Title: Bethurem v. Hammett

State: wyoming

Issuer: Wyoming Supreme Court

Document:

Bethurem v. Hammett1987 WY 65736 P.2d 1128Case Number: 86-200Decided: 05/15/1987Supreme Court of Wyoming
Donald 
E. BETHUREM and Colleen Bethurem, Appellants 
(Plaintiffs)

 
 
v.

 
 
Edward 
L. HAMMETT and Elsie Mae K. Hammett, Appellees 
(Defendants)

 
 
Robert 
W. Brown of Lonabaugh and Riggs, for Appellants.

 
 
Robert 
E. Holstedt of Holstedt Law Offices, P.C., for Appellees. 

 

Before 
Thomas, 
Cardine, Urbigkit, and Macy, JJ., and Grant, D.J.  Cardine, Justice, dissenting, with whom 
Grant, District Judge, joins.  
Grant, District Judge, dissenting. 

 
URBIGKIT, 
Justice.

 
 

[¶1.]     Buyers sued, raising 
breach-of-warranty issues, to rescind the purchase of a residence because the 
lot and structures encroached into the dedicated street. Sellers won in 
trial-court decision, and Buyers appeal by presented issues of contractual 
warranties of title merchantability and parol-evidence 
admissibility.

 
 
FACTS

 
 

[¶2.]     In 1983, appellants, 
the Bethurems (Buyers), contracted to purchase a residence in Sheridan, Wyoming 
from appellees, the Hammetts (Sellers). In exchange for the realty, Buyers made 
a cash down payment and agreed to monthly installment payments for the 
purchase-price balance. In 1985, a dispute arose from encroachment of the 
residence structure, the garage and the cemented-in fence into the dedicated 
city street, as thenconfirmed by surveys by both parties.

 
 

[¶3.]     After unsatisfactory 
negotiations, Buyers sued to rescind the sales agreement, claiming that Sellers 
had materially misrepresented the property in failing to apprise Buyers of known 
encroachments. At trial, Buyers relied on provisions of the executed Offer, 
Acceptance & Receipt (Specific Performance Contract), a pre-printed document 
which stated:

 
 
"8. 
Title shall be merchantable in the Seller, except as stated in this paragraph. 
Subject to payment or tender as above provided and compliance with the other 
terms and conditions hereunder by Purchaser, the Seller shall execute and 
deliver a good and sufficient statutory warranty deed in favor of those persons 
named in Paragraph 7 above, including the release and waiver of all homestead 
rights, if any, and a good and sufficient bill of sale, and deliver the same to 
said Purchaser at closing, which shall occur on or before April 29, 1983, 
conveying said real and personal properties free and clear of all liens and 
encumbrances, except:"(a) The general taxes for 
1983;

 
 
"(b) 
Liensfor special improvements, if any;

"(c) 
Easements for utilities;

"(d) 
Subject to building and zoning regulations;

"(e) 
City, state and county subdivision laws;

"(f) 
Reservations, restrictions and easements of record, if any; 
and

"(g) 
Except

 
 
"9. 
Any encumbrance required to be paid shall be paid by closing agent at the time 
of closing from the proceeds of this transaction.

 
 
"10. 
The Seller covenants that upon execution of this Contract:

 
 
"(a) 
The above-described property is in substantial compliance with applicable city, 
county and state subdivision laws, requirements and regulations in force and 
effect as of that date, EXCEPT:

"(b) 
There are no known defects, EXCEPT:

"(1) 
Those which are readily visible upon inspection; 
and

"(2)"

 
 

[¶4.]     Executed documentation 
in the case includes the standard Offer, Acceptance & Receipt form (a 1979 
Wyoming Association of Realtors model instrument), a typed sales agreement, and 
an executed warranty deed. The warranty deed is not in evidence, so that 
possible exceptions to its general warranty provisions cannot be determined. The 
typed sales agreement, which also included a nonpayment provision, in part 
provided:

 
 
"IV

"Sellers 
shall, at their expense, furnish Buyers with an Abstract or Title or Commitment 
for Title Insurance covering the above described premises. Said Abstract of 
Title or Commitment for Title Insurance shall be of recent date and shall show 
good merchantable title in Edward L. Hammett and Elsie Mae K. Hammett, husband 
and wife, free and clear of all encumbrances. Buyers shall have ten (10) days 
within which to cause said Abstract or Commitment to be examined by an Attorney 
of their choice. Any defects in title shall be forthwith corrected by 
Sellers."

