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Lyons v. Christ Episcopal Church

OPINION FILED MAY 4, 1979.

DAVID A. LYONS ET AL., PLAINTIFFS-APPELLEES,

v.

CHRIST EPISCOPAL CHURCH ET AL., DEFENDANTS-APPELLANTS. — (RICHARD B. WALLACE, D/B/A WALLACE REALTORS, CROSS-PLAINTIFF,

v.

CHRIST EPISCOPAL CHURCH, CROSS-DEFENDANT.)



APPEAL from the Circuit Court of Madison County; the Hon. CLAYTON R. WILLIAMS, Judge, presiding.

MR. JUSTICE JONES DELIVERED THE OPINION OF THE COURT:

Following a bench trial, the circuit court of Madison County found defendants, Christ Episcopal Church and Wallace Realtors, liable for negligent misrepresentation in connection with the sale of a residence in Collinsville to plaintiffs David and Denise Lyons. Judgment was entered against them in the amount of $1703 and costs of suit. Both defendants have appealed, submitting separate briefs.

The realtor contends that the circuit court erred in denying its motion to dismiss the negligent misrepresentation count against it for failure to state a cause of action. The church, in turn, contends that the complaint against it should have been dismissed since contract rescission was the only proper remedy, and that the judgment against it for negligent misrepresentation was contrary to the manifest weight of the evidence.

The facts of this case may be stated as follows. In June of 1974, the church entered into a listing agreement with the realtor for the sale of a residence which was then being used as a rectory. The residence was located at 208 Sumner Boulevard in Collinsville, Illinois. On behalf of the church, an attorney represented the house to realtor Richard Wallace as being fully connected to the city's sanitary sewerage system, except for a basement drain which was connected to a septic tank.

On June 20, 1974, the realtor advertised the house in the Collinsville Herald, listing one feature as "sewers." After seeing the advertisement, the Lyonses contacted the realtor and arranged to view the house on June 21. They were thereafter shown the house by agent Susan Landing, who during the viewing informed them that the house was connected to the city's sewerage system.

On June 27, 1974, the Lyonses and the church executed a purchase agreement for the house. One year later, neighbors complained to the Lyonses about the odor of a septic tank. In response, the Lyonses had the city perform a dye test which established that the house was not in fact connected to the city's sewers. After obtaining several estimates, they had the house connected to the sewers at a total cost of $1703 and commenced this action against both defendants.

On October 20, 1977, plaintiffs amended their original complaint by adding counts three and four. Count four was directed at the realtor and alleged that it was liable for negligent misrepresentation. The realtor filed a motion to dismiss this count on October 31, asserting that the count was factually insufficient to state a cause of action or to enable the realtor to prepare a defense for trial. This motion was subsequently denied.

• 1 After examining count four, we find that it should have been dismissed; the judgment against Wallace Realtors must be reversed.

At least since Rozny v. Marnul (1969), 43 Ill.2d 54, 250 N.E.2d 656, Illinois has recognized that an action for negligent misrepresentation is maintainable if it alleges the necessary elements of an action for negligence. (McAfee v. Rockford Coca-Cola Bottling Co. (1976), 40 Ill. App.3d 521, 352 N.E.2d 50.) These elements are a duty owed by defendant to plaintiff, a breach of such duty and injury proximately resulting from such breach. (Lindquist v. Highland Park Hospital Foundation (1976), 40 Ill. App.3d 722, 353 N.E.2d 156; Browning v. Heritage Insurance Co. (1975), 33 Ill. App.3d 943, 338 N.E.2d 912.) Of course, it is fundamental that there can be no recovery in tort for negligence unless the defendant has breached a duty owed to the plaintiff. Boyd v. Racine Currency Exchange, Inc. (1973), 56 Ill.2d 95, 306 N.E.2d 39.

• 2 Count four simply alleges that the realtor acted as a conduit to pass on the church's inaccurate representation that the real estate was connected to a complete sanitary sewer system. This act could be negligent only if the realtor had a duty to independently corroborate the representations of the church with respect to the house. Although the plaintiffs did not assert that the realtor had such a duty, it would not alter our decision if they had since it is our belief that a realtor has no duty to prospective purchasers to independently substantiate the representation of a disclosed seller unless he is aware of facts which tend to indicate that such representation is false. Such was not the case here. Of course, even if such a duty is invoked, there is no break unless the realtor could have discovered the falsity of the representation by exercise of ordinary care.

It is fundamental that there can be no liability in negligence without fault. The rule we follow would permit a finding of fault only in situations where the real estate agent knew or should have known that the representation might be false. If the instant complaint were sufficient to state a cause of action, the element of fault would be entirely absent; the realtor would be liable simply because he acted as the church's agent.

We further believe that our holding is analogous to and consistent with comment b of section 348 of the Restatement (Second) of Agency (1957). That comment states that an agent who repeats a fraudulent misrepresentation of his principal is not liable unless he knows or should know that it was a misrepresentation, and that an agent can properly rely upon statements of the principal to the same extent as upon statements from any other reliable source.

We turn now to the contentions of the church.

• 3 The church's first argument is that a mutual mistake of fact existed as to the house's connection to city sewers and that this mistake precluded plaintiffs from pursuing any remedy other than rescission of the contract. This argument is without merit. It misses entirely the central fact of this litigation, that the "mistake" was created by the negligence of the church.

• 4 The general rule with respect to fraudulent misrepresentation in the sale of real estate is that the contract is merely voidable, not void, at the option of the injured party. (Halla v. Chicago Title & Trust Co. (1952), 412 Ill. 39, 104 N.E.2d 790; 91 C.J.S. Vendor and Purchaser §§ 54 and 157(b) (1955); see also 35 Ill. L. & Prac. Vendor & Purchaser § 73 (1958).) The same rule must obtain where, as here, there has been a negligent misrepresentation made by the seller. The defendant may not choose the plaintiffs' remedy. They are free to honor the contract and pursue an action in tort to compensate them for their injury.

The church's final contention is that the finding that it was negligent in making the instant representation is against the manifest weight of the evidence. We disagree.

This contention is based upon the church's belief that they were justified in relying upon an alleged representation of Graham Sanitation that the bulk of the house was connected to the sewers. The church argues that in view of this representation, "there was no further need or reason [for it] to conduct any further tests or examination[s] to ...


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