Dixon v. Mountain City Const. Co.
| Decision Date | 03 May 1982 |
| Citation | 632 S.W.2d 538 |
| Parties | Henry L. and Geneva M. DIXON, Appellees, v. MOUNTAIN CITY CONSTRUCTION COMPANY, Appellant. |
| Court | Tennessee Supreme Court |
Phillip C. Lawrence, Selma C. Paty, Paty, Rymer & Ulin, P. C., Chattanooga, for appellant.
Thomas M. Fleming, Wolfe, Jenkins & Grantham, P. C., J. Troy Wolfe, Wolfe, Jenkins & Grantham, P. C., Chattanooga, for appellees.
Plaintiffs, Henry Dixon and wife Geneva Dixon, brought suit against defendant, Mountain City Construction Company, for defects in the construction of a residence allegedly attributable to poor workmanship and materials. The uniform real estate sales contract between plaintiffs, as purchasers of a residence to be built according to plans and specifications, and defendant, as builder-vendor, contained no provision with respect to the quality of workmanship or materials. The gravamen of plaintiffs' suit is three pronged. First they insist that defendant's president made an express warranty that the house would be built in a good workmanlike manner and guaranteed for one year after closing. Second plaintiffs insist that there prevails in the Chattanooga area, by usage and custom among builders, a one-year warranty of workmanship and materials that is legally binding upon defendant. Third, if they should be mistaken as to those contentions, plaintiffs urge that Tennessee join the majority of American jurisdictions that have abandoned the Doctrine of Caveat Emptor and imposed upon builder-vendors an implied warranty of good workmanship and materials, in comparable factual situations.
There was a concurrent finding by the chancellor and the Court of Appeals that plaintiffs proved defects of a substantial nature attributable to poor workmanship and material, that did not appear or were not reasonably discoverable until after the closing. The learned chancellor held that the written contract provided no relief for plaintiffs and that this Court had rejected the "implied warranty concept" in Zack Cheek Builders, Inc. v. McLeod, 597 S.W.2d 888 (Tenn.1980). The trial court held that the testimony of Mr. and Mrs. Dixon with respect to the oral warranty was inadmissible being in violation of the parol evidence rule.
The Court of Appeals held that Zack Cheek Builders had no application to this case, but that plaintiffs were entitled relief under the principles announced by the Court of Appeals in Chastain v. Billings, 570 S.W.2d 866 (Tenn.App.1978); and Vincent v. Jim Walter Homes, Inc., an unpublished opinion released by the Court of Appeals, Eastern Division, August 15, 1978, certiorari denied concurring in results only, May 7, 1979. We are of the opinion that those cases as well as Zack Cheek Builders are inapposite and that in the present posture of this case, plaintiffs' relief depends solely upon the viability of an implied warranty of good workmanship and materials.
Lawson Whittaker was engaged in the real estate business and also built homes, using the corporate entity Mountain City Construction Company. He was President of that corporation and represented the corporation in all of its dealings with plaintiffs.
Plaintiffs lived in Pennsylvania until Mr. Dixon was employed as plant manager of a carpet company in Trion, Georgia and they decided that Signal Mountain would be a good place to live. Hilda Atkinson, a real estate sales person, showed them some homes among which were houses under construction by defendant. Ms. Atkinson introduced plaintiffs to Whittaker but did not take part in the negotiation of the contract between plaintiffs and defendant. The broker for whom she worked was paid a finder's fee, and was sued by plaintiffs, but that action was properly dismissed by the learned chancellor at the conclusion of plaintiffs' proof.
Plaintiffs liked a two-story, four bedroom residence that defendant had built or was under construction on Signal Mountain. Negotiations were conducted with Whittaker to build a similar house for plaintiffs, with an additional bedroom in the basement, on a lot owned by defendant. A written contract was executed by the parties on May 12, 1978, using a form prepared for use by members of the Chattanooga Board of Realtors, Inc. The Contract price was $112,000, and the filled-in portion of the standard form real estate sales contract relating to the construction of the house was as follows:
Attached to the one page form contract was a four page form entitled "Description of Materials" specifying materials to be used in the construction of the foundation, exterior walls, floors and sub-floors, framing roofing, plumbing, heating, wiring, cabinets, etc. The written contract contained no reference whatever to the quality of workmanship expected of the builder and the material specifications would obviously allow the builder a wide range of quality in the selection and use of materials.
Since WWII there has been a dramatic increase in the sales of newly constructed homes by builder-vendors,-defined as persons or business entities engaged in constructing homes on real estate they own for sale to the home buying market. Traditionally the contract has been a standard form real estate sales contract that contained no warranties applicable to the construction of the house and upon the closing of the sale of the land, the doctrine of caveat emptor negated any implied warranty with respect to construction or the condition of the premises and left the purchaser with no avenue of relief for defects in workmanship or materials.
The first breach of the caveat emptor bastion as it concerns real estate purchases, was by an English court in Miller v. Cannon Hill Estates, Ltd., 2 K.B. 113 (1931). The purchaser bought a home from a builder-vendor that was under construction at the time the contract was signed. The English court reasoned, in part, that since the vendee had no opportunity to inspect a completed structure, at the time the contract was signed, he must necessarily rely on the skill of the builder. The court imposed liability upon the builder-vendor on an implied warranty of workmanship, materials and fitness for habitation.
Many American jurisdictions have circumvented the doctrine of caveat emptor by predicating liability on other theories such as fraudulent concealment, failure to disclose, strict liability in tort, Restatement, § 402A, the UCC implied warranty of goods and, in the case of injuries resulting from defects in construction, the rule of McPherson v. Buick Motor Co., 217 N.Y. 382, 111 N.E. 1050 (1916). See 14 Vand.L.Rev. 541 (1961), Caveat Emptor in Sales of Realty: Recent Assaults Upon The Rule; and 25 A.L.R.3d 383,...
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