KOSRAE STATE COURT
FEDERATED STATES OF MICRONESIA
cite as Frierson vs. Kilafwasru, (Kosrae, 1990)
Civil Action No. 38-88
This matter came on for trial June 25, 1990. Present for plaintiff was Clanry Likiaksa, and Patrick Olter for the defendant. After trial both counsel submitted trial briefs. For the reasons stated in this opinion, we enter judgment in the amount prayed for in the complaint in favor of plaintiff minus counsel's fee.
FINDINGS OF FACT
This case arises from the sale of land by defendant to plaintiff on 4/27/88. The parties stipulated to the fact that defendant had obtained a certificate of title from the Land Commission on 4/27/88. A "Warranty Deed" was executed by the parties, in both Kosraen and English versions. Plaintiff paid the full purchase price of six thousand five hundred dollars.
Sometime in 5/7/88 plaintiff tried to enter the property but was physically prohibited from doing so by one Eklun Ned.
Plaintiff on several occasions thereafter approached defendant and asked for her money back. Defendant retains the purchase money and plaintiff has yet to enter the property to make use of
it; however, defendant has made several unsuccessful attempts to resolve the dispute with Mr. Ned.
Plaintiff asks judgment from this Court requiring defendant to refund the entire purchase price, based upon defendant's failure under the "Warranty Deed" to defend plaintiff's title from Mr. Eklun Ned. Defendant argues that the claim of Eklun Ned is not lawful, therefore defendant's duty to defend under the warranty does not arise. Defendant further argues that even if the duty to defend has matured, that defendant's duty has been discharged by his attempts to meet with Mr. Eklun Ned to resolve the dispute.
The first issue for this Court is what type of contract was entered into. We note that in order to be enforceable,, specific warranties in a deed must be clear and unambiguous. Here, the type of document executed between the parties is a standard "Warranty Deed." It contains covenants and warranties which have technical and precise legal meanings, taken primarily from English common law. When these terms are translated into the Kosraen language, many of the subtle legal distinctions are lost.
The Kosraean version specifically stated that the property
was controlled by defendant and his family before the land was sold and that there was no dispute by any interested persons and that defendant shall defend the agreement according to our signatures at the bottom. These differences between the Kosraean and English versions of the deed are both substantial and significant.
Under standard United States common law interpretation of the English version of the deed, the present action on the covenant to defend title against all lawful claims would not mature, and recovery would be precluded:
A covenantee cannot claim a breach of warranty.....where such (adverse) title is not paramount; the showing of a superior outstanding title in a third party is essential to mature the right of action for a breach of the warranty...In other words, a covenant of warranty of title does not extend to apparent but unfounded titles in the land, but only against hostile titles, superior in fact to that of the grantor. 20 Am Jur2d Covenants §56, p. 627(footnotes omitted)
At trial it was shown that the third party's claim was not a colorable claim. Eklun Ned claims ownership after a full hearing and determination by the Land Commission, of which he received notice and from which he did not appeal. .From Mr. Ned's testimony, we find that his claim was determined by the Land Commission to be inferior to defendant's. Therefore, his title is not in fact superior, as required by the United States common law.
Though a strict application of the United States common law
to the English version of the deed would preclude recovery in this action under the conversant to defend title, this is not the only means of relief available to plaintiff, especially in light of the Kosraean version of the deed. This Court has previously spoken on the power of the Court to reform and cancel a deed where fraud or mistake is involved. Melander v. Kosrae 3 FSM Intrm. 324, 328 (Kos S. Ct. Tr. 1988) . In that case we dealt Ar with a "Statement of Intent" which essentially granted an..~ easement. We stated at page 328:
Where fraud or mistake are involved, the court can reform or cancel a deed. However, in both situations, relief will be denied if the aggrieved party failed to read the necessary documents. Id. (citation omitted).
Though the facts here do not amount to a fraud, or a mistake, it is clear that the statement contained in the Kosraean "Warranty Deed" that the land was free from dispute was misleading.
Misrepresentation has been defined as a:
(S)tatement made by a party that a thing is in fact a particular way, when it is not so; untrue representation; false or incorrect statements . . . 58 CJS 828.
It is clear from the facts of this case that defendant stated that the property was free from dispute in the Kosraean language. Plaintiff found out that this was not in fact the status of the property when she was physically prevented from entering the property after the purchase. Defendant knew of the dispute, as he had tried to sell the property to other persons who did not buy the property because of Mr. Ned's claim.
Therefore, it is apparent that misrepresentation occurred.
The Court is convinced that a misrepresentation occurred here, upon which plaintiff relied to her detriment, and therefore, the contract is voidable by her. We hold that under the facts of this case, i.e. where a seller of land is on notice of a dispute, even though the claim causing the dispute is not a "lawful" claim under United States common law, and where a purchaser is physically prevented by the disputing party from obtaining possession of the property, and the seller has expressly claimed that the property is free from dispute, a duty arises in the seller to inform the purchaser of the dispute. Failure by a seller to do so is a misrepresentation, which if relied upon by the purchaser to her detriment, allows the purchaser to void the contract, and receive her money back.
We find for plaintiff here not on the covenant to defend, but on the basis of a material misrepresentation in the. Kosraen warranty deed. We do not follow United States common law which would preclude recovery on the covenant to defend because Mr. Ned's adverse claim is not "lawful". Nevertheless, plaintiff is entitled to rescind the contract and to be placed in the position she was before the deed was executed.
Plaintiff also requests 500.00 for counsel's fee. I do not grant such reliefs as requested. It is not clear and was not established during trial. No costs are assessed to either party.
Judgment is therefore rendered in favor of plaintiff in the amount of six thousand five-hundred dollars. Defendant may apply to court for an order fixing reasonable payment terms within ten days of entry of judgment.
So ORDERED, ADJUDGED, and DECREED the 2nd day of August, 1990.
Entered on this 2nd day of August, 1990.
Chief Clerk of Court, Kosrae