Opinion
84-382-NJ-2; CA A38256
Petition for reconsideration filed August 5, 1987
Reconsideration allowed, opinion modified, October 21, 1987, Petition for review allowed February 9, 1988
Appeal from Circuit Court, Jackson County.
L.A. Merryman, Judge.
Doug S. Gard, Medford, for petition. With him on the petition was Jackson County Legal Services, Medford.
Before Richardson, Presiding Judge, and Newman and Deits, Judges.
NEWMAN, J.
Petition for reconsideration granted; opinion modified and adhered to as modified.
In our previous opinion, we stated ( 85 Or App at 471):
"Moreover, the exception for zoning ordinances that appeared in the earnest money receipt does not, as a matter of law, preclude plaintiffs' reliance on defendants' representation. That exception did not appear in the deed.4 In Winn v. Taylor, 98 Or. 556, 578, 190 P. 342, 194 P. 857 (1921), the court held that a prior understanding between the parties that a lease was excepted from the covenant against encumbrances was superseded by the warranty deed which did not contain the exception and that the plaintiff was entitled to damages for its breach. Similarly, although the earnest money agreement here contains an exception for zoning ordinances, the warranty deed does not. The provision in the earnest money receipt merged into the deed, and defendants cannot claim its protection.5
Respondents assert that the exception for zoning ordinances in the earnest money receipt did not merge into the deed, because the zoning ordinance is not an encumbrance. We grant their petition for reconsideration.
We modify our opinion to delete the quoted paragraph, including footnotes 4 and 5, and replace it with the following:
As we have noted, there is a genuine issue of material fact whether plaintiffs could reasonably have understood defendants' representation that the property was "suitable for residential purposes" to mean that the access to the property complied with the zoning ordinance. Moreover, as indicated above, in a rescission action, the plaintiffs are not, as a matter of law, charged with knowledge of applicable zoning restrictions. Accordingly, in the absence of undisputed fact that plaintiffs had actual knowledge of the applicable zoning restrictions, the exception for zoning ordinances that appeared in the earnest money receipt does not preclude their reliance on defendants' representation.4
The remainder of our previous opinion is unchanged.
Petition for reconsideration granted; opinion modified and adhered to as modified.