum opinion in which he said, in part: “The Court finds and holds that it is substantially agreed to by the parties that the plaintiffs’ application to construct a mobile home park met or exceeded all the requirements of the mobile home ordinance which was the only law in effect in Hamblen County at that time concerning mobile home parks.

“The Court permitted owners of property in close proximity to the mobile home park site to file an intervening petition and to be heard, and the thrust of their opposition to the proposed park was that it would create an undue burden on the school system, the garbage collection, the traffic on the highways, and generally be disruptive and damaging to the value of their homes if it were permitted to be constructed. The Court, after considering this matter believes that the plaintiffs have complied with the rules and regulations of the mobile home park ordinance and should, therefore, be granted a permit to construct same and that the action of the Planning Commission and the Quarterly County Court was arbitrary and contrary to the laws and rules and regulations in force and effect at the time the application was denied.”

We concur with the Chancellor in his findings of fact. We think it is abundantly clear from reading this record that the Petitioners had fully complied with the requirements of the ordinance governing standards for mobile home parks in Hamblen County.

It is interesting to note that none of the witnesses who testified suggested that the Petitioners had failed to meet the standards set forth in the ordinance and none of those who voted against issuing the permit gave this as a reason for so voting.

Section I of the Mobile Park Ordinance provides as follows: “Purpose and Scope— The purpose of this ordinance and resolution is to promote the public health, safety, morals, convenience, order, prosperity and general welfare by the régulation of the location of and the development of mobile home parks and trailer courts in that area of Hamblen County outside the city limits of the City of Morristown.”

The Appellants argue that this provision of the ordinance gives the Planning Commission the discretion to deny a permit at any place where, in their judgment, the general welfare of the community might be affected.

We cannot agree. Section I is the preamble of the ordinance. It is well settled in this state that the preamble of a statute or ordinance may be looked to in determining its construction but it is not a part of the controlling provisions of the ordinance. Memphis Street Railway Co. v. Byrne, 119 Tenn. 278, 104 S.W. 460; Queener v. Magnet Mills, 179 Tenn. 416, 167 S.W.2d 1; City of Kingsport v. Jones, 196 Tenn. 544, 268 S.W.2d 576.

It is obvious that the Planning Commission and the Quarterly Court denied the permit to the Petitioners because of the objection of the adjacent property owners, which they were without authority to do. 101 CJ.S. Zoning, § 224.

Although these adjacent property owners may be justifiably concerned as to the adverse effect that may be had on the value of their property, this does not permit an administrative agency to deny an adjoining property owner the right to use his property for lawful purposes and not in violation of zoning or restrictions. Application of Garden City Jewish Center, 2 Misc.2d 1009, 155 N.Y.S.2d 523; Congregation Committee, North Fort Worth Congregation, Jehovah’s Witnesses v. City Council of Halton City, Texas Civ.App., 287 S.W.2d 700.

“The grant or refusal of a permit is to a certain extent within the sound discretion of the board or official authorized to use it, but the discretion must be exercised reasonably, and if an applicant meets all of the requirements of the zoning regulations and there is no valid ground for denial of the application, the permit should be issued.” 101 CJ.S., supra.

The Law of Zoning and Planning, Chapter 55, Section 3, says:

“So long as the application is in order and the proposed use of the property complies with applicable municipal ordinances or, where although not complying, the premises has a vested non-conforming status, the applicant is entitled to a permit, and it is the duty of the administrative officer to issue him one.”

