An experienced builder was mistaken about the boundary line between two neighboring lots, Lots 16 and 17, in a new residential subdivision based on four stakes placed by the developer at the perimeter of Lot 17, following a recent survey. As a result, the home he built for the Pitts family on Lot 17 encroached five feet onto the ten-foot setback required by the subdivision covenants. His error also caused the driveway appended to the home to encroach upon adjacent Lot 16. Lot 16 was then, and at the time of trial, owned by developer David M. Cox, Inc. (Cox, Inc.). When selling Lot 17 to the Pitts family, the developer’s daughter acted as dual agent for the builder and family and made no disclosures regarding the encroachments. When purchasing the home, the Pitts family asked whether a survey would be necessary and the developer’s daughter stated that a survey would be unnecessary because it was a platted subdivision, her father was the original owner and the property had passed directly from her father to the developer. The Pittses later built a detached garage directly at the end of the encroaching driveway.
Although David Cox (Cox), the developer of the subdivision and founder of Cox, Inc., witnessed the construction of the new garage on a daily basis, the garage was completed without any objection from him or any agent of Cox, Inc., until a new survey of Lot 16 was taken four years after construction of the garage. Upon discovering the encroachment, Cox, Inc. demanded removal of the garage. When the garage was not removed, the developer filed suit seeking to have the garage removed and the driveway repositioned. Finding Cox, Inc., to be the more responsible party and the party with superior knowledge, the chancellor ordered Cox, Inc. to convey title of the affected portion of Lot 16 to the Pittses in exchange for the highest stated market value.
The Mississippi Court of Appeals affirmed, explaining that “[i]f the owner of land with full knowledge, or with sufficient notice or means of knowledge, of his rights and of all the material facts, knowingly, though passively, looks on while another person expends money on the land under an erroneous opinion of title, it would be an injustice to permit the owner to exercise his legal rights against such other person. The owner is bound by the doctrine of equitable estoppel.” Bright v. Michel, 242 Miss. 738, 749, 137 So.2d 155, 159 (1962)
The Court of Appeals concluded with a number of findings favorable to purchasers of real property: “Although we recognize that it would be a safer practice for the purchasers of real property to obtain an independent survey, we find that it was reasonable for the purchaser of a new home in a new subdivision, who was being represented by the developer’s daughter and an agent of the development corporation, to rely upon the assertions made to him or her. It was not unreasonable for the Pittses to trust that their new home, as well as its driveway, was properly situated on the lot. It was also not unreasonable for them to believe that the land directly at the end of their driveway was part of their property.”
David M. Cox, Inc. v. Pitts, No. 2008-CA-00499-COA, 2009 WL 2152278 (Miss. App. July 21, 2009).