 
 

[¶5.]     Contrary to the 
covenant in Paragraph 10(a) of the standard Offer, Acceptance & Receipt that 
the property was in substantial compliance with all applicable city, county, and 
state subdivision laws, requirements and regulations, those street line 
encroachments also violated Section 23-22 of the Sheridan City Code, which 
provides that

 
 
"[n]o 
person shall erect, build, set up or maintain in whole or in part any fence, 
sign, shop, post, building or obstruction whatsoever in or upon any street, 
avenue, alley, sidewalk or public ground within the city."

 
 
The 
property was repossessed by Sellers, and is presently in their possession. The 
trial court judgment gave Buyers a ten-day option to bring the installment 
payments current in order to regain purchase possession. Apparently that 
election was not exercised.

 
 
CONTENTIONS 
OF THE PARTIES

 
 

[¶6.]     Buyers contended that 
the breach of the sales agreement covenants was a misrepresentation entitling 
them to rescission, also asserting that encroachment onto the public street was 
a defect which renders title unmarketable in violation of Sellers' covenants in 
Paragraphs 8 and 10 of the standard offer document and Section IV of the typed 
sales agreement. At trial, the parties took opposite positions regarding Buyers' 
knowledge of the encroachment. Buyers claimed that Sellers led them to believe 
that there were no defects, that the transferred realty included all the land 
and improvements enclosed by the fence, and that the enclosed property was 
marketable. Sellers contended that they had orally discussed the encroachments 
and that Buyers assured them that the defect would not pose a problem since they 
planned to build a house farther back on the property. Appellants objected to 
the introduction of this oral evidence of preagreement communicated title 
defect, but the objection was overruled and direct conflict testimony was 
consequently introduced.

 
 

[¶7.]     The trial court found 
generally in favor of the defendants, Sellers, and denied the claim for 
rescission. The following arguments are now presented:

 
 
I. 
Misrepresentation of the boundaries of real property entitles the purchaser to 
rescind.

II. 
Encroachment onto the city street is a defect in the premises rendering title 
unmarketable.

III. 
Encroachment as contrary to the city ordinance justifies 
rescission.

IV. 
Hammetts' alleged oral disclosures of the encroachment problem violate the 
parol-evidence rule and are inadmissible.

V. 
Sufficient admissible evidence was produced at trial to entitle Bethurems to be 
granted rescission.

 
 

[¶8.]     We 
reverse.

 
 
ENCROACHMENT 
AS WARRANTY VIOLATION

 
 

[¶9.]     This court set forth 
the general rule regarding a seller's misrepresentation of boundaries in 
Meeker v. Lanham, Wyo., 604 P.2d 556, 559 (1979), stating:

 
 
"With 
regard to the boundary lines, the rule regarding misrepresentations concerning 
the boundaries of property, is correctly pointed out to us by the 
appellant:

 
 
"'A 
purchaser has the right to rely upon the representations of the seller as to the 
boundaries of the land, and if the seller misrepresents the true boundary of the 
land, whether innocently or intentionally, it is ground for rescission by the 
purchaser.'"

 
 

[¶10.]  From Buyers' contentions we discern their 
three claims of false representations to have been made by Sellers as covenants 
in the contractual documents: first, that title was merchantable (marketable);1 second, that property was in 
compliance with the relevant city ordinance; and third, that there were no known 
defects in title or condition. The representation that there were no defects 
overlaps with the representation that title was marketable, and consequently our 
discussion of the two representation claims is combined in first addressing the 
question whether the encroachments (defects) rendered the title 
unmarketable.

 
 

[¶11.]  The Montana Supreme Court has 
stated:

 
 
"'The 
term "marketable title" is difficult of definition . . . . The most practical 
test is as to whether the title is such that a third person may reasonably raise 
a question after the time the contract would have been completed. If the 
conditions of the title warrants such an attack, the purchaser may reject the 
title as unmarketable. '" McCarthy v. Timberland Resources, Inc., Mont., 
219 Mont. 278, 712 P.2d 1292, 1294 (1985), quoting from Silfvast v. 
Asplund, 93 Mont. 584, 20 P.2d 631, 637 (1933).

