Opinion ID: 754757
Heading Depth: 3
Heading Rank: 8

Heading: breach of contract--breach of warranty

Text: 58 The appellants admit that their claims for breach of contract and breach of warranty are essentially the same as that made for the fraud and negligent misrepresentation claims. Appellants' Br. at 31 (quoting Menuskin, 940 F.Supp. at 1218). There is no evidence, however, that National Title or Sartain agreed to a contract between themselves and the appellants. The appellants also argue in the alternative that, even if no contractual relationship existed, National Title and Sartain are still liable for contributing to and inducing the breach of the contract between plaintiffs and DWCC. Appellants' Br. at 31. 59 Additionally, courts in Tennessee have previously dealt with the issue of when a claim based on misrepresentation or fraud on the contract may be brought in real property cases. The plaintiffs in Winstead v. First Tennessee Bank N.A., Memphis, 709 S.W.2d 627 (Tenn.Ct.App.1986), purchased property believing that it could be used for commercial purposes. They then sued their attorney, their real estate agent, the vendor, the owner who had sold her interest to the vendor, and the vendor's attorney after they discovered that they could not use the property for commercial purposes. Although the case against their attorney was dismissed by consent order, the court held that: 60 [I]f a purchaser of real property has notice or with ordinary diligence should have had notice of a problem with the real estate, the purchaser cannot attack the validity of the contract for fraud, misrepresentation, or concealment of that problem. 61 Winstead, 709 S.W.2d at 631 (noting the information in question was available and accessible to all parties). 62 The court's decision in Winstead was based in part on the Tennessee Supreme Court holding in Hall v. Hall, 604 S.W.2d 851 (Tenn.1980), which held that purchasers of real property are: 63 [c]hargeable with notice, by implication, of every fact affecting the title which would be discovered by an examination of the deed or other muniments of title of his vendor, and of every fact as to which the purchaser, with reasonable prudence or diligence, ought to become acquainted. If there is sufficient [sic] contained in any deed or record, which a prudent person ought to examine, to produce an inquiry in the mind of an intelligent person, he is chargeable with knowledge or notice of the fact so contained. 64 Id. at 853 (quoting Teague v. Sowder, 121 Tenn. 132, 114 S.W. 484, 489 (1908) (quotation omitted in original)); see also Winstead, 709 S.W.2d at 632; Tennessee v. Cox, 840 S.W.2d 357, 366 (Tenn.Ct.App.1991) (citing Teague, 114 S.W. at 489) (A purchaser of land is charged with notice as to recital of the deeds in the chain of title and of every fact which, with reasonable prudence or diligence, he ought to become acquainted.). 65 As in Winstead, the information the appellants in the instant case needed was available and accessible to them. Section 66-26-102 of the Tennessee Code Annotated states that properly registered instruments are notice to all the world from the time they are noted for registration.... The plaintiffs could have simply performed their own title search to discover if the titles were encumbered, but they instead chose to rely on the assurances of DWCC. This cannot be blamed on National Title or Sartain who appear to have had no knowledge of DWCC's assurances or Don Williams's illegal actions. Because there is no evidence that National Title or Sartain were contracting with the appellants to perform any service, let alone a title search, under these circumstances appellants cannot attack the validity of the contract for fraud or misrepresentation. See Winstead, 709 S.W.2d at 631. 66 Additionally, even if a negligent misrepresentation had been made by the appellees, the contractual remedy for a misrepresentation by a third-party is to make the contract voidable by the recipient of the misrepresentation. See RESTATEMENT (SECOND) OF CONTRACTS § 164 (1981). The appellants argue that the appellees should be liable on the contract because rescission would not make them whole. See Appellants' Br. at 33. While rescission might not be an adequate remedy under the circumstances here, appellants cite no authority for any other remedy in contract; the remedy they are searching for may be available under these circumstances in tort, but not in contract. Cf. RESTATEMENT (SECOND) OF CONTRACTS at 424-25 (Introductory Note). 67 To the extent that the appellants attempt to hold the appellees liable on the contract based on the appellees' status as agents of DWCC, their claim also lacks sufficient support. Under Tennessee law, a known agent is bound by the contracts of his or her principal only when the circumstances show that the agent intended to be bound or assumed the obligations under the contract. Holt v. American Progressive Life Ins. Co., 731 S.W.2d 923, 925 (Tenn.Ct.App.1987). The appellants have not put forth sufficient evidence to demonstrate that any of the appellees intended to be bound personally under the appellants' contracts with DWCC. They were at all times simply acting in their capacity as known agents. The district judge properly granted summary judgment on the breach of contract and breach of warranty claims.