Also within Chapter 55 at pages 55-4, 55-5, of the above treatise, it says:

“The issuing of permits has often been held to be an administrative or ministerial act and the person charged with the duty of issuing permits must follow literally the provisions of the ordinance. Although, in a New York case, the court said: ‘Undoubtedly, the right to grant or withhold a permit carries with it an exercise of discretion in the discharge of a public duty,’ it added that ‘. such discretion must be exercised reasonably and. upon a proper factual foundation.’ Discretion can enter only where the language of the ordinance necessitates administrative interpretation. In a New York case, the court said:
“ ‘It has been held that the administrative official charged with the duty of issuing permits is bound by the provision of the ordinance pursuant to which he purports to act, Larkin Co. v. Schwab, 242 N.Y. 330, 151 N.E. 637; Brooklyn Parking Corp. v. Cannella, 193 Misc. 811, 85 N.Y.S.2d 389, and a refusal to issue a permit upon a ground other than one which comes within the scope of the building inspector’s authority as spelled out by the ordinance constitutes an arbitrary act. Carpenter v. Grab, 257 App.Div. 860, 12 N.Y.S.2d 906.
“ ‘Ordinarily the issuance of a building permit is purely an administrative act, and the person charged with its issuance must follow the literal provisions of the zoning ordinance. He is circumscribed by their provisions and absent some cogent reason based on the wording in the ordinance, the granting of a permit is required as a matter of course. The granting or withholding of a permit Is not a matter of arbitrary discretion. If the applicant complies with the requirements of the ordinance, he is entitled to his permit. Beckmann v. Talbot, 278 N.Y. 146, 15 N.E.2d 556; Carpenter v. Grab, supra; People ex rel. Corn Hill Realty Co. v. Stroebel, 209 N.Y. 434, 103 N.E. 735; McQuillin, Municipal Corporation, 3d Ed., Sec. 26.206 and cases cited. This being so, the respondents must be guided by provisions of the ordinance set forth above.’ ”

The assignments of error are overruled. The decree of the Chancellor is affirmed and the case is remanded to the Chancery Court of Hamblen County for the enforcement of its decree.

The cost of this appeal is taxed to the Appellants.

PARROTT, P. J. (E. S.), and GODDARD, J., concur.


author: REAVLEY, Justice.

text:
    NATIONAL RESORT COMMUNITIES, INC., Petitioner, v. Kenneth L. CAIN et al., Respondents.
    No. B-4868.
    Supreme Court of Texas.
    May 28, 1975.
    Rehearing Denied July 9, 1975.

      Clark, Thomas, Denius, Winters & Shapiro, Barry K. Bishop, Austin, for petitioner.
    Stayton, Maloney, Hearne, Babb & Cow-den, Douglass D. Hearne, Austin, for respondent.
   REAVLEY, Justice.

The purchasers of lots in a lake subdivision are seeking to reform the lot descriptions in their contracts of sale on the ground of mutual mistake. The trial court reformed the contracts to meet the prayer of the purchasers, and the Court of Civil Appeals affirmed. 512 S.W.2d 367. We hold that the mistake of the parties to the contracts cannot be rectified by reformation because of the absence of any agreement by the parties at the time of making the contracts that the writing would bind them to the transfer of the particular land purchasers now seek to obtain.

Between March and July of 1969 these five purchasers selected areas which they desired to purchase in the Lago Vista subdivision on Lake Travis. The surveying of the roads and lots was not completed until July. The purchaser and the subdivision sales agent agreed that the former would have the option of purchasing lots which would extend on the west to the former bed of the Colorado River, which meant that the lots would always reach into the water of this inconstant level lake. When the surveying was done, however, the west boundary of the lots was placed along the 715 foot elevation, the contour line to which the Lower Colorado River Authority had a flowage easement. This put the lots allocated to these purchasers away from the edge of the water. Since July of 1969 the seller has been willing to rescind all of the transactions, and it offered to execute contracts for certain lots as subdivided and platted nearest the water, but the seller has refused to contract for the sale of land between the 715 foot contour line and the old river. The difference being critical to the purchasers, who wanted and agreed with the selling agent that they were to get waterfront land, this litigation resulted.