 
 

[¶12.]  Similarly, the uniform rule regarding 
marketability has been explained in an Oregon decision:

 
 
"A 
purchaser is not required to accept title which might reasonably be expected to 
involve litigation. 'If there is doubt and uncertainty about the title 
sufficient to form the basis for litigation, * * * * it cannot be thrown upon 
the purchaser to contest that doubt * * * *.'" Cameron v. Benson, 57 Ore. 
App. 169, 643 P.2d 1360, 1363 (1982), rev'd on other grounds, 295 Or. 98, 664 P.2d 412 (1983), quoting from Wollenberg v. Rose, 45 Or. 615, 78 P. 751 
(1904).

 
 
See 
also Medallion Homes, Inc., v. Thermar Investments, Inc., Texas 
App., 698 S.W.2d 400, (1985); and Glaser v. Minnesota Federal Savings and 
Loan Association, Minn. App., 389 N.W.2d 763 (1986).

 
 

[¶13.]  There is also overwhelming authority for 
the proposition that title is unmarketable where it cannot be readily sold to a 
reasonably prudent person, familiar with the facts.  Wilson v. Fenton, Iowa, 312 N.W.2d 524 (1981); Vazquez v. Davis, La.App., 466 So. 2d 671, writ 
denied, 468 So. 2d 574 (1985); Madhavan v. Sucher, 105 Mich. App. 284, 
306 N.W.2d 481 (1981); Glaser v. Minnesota Federal Savings and Loan 
Association, supra; Tedco Development Corp. v. Overland Hills, Inc., 
200 Neb. 748, 266 N.W.2d 56 (1978); Belrose v. Baker, 121 N.H. 48, 426 A.2d 454 (1981); Brown v. Herman, 75 Wash. 2d 816, 454 P.2d 212 
(1969).

 
 

[¶14.]  Whether title to real estate is 
marketable is a question of law for the court.  Wilfong v. W. A. Schickedanz Agency, 
Inc., 85 Ill. App. 3d 333, 406 N.E.2d 828, 40 Ill. Dec. 625, (1980); 
Myerberg, Sawyer & Rue, P.A. v. Agee, 51 Md. App. 711, 446 A.2d 69 
(1982).

 
 

[¶15.]  In this case, the fence encroached 
approximately 17 feet into the city street, the garage encroached approximately 
eight feet, and the actual residence encroached approximately four feet. 
Clearly, such substantial encroachments subjected Buyer to potential litigation 
involving the purchased property. Furthermore, a reasonably prudent person 
familiar with the nature and extent of these encroachments would decline to 
purchase at an otherwise reasonable market price. Accordingly, we find that the 
title was unmarketable. See Chesapeake Homes, Inc. v. McGrath, 249 Md. 
480, 240 A.2d 245 (1968).

 
 

[¶16.]  In analagous situations numerous courts 
in other jurisdictions have found title unmarketable, and have granted buyers of 
realty the right to rescind their purchase agreements. In Zatzkis v. 
Fuselier, La. App., 398 So. 2d 1284, writ denied, 405 So. 2d 533 (1981), the 
conveyed property encroached onto neighboring property. The gutter encroached 
six inches; the roof encroached two feet; and the step and fence encroached 
eight-tenths of a foot. That court held that the encroachments rendered title to 
the property unmarketable, and allowed the purchaser to rescind. Likewise, in 
Morrison v. Fineran, La. App., 397 So. 2d 838 (1981), it was held that a 
fence which encroached onto neighboring property for a distance atthe front of 
0.31 feet gradually increasing to 1.24 feet at the rear rendered title 
unmarketable, and the prospective purchaser was permitted to reject the 
sale.

 
 

[¶17.]  Similarly in Kempff v. Morgan, La. 
App., 291 So. 2d 520 (1974), overruled on other grounds by Lanusse v. 
Gerrets, La. App., 357 So. 2d 45 (1978), the property in question included a 
fenced backyard with a deck and dressing rooms for a swimming pool. A survey of 
the property revealed that:

 
 
"1. 
There was a five foot servitude inside of and adjacent and parallel to the rear 
property line.

"2. 
The dressing rooms had been built on the servitude.

"3. 
The wooden fence extended an additional 10.7 feet beyond the rear property 
line.

"4. 
The wooden patio had been constructed entirely upon the 10.7 feet to which 
sellers had no title.

"5. 
The roof of the dressing rooms overhung the property line by 0.9 
feet.

"6. 
The improvements were constructed in violation of several portions of the 
Jefferson Parish Zoning Ordinances." 291 So. 2d  at 522.

