Crowder v. Vandendeale

Decision Date14 April 1978
Docket NumberNo. 59917,59917
Citation564 S.W.2d 879
PartiesLois M. CROWDER, Plaintiff-Appellant, v. Arthur VANDENDEALE, Defendant-Respondent.
CourtMissouri Supreme Court

Don R. Lolli, Morris, Foust & Beckett, Kansas City, for plaintiff-appellant.

John Gregory Dorsey, Dorsey, Brannon & Dorsey, North Kansas City, for defendant-respondent.

FINCH, Judge.

This is an action by the present home owner against a contractor who built the house and sold it to plaintiff's vendors, the previous occupants. The petition alleged that shortly after purchasing the house plaintiff discovered that the front porch and steps were settling and separating from the house foundation, causing cracks in the brickwork and the foundation wall. It further alleged that it later developed that the foundation wall all along the south side of the house also was settling, resulting in cracks in the brickwork and foundation wall as well as a crack in the ground floor slab. In addition, the concrete driveway adjacent to the house settled and cracked.

The petition alleged that the damage to the house resulted from defendant's negligence in failing to conduct a proper analysis of existing soil conditions, improperly preparing and pouring footings for the foundation and, in general, failing to construct the house in a good, workmanlike manner. It sought to recover expenses incurred in repairing the house and driveway in the sum of $6,500.

The trial court sustained defendant's motion to dismiss for failure of the petition to state a claim upon which relief could be granted. On appeal the Missouri Court of Appeals, Kansas City District, reversed and remanded for trial. We ordered the case transferred on defendant's application and we now decide the case as though here on direct appeal.

The fundamental question presented is whether builders have a duty, enforceable by an action in tort, to protect prospective purchasers from damage consisting of deterioration or "loss of bargain." It should be noted that plaintiff does not seek recovery under the doctrine of implied warranty recognized in Smith v. Old Warson Development Co., 479 S.W.2d 795 (Mo. banc 1975). Whether this additional remedy in tort sought by plaintiff should be established is a question of public policy. In determining that question, we should and do consider the policies which give rise to the incidents and limitations of the implied warranty action which we have established.

In Old Warson an original purchaser of a new home was allowed to recover from a builder-vendor for damages resulting from latent structural defects on the basis of a common law implied warranty of habitability 1 or quality. This was based on our determination that to such extent the existing rule of caveat emptor as applied to the sale of new houses should be relaxed. The court stated, 479 S.W.2d at 801: "Relaxing the caveat emptor rule in this limited area would not require a builder-vendor to construct a perfect house as the test would be one of reasonableness of quality. In addition, the duration of liability would be premised, also, on a standard of reasonableness."

The language of Old Warson has given rise to some uncertainty as to whether the action of implied warranty allowed in that case was grounded in contract or in tort. We recognize that in Old Warson this court quoted the earlier opinion by the Missouri Court of Appeals, St. Louis District which, based on language used in Keener v. Dayton Electric Manufacturing Co., 445 S.W.2d 362 (Mo.1969), stated that the difference between "strict liability" and "implied warranty" would not be one of substance in Missouri because of the tort nature of the liability imposed. 2 Keener and the cases it relied on were for personal injury, including death, or property damage either to property other than the property sold or to the property sold where it was rendered useless by some violent occurrence. Those are situations where strict liability was found to be appropriate. The liability clearly is for tort in those instances, regardless of how labeled. However, after further consideration of the nature of recovery for deterioration of a house, as contrasted with the kind of recovery involved in Keener (damages for death caused by faulty product), we have concluded that the liability imposed for mere deterioration or loss of bargain resulting from latent structural defects is contractual, and that the recovery allowed in Old Warson is to be justified on that basis.

This conclusion is buttressed by several factors. First, the liability imposed in Old Warson clearly was predicated on the transaction of purchase rather than the conduct of the builder. 3 This is not true of negligence, which is inherently tied to the conduct of the builder.

Also implicitly recognized in our analysis in that case is the potential vitality of traditional contractual defenses under proper circumstances. For example, rather than reject outright the possibility of a valid disclaimer or modification under any set of facts, the provision in question was instead deemed ineffective under the facts presented. Thus, the right of the parties to make their own bargain as to economic risk was preserved even though the burden of demonstrating the fact of such a bargain, insofar as it is asserted that it varies implied warranty terms, remains great. 4 By this approach, boilerplate clauses, however worded, are rendered ineffective, thereby affording the consumer the desired protection without denying enforcement of what is in fact the intention of both parties.

A third factor supporting the conclusion that the liability involved where the purchaser seeks recovery from the builder for deterioration of the house purchased is contractual is the fact that in such instances it is desirable to require purchasers to give notice of the breach (the deterioration) and an opportunity to repair to the builder. Notice was not placed in issue in Old Warson but it is clear that the builder was given notice of the breach and an opportunity to repair. Likewise, in O'Dell v. Custom Builders Corp., supra, fn. 2, an implied warranty case, such notice was given. Notice is not required when recovery is sought on a tort theory. Permitting recovery in negligence would not afford builders the opportunity to make repairs.

The contractual nature of the theoretical underpinnings of the implied warranty recognized in Old Warson also implicitly limits the right of action to the first purchaser. Because the warranty is implied by virtue of the contemplated sale to the first purchaser and arises by reason of the purchase, it theoretically accrues in him. The practical aspects of the contractual defenses also lead to this conclusion. The first purchaser is the only one with whom the builder may negotiate an allocation of the risk. Furthermore, the builder is in a better position to know the condition of the home at the time of sale, and thus whether defects were latent. This is not true if the builder is sued by a subsequent vendee.

Analysis of the policy factors which led to our recognition of the implied warranty theory in Old Warson clearly demonstrates our focus on the quality of the home sold rather than the conduct in building it. The inquiry is directed to whether the home is of reasonable quality or reasonable fitness. If, by reason of some latent structural defect, it is not, the builder will be held responsible. In arriving at this standard, we indicated our concern that the structural quality of the home is not susceptible of discovery by the ordinary consumer who must rely on the builder's implicit representation that the home is fit for use as a residence. This assumed standard of quality is so fundamental to any sale of a new home that we engage in no fiction in declaring it to be an implied term. Unless it is otherwise clear from the bargain that the buyer and builder have reached an understanding to the contrary, we will presume that it is part of the bargain.

The foregoing stands in sharp contrast with negligence theory. In negligence, the focus is on both conduct and result. Generally, the standard of negligence is the requirement that the actor use ordinary care and skill. Yet this is particularly difficult to determine in the case of a completed home....

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