IN THE COURT OF APPEALS 

FILED

November 24, 1999

Cecil Crowson, Jr.

Appellate Court Clerk

AT KNOXVILLE

 

 

BRIAN RAY BOWMAN ) UNION COUNTY 

 ) 

03A01-9904-CH-00158

 Plaintiff-Appellee )

 )

)

 v. ) HON. BILLY JOE WHITE,

) CHANCELLOR

)

SWAN SEYMOUR )

 ) 

 Defendant-Appellant ) AFFIRMED AND REMANDED

JOHNNY V. DUNAWAY OF LaFOLLETTE FOR APPELLANT

ROBERT W. GODWIN OF KNOXVILLE FOR APPELLEE

 O P I N I O N

 

Goddard, P.J. 

 This is a suit by Plaintiff Brian Ray Bowman, seeking to

rescind a deed wherein he acquired a certain lot from Swan Seymour.
 The Trial Court sustained Mr. Bowman’s complaint, rescinded

the deed, and awarded him a money judgment1 against Mr. Seymour as follows:

 2. The Defendant, SWAN SEYMOUR, shall refund to the Plaintiff

the purchase price thereof, being ELEVEN THOUSAND AND 00/100 ($11,000.00)

DOLLARS, and the sum of TWO THOUSAND THREE HUNDRED TWENTY EIGHT AND 23/100

($2,328.23) DOLLARS, representing Plaintiff’s closing costs in the purchase

of the property, property taxes paid thereon for the years 1996, 1997 and

1998, and interest on his purchase money mortgage in the amount of ONE

THOUSAND SEVEN HUNDRED FIFTY SEVEN AND 58/100 ($1,757.58) DOLLARS.

 Mr. Seymour’s appeal raises a single issue:

STATEMENT OF THE ISSUE 

 WHETHER THE TRIAL COURT ERRED IN GRANTING RESCISSION OF THE DEED

WHEN THE APPELLEE WAS PLACED ON NOTICE OF THE EXISTENCE OF AN EASEMENT BY

DEEDS OF RECORD AND A TITLE EXAMINATION THAT WAS PERFORMED BEFORE APPELLEE

CLOSED THE LOAN AND PAID APPELLANT?

 By deed dated August 6, 1996, Mr. Bowman acquired from Mr.

Seymour lot number 11 of the Dodson Creek Subdivision located in the Third

Civil District of Union County for the purpose of building a house. Prior

to purchasing the lot Mr. Bowman 

observed there was an old logging road traversing the middle of the lot

generally from east to west. When Mr. Bowman made inquiry of Mr. Seymour,

Mr. Seymour told him that the road was his “to do as he pleases.”

Thereafter, prior to the sale, Mr. Seymour made the same representations to

Mr. Bowman’s live-in girlfriend and his mother. Also prior to the sale,

Mr. Seymour, in support of his representation relative to the right-of-way,

faxed to Mr. Bowman by way of his girlfriend a plat of the subdivision

which shows no right-of-way crossing lot 11.

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 Subsequent to purchasing the property Mr. Bowman was

advised by Jerry Cook, who along with his wife owned lot number 14 in the

subdivision, that they had a right-of-way over lot 11. Upon receiving this

information Mr. Bowman again contacted Mr. Seymour and was again advised

that there was no such right-of-way. Mr. Seymour again made the same

representation to Mr. Bowman’s mother.

 Subsequent investigation disclosed that there was in fact a

right-of-way conveyed to Floyd W. Carr by Mr. Seymour and his wife by deed

dated September 16, 1977, which conveyed lot 14. This deed contains the

following language:

Also, included in this conveyance is a right-of-way along the existing road

which crosses Lots No. 9, 10, 11, 12, & 13 as an access road to this lot.

 The deed conveying lot 11 to Mr. Bowman contains the

following language:

THIS CONVEYANCE is made subject to the restrictions of Cool Branch

Subdivision, which restrictions are also applicable to Dodson Creek

Subdivision, which restrictions appear of record in Misc. Book 5, page 491,

in the Union County Register of Deeds Office, and subject to the

restrictions, reservations and easements contained in that deed from the

United States of America, dated April 23, 1958, of record in Warranty Deed

Book J-3, page 554, and in those deeds of record in Warranty Book S-3, page

235, and Warranty Book E-4, page 664, and subject to those conditions set

forth in Warranty Book Z-5, page 687, all of record in the Union County

Register’s Office.

