Ackmann v. Keeney-Toelle Real Estate Co.

• Decision Date: 11 April 1966
• Docket Number: KEENEY-TOELLE,51772,Nos. 51764,s. 51764
• Parties: Eugene ACKMANN and Melba L. Ackmann, Plaintiffs-Respondents, v.REAL ESTATE COMPANY, Twillman Construction Company and Wilbert W. Twillman, Defendants-Appellants.
• Court: Missouri Supreme Court

Page 483

401 S.W.2d 483

Eugene ACKMANN and Melba L. Ackmann, Plaintiffs-Respondents, v. KEENEY-TOELLE REAL ESTATE COMPANY, Twillman Construction

Company and Wilbert W. Twillman, Defendants-Appellants.

Nos. 51764, 51772.

Supreme Court of Missouri, En Banc.

April 11, 1966.

Edward F. Downey, John J. Delabar, Jack V. Hoskins, St. Louis, for respondents.

R. K. Schurr, Schurr & Inman, Clayton, for appellant Keeney-Toelle Real Estate Co.

Andrew H. McColloch, Wentker & McColloch, Robert V. Niedner and Niedner, Niedner & Moerschel, St. Charles, for appellants Twillman Const. Co. and Wilbert W. Twillman.

HYDE, Judge.

Action for damages for fraudulent misrepresentations in the sale of a home to plaintiffs, who had verdict for $3,000.00 actual damages and $10,500.00 punitive damages. After remittitur ordered was made, judgment was entered for plaintiffs for $1,500.00 actual damages and $3,500.00 punitive damages. Defendants appealed and contend the court erred in overruling their motions for directed verdicts at the close of all the evidence. The St. Louis Court of Appeals held the trial court correctly overruled these motions but reversed and remanded (because of error in giving Instruction No. 3) for a new trial on the issue of damages only. On application of defendants, we ordered the case transferred; and it is to be determined here 'the same as on original appeal.' Sec. 10, Art. V, Const., V.A.M.S.

Because of defendants' claim of error in overruling their motions for directed verdicts, it is necessary to make a full statement of facts and we adopt the following statement from the opinion of the Court of Appeals, without quotation marks, and with some additions. The construction company began work on 'Harvest Acres' subdivision early in 1959. Keeney-Toelle was the sales agent. This subdivision was located in an unincorporated area in St. Charles County and water for it was to be supplied by the developer. Sec. 192.200, RSMo V.A.M.S., requires water suppliers to file plans 'with a description of the methods of purification and of the source from which the supply of water is derived' and provides 'no source of supply shall be used without a written permit of approval from the division of health.' Section 3 and Section 5 of the regulations of the State Division of Health governing the installation and operation of public water supplies provide: 'Sec. 3. SUBMISSION OF PLANS FOR NEW WATERWORKS--Every owner or his authorized agent, before installing or entering into a contract for installing a water supply or water purification plant, shall submit in duplicate to and receive the written approval of the Division of Health of complete plans and specifications fully describing such water supply or water purification plant, and thereafter such plans and specifications shall be substantially adhered to unless deviations are submitted to and receive the written approval of the Division of Health. * * * Sec. 5. FINAL APPROVAL--Every owner, before accepting or placing in operation a new water supply or water purification plant, or additions to, or changes or alterations in, any existing water supply or water purification plant, shall receive written final approval of the Division of Health stating that the completed work substantially adheres to the approved plans and specifications.'

In July of 1959 Twillman furnished sales information to Keeney-Toelle. This information contained the words 'water State approved.' The advertisements placed by Keeney-Toelle by Twillman and by the construction company for the sale of houses in the subdivision contained that statement. In August, a month after advertisements containing this statement began to appear on billboards and in the newspapers, Twillman first submitted to the Division of Health plans for a well to supply Harvest Acres. Twillman admitted that he did not have state approval of his water when he started placing the advertisements and when he gave information for the advertisements and that, at that date, he hadn't even begun the well. The Keeney-Toelle sales manager testified that the purpose of placing the ads was to get people to read them and rely upon them and that in fact people did rely on those advertisements and contact his salemen and buy houses. Later there were signs saying 'gas, water, sewers, wide streets.' In December of 1959 the plaintiffs became interested in a home in this subdivision. In looking for homes they had read the advertisements that the water was state approved. While they were considering buying a home in the subdivision, they looked at a display house used by Keeney-Toelle and while doing so, Twillman gave them a glass of drinking water. After drinking it in the presence of Twillman and a Keeney-Toelle salesman, the plaintiff said, 'That's one thing we don't have to worry about. We have got good drinking water here.' Twillman and the salesman made no comment although they knew the water that the plaintiff drank was hauled in from the City of St. Charles. The plaintiffs testified that they relied upon the statement in the advertisements that the water was state approved and would not have purchased a home otherwise. Plaintiffs were the fourth family to move into this subdivision.