The purchasers first sued the seller to enforce the promises of its agent and to obtain specific performance of the lot selected by each purchaser and extending to the bed of the old river. That effort fell unsuccessful on the horns of the statute of frauds. National Resort Communities, Inc. v. Cain, 479 S.W.2d 341 (Tex.Civ.App.1972, writ ref’d n. r. e.). The Court of Civil Appeals then remanded in the interest of justice to permit the purchasers to prove, if that were the case, that the parties were mutually mistaken in a belief that the descriptions of the property used in the contracts were sufficient to identify the land between the platted lots and the old river channel. The purchasers applied for writ of error in this Court, contending unsuccessfully that they were entitled to the judgment of specific performance as rendered by the trial court. The seller did not apply for writ of error and accepted the remand.

Back in the trial court, the purchasers amended their pleadings to seek reformation of the contracts and contended that the parties were mutually mistaken in the belief that the descriptions were sufficient to bind them to the transfer of the waterfront property. A summary of the evidence of the transaction With each of the purchasers follows.

Kenneth Cain

Cain was the one who discovered this attractive land and who told the other purchasers. He was at the Lago Vista lake resort in March of 1969 when he met and spoke of his interest in acquiring lakefront property with the Lago Vista salesman, T. M. Irvin. Irvin told him that Lago Vista had just acquired a new tract and that lakefront lots would be available. This new tract contained 776 acres and in March there were no improved roads into the area; Cain and Irvin rode in a jeep and walked over the land to inspect it. Cain selected an area of the lakefrontage that he desired to purchase and one stake was placed to designate that area. No surveying had been done within the 776 acres ; so Cain and Irvin agreed that when the lot lines were located, an adjustment would be made if necessary to give Cain the lake-frontage he desired. There is no dispute but that the two agreed that the land to be conveyed would extend into the lake and to the old river bed.

On March 18, 1969 a contract with the seller was executed by Cain. It consisted of a complete contract for lot 408 which was located in an older section of Lago Vista. The parties also signed a sales deposit receipt which provided under “other terms and conditions” the following:

Buyer herein may transfer equity to stake parcel in new area for 6500 total purchase price lakefront at least 100 X 125. Thereafter Cain received a letter from

the seller, confirming the March 18 contract and saying in part:

This letter will confirm that you have the option to trade your equity in said lot toward the purchase of a lot on the lakefront as near as possible to the location of a stake with your name thereon. Said lot shall be a minimum of 100 feet by 125 feet with a purchase price of $6,500.00.

Lago Vista filed with the County Clerk a subdivision plat of its “Country Club Estates, Section Five” on July 15, 1969. All of the lots in the area of controversy have the 715 foot contour line as their western boundaries. Prior to the trial of this cause, Cain and his fellow purchasers employed a surveyor to extend the north and south lines of certain lots westwardly toward the lake. By this means they obtained field-notes which described lakefrontage matching the area originally desired by each purchaser. These fieldnotes were used by the trial court in its judgment reforming the contracts in accord with the contentions of the purchasers. The contract for Cain was thus reformed to describe lot 776 as shown on the Lago Vista plat but extended on west to the old Colorado River bed.

Donald Yarbrough

Yarbrough desired lakefront next to Cain, and the agreement and transaction were to the same effect in all material respects. On March 27, 1969, Yarbrough signed a contract for platted lot 607 as well as a sales deposit receipt which stated:

Customer has option to exchange this lot on lot where stake on new section of Country Club. Waterfront price $6,500 — 100 X 125 at least.

The contract for Yarbrough was reformed by the trial court to describe lot 777 as shown on the Lago Vista plat but extended on west to the river bed.

Irene Yarbrough

Donald Yarbrough selected an adjoining site for his mother, Irene Yarbrough. Her contract to purchase lot 426 is dated April 2, 1969. At the bottom of that contract is written: “Customer has option to exchange for waterfront lot in new section CC.” On the sales deposit receipt is written:

Customer has option to exchange this lot for waterfront lot in new section Country Club at $6500. 100 X 125 above the waterline 715.

