Panzich v. Gaylord

GIBSON, C. J. Plaintiffs brought this action to recover damages for defendant’s alleged fraud in connection with the sale to them of a house and lot together with a garage which had been remodeled for use as a small dwelling. It was alleged that defendant falsely represented to plaintiffs that the small house could be rented for residential purposes, that he concealed the fact that no building permit had been obtained for its construction, that plaintiffs purchased the [53]property in reliance on defendant’s representations, and that they were damaged as a result of the “fraudulent representations and concealments.” The trial court, sitting without a jury, found for defendant, and the sole question to he determined on this appeal is whether the evidence supports the judgment.

In 1947, defendant obtained building permits to construct a house and garage, and both buildings were approved by the city inspector of Arcadia, where the property is located. At the time it was built the garage was wired for electricity and contained a bathroom, and later, in order to provide a dwelling for his sister and brother-in-law who could find no other place to live, defendant made certain alterations in the building. A partition was erected which divided it into two rooms in addition to the bathroom, one of the doors was sealed shut, and a screen porch was added. A sink was also installed, but the record is not clear whether this was done when the garage was built or when the alterations were made. No permit was obtained for the erection of the screen porch, and the record is silent as to whether one was secured for the other alterations.

Defendant listed the property for sale with a real estate agent who took plaintiffs to see the premises on October 21, 1948. The small house was then being occupied by defendant’s sister and brother-in-law who were renting it for $35 a month. The agent told plaintiffs that the small house was rented and was producing an income of $35 a month. Plaintiffs orally agreed to buy the property on October 21, an escrow was opened on October 25, and the transaction completed on November 16.

Defendant’s mother, Mrs. Gaylord, had conversations about the property with Mr. Panzich on two occasions. During the course of the first conversation, which occurred on the premises, she talked to Mr. Panzich about the relatives who lived in the small house and asked him “if it would be permissible for them to stay there until such time as they could locate a house they could afford,” and she testified that “we' told Mr. Panzich at the time the arrangements for Henry [defendant] to live in the garage when it was being built was —he was given permission to live there while the house was being built.” Defendant testified that his mother told Mr. Panzich in his presence “that he had better check the legality of renting that garage to anyone except one of his own family,” and that Panzich had replied, “The ordinance has