Gagne v. Bertran

• Decision Date: 19 October 1954
• Citation: 43 Cal.2d 481,275 P.2d 15
• Court: California Supreme Court
• Parties: Alfred GAGNE and Mary Gagne, husband and wife; Joseph Billiet and Haydee Billiet, husband and wife, Plaintiffs and Respondents, v. Benjamin E. BERTRAN, also known as B. E. Bertran, Doe I, Doe II and Doe III; Benjamin E. Bertran, also known as B. E. Bertran, Doe I, Doe II and Doe III, doing business under the fictitious firm name and style of Bertran Drilling Co., Defendants. Benjamin E. Bertran, Individually, and doing business as Bertran Drilling Co., Appellant. L. A. 23098

Page 15

275 P.2d 15

43 Cal.2d 481

Alfred GAGNE and Mary Gagne, husband and wife; Joseph Billiet and Haydee Billiet, husband and wife, Plaintiffs and Respondents, v. Benjamin E. BERTRAN, also known as B. E. Bertran, Doe I, Doe II and Doe III; Benjamin E. Bertran, also known as B. E. Bertran, Doe I, Doe II and Doe III, doing business under the fictitious firm name and style of Bertran Drilling Co., Defendants Benjamin E. Bertran, Individually, and doing business as Bertran Drilling Co., Appellant.

L. A. 23098.

Supreme Court of California

Oct. 19, 1954.

Rehearing Denied Nov. 17, 1954.

Wallace & Cashin, W. W. Wallace and Earl A. Everett, Los Angeles, for appellant.

Nicolas Ferrara, Los Angeles, for respondents.

TRAYNOR, Justice.

The evidence in this case is in sharp conflict and is considered here in the light most favorable to plaintiffs. Plaintiffs had contracted to buy two unimproved lots for $8,500 'subject to * * * a fill test to be made at buyer's expense.' Plaintiff Joseph Billiet telephoned defendant that he had a contract to buy the lots but 'would not proceed with the deal unless we had a test made for fill, and I told him if he would like to do it, I would like to have him handle it because he handled my work before, so he said, 'All right, I will take care of it. '' Billiet testified that between 1939 and 1942 defendant told him that it was his business to test soil for fill and that he employed defendant on four different occasions for that purpose. Defendant did not tell plaintiffs at any time that he was not a geologist or soil engineer or that plaintiff should get an engineer or city inspector to check the soil. Defendant fixed the price for his services at $10 per hour, which plaintiffs agreed to pay. On March 7, 1947, several days after this telephone conversation, defendant sent two employees and a drilling rig to plaintiffs' lots. Several holes had been drilled when Billiet arrived at the lots; defendant arrived shortly thereafter. Billiet testified that he remained on the sidewalk near the street while defendant picked up and examined samples of soil at each of the holes drilled. The location, depth, and number of holes to be drilled were entirely under the control of defendant. After defendant had examined samples of soil from each of the holes, he directed his employees to close the holes and told Billiet that he had 'nothing to worry about here. It is perfectly okay * * *. You may go 12 to 16 inches but that is about all * * *. You have got a normal condition here, for about an 18 inch foundation.' Defendant's employee in charge of the drilling rig testified, however, that he observed evidence of fill 4-5 feet deep in several of the holes, but did not inform either his employer or plaintiff of that fact. On March 17, 1947, in response to defendant's invoice, plaintiffs mailed defendant a check for $25 for his services and requested a letter from defendant stating his 'findings' because it might be required by F.H.A. Defendant replied that 'On March 7, 1947 we drilled five 16 dia. test holes * * * the holes were drilled to a depth of 5 0 to 6 0 deep, we did not find any evidence of fill other than on the surface for about 12 ' to 16 '.' Defendant's invoice included the printed statement that among other things he did 'test drilling.' Billiet testified that in reliance on defendant's oral and written statements about the extent of the fill they bought the lots for $8,500 and that they would not have bought them had they known that defendant's statements were erroneous.

After purchasing the lots, plaintiffs decided to erect a two-story apartment building thereon. They entered into contracts for the construction of the building and for a loan to finance the construction. Plaintiffs' contract for the installation of the foundation at a cost of $3,121.40 was based on defendant's report that there was no fill below 16 inches and was expressly subject to an additional charge in the event the contractor encounter 'unforeseen conditions such as fill and extra work is required * * *.' As the first foundation trench was being dug, it was discovered that the lots contained areas with 3 to 6 feet of fill. When notified by Billiet of this condition, defendant came to the site, looked at the trenches that had been dug, and stated that he had 'evidently made a mistake.' The depth of the fill required a much deeper foundation ¹ that defendant's report had led plaintiffs to expect.

