decided: February 18, 1977; February 28, 1977, Decided.
Myers, Myers, Flower & Johnson, Thomas I. Myers, Lemoyne, for appellant.
McNees, Wallace & Nurick, G. Thomas Miller, Harrisburg, for appellees.
Jones, C. J., and Eagen, O'Brien, Roberts, Pomeroy, Nix and Manderino, JJ. Eagen, J., filed a concurring and dissenting opinion. Manderino, J., filed a dissenting opinion.
This is an action in equity brought by appellant to compel specific enforcement of a contract for the sale of land to appellant by appellees. After a hearing, the chancellor entered a decree nisi declaring the contract unenforceable because of the fraud and unclean hands of plaintiff, the vendee. The decree denied specific performance
and directed the vendor to return the down payment. The plaintiff's exceptions to the adjudication were dismissed and the decree nisi made final. This appeal followed.*fn1 We will affirm.
The record discloses the following essentially undisputed facts. In 1969 Mr. W. R. Keeley was the president and owner of all of the capital stock of Keeley Realty Company and Brentwater Homes, Inc., corporations with offices in Camp Hill, Cumberland County, Pennsylvania. He was also president of Pennsboro Homes, Inc., a wholly owned subsidiary of Keeley Realty Company. In the spring of that year Keeley undertook to acquire land in Hampden Township, Cumberland County for the development of a planned community to be known as the "Village of Westover". To this end he introduced himself to Richard W. Weibley, one of the appellees. Mr. Weibley and his wife, Kathryn, owned a stone farmhouse on Skyport Road in Hampden Township built during the colonial period; his mother, Lucy G. Weibley, owned an adjacent tract of land of 109 acres. Mr. Keeley indicated to Mr. Weibley that he intended to develop the land, if acquired, as part of his projected "colonial village", and he further indicated that the Weibleys' colonial farmhouse would be a focal point of the proposed village. Mr. Weibley became interested in the planned colonial village, and on behalf of his mother entered into negotiations with Mr. Keeley for the sale of the 109 acre tract. The result was a written agreement, dated April 24, 1969, by which Mrs. Lucy Weibley contracted to sell her land to Pennsboro Homes, Inc.*fn2
In late June or early July, 1969, after the closing of the transaction above described, Mr. Keeley informed Mr. Weibley that he was interested in obtaining more land for the Westover Village project, and the two entered into negotiations concerning land owned by appellees and located directly across the road from their colonial farmhouse. After two or three meetings between the parties, appellees, by written agreement dated August 2, 1969, contracted to convey on or before April 1, 1970 an unrestricted title to a 4 1/2 acre tract to Brentwater Homes, Inc., the appellant. It is this agreement which is the subject of this litigation.
In the meantime, on July 17, 1969, prior to the execution of this agreement of sale and without the knowledge of the Weibleys, a representative of Brentwater Homes and Mr. Keeley appeared at a public meeting of the Hampden Township Planning Commission, submitted a preliminary plan for Keeley's proposed colonial village development, and requested that the entire area be rezoned from R-2 -- single family residences -- to A-0 -- office and commercial uses.*fn3 The tract involved in the present litigation appeared on the map submitted to the Planning Commission with the notations "uses such as medical center nursing home also retiree apts." and "potential high rise site." The Commission gave preliminary approval to Mr. Keeley's plan at this time. In September, 1969, after the execution of the agreement of sale, the Weibleys learned for the first time of the proposed rezoning, and Mr. Weibley spoke in opposition to
the rezoning in public hearings on the subject. Nevertheless, in November, 1969, the Hampden Township Commissioners rezoned the area to permit the proposed development. When, shortly prior to the date for closing the sale transaction, Mr. Keeley expressed readiness to close on behalf of Brentwater Homes, Inc., the Weibleys refused to do so except on condition that restrictions be inserted in the deed which would have limited the use of the property to single houses of a stated value and would have had the effect of maintaining in force the zoning classifications existing at the date of the contract. These conditions were unacceptable to Keeley, who also refused to rescind the sale agreement. This action was then commenced by Brentwater Homes.