Plaintiffs and their neighbors in the subdivision were experiencing the same hardships with the water, and their testimony was that the water was extremely salty, unfit for drinking, and with a smell like a bad egg. Some of the children in the neighborhood got diarrhea from the water. In the summer of 1960 following the plaintiffs' purchase of a home in this subdivision, the residents complained to the defendants concerning the quality and quantity of water. On July 20 of that year some water from well No. 1 was submitted to the state for analysis. The testimony was that all of the chemical components were '* * * within the acceptability of the United States Public Health Service standards' followed by the State Department of Health. However, its chloride content was high and accounted for its salty taste.

A sanitary engineer with the Missouri Division of Health, Robert S. Miller, testified by deposition that he was the assistant chief of water supply and that Twillman's plans and specifications for well No. 1 were approved on August 12, 1959 although no one wrote a formal approval. Formal written approval is required by the regulations, and he doesn't know why it was not done except that the Department was then experiencing a change of personnel. The requirements for submission and approval of plans for a well mainly are to require construction that will prevent surface contamination. The construction company drilled a second well in 1960 and chemical analysis on the water in this well showed that its mineral content was similar to well No. 1. By letter of February 7, 1961, Twillman was informed that his water system could not be approved due to the fact that no plans and spcifications were submitted for well No. 2 or for the reservoir and also due to the fact that his chlorination system was defective. In March of 1961 Twillman was informed by the State Department of Health that well No. 1 was acceptable for serving approximately twenty homes and stated that '* * * because of the low yield of wells in this area and mineralization of the water, long range plans should be completed for a source of water supply of adequate quantity and quality.' There were then forty-three finished houses in the subdivision of which thirty were occupied. As to well No. 2 Twillman was informed: '(2) Well No. 2 may be utilized as an emergency standby source of supply, providing chlorination and a two-hour detention time are provided. When not in service, the piping must be completely disconnected from the water distribution system serving the subdivision. Approval for usage of this well as an emergency source of supply is given with the understanding that an additional properly constructed well is to be provided at an early date and this well will be abandoned when the new supply is available.' The plans for the third well were approved in 1962 and the well was placed in service sometime prior to March of 1963. It produced a satisfactory water supply. Miller was asked if the water from these first wells was fit for human consumption. His answer was that the water '* * * wasn't health hazard to the people consuming * * *' it. He further testified that '* * * I don't know what State approved water is' and that he could only judge water on the basis of whether it constituted a health hazard and that this was the extent of the function of his department of the Division of Health with regard to the approval of water. Miller's testimony also was that Dr. Hardwicke, head of the Department of Health of the State of Missouri, at a meeting with the people living in the subdivision, expressed the opinion the water would cause diarrhea but also '* * * expressed the opinion to these people it wasn't a health hazard. * * *' Defendants made an offer of proof that if permitted, Miller would testify that the United States Department of Health drinking water standards had two basic criteria; that the first of these concern chemical constituents which shall not be in the water. These are constituents which affect the health of people. The second of these are constituents which should not occur in the water. These do not affect the health of people but result in staining fixtures and other similar results.

With respect to the issue of damages, the transcript shows the plaintiffs pleaded that they '* * * have been induced to make promissory note whereby they have become indebted * * *' in the amount of $30,000.00 (for principal and interest on a 30-year loan); that the '* * * bathroom, kitchen and utility appliances, fixtures and tile have been damaged and caused to depreciate in the approximate amount of $2,500.00' due to contact with the dangerous and harmful chemicals contained in said water;...