 
 

[¶18.]  That court held that the title was 
unmarketable because it suggested future litigation, and ordered the seller to 
return the prospective purchaser'sdeposit. See also LaVenia v. National 
Business Consultants, Inc., La. App. 83, 425 So. 2d 840, 844 (1982), writ 
denied, 432 So. 2d 269 (1983). In Young v. Stevens, 252 La. 69, 209 So. 2d 25 (1967), where a fence encroached ten inches, tapering down to three inches 
onto the adjoining lot to the rear of the property, and encroached six inches 
onto the adjoining property on the side, the Louisiana Supreme Court concluded 
that the title was not merchantable, and permitted the purchaser to rescind the 
contract. That court stated:

 
 
"* 
* * * [A] person buying property whose improvements encroach upon his neighbor 
is likely to sustain a law suit to defend his right to possession of the 
property sold to him beyond his title. [Citations.]

 
 
"* 
* * * What makes the title unmerchantable * * * * is not necessarily the extent 
of the encroachment, but the fact that it suggests litigation." 209 So. 2d  at 
28.

 
 

[¶19.]  In Wertheimer v. Byrd, 278 Minn. 
150, 153 N.W.2d 252 (1967), where the purchase agreement failed to mention the 
existence of an easement, the court held that:

 
 
"An 
outstanding easement makes title to realty unmarketable in a situation where the 
title to be conveyedas specified in the contract to purchase has not been made 
subject to such easement." 153 N.W.2d  at 253.

 
 
The 
decision affirmed the trial court's finding as a matter of law that the 
purchaser was entitled to rescind the purchase agreement.

 
 

[¶20.]  In Rhodes v. Astro-Pac, Inc., 51 A.D.2d 656, 378 N.Y.S.2d 195 (1976), aff'd 41 N.Y.2d 919, 394 N.Y.S.2d 623, 363 N.E.2d 347 (1977), it was said:

 
 
"* 
* * * Since the easement over defendant's property in favor of the adjoining 
landowner was an encumbrance which rendered the seller's title unmarketable 
[citation], and it was an encumbrance which had not been excepted by the 
seller's agreement to convey marketable title, the seller breached its contract 
and the purchaser is entitled to [the return of his down payment]." 378 N.Y.S.2d  
at 197.

 
 

[¶21.]  Carrick v. Gorman, 232 Ark. 729, 
340 S.W.2d 377 (1960), is factually similar to this case:

 
 
"The 
undisputed evidence shows that Gorman's title is not merchantable. Two surveyors 
testified that the brick wall of the hotel building encroaches upon the 
adjoining land, some of which is owned by the United States. It goes almost 
without saying that in this situation the seller's titleis not merchantable." 
340 S.W.2d  at 379.

 
 

[¶22.]  The case of Dukas v. Tolmach, 2 A.D.2d 57, 153 N.Y.S.2d 392 (1956), presents a strikingly similar fact pattern. 
That court stated:

 
 
"The 
claim of unmarketability is based upon the following:

 
 
"1. 
A stone retaining wall, lawn and plantings alleged to encroach (from 2 3/4 
inches to 16 feet 2 3/4 inches) on a city owned street.

"2. 
Another stone retaining wall alleged to encroach on the street to the extent of 
17 feet 1 1/2 inches.

"3. 
An access ramp or driveway alleged to encroach about 17 feet on the 
street.

"4. 
A stairway, consisting of stone and masonry steps, walls and landing providing 
ingress and egress to the property, alleged to encroach more than 17 feet on the 
city street.

* 
* * *

"The 
question posed therefore is whether under these facts (the so-called 
encroachments being clearly established by the evidence) defendant's title is 
marketable. We think it is not. A purchaser may not be compelled to accept a 
title which will subject him to a lawsuit or which will require him to expend 
substantial sums of money in order to comply with the law [citations]." 153 N.Y.S.2d  at 394.

 
 

[¶23.]  Weagree with the reasoning found in these 
cases, and think it is unquestionably applicable to the situation in this case. 
Where improvements to realty encroach onto adjoining property, exposing the 
buyer to a reasonable possibility of litigation, title to the property is 
unmarketable as a matter of law.