Her contract was reformed by the trial court to describe lot 778 as shown on the Lago Vista, plat but extended on west to the river bed.

Richard Young

By June 15 when Young made his agreement and signed the contract, some surveying had been done and a plat was available, although the work was not completed. Young was interested in two areas, each composing two lots. He signed contracts to purchase lots 755 and 757, and on his sales deposit receipts is written: “Customer has option on 772 and 773 at same price.”

At that time Irvin and Young were not certain of the numbers of the lots which Young wanted, and which they named in the receipts as 772 and 773. They had an agreement as to the lots on the ground but were to adjust the description to 771 and 772 if those were the correct lot numbers (as was later determined to be so).

As to the west line of lots 771 and 772, the stakes on the ground were at the 715 contour line, and there had been no surveying or any line located on the ground further west between that 715 level and the lake or river bed. This was also shown on the plat. These lots were bounded on the west by the 715 foot line and did not extend to the river bed. The seller’s agent, Irvin, assured Young nevertheless that the surveying was incomplete and that these lots would be extended west to the river bed.

Paul Nelson

Nelson signed his contract for lot 775 on June 25. He, like Young, saw the plat which placed the west boundary at the 715 foot contour line, but he was told that the final survey would locate that line at the river bed.

There is no contention that Irvin was dishonest in what he told these purchasers. He testified at the trial that the testimony of the purchasers was correct and that he agreed that all of them would get lots extending to the river bed. He is still selling lots in this subdivision. Apparently his superiors changed their plans or he had misunderstood them. We assume for purposes of this opinion that the officers of the corporation which owned the land were aware of the oral agreement between Irvin and the purchasers and that any mistake of Irvin was the mistake of the corporate officers.

The trial court asked the jury to answer special issues for each of the five purchasers. For Kenneth Cain, Donald Yar-brough, and Irene Yarbrough, the issues inquired whether the parties “were mutually mistaken in the belief that the descriptions used in the sales contracts were sufficient to describe a particular and identified lot which would be at least 100 X 125 feet above the 715-foot contour line and extending westerly into the lake to the channel of the old river?” The issue pertaining to Richard Young inquired if the parties “were mutually mistaken in the belief that the descriptions used in the sales contracts were sufficient to describe lots Nos. 771 and 772 and the extensions thereof westerly into the lake to the channel of the old river.” The issue relative to Paul Nelson made the same inquiry as that of Richard Young, except that Nelson’s question was whether the contract was “sufficient to describe Lot No. 775 and the extensions thereof westerly into the lake to the channel of the old river?” The jury answered all of these issues in favor of the purchasers and the trial court entered judgment reforming the contracts to describe tracts of land by metes and bounds which placed the west boundaries at the river bed. The Court of Civil Appeals affirmed, thinking that the result was in accord with Morrow v. Shotwell, 477 S.W.2d 538 (Tex.1972).

The statute of frauds, V.T.C.A., Bus. & C., § 26.01, is no bar to the reformation of a contract for the sale of land where the parties had an agreement and by their mutual mistake failed to state the agreement in the writing. The one who seeks to have equity change the writing must satisfy two requirements. First, he must prove the true agreement of the parties, for it is not enough to show that both parties were mistaken about some feature of their bargain. Mistakes of that nature may warrant rescission but not reformation. For example, in Continental Oil Co. v. Doornbos, 402 S.W.2d 879 (Tex.1966), the grantor and grantee both thought that the grantor owned all of the mineral estate except ⅜2 royalty interest and that after reserving another ⅝2 royalty to the grant- or, the grantee would then be entitled to all royalty above an eighth of production if provided by any subsequent lease. They were mistaken; the effect of a prior deed entitled the prior grantee to take ½ of all royalty, regardless of whether the lease paid Ys or more. There was a mistake, but there was no agreement to substitute for that of the written conveyance.

