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October 12, 1978

Donald K. MILLER and Barbara L. Miller, his wife, Plaintiffs,
E. Edward BARE and Margaret S. Bare, his wife, Defendants

The opinion of the court was delivered by: SNYDER

Plaintiffs, residents of Hampton Township, Pennsylvania, brought this action against the Defendants, who are residents of Canfield, Ohio, for compensatory and punitive damages for injury resulting from misrepresentation by Defendants of the boundaries and condition of property they sold to Plaintiffs. Jurisdiction is founded on diversity of citizenship, 28 U.S.C. § 1332.


 On December 29, 1972, E. Edward Bare and Margaret S. Bare, his wife, became the owners of two contiguous tracts of land in Hampton Township, Allegheny County, Pennsylvania, composed of Lot Number 5 in the Royal Crest Plan of Lots, dedicated and of record in the Recorder's Office of Allegheny County, and of an adjacent tract containing .63 acres.

 On June 9, 1976, the Bares conveyed these same two tracts to Donald K. Miller and Barbara L. Miller, his wife, along with the house erected on the lot and a swimming pool to the rear within the adjacent area, for consideration of $ 95,000.00. A portion of the .63 acre tract was enclosed with a fence, as required by a township ordinance.

 In late April or early May, 1976, the Millers learned that the Bares' property was for sale by Northwood Realty Company and Barnhardt Realty Company. The Millers made several visits to the property. Mrs. Miller toured the house and grounds first with Sandra Tupper, and, at the time, asked Edward Bare whether he owned the property inside the fence and a flat, mowed rectangular piece immediately to the south of the fence and was told by him that he did. On a third visit, which the Millers made together to inspect a right-of-way and paper street on the property, Edward Bare again indicated that he owned the area within the fence and the parcel just beyond it to the south, and, on hearing of Donald Miller's interest in gardening, told him that the area beyond the fence was once used as a garden and could be used for gardening by the Millers. The entire area Edward Bare represented as part of his property was being maintained by him. Both Donald and Barbara Miller testified that the size and beauty of the property surrounding the house and swimming pool were a major part of their decision to buy from the Bares; there is no serious dispute as to the materiality of the representation of boundaries or the fact that the Millers relied on it in deciding to buy from the Bares.

 While the testimony is somewhat conflicting, the Court finds that when the agreement was first taken to the Bares, the selling agents, Sandra Tupper and Don Pohlig, specifically inquired of them whether or not there were any major construction or maintenance problems with the premises and were assured that there were none. The agents then transmitted this information to the Millers, who then agreed to the elimination of the contingency clause.

 Neither the sellers nor the buyers had a survey of the premises prepared, and none was procured until after the closing, which, on the insistence of the Bares, was held within two weeks of the signing of the "Sales Agreement". When a survey prepared by Henry Martone was received on June 24, 1976, it clearly showed that the Bares had not transferred all of the property within the fence lines or the piece beyond the fence, and, in fact, they never had title to all of the area. The total area of the "unowned" piece is approximately 7,000 square feet. The Court finds no evidence of an intention on the part of Edward Bare to mislead the Millers as to the size or boundaries of the property. Apparently, the boundaries Edward Bare represented to the Millers were the same ones that the Bare's grantor, William P. Cornelius, had pointed out to them when they purchased the property. The description of the property in their deed from Cornelius is identical to the description in their deed to the Millers.

 Very shortly after the Millers received title to the property, their son moved into the house in order to protect it while Donald Miller did various minor repair and maintenance work preparatory to moving in. During this period, the Millers discovered a fairly large area along the north wall of the recreation room, which had previously been covered up by a work bench that was removed by the Bares when they left the premises, which had stain marks of some duration and where the paneling and coving were rotting and coming loose from the wall. In a heavy rain, water flows through this part of the wall to an average depth of one inch until it reaches an outside drain. The Millers later found some v-shaped troughs on the outside of the house, which Bare admits he used to conduct the roof water away from the walls by connecting these extensions to the down spouts from the roof, which did not go into drains or sewer lines, but were extended out onto the ground.

 After the closing and before he left the house, Edward Bare was informed by Lawrence R. Hopper of Peoples Natural Gas Company that the gas line from the house to the heater in a small structure near the swimming pool had a leak. Hopper closed the line and told Bare it was not installed in compliance with the Gas Company regulations. Bare called Donald Miller and told him about the leak.


 Although we have determined that Edward Bare's misrepresentations concerning the boundaries of the property were innocently made, this does not bar the Millers from recovering damages for the injury they have sustained. It is now well established in Pennsylvania that an innocent misrepresentation of a material fact by a vendor that is justifiably relied on by a purchaser is a basis for rescission of a contract for sale of land. The court in LaCourse v. Kiesel, 366 Pa. 385, 77 A.2d 877, 879-80, held that purchasers could rescind their agreement to buy real property and recover their deposit, when they discovered that the property, advertised as "splendid for apartments, which would bring in a handsome income in addition to providing beautiful living quarters for the owner," was zoned for single family dwellings only. The court explained their reasons for imposing liability as follows:

"Moreover, whether the auctioneer or the owners Knew that the representation was false has been repeatedly held in this jurisdiction to be a matter of no consequence. A vendor has no right to make such a statement of which he has no knowledge: Braunschweiger v. Waits, 1897, 179 Pa. 47, 36 A. 155; Jack v. Hixon, 1903, 23 Pa.Super. 453, 446; 3 Pomeroy's Equity Jurisprudence, 5th ed., sec. 889. So also we have repeatedly held there is no obligation on the part of the purchasers to examine public records before purchase: See Lake v. Thompson, 366 Pa. 352, 77 A.2d 364; Merritz v. Circelli, 1949, 361 Pa. 239, 64 A.2d 796, 7 A.L.R.2d 1325; Suraci v. Ball, 1947, 160 Pa.Super. 349, 51 A.2d 404."
"A material misrepresentation of an existing fact confers on the party who relies on it the right to rescind whether the defendants here actually knew the truth or not, especially where, as here, they had means of knowledge from which they were bound to ascertain the truth before making the representation. Misrepresentations made under such circumstances Are fraudulent and have been variously called implied, constructive or legal fraud or fraud in Equity: See 37 C.J.S. Fraud § 2 pp. 209 and 214; 3 Pomeroy's Equity Jurisprudence, 5th ed., p. 482 and ...

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