 
 

[¶24.]  As further authority for our finding that 
the encroachments rendered title unmarketable, we also approve the following 
general statements:

 
 
"In 
the absence of any particular agreement or stipulation in regard thereto, the 
vendee in a contract for the sale of land is entitled to have the walls of the 
building, or buildings, upon the land which he has contracted to purchase stand 
completely upon the land conveyed, and where they encroach to a substantial 
extent upon adjoining premises, the title to the land to be conveyed is 
unmarketable." 77 Am Jur 2d Vendor and Purchaser § 218, p. 
395.

 
 
"Encroachment 
of structures on or over a public way may render title to the property 
unmarketable depending largely upon the character and extent of the encroachment 
and the laws of the municipality wherein the property lies. A vendor does not 
have a marketable title if his building encroachesupon the public streets to 
such an extent as to threaten the vendee * * * * with a burdensome expense in 
altering the building to meet the requirements of the law." 77 Am Jur 2d Vendor 
and Purchaser § 219, pp. 396-397.

 
 

[¶25.]  Under the city ordinance, maintenance of 
the encroachments was unlawful, and irrespective of any failure to enforce it, 
the ordinance could require removal. In order to move the buildings and fence to 
conform to the requirements of the city ordinance, the buyers were faced with a 
burdensome expense. The testimony at trial described the work as costing many 
thousands of dollars. The text of the Sheridan city ordinance and the 
potentially substantial expense to obtain compliance supports a determination of 
unmarketability of title. See McFarland v. Cobb, Mo., 64 S.W.2d 931 
(1933); Pamerqua Realty Corporation v. Dollar Service Corporation, 93 A.D.2d 249, 461 N.Y.S.2d 393 (1983); Moyer v. DeVincentis Construction 
Co., 107 Pa. Super. 588, 164 A. 111 (1933).

 
 

[¶26.]  This court agrees with the rule as stated 
in Pamerqua, supra:

 
 
"* 
* * * Where the contract contains a provision whereby the seller warrants and 
represents that, upon purchase, the propertyand its structures will not be in 
violation of any zoning ordinance or regulation * * * * [and] where it 
reasonably appears that the vendee will be plagued by zoning problems when he 
purchases the property, a title defect does exist and the vendee is entitled to 
demand that the vendor rectify the same or return any moneys paid on account 
[citation]." 461 N.Y.S.2d  at 395.

 
 

[¶27.]  Where, contrary to a seller's covenant of 
merchantability, title to realty is unmarketable, a buyer, Bethurems in this 
case, is entitled to rescission. Shaffer v. Earl Thacker Co. Ltd., 3 
Hawaii App. 81, 641 P.2d 983 (1982); Myerberg, Sawyer & Rue, P.A. v. 
Agee, supra; McCarthy v. Timberland Resources, Inc., supra, 712 P.2d 1292; Carrick v. Gorman, supra, 340 S.W.2d  at 379.

 
 
RESCISSION 
UNDER WYOMING LAW

 
 

[¶28.]  In Wyoming, the law imposes the following 
conditions for a successful rescission action based on 
misrepresentation:

 
 
"* 
* * * Before a buyer may have a contract rescinded and restitution made, he must 
prove in a clear and convincing fashion that one, the seller misrepresented the 
interest in land which was being sold, in a material and substantial aspect; 
two, the buyer relied upon thefalse representation; and three, as a result the 
buyer suffered injury." Hagar v. Mobley, Wyo., 638 P.2d 127, 132 
(1981).

 
 

[¶29.]  That three-part misrepresentation 
analysis also supports the right to rescission in this case. First, the breach 
of the covenant of merchantability and the breach of the covenant of compliance 
with the city ordinance amount to a misrepresentation of the interest in the 
realty being sold, in a material and substantial aspect.

 
 

[¶30.]  Second, Buyers relied on that 
misrepresentation. We note that these representations were included in the 
contractual documents and were a constituent part of the written undertaking 
which both parties signed. Furthermore, it is difficult to imagine that Buyers 
would have been willing to purchase the property had they known that the 
encroachments existed, raising the marketability problems.

 
 

[¶31.]  The third and final criterium under 
Hagar v. Mobley, supra, is that Buyers suffered injury as a result of 
Sellers' false representations. There can be no doubt of injury where, as here, 
the false representation would subject Buyers to the expense to remove the 
encroachments for legal property usage.  
Dukas v. Tolmach, supra. Furthermore, the fact that the buyers 
came to be in possession of property by purchase as now subject to difficulty of 
resale also constitutes injury and monetary damage.