The second requirement for reformation is that ⅞0 erren'■; 1" written (or included or omitted) into the instrument was there by mutual mistake. It is not enough that the writing differed from the oral agreement. Estes v. Republic National Bank of Dallas, 462 S.W.2d 273 (Tex.1970); Sun Oil Co. v. Bennett, 125 Tex. 540, 84 S.W.2d 447 (1935). “The province of reformation is to make a writing express the bargain which the parties desired to put in writing.” 13 Williston on Contracts § 1549 (3rd ed. 1970).

These requirements were both met by the purchaser in Shotwell v. Morrow, 498 S.W.2d 432 (Tex.Civ.App.1973, writ ref’d n. r. e.). Both seller and purchaser had identified all four corners and boundary lines prior to the time they signed the contract, and they both thought that the description in the deed was legally sufficient to describe that very tract. The trial judge shared their mistake on that score when the case was first heard on the purchaser’s attempt to obtain specific performance of the contract as written. In the first phase of the case, the Supreme Court held the description to be inadequate, but remanded the case for this reason:_

There is in the record strong evidence that the parties intended to describe a particular and identified tract of 12.375 in their contract, and that they were mutually mistaken in the belief that the description used was legally sufficient for that purpose. If that be a fact, Morrow would have been entitled to reformation of the contract had he sought it. Morrow v. Shotwell, 477 S.W.2d 538, 541 (Tex.1972).

Following the second trial, where the purchaser’s evidence and the findings met these requirements stated by the Supreme Court, the second appeal by the seller was correctly disposed of by the Court of Civil Appeals with the explanation that no mistake had been made in the identity of the property itself, but the mutual mistake was made in the misdescription in the written contract. 498 S.W.2d 432, 434.

The answer to the suit of Cain et al. is that no precise land beyond the 715 foot contour line was ever identified by the párties. They agreed upon a general area or site. This neither satisfies the express requirements for reformation stated in Morrow v. Shotwell, nor would it satisfy the statute of frauds if the contract were reformed to that effect. A tract of land is not identified for these purposes by the location of a single stake and the agreement to adjust future plat lines to include a certain point or stand of trees.

Three of the purchasers signed contracts at a time when no corner or boundary line was known. The other two were definite only about the lot lines above the 715 foot elevation; there was no agreement that the north and south lines would be extended due west or on the very same bearing as the existing line (straight from the road to the river bed) or that the purchaser himself was to elect exactly how to extend the lines westerly. The acreage below the 715 foot elevation was to be located after all of the written contracts were signed. The surveyor subsequently employed by the purchasers did more than produce descriptive fieldnotes for the trial court’s judgment; he located the lines below the 715 foot elevation for the first time.

Surely these parties were mutually mistaken. They thought that, when the surveying was completed, lots in this area would extend to the old river bed. Perhaps they were mistaken about the law, thinking that the oral agreements could be enforced and that equity would complete the surveying and locate lot lines in substantial accord with those agreements. These mistakes are no basis for reformation. The parties had no agreement for the sale of tracts with specifically defined boundaries and they could not have thought that the recitations on the sales deposit receipts described tracts so “particular and identified.”

The seller has stood ready throughout this litigation to rescind the contracts. The cause will therefore be remanded to the trial court to allow each purchaser to obtain rescission or to stand upon his contract as written.

The judgments of the courts below are reversed and the cause is remanded to the trial court.

SAM D. JOHNSON, J., notes his dissent.


author: DENTON, Justice.

text:
    Eileen SAUNDERS et al., Petitioners, v. TEXAS EMPLOYERS’ INSURANCE ASSOCIATION, Respondent.
    No. B-5025.
    Supreme Court of Texas.
    July 9, 1975.
    Rehearing Denied Sept. 24, 1975.
    Combs & Archer, Marvin B. Peterson, Jr., Houston, for petitioners.
    Butler, Binion, Rice, Cook & Knapp, Tom M. Davis, Jr., and Donald B. McFall, Houston, for respondent.
   DENTON, Justice.

