Preview:

IN THE COURT OF APPEALS 04/22/97 OF THE STATE OF MISSISSIPPI
NO. 93-CA-01210 COA

ELAINE D. MULLINS, INDIVIDUALLY, AND AS REPRESENTATIVE OF ANDREW P. MULLINS, DECEASED APPELLANT v. C. DOUGLAS COLEMAN, MYRA SUE COLEMAN, HIS WIFE, AND MERCHANTS & FARMERS BANK APPELLEE

THIS OPINION IS NOT DESIGNATED FOR PUBLICATION AND MAY NOT BE CITED, PURSUANT TO M.R.A.P. 35-B

TRIAL JUDGE: HON. ROBERT L. LANCASTER COURT FROM WHICH APPEALED: NOXUBEE COUNTY CHANCERY COURT ATTORNEY FOR APPELLANT: W. H. JOLLY, JR. ATTORNEY FOR APPELLEE: J. RANDOLPH LIPSCOMB NATURE OF THE CASE: CONTRACTS - RESCISSION TRIAL COURT DISPOSITION: CONTRACT RESCINDED

EN BANC. THOMAS, P.J., FOR THE COURT: The Chancery Court of Noxubee County found that Andrew and Elaine Mullins [Mullins] committed fraud in representing to Douglas and Myra Sue Coleman [Coleman] that the home occupied by Mullins and offered for sale to Coleman was free of termite damage or infestation. Subsequent to purchasing the property and after having made substantial improvements thereto, Coleman discovered extensive termite damage and infestation in the home. Coleman offered to reconvey the property and demanded that Mullins rescind the sale. Mullins refused the offer, prompting Coleman to pursue this action in equity for a rescission of the contract. Upon finding that Mullins committed fraud in his representations to Coleman the chancellor decreed a rescission of the contract for the sale of the home. Both parties appeal the chancellor's ruling. On appeal to this Court Mullins raises the following issues: I. THE TRIAL COURT COMMITTED REVERSIBLE ERROR IN ORDERING RESCISSION OF THE CONTRACT FOR SALE WHICH REMEDY SHOULD BE RESERVED FOR CASES INVOLVING FRAUD AND ONLY IN THE MOST EXTREME CASES, AND THAT SAID REMEDY IS NOT EQUITABLE UNDER THE FACTS AS PRESENTED IN THIS CASE, AND RESCISSION DOES NOT REPRESENT THE MOST EQUITABLE SOLUTION IN THIS CASE. II. THE TRIAL COURT COMMITTED REVERSIBLE ERROR IN ORDERING RESCISSION OF THE CONTRACT OF SALE, WHICH RESCISSION PLACES AN UNREASONABLE BURDEN ON THE APPELLANTS IN THAT NUMEROUS CHANGES HAVE OCCURRED TO THE RESIDENCE IN QUESTION, AND, THEREFORE, IT IS IMPOSSIBLE TO PLACE THE PARTIES BACK INTO THE POSITIONS THAT THEY OCCUPIED ON THE DATE OF THE CLOSING, AND, IN EQUITY, THE COURT SHOULD HAVE ORDERED THE APPELLANTS TO MAKE REASONABLE REPAIR TO THE PREMISES OR, IN THE ALTERNATIVE, ORDER THE APPELLEES TO RESTORE THE PREMISES TO THE CONDITION IN WHICH THE HOUSE EXISTED ON THE DATE OF THE CLOSING. III. THE JUDGMENT OF THE COURT ENTERED HEREIN IS AGAINST THE OVERWHELMING WEIGHT OF THE EVIDENCE AND IS CONTRARY TO THE ORDER SPECIFYING FACTS, WHICH WAS ENTERED BY THE LOWER COURT PRIOR TO THE TRIAL.

On cross-appeal Coleman raises the following issues:

IV. THE CHANCELLOR ERRED AND ABUSED HIS DISCRETION IN FAILING TO AWARD PREJUDGMENT INTEREST TO APPELLEES. V. THE CHANCELLOR ERRED IN FAILING TO AWARD APPELLEES THEIR

REASONABLE ATTORNEYS' FEES AND EXPERT WITNESS FEES. We hold both Mullins's and Coleman's assignments of error to be without merit. Accordingly, the judgment of the chancellor is affirmed.