The defense of the Weibleys to this action was that they had been induced by Brentwater Homes' agent, Mr. Keeley, to sign the contract of sale by representations that the real estate to be conveyed would be developed as a single family, "high class" residential community and that these representations were in fact false and fraudulent when made. The chancellor held that this defense had been made out. The only question for determination on this appeal is whether the evidence supports the chancellor's conclusion. We hold that it does.
It is well settled that an appellate court is bound by the chancellor's findings of fact, approved by a court en banc, to the same extent as it would be bound by the findings of a jury. The test in either case is whether the findings are adequately supported by the record and whether the factual inferences and legal conclusions based on the findings are correct. Charles v. Henry, 460 Pa. 673, 679, 334 A.2d 289, 292 (1975). Where credibility of the witnesses is important, the chancellor's findings are entitled to particular weight because of the opportunity which was his to observe the demeanor of witnesses on the stand. Charles v. Henry, supra. See also Dozor Page 22} Agency, Inc. v. Rosenberg, 431 Pa. 321, 323, 246 A.2d 330, 331 (1968).
The chancellor found as facts that throughout the negotiations for the sale of Mrs. Lucy Weibley's 109 acre tract, the Richard Weibleys evidenced a substantial interest in the developer's plans for Mrs. Weibley Sr.'s property and in preserving the value of their own colonial farm house; that Mr. Keeley assured the Weibleys that "he was not interested in erecting multi-family units, and further, that his expansion of the adjacent tract, the village of Westover, would be of colonial, single family homes designed to highlight the farmhouse"; that the appellant's plans relating to the appellees' own property, as submitted to and approved by the Hampden Township Planning Commission, in fact "required development of structures other than single family dwellings, e. g., a medical center, a nursing home, apartments, and a highrise structure"; that the approval of these plans required a change in zoning of the area from single family dwellings, which was accomplished, over appellees' objections; that the Weibleys would not have entered into the agreement with Brentwater Homes had they known of such plans, and that this was the reason they refused to consummate the agreement and demanded rescission. In his adjudication the chancellor characterized Richard Weibley's testimony concerning Mr. Keeley's assurances as "credible, convincing, distinct and detailed," and concluded as a matter of law that Keeley had induced the appellees to enter into the contract of sale "by fraudulently assuring them that he had plans to erect only single family homes on the tract", and that the contract was therefore voidable by the Weibleys.*fn4
This Court has defined the nature of the parol evidence which is sufficient to render a written agreement invalid because of fraud in these terms:
"Fraud is composed of a misrepresentation fraudulently uttered with the intent to induce the action undertaken in reliance upon it, to the damage of its victim. Edelson v. Bernstein, 382 Pa. 392, 115 A.2d 382 (1955); Neuman v. Corn Exchange National Bank & Trust Co., 356 Pa. 442, 51 A.2d 759 (1947). To sustain the conclusion of the court below, evidence of . . . fraud must be clear, precise and convincing. Aliquippa National Bank v. Harvey, 340 Pa. 223, 16 A.2d 409 (1940); Pennsylvania R.R. Co. v. Shay, 82 Pa. 198 (1876). The test is met where the witnesses depended upon to prove fraud distinctly remember the facts to which they testify and narrate the details with specificity. Broida v. Travelers Insurance Co., 316 Pa. 444, 447, 448, 175 A. 492, 494 (1934); Ralston v. Philadelphia Rapid Transit Co., 267 Pa. 257, 269, 110 A. 329, 333 (1920)." Thomas v. Seaman, 451 Pa. 347, 350-51, 304 A.2d 134, 137 (1973).
A statement of present intention which is false when uttered may constitute a fraudulent misrepresentation of a fact. See, e. g., Thomas v. Seaman, supra. Furthermore, it is well settled that a material misrepresentation of the use to which property will be put by the buyer, even if the consideration given is otherwise fair, may be ground for rescinding a contract for the sale of land as fraudulent. Williams v. Kerr, 152 Pa. 560, 25 A. 618 (1893). See generally Annotation, "Purchaser's ...