This is a workmen’s compensation ease where the question presented is whether an injured employee’s death which resulted from suicide is compensable under the terms of Article 8306, Section 1, Vernon’s Civil Statutes Annotated, which precludes recovery if “the injury was caused by the willful intention” of the employee. The trial court, based upon a jury verdict, awarded benefits to Saunders’ widow and minor child; however, the court- of civil appeals reversed and rendered, holding that for death by suicide to be compensable it is necessary that the deceased have taken his life through an uncontrollable impulse or in a delirium of frenzy without conscious volition. Tex.Civ.App., 516 S.W.2d 242. We reverse the judgments of the courts below and remand the case for a new trial.

James E. Saunders sustained a serious injury to his back while on the job in February of 1972 which required that he be admitted to a hospital where corrective surgery was performed. After the initial surgery and dismissal from the hospital, Mr. Saunders was readmitted in April of 1972 for treatment of a leg condition that was attributed to the prior accident sustained in February. Texas Employers’ Insurance Association authorized and paid for Saunders’ medical treatment as well as paying compensation benefits throughout this period. From April through June of 1972 Mr. Saunders appeared to be making a normal recovery and was anxious to return to work; however, in July his condition worsened and he began to suffer intense pain in his back. To combat this reversal, Saunders administered to himself more and more medication which had been prescribed to ease his pain, and sought, with the permission of his treating physician and the insurance carrier, the opinion of another specialist. He was readmitted to the hospital for more tests and upon his discharge was told that he possibly might need additional surgery in order to alleviate the severe pain he was experiencing. Mrs. Saunders and several neighbors testified that because of the increased pain, Mr. Saunders took more and more medication; and that he underwent a radical personality change exemplified by irritableness, rejection of his family and friends and becoming quite withdrawn. On Sunday, September 24, 1972, Mr. Saunders was observed taking his medicine and complaining of the pain in his back prior to his wife and daughter’s departure for church. Upon their return, he was found dead as a result of a self-inflicted shotgun wound.

Mr. Saunders’ widow and minor child brought suit under the Workmen’s Compensation Act and were awarded benefits thereunder by the trial court based upon a jury verdict. The jury’s answers to special issues, which were submitted in accordance with the rule laid down in Jones v. Traders & General Insurance Co., 140 Tex. 599, 169 S.W.2d 160 (1943) were as follows: that the back injury, combined with Saunders’ subsequent medical treatment, caused him to become so deranged that he was compelled to take his own life through an uncontrollable impulse; that the injury so suffered, combined with the resulting derangement, was the producing cause of the death; and that Saunders’ taking of his own life was not caused by his willful or voluntary intent to injure himself.

The court of civil appeals, in reversing the trial court’s judgment, concluded that there was no evidence to support the jury’s answers to the above special issues in view of the test set out in Jones v. Traders & General Insurance Co., supra. In Jones, it was announced that in order for a suicide to be compensable under the Workmen’s Compensation Act there must follow as a direct result of the work-injury,

an insanity of such violence as to cause the victim to take his own life through an uncontrollable impulse or in a delirium of frenzy without conscious volition to produce death . . . however, where the suicide is the result of voluntary and willful choice determined by a moderately intelligent mental power with knowledge of the purpose and effect of the act, even though dominated by a disordered mind, a new and independent agency breaks the chain of causation.

In Jones, the workman was suffering from intense pain as a result of an injury to his foot and subsequently drank a mixture of concentrated lye, cleaning fluid and insect poison which caused his death three days later. The court thereupon concluded that no evidence had been adduced tending to prove a derangement or an insanity of such violence as to have caused the deceased to have taken his life through an uncontrollable impulse without conscious volition. Rather, the court was of the opinion that the evidence proved that the deceased had deliberately and voluntarily drunk the poison for the very purpose of taking his life and thus to put an end to his suffering. This same conclusion could be drawn under the evidence presented at the trial of the instant case, for there was testimony that Saunders was experiencing severe pain and probably knew what would happen when he pulled the trigger. The expert testimony, however, indicates that while the deceased was aware of the physical nature of his actions, the evidence also supports the determination that the deceased’s impulse to commit suicide was one which arose at a time when he was unable to realistically evaluate such a course of action due to the cumulative effect of the drugs he was then taking.