FACTS In February of 1992 Mullins and Coleman entered into a contract for the purchase/sale of real property, whereby Coleman agreed to purchase Mullins's home in Macon, Mississippi for the sum of $99,500. Prior to the formation of the sales contract Mullins represented to Coleman that the structure had no termite problems, damage, or infestation. In June of 1992 the sale was closed and Coleman took possession of the property and began to make improvements upon it. In August, live termites were found by a laborer working on the home. Coleman immediately called Redd Pest Control, who performed a thorough investigation of the structure. Upon detailed inspection it was discovered that termites had eaten holes in the floor which were not visible to the casual observer because they were underneath the carpet. These holes showed evidence of having previously been repaired with wood putty and sheets of metal, and then covered with carpet. The inspection also revealed that major support beams and floor joists were heavily damaged by termites. Additionally, it was observed that rafters supporting the roof had been eaten through by termites and the rafters repaired by "scabbing" at an earlier date. In decreeing a rescission of the contract, the chancellor ordered that Coleman reconvey the real property to Mullins and that Mullins return to Coleman the purchase price of $99,500 that Coleman had paid for the home. Additionally, the chancellor ordered Mullins to pay Coleman the sum of $18, 740.45, representing the value of the improvements Coleman made to the property prior to discovering the termite damage. The chancellor also ordered Mullins to pay Coleman the sum of $188.54, representing the property taxes paid by Coleman during his possession of the premises in 1992. Furthermore, the chancellor's order declared valid a deed of trust upon the property in favor of The Merchants and Farmers Bank. In response to motions for new trial filed by both parties the chancellor denied the requests for a new trial, but modified his decree to also require Mullins to pay post-judgment interest on the $99,500 and $18,740.45 amounts that Coleman had expended on the home. ANALYSIS I. THE TRIAL COURT COMMITTED REVERSIBLE ERROR IN ORDERING RESCISSION OF THE CONTRACT FOR SALE WHICH REMEDY SHOULD BE RESERVED FOR CASES INVOLVING FRAUD AND ONLY IN THE MOST EXTREME CASES, AND THAT SAID REMEDY IS NOT EQUITABLE UNDER THE FACTS AS PRESENTED IN THIS CASE, AND RESCISSION DOES NOT REPRESENT THE MOST EQUITABLE SOLUTION IN THIS CASE.

While not denying that there was termite damage to the home or that he represented to Coleman that

the home was free from termite damage or infestation, Mullins contends that a rescission of the contract was not the appropriate remedy for his actions. Mullins contends that the appropriate remedy was monetary damages in an amount necessary to place Coleman in the position he would have been but for the termite damage. Coleman, however, argues that because Mullins engaged in fraud, rescission of the contract was an appropriate remedy in equity. Coleman argues that he had the option of proceeding against Mullins under either the equitable theory of rescission, or an action at law on the contract. Coleman chose the equitable remedy and contends that the chancellor's decision to rescind the contract was not an abuse of discretion. Rescission of contracts is allowed in cases of fraud, mistake, or material breach. Cenac v. Murry, 609 So. 2d 1257, 1273 (Miss. 1992). Fraud must be proven by clear and convincing evidence in order to justify the rescission of a contract. Ezell v. Robbins, 533 So. 2d 457, 461 (Miss. 1988). In Ezell, the Mississippi Supreme Court held that: In order to establish fraud, the plaintiff must prove (1) a representation, (2) its falsity, (3) its materiality, (4) the speaker's knowledge of its falsity or ignorance of its truth, (5) his intent that it should be acted upon by the hearer and in the manner reasonably contemplated, (6) the hearer's ignorance of its falsity, (7) his reliance on its truth, (8) his right to rely thereon, and (9) his consequent and proximate injury. Ezell, 533 So. 2d at 461. The rescission of a contract is a highly fact-specific determination, which necessitates an exercise of the chancellor's sound discretion in finding an equitable resolution to the dispute at hand. See 2 Henry C. Black, Rescission of Contracts and Cancellation of Written Instruments

Download Elaine D. Mullins vs. C. Douglas Coleman.pdf

Mississippi Law