Plaintiffs brought this action to recover the increased cost of installing the foundation. Their complaint stated three alternative theories of recovery: (1) breach of warranty, (2) deceit, and (3) negligence. The trial court made findings supporting a recovery on each of these theories. It found, among other things, that defendant held himself out as being qualified to make soil tests; that defendant represented and warranted to plaintiffs that there was no fill beyond 16 inches; that plaintiffs believed and acted in reliance on this representation and warranty, which was untrue; that defendant made his test for fill negligently and carelessly; that defendant had no reasonable grounds for believing his representation to be true; that the additional expenses plaintiffs incurred in the installation of the foundation were proximately caused by defendant's warranty, misrepresentation, and negligence; that plaintiffs did not know the true depth of the fill until the foundation trenches were being dug, and that had they known the true depth of the fill, they would not have purchased the lots. Judgment was entered awarding plaintiffs $3,093.65, the increased cost of installing the foundation. Defendant appeals. He challenges the sufficiency of the evidence to support the findings of fact and contends that the trial court did not apply the proper measure of damages. We have concluded that these contentions are, in part, well taken, and that the judgment must be reversed.

The Cause of Action For Breach of Warranty

Plaintiffs contend that defendant undertook to guarantee the accuracy of the results of his test, not on the ground that there was an express warranty agreement, for there is no evidence of such an agreement, but on the ground that under the circumstances of this case the law imposes the strict liability of a warranty.

For historical reasons warranties have become identified primarily with transactions involving the sale or furnishing of tangible chattels, see, Prosser, Torts (1941), pp. 739-710; 1 Williston on Sales (Rev. ed., 1948), §§ 195-197, but they are not confined to such transactions. ² Strict liability has also been imposed for innocent misrepresentations of facts that the maker purported to know, that the recipient relied on in matters affecting his economic interests, and that the maker positively affirmed under circumstances that justify the conclusion that he assumed responsibility for their accuracy. ³

The evidence in the present case does not justify the imposition of the strict liability of a warranty. There was no express warranty agreenent, and there is nothing in the evidence to indicate that defendant assumed responsibility for the accuracy of his statements. He did not, as did the defendant in Crawford v. Duncan, 61 Cal.App. 647, 650, 215 P. 573, tender plaintiffs an 'absolute promise' that the results of his test would be accurate. He was not a seller of property who obligated himself as part of his bargain to convey property in the condition represented. The amount of his fee and the fact that he was paid by the hour also indicate that he was selling service and not insurance. Thus the general rule is applicable that those who sell their services for the guidance of others in their economic, financial, and personal affairs are not liable in the absence of negligence or intentional misconduct.

The Cause of Action For Deceit

To be actionable deceit, the representation need not be made with knowledge of actual falsity, but need only be an 'assertion, as a fact, of that which is not true, by one who has no reasonable ground for believing it to be true' Civ.Code, § 1710 (2); ⁴ Gonsalves v. Hidgson, 38 Cal.2d 91, 100, 237 P.2d 656; Hoffman v. Kirby, 136 Cal. 26, 29, 68 [43 Cal.2d 488] P. 321; Daley v. Quick, 99 Cal. 179, 182, 33 P. 859; Lerner v. Riverside Citrus Ass'n, 115 Cal.App.2d 544, 547, 252 P.2d 744; Wishnick v. Frye, 111 Cal.App.2d 926, 930, 245 P.2d 532; Morrell v. Clark, 106 Cal.App.2d 198, 201, 234 P.2d 774; Graham v. Ellmore, 135 Cal.App. 129, 132, 26 P.2d 696; Williams v. Spazier, 134 Cal.App. 340, 345-346, 25 P.2d 851; Andrew v. Bankers & Shippers Ins. Co., 101 Cal.App. 566, 575, 281 P. 1091; Rest., Torts § 552; see also, Civ.Code, § 1572(2); Horrell v. Sante Fe Tank & Tower Co., 117 Cal.App.2d 114, 119, 254 P.2d 893, and made 'with intent to induce (the recipient) to alter his position to his injury or his risk * * *.' Civ.Code, § 1709; ⁵ Gonsalves v. Hodgson, supra, 38 Cal.2d 91, 100, 237 P.2d 656; Hobart v. Hobart Estate Co., 26 Cal.2d 412, 422, 159 P.2d 958; Estate of Newhall, 190 Cal. 709, 718, 214 P. 231, 28 A.L.R. 778; Work v. Campbell, 164 Cal. 343, 347, 128 P. 943, 43 L.R.A.,N.S., 581; Carlson v. Murphy, 8 Cal.App.2d 607, 609-612, 47 P.2d 1100. Defendant's intent to induce plaintiffs to alter their position can be inferred from the fact that he made the representations with knowledge that plaintiffs would act in reliance on them. Glanzer v. Shepard, 233 N.Y. 236, 239, 135 N.E. 275, 23 A.L.R. 1425; see also, International Products Co. v. Erie R. R. Co., 244 N.Y. 331, 339, 155 N.E. 662, 56 A.L.R. 1377. The evidence discloses that defendant's statements were erroneous, that, as will be shown presently, defendant negligently performed the fill test, that his statement was therefore made without reasonable ground for believing it to be true, see, International Products Co. v. Erie R. R. Co., supra, 244 N.Y. 331, 338, 155 N.E. 662, 56 A.L.R. 1377 and that plaintiffs...