The rule applied in Jones v. Traders & General Insurance Co., supra, was formulated by the Massachusetts Supreme Court in 1915 in the case of In re Sponatski, 220 Mass. 526, 108 N.E. 466 (1915), and thereafter adopted by a number of other jurisdictions. See Annot., 15 A.L.R.3d 616 (1967). The rule is directed at examining the deceased’s capacity for conscious volition and is based on the assumption that where this element exists in a person who commits suicide, then the death does not arise directly from the prior injury, but rather from an independent intervening cause. The death is thereby considered a willfully self-inflicted act and therefore not covered by workmen’s compensation statutes. The Sponatski doctrine, however, as articulated by the courts, is not a unitary concept, but contains two components: (1) uncontrollable impulse, which has to do with one’s will power, and (2) lack of knowledge of physical consequences, which has to do with an individual’s understanding or recognition of what he is doing. See A. Larson, Workmen’s Compensation § 36.30, at 6-43 (Desk edition 1974). It is the strict application of this second factor, as was done in Jones, which has caused the greatest criticism of the Sponatski doctrine, for it fails to recognize the effect of pain, despair and prescribed psychotropic drugs. A number of jurisdictions, upon recognizing the advances made by medical science and psychiatry relating to the study of human reasoning and behavior have concluded that a suicide cannot be considered to have been intentionally self-inflicted if, in spite of the fact that the act is a conscious one, the suicide can be shown to have resulted from the deceased’s inability to control the impulse to kill himself. See, e. g., Burnight v. Industrial Accident Commission, 181 Cal.App.2d 816, 5 Cal.Rptr. 786 (1960); Whitehead v. Keene Roofing Co., 43 So.2d 464 (Fla.1949); Anderson v. Armour & Co., 257 Minn. 281, 101 N.W.2d 435 (1969); Prentiss Truck & Tractor Co. v. Spencer, 228 Miss. 66, 87 So.2d 272 (1956); Reinstein v. Mendola, 39 A.D.2d 369, 334 N.Y.S.2d 488 (Sup.Ct. 1972), aff'd, 33 N.Y.2d 589, 347 N.Y.S.2d 455, 301 N.E.2d 438 (1973); Petty v. Associated Transport, Inc., 276 N.C. 417, 173 S.E.2d 321 (1970). It would appear to us that this modification of the Sponatski doctrine is a sound one, for if the effects of an injury or its treatment so acts upon the will of the injured workman so that it is not operating independently at the time of the suicide, then the chain of causation would appear to be unbroken and the fact that the decedent knew of the physical consequences of his act would be irrelevant.

The Jones decision, as in the other jurisdictions following the Sponatski doctrine, also emphasized the necessity for the presence of an uncontrollable impulse, evidenced by a delirium or frenzy, in order for a suicide to be compensable. See, e. g., Barber v. Industrial Commission, 241 Wis. 462, 6 N.W.2d 199 (1942). As a result, compensation claims have been generally allowed when death was occasioned by some violent or eccentric method of self-destruction, but denied when the suicidal act was accomplished through some milder form such as the taking of an overdose of sleeping pills. See A. Larson, Workmen’s Compensation § 36.20, at 6-42 (Desk edition 1974). It would seem, however, that the. test should not be concerned with whether the compulsion could be characterized as being abrupt, unpremeditated or violent, but whether an uncontrollable impulse resulted from an impairment of the workman’s reasoning facilities which would cause the suicidal act to be an involuntary one.