 
 

[¶32.]  The facts of Hagar are comparable to this 
case to the extent that that decision was reasoned from an analogy of 
misdescription cases to its facts, involving the term of an underlying state 
lease form from which possession was derived by the vendor. See Chesapeake 
Homes, Inc. v. McGrath, supra, 240 A.2d 245; E. H. Dreifus Lumber Co. of 
Oregon v. Werner, 221 Or. 467, 351 P.2d 684 (1960); and Dugan v. 
Jones, Utah, 615 P.2d 1239 
(1980). This kind of an encroachment is a boundary problem in 
reality.

 
 

[¶33.]  We conclude that Buyers meet the 
three-part Mobley test for entitlement to rescission on the ground that they 
were injured by their reliance on the false representations that (1) title to 
the property was marketable, and (2) the property was in compliance with all 
applicable laws, including city ordinances.

 
 
"The 
right to rescind exists for various reasons. Among them are enumerated want of 
title * * * *." Hawkins v. Stoffers, 40 Wyo. 226, 276 P. 452, 456 
(1929).

 
 
Since 
Sellers have regained the property, rescission only invokes repayment.  Twing v. Schott, 80 Wyo. 100, 338 P.2d 839 (1959). See Flygare v. Brundage, 76 Wyo. 350, 302 P.2d 759 (1956), where the 
remedy of rescission was recognized, although the facts are 
dissimilar.

 
 
PAROL 
EVIDENCE ADMISSIBILITY

 
 

[¶34.]  In affirmative responsive argument, 
Sellers contend that, lacking misrepresentation, Buyers are not entitled to 
rescind the agreement because Buyers accepted title with full knowledge that the 
encroachments existed. In order to substantiate these contentions, Mr. Hammett, 
Seller, testified at trial that he orally informed Buyers of the encroachments, 
and, furthermore, that the encroachments were readily visible upon inspection 
because the boundary between the parcel and the street was marked by two pieces 
of string tied to a fence.

 
 

[¶35.]  Buyers denied that the statement was 
made, and objected to its introduction, arguing that any testimony about the 
oral representations which communicated the existence of the encroachment 
violates the parol evidence rule. They claim that this evidence, extrinsic to 
the parties' written agreements, contradicts the parties' clear intentions as 
expressed by the specific terms of the written and mutually signed 
documents.

 
 

[¶36.]  One of the covenants 
states:

 
 
"There 
are no known defects, EXCEPT:

"(1) 
Those which are readily visible upon inspection."

 
 
From 
this, Sellers contend that trial testimony is not precluded by the parol 
evidence rule because it did not contradict, alter, add to, or vary their 
agreement, but merely explained which defects were readily visible upon 
inspection. A piece of string on a fence, which basic fact was controverted in 
this case, does not prove more than its existence without explanatory oral 
testimony to communicate purpose. There is no difference in whether the oral 
testimony seeks to disprove warranty status by a prior notice of encroachment, 
or in description of the surveyed encroachment, by explanation of the string and 
its survey purpose. In either case, parol evidence was tendered to disprove 
warranties in the later signed written sales documents. An unexplained piece of 
string on a fence is just that, and is not determinative as an encroachment 
readily visible upon inspection. It is similar to an unexplained river.  Dugan v. Jones, supra. We find 
that the evidence should have been excluded by the parol evidence 
rule.

 
 

[¶37.]  As a general rule, courts will ascertain 
the intentions of the parties by interpreting the language that is used in the 
contract and will not resort to adding what has been omitted or omitting what 
has been added.  Bakken v. 
Price, supra, 613 P.2d  at 1230, McClintock, J., concurring in part and 
dissenting in part; Goodman v. Kelly, Wyo., 390 P.2d 244, 248 (1964). If the 
contract is in writing and the language is clear and unambiguous, the intention 
is to be established from the words of the contract by considering the contract 
as a whole and reading each provision in light of all other provisions.  Samuel Mares Post No. 8 v. Board of 
County Commissioners of Converse County, Wyo., 697 P.2d 1040, 1043 (1985); 
Knadler v. Adams, Wyo., 661 P.2d 1052, 1053 (1983); Amoco Production Co. v. Stauffer Chemical Co. of 
Wyoming, Wyo., 612 P.2d 463, 
465 (1980).