THIS CONVEYANCE is made subject to any and all applicable restrictions,

easements, and building setback lines as are shown of record in the Union

County Register’s Office and further to any matter and/or conditions which

would be disclosed by a current accurate survey and/or inspection of the

property herein described.

 In the deed from Mr. Seymour to Mr. Bowman, the specific

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conveyance of lot 14 to Mr. Carr and the right-of-way appurtenant is not

referenced, although there is a reference to a tract of land conveyed to

Mr. Seymour which does except lot 14 and a right-of-way. It is doubtful

whether the right-of-way mentioned in the exception is the right-of-way

crossing lot 11. Indeed, it would appear that it was not, in that Mr.

Seymour apparently subsequently acquired lot 14 which, as already noted,

was excluded from the deed aforementioned and apparently acquired by him

from some other source. Moreover, as far as the record discloses, Mr.

Seymour first imposed the right-of-way in the conveyance of lot 14 to Mr.

Carr.

 There is, however, a specific reference to the right-of-way

across lot 11 in a title examination prepared for First State Bank of

Maynardville, the institution lending the money to Mr. Bowman for the

purchase of the property. This title examination states in the first

sentence that it is “for the exclusive use of First State Bank,

Maynardville, Tennessee, and not to be relied upon by any other person or

firm.” 

 It does not appear that Mr. Bowman was ever aware of the

portion of the title examination relating to lot 14 and the right-of-way. 

 Finally, as to constructive notice, the recorded plat of

the subdivision shows the right-of-way crossing lot 11. 

 The only witness called by the defense was Mr. Seymour

himself, who stated repeatedly that he did not recall any conversations

with either Mr. Bowman, his girlfriend, or his mother. When pressed by

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adverse counsel near the conclusion of his testimony, he responded as

follows:

 Q When your lawyer asked you that and you say you don’t recall

telling Mr. Bowman, Ms. Dyer, Mrs. Bowman that it didn’t matter, you’re

unable to tell the Court under oath today that you never made those

statements, are you?

 A I said I don’t recall it.

 Q That’s the best you can do, right?

 A That’s the best I can do.

 The Trial Court found Mr. Bowman and his witnesses to be

credible, and that Mr. Seymour had indeed made the representations they

testified about.

 A party is entitled to rescind a contract where a material

mutual mistake of fact has occurred, Isaacs v. Bokor, 566 S.W. 532 (Tenn.

1978); Vakil v. Idnani, 748 S.W.2d 196 (Tenn. Ct. App. 1987); Robinson v.

Brooks, 577 S.W.2d 207 (Tenn. Ct. App. 1978), or because of fraud--which

vitiates all contracts--practiced by one party upon the other. Richards v.

Taylor, 926 S.W.2d 569 (Tenn. Ct. App. 1996); Winstead v. First Tenn. Bank

N.A., Memphis, 709 S.W.2d 627 (Tenn. Ct. App. 1986). The equitable remedy

of a rescission, however, is not enforceable as a matter of right, but

rests within the sound discretion of the trial court. Vakil v. Idnani,

supra.

 Applying the foregoing law to the facts of this case, it is

apparent that if the representation given by Mr. Seymour was given in good

faith, and he at the time it was given believed no right-of-way existed,

there was a mutual mistake giving rise to a suit for rescission. If, on

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the other hand, Mr. Seymour knew the true facts and misrepresented them to

Mr. Bowman he would be guilty of fraud which would likewise give rise to a

suit for rescission. Accordingly, we find under the facts of this case the

Trial Judge did not abuse his discretion and acted properly either under

theory of mutual mistake or fraud.

 In our resolution of this case we concede that Mr. Bowman

was upon constructive notice of the right-of-way by virtue of the recorded

plat which shows the right-of-way. However, we believe that the false

representation made to Mr. Bowman is sufficient to outweigh constructive

notice. Moreover, it is arguable that even if Mr. Bowman had actual notice

of the right-of-way he might still be able to prevail because of Mr. Seymour

’s representations from which he might conclude that Mr. Seymour had

purchased the right-of-way from the owner of lot 14, as indeed he tried to

do after this controversy arose.

 For the foregoing reasons the judgment of the Trial Court

is affirmed and the cause remanded for collection of the judgment and costs

below. Costs of appeal are adjudged against Mr. Seymour and his surety.

 

___________________________

 Houston M. Goddard,

P.J.

CONCUR:

______________________________

Herschel P. Franks, J.

______________________________

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D. Michael Swiney, J.

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