Cousins Properties of Tennessee, Inc. v. Karr

NEARN, Judge. Cousins Properties of Tennessee brought suit against Maurice Karr for the recovery of sewer tap fees. Karr, a builder, had tapped onto plaintiff’s sewer line and refused to pay plaintiff for its use. There was no contract between plaintiff and defendant and plaintiff’s suit was based solely on the- theory of unjust enrichment. The Chancellor found for the plaintiff and awarded plaintiff the sum of $200 for each tap made by Karr. The defendant has appealed. The facts are relatively undisputed. Plaintiff, formerly known as Larchwood, Inc., purchased an 800 acre tract of land for development, which area it designated as Hickory Bend Subdivision. As part of the development plan, plaintiff constructed a sewer treatment plant and mains connecting thereto at a cost in excess of $300,000. Plaintiff then contracted with a subsidiary corporation, Hickory Bend Development Company to operate and maintain the entire system. On February 9,1962, plaintiff had recorded certain restrictive covenants on Hickory Bend Subdivision. The recorded restrictive covenants were attached to and made a part of the complaint. Among other things, these 1962 restrictions recited that plaintiff had constructed a sewerage disposal system and had entered into a contract with Hickory Bend to operate and maintain the system and also to provide for collection and disposition of garbage and waste from the subdivision. The restrictions also provide that all dwellings are to be connected to the sanitary sewerage system and all connections must, be approved by a representative of Hickory Bend. The restrictions do not specifically mention any tap fee or charge therefor. Later plaintiff sold Section IY of said subdivision to a now bankrupt corporation known as Waterfalls Developers, Inc. Waterfalls then contracted with plaintiff for a sewer tap fee of $200 per lot for each tap when made. This contract was unrecorded. On September 25, 1968, Waterfalls executed certain restrictive covenants applicable to the land purchased. This instrument was recorded in Book 4175, page 84 of the Register’s Office of Davidson County and was attached to and made a part of the complaint. These additional restrictive covenants were placed of record solely by Waterfalls and were not executed by plaintiff nor its subsidiary Hickory Bend. To a large extent [500] the additional covenants are repetitious of those placed of record by plaintiff. However, the instrument also provides: “Waterfalls Developers, Inc. has constructed sewer lines and tapped onto a sewerage disposal system built and owned by Larchwood, Inc._” The instrument also provides that there shall be a reasonable monthly service charge to each lot owner to be paid to Hickory Bend for furnishing sewerage disposal services. On September 19, 1969, Karr purchased from Waterfalls 30 lots in Section IY of the subdivision with no mention of any tap fee by Waterfalls. Waterfalls never made any sewer taps or paid plaintiff any tap fees. The defendant Karr has tapped 27 lots onto plaintiff’s sewer system over plaintiff’s protest and has refused to pay. The defendant testified that when he purchased the lots from Waterfalls, it was his understanding that the sewer tap fees were “thrown in” with the deal and that there was nothing of record to advise him otherwise. The appellant has not filed Assignments of Error as required by Rule 12 of this Court. The lawsuit was heard by the Chancellor on oral testimony, without a jury, and we are more lenient in the enforcement of Rule 12 in that situation than on an appeal from a jury trial. This difference in approach is justified by reason of T.C.A. § 27-303, which provides that on appeals of this nature the review is de novo upon the record in the Trial Court, with a presumption of the correctness of the Trial Court’s finding unless the evidence preponderates to the contrary. We also note the appellant has by brief and argument clearly placed before this Court those areas wherein he claims the Chancellor erred. We therefore conclude, under the record as presented, a refusal to review the action of the Trial Court would be extremely harsh, if not unjust. No exhibit introduced and identified at the oral hearing is authenticated by the Chancellor. Admittedly, the exhibits introduced at the oral hearing had been-previously filed in the lawsuit as exhibits to the complaint, or as exhibits to an affidavit previously filed by the defendant in response to a show cause order why he should not be enjoined from making additional taps onto the sewer system pending this litigation. We further note, however, that neither the affidavit of the defendant, nor the exhibits thereto, are authenticated by the Chancellor. We conclude this Court cannot consider the affidavit of the defendant nor the exhibits attached thereto, neither can we consider the exhibits which depend solely upon their having been introduced at the oral hearing, because of the lack of authentication by the Chancellor. We hold those documents which are made exhibits to the complaint are a part of the technical record in this lawsuit, Rule 10.03, and may be considered by this Court. The defendant-appellant insists he is a bona fide purchaser for value of the 30 lots; he had no actual knowledge of the $200 per lot tap fee, and that fee is not mentioned or referred to in any recorded instrument which would place the defendant on constructive notice. The defendant argues he is not to be held liable on a contract between the plaintiff and Waterfalls of which he had no knowledge, from which he gained no benefit, and of which he had no reason to inquire. The plaintiff insists the defendant is being unjustly enriched by using the plaintiff’s property, the sewerage system, without making the proper payment for the right to so use. The plaintiff argues the defendant is an experienced builder and should have known a tap fee was required, or at least should have informed himself concerning that possibility. The proof of the defendant admits that tap fees are customarily charged to someone. However, it is argued that since it [501] was his understanding with Waterfalls that they had been paid or would not now be charged, he does not owe plaintiff a tap fee. Further, it was plaintiff’s obligation to place some instrument of record to show that tap fees would be owed to plaintiff as all he thought he had to pay was the monthly service charge mentioned in the Waterfalls restrictions. We cannot agree with this position. Arguendo, if we assume that Waterfalls misled defendant to induce him to purchase the 30 lots, such fact would not render plaintiff answerable for Waterfalls’ misconduct. Waterfalls is not the agent of plaintiff but simply a vendee of plaintiff and the record reveals no connection between the two other than vendor-vendee. We need cite no authority for the proposition that the misstatement or fraud of a subsequent vendee does not bind a previous vendor. Further, we think it unnecessary to cite any authority for the proposition that the owner of property does not have to place anything of record stating he is not giving his property away or suffer a presumption that he has given it away. After reading the subdivision restrictions placed of record by the plaintiff we are unable to find anything therein which would, in our mind, constitute a giving away of sewer taps by the plaintiff. And it is not argued that they do; or that reliance was made by the defendant to any supposed gift or waiver contained therein. Appellant complains of the restrictions placed of record by Waterfalls. The prime argument for reversal is that the defendant had no knowledge of the tap fee contract between plaintiff and Waterfalls; that such was not a matter of public record and the Chancellor should not have bound the defendant to the Waterfalls contract. The Chancellor did not bind the defendant to the Waterfalls contract. The suit was for unjust enrichment and not to enforce a contract. After hearing all the proof the Chancellor came to the conclusion that a tap fee of $200 was reasonable and was the reasonable amount of which plaintiff had been deprived and the defendant had been unjustly enriched by the use of the system. Had the contract been recorded it would not have applied to defendant for he was not a party to it. Had he contacted plaintiff about a tap fee the parties would have been free to negotiate the tap fee. Neither was bound to the other by the Waterfalls contract. We therefore conclude that the evidence does not preponderate against the finding of the Chancellor and his decree is affirmed at the cost of appellant and surety. Honorable Roy A. Miles, by designation of the Supreme Court of Tennessee, took part in the hearing of this appeal in the absence of Presiding Judge C. S. Carney. MILES, Special Judge, concurs.