 
 

[¶38.]  In this case, we must read the covenant 
that there are no defects except those visible upon inspection in light of other 
covenants that title was merchantable and that the property complied with all 
applicable statutes and regulations. Taken as a whole, we find that the written 
contractual terms preclude the existenceof the encroachments that violate the 
title warranties.  Kincheloe v. 
Milatzo, Wyo., 678 P.2d 855 
(1984).

 
 

[¶39.]  We note that this is a transaction 
involving real property, where written documentation is customarily required by 
the Wyoming statute of frauds:

 
 
"(a) 
In the following cases every agreement shall be void unless such agreement, or 
some note or memorandum thereof, be in writing and subscribed by the party to be 
charged therewith:

* 
* * *

"(v) 
Every agreement or contract for the sale of real estate * * * *." Section 
1-23-105, W.S.1977, Cum. Supp. 1986.

 
 
This 
statute reflects a legislative policy to avoid the uncertainty and potential 
fraud which results from reliance on oral agreements involving the transfer of 
real estate.  Kincheloe v. 
Milatzo, supra.

 
 

[¶40.]  In Crosby v. Strahan's Estate, 78 
Wyo. 302, 324 P.2d 492 (1958), 
this court relied on the following language from the Supreme Court of Ohio and 
the United States Supreme Court:

 
 
"'The 
statute of frauds is founded in wisdom, and has been justified by long 
experience. As was said by Mr. Justice Grier in Purcell v. Miner, 71 U.S. 513, 4 Wall. 513, 517 (18 L. Ed. 435):

 
 
"'The 
statuteis "absolutely necessary to preserve the title to real property from the 
chances, the uncertainty, and the fraud attending the admission of parol 
testimony."

 
 
"'It 
should be enforced * * * *.'" 324 P.2d  at 496, quoting from Newman v. 
Newman, 103 Ohio St. 230, 133 N.E. 70, 74, 18 A.L.R. 1089 
(1921).

 
 
We 
reaffirmed our reliance on those authorities and cited Crosby v. Strahan's 
Estate with approval in Remilong v. Crolla, Wyo., 576 P.2d 461, 464 (1978). We also 
relied upon another oft-quoted statement that

 
 
"'"* 
* * * the policy of the law requires that everything which affects the title to 
real estate shall be in writing, and that nothing shall be left to the frailty 
of human memory or as a temptation to perjury."'" 576 P.2d  at 464, quoting from 
Stephens v. St. Louis Union Trust Co., 260 Ill. 364, 103 N.E. 190, 193 
(1913).

 
 

[¶41.]  Oral contracts involving real estate are 
difficult to enforce, and all the agreements and understanding which affect the 
transfer of real property should be included in the written sales contract. We 
think it important to protect the integrity of written contracts, particularly 
where they involve the transfer of realty, andto do otherwise would throw 
Wyoming real estate transactions into uncertainty and chaos. Under the sound 
policy of the parol evidence rule, this court will not allow a party to 
interject alleged oral understandings into an agreement where those 
understandings contradict, alter, add to, or vary the plain terms of the 
writing.  Busch Development, Inc. 
v. City of Cheyenne, Wyo., 645 P.2d 65, 68 (1982); Hollabaugh v. Kolbet, Wyo., 604 P.2d 1359, 1361 (1980); 
Goodman v. Kelly, supra.

 
 
"* 
* * * It has long been recognized by this and other courts that a different rule 
would soon render instruments in writing of no value and the temptation to 
commit perjury would be increased." Hollabaugh v. Kolbet, supra, 604 P.2d  
at 1361.

 
 

[¶42.]  In this case, Sellers represented that 
the title was merchantable, and that the property complied with all applicable 
statutes and regulations. This was not so. They cannot now assert that these 
sweeping covenants may be contradicted by claiming that they informed Buyers 
about two strings tied to the fence on the property which marked the boundary. 
These markings go to the very enforceability of the contract, indicating a 
defect inthe property and its title -- that a portion of the land and parts of 
the buildings extended out into the dedicated city-owned 
street.

 
 

[¶43.]  Nowhere in the written documents is there 
any indication that a visible inspection revealed or would reveal the street 
encroachments. The only indication that any irregularities were discoverable by 
visible inspection is Sellers' claim that there was string on the fence which 
would show the boundary of the conveyed parcel. That is not enough. This oral 
evidence about those markings contradicts Sellers' written covenant of 
marketability and written covenant that the property was in compliance with all 
city ordinances, and is not admissible.