The essential question then becomes what criteria are to be followed in reaching the ultimate conclusion as to whether or not the record establishes sufficient mental derangement, causally related to the original injury. Although there is some controversy among the jurisdictions as to the kind or degree of mental disorder which will prohibit suicide from being viewed,as an independent intervening cause, see Larson § 36.10, at 6 — 40, we believe that in cases where the effects of injuries suffered by the deceased result in his becoming dominated by a derangement of the mind which impairs the ability to resist the impulse to take his own life to the extent that the decedent was in fact unable to control it, the suicide cannot be termed as willful under article 8306, section 1. A brain derangement would not necessarily be restricted to some organic mental disease or defect, for advances in the field of psychiatry bring such afflictions as deep depressive anxiety reactions into the area of brain derangement and medical science has made great strides in determining the effects that drugs have on human behavior. See Reinstein v. Mendola, 39 A.D.2d 369, 334 N.Y.S.2d 488 (Sup.Ct.1972), aff’d, 33 N.Y.2d 589, 301 N.E.2d 438, 347 N.Y.S.2d 455 (1973); Avery v. City of Middletown, 40 A.D.2d 568, 334 N.Y.S.2d 708 (Sup.Ct.1972), rev’d, 38 N.Y.2d 771, 350 N.Y.S. 412 (1973) (adopting lower court’s dissenting opinion); Berger, Drugs and Suicide in the United States, 8 Clinical Pharmacology and Therapeutics 219 (1967).

In examining the testimony given at the trial of the instant case, it becomes evident that Saunders’ mental condition was substantially. altered by the drugs he was prescribed in an effort to relieve his pain. This was apparent from testimony concerning his personality changes as mentioned before as well as the following expert testimony by Doctor Doak concerning the cumulative effect of the drugs that Saunders was taking:

Q. All right sir. You indicated earlier that a person’s judgment could be impaired [by these drugs]. Could a man’s judgment be impaired so much that he could not distinguish a right from a wrong?
A. Yes, in the sense that a person’s sense of values would be quite, quite distorted, and he might well feel impelled to do something that otherwise he would not be impelled to do.
. [It] won’t give him hallucinations necessarily, like some medicines will, but it distorts, can distort the sense of values and give a person a different perspective in terms of values and value judgments. . .

The doctor was also provided with a hypothetical fact situation which tracked Saunders’ last months to which he responded:

I would say that it’s very probable that this act of suicide was brought on by a state of profound emotional depression which had its basis in the actualities of the man’s situation, of pain and disability — I suppose he would have a somewhat hopeless outlook had his two doctors disagreed as to what should be done, and his normal good sense, that should have kept him from doing such a thing, would be largely altered by the combinations of medicines that he was taking, because he was taking several different ones that individually can cloud judgment and working together are well recognized to augment these effects of one another.
. [T]he effect of these medicines very probably in a susceptible individual could induce a state of mind, and outlook, a distortion of values, an impairment of judgment that would interfere with the operation of his normal good sense, and make him very likely to do what he did.

There was also testimony of an express warning accompanying one of the medications prescribed for Saunders which warned that suicidal tendencies might be evidenced when the drug was taken in conjunction with other psychotropic drugs.

The above evidence is indicative of an individual whose suicidal act was the result of a mental derangement which impaired his ability to resist what then became an uncontrollable impulse to do away with himself. This condition, which arose out of the effects of a compensable injury, resulted in a suicide which was not occasioned by the willful intention of the deceased to kill himself as contemplated by the statute.

It is clear from the opinion of the court of civil appeals that the trial court’s judgment was in error in that there was no evidence to support the jury’s answers to special issues which were framed according to the law as it existed under Jones v. Traders & General Insurance Co., supra. In view of the error in the judgment of the trial court and the new test announced in this opinion which is to be applied to suicide cases arising under the Workmen’s Compensation Act in the future, we reverse the judgments of the courts below and remand the cause to the district court for a new trial in the interest of justice. See Scott v. Liebman, 404 S.W.2d 288 (Tex.1966).