 
 
"* 
* * * If a vendor wishes to convey subject to an encumbrance affecting title the 
contract should include the appropriate exception [citation], and the Court may 
not impose an agreement other than that which was arrived at between the parties 
[citation]." Atlas Realty of East Meadow, Inc. v. Ostrofsky, 56 Misc.2d 
787, 289 N.Y.S.2d 784, 786 (1967).

 
 
Where 
a defect acceptance agreement which is essential to a seller's right to enforce 
a contract to transfer real property is not included inthe written contract, we 
will not, under the circumstances of this case, allow Sellers to make the 
contract enforceable by proving that agreement did exist by parol evidence 
introduced at trial. See Cordova v. Gosar, Wyo., 719 P.2d 625 
(1986).

 
 
CONCLUSION 
FOR REVERSAL

 
 

[¶44.]  Excluding the inadmissible parol 
evidence, there is no other support for Sellers' contention that they informed 
Buyers about the encroachments and that the sale was consummated despite 
intrinsic unmarketability of title. The trial court's decision was necessarily 
premised upon Sellers' parol contradiction of the parties' written agreement, 
and must be reversed. Since Buyers did not receive what the written agreement 
promised, rescission was legally justified, with the terms for entry of relief 
to be determined by the trial court, with or without additional evidence upon 
remand. See Walter v. Moore, Wyo., 700 P.2d 1219 
(1985).

 
 

[¶45.]  Reversed and remanded.Cardine, Justice, 
dissenting, with whom Grant, District Judge, joins.  Grant, District Judge, 
dissenting.

 
 
FOOTNOTES

 
 

1The words "merchantable" and "marketable" are synonymous and 
interchangeable when used in the context of a land contract.  United States v. Mansion House 
Center, North Redevelopment Co., 607 F. Supp. 392 (E.D.Mo. 1985), aff'd 796 F.2d 1039 (8th Cir. 1986); Frank's Nursery Sales, Inc. v. American National 
Insurance Co., 388 F. Supp. 76 (E.D. Mich. 1974); Tri-State Hotel Co., 
Inc. v. Sphinx Investment Co., Inc., 212 Kan. 234, 510 P.2d 1223 (1973). See 
Bakken v. Price, Wyo., 613 P.2d 1222, 1226 (1980), for a Wyoming case where the terms were used 
interchangeably.

 
 
Cardine, 
J., filed a dissenting opinion in which Grant, District Judge, 
joined.

 
 
Grant, 
District Judge, filed a dissenting opinion.

 
 
CARDINE, 
Justice, dissenting, with whom GRANT, District Judge, 
joins.

 
 

[¶46.]  I dissent. I would affirm the decision of 
the trial judgewho observed the witnesses, listened to their live testimony, 
judged their credibility, and accorded such evidence the weight to which he 
determined it was entitled. When, as in this case, the parties' written 
agreement specifically provides "there are no known defects, EXCEPT: (1) 
Those which are readily visible upon inspection," (emphasis added) it is 
patently clear that the parties were properly allowed to testify orally as to 
what was readily visible upon inspection. It was the function of the trial court 
to accept or reject that testimony and to resolve the disputed statements of 
fact that were present. That is not our function. We should not be deciding upon 
a cold record whether a piece of string on a fence is significant. If we adhere 
to our oft-stated rule that we accept the evidence favorable to the successful 
party as true and leave out of consideration entirely the evidence of the 
unsuccessful party in conflict therewith, we are left with evidence supporting 
the decision of the trial court and it ought to be 
affirmed.

 
 
GRANT, 
District Judge, dissenting.

 
 

[¶47.]  I join in Justice Cardine's dissent. 
After a thorough review of the record I am convinced that the buyers, unable or 
unwilling to fulfill their legal obligation under the contract, used the 
encroachment issue to avoid those obligations. Having heard the evidence, the 
trial court was convinced of this. That is, the trial court was convinced that 
the buyers simply did not rely on the alleged 
misrepresentations.

 
 

[¶48.]  The majority cite Hagar v. Mobley, 
Wyo., 638 P.2d 127, 132 (1981), 
setting forth the three elements justifying rescission. Of course this is the 
law. But the trial court did not believe that the evidence proved the buyers' 
alleged reliance and so found.

 
 

[¶49.]  This case vividly illustrates the 
soundness of the principles recited by Justice Cardine. The majority cite 
abundant sound legal authority which, in view of the record, is not properly 
applicable.