Elderkin v. Gaster

• Decision Date: 20 March 1972
• Citation: 447 Pa. 118,288 A.2d 771
• Parties: Richard L. ELDERKIN and Clarie H. Elderkin et ux., Appellants, v. Gerald W. GASTER.
• Court: Pennsylvania Supreme Court

288 A.2d 771

447 Pa. 118

Richard L. ELDERKIN and Clarie H. Elderkin et ux., Appellants, v. Gerald W. GASTER.

Supreme Court of Pennsylvania.

March 20, 1972.

Joseph T. Doyle, Trevaskis, Doyle, Currie, Nolan &amp Bunting, Media, for appellants.

Dale A. Betty, Kassab, Cherry, Curran & Archbold, Chester, for appellee.

Before BELL, C.J., and JONES, EAGEN, O'BRIEN, ROBERTS POMEROY and BARBIERI, JJ.

OPINION OF THE COURT

POMEROY Justice.

This appeal arises out of a dispute concerning an agreement of sale under the terms of which the appellants agreed to purchase from the appellee a lot and home to be constructed thereon. The water supply for this home was to be provided by a private well drilled on the lot. It is undisputed that appellee, the builder-vendor of the home, adequately constructed the home and the well; it is also undisputed that the well has never produced water of a quality suitable for human consumption. Appellants refused to release the remaining balance in the construction fund unless and until appellee would provide them with an adequate supply of unpolluted water. Appellee sued the appellants for the balance of the construction fund, whereupon appellants brought suit in equity against appellee praying that he be ordered to supply them with an adequate quantity of water fit for human consumption. The two causes were consolidated for hearing and tried before a judge sitting without a jury. The lower court ruled in favor of appellee in both suits and awarded appellee the monies due him under the construction agreement. Although finding that it was not appellee's duty to supply the home buyers with a source of potable water, the trial judge nevertheless ordered the builder-vendor to redrill the well to the deepest water bearing stratum on appellants' property. The Elderkins appeal, ^[1] and we reverse.

A more detailed statement of the background is necessary. The pertinent facts are as follows: Appellee Gaster subdivided an area of land owned by him and referred to in the record as Spring Valley, Middletown Township, Delaware County, into 32 lots, each approximately one acre in size. Gaster would sell a lot to an interested purchaser only if the purchaser concurrently agreed to have Gaster construct a house on the property. For sales purposes, apellee maintained a model home in the development.

On January 16, 1963, Gaster and the Elderkins entered into an agreement whereby the latter would purchase a lot and home in Spring Valley for a total consideration of $26,430, $500 of which was paid at the signing of the sales agreement. The balance was to be paid partially at settlement of the sale transaction and partially under the terms of a subsequently executed construction agreement. On January 31, 1963, appellee deeded a lot to appellants for the consideration of $6,000, ^[2] and the parties executed a construction agreement obligating the appellee to construct a house, similar to the display house, on appellant's lot. For this service appellant was to receive a total of $20,430 in installment payments to be paid at various stages of construction. It was the final $4,086 of this fund, withheld by appellants, that appellee was awarded by the lower court.

Attached to the construction contract was a list entitled 'Description of Materials', which noted the detailed specifications of the materials which would be used in constructing the several parts of the Elderkin's home. Pertinent to this case is the notation, under heading 'Plumbing', that the water supply would be by 'individual (private) system.' ^[3] Otherwise, the agreement of sale, the deed to the lot, and the construction agreement are silent on the matter of water supply or the quality of the water to be supplied. ^[4]

Appellants took possession of the premises on June 1, 1963, when the house, except for the private well, was substantially completed. The well was completed and water supplied to the home on June 17, 1963. ^[5] Shortly thereafter appellants had the water from their well tested by chemical analysis. ^[6] These tests showed the water to contain concentrations of organic nitrates and synthetic detergent in excess of the limits noted by the 'Public Health Service Drinking Water Standards (Revised 1962)' published by the United States Department of Health, Education and Welfare. ^[7] Appellants continued to have tests performed on their water supply up to the time of the lower court hearing in this case in 1967. The tests consistently showed the nitrate content of the well water to be at least four times greater than the standard promulgated by the United States Department of Health, Education and Welfare. ^[8] All of the experts testifying in the lower court agreed that because of this condition appellants' water supply was unfit for human consumption. ^[9]

On this appeal appellants maintain that the builder-vendor of a home impliedly warrants that the home has been constructed in a reasonably workmanlike manner and that the dwelling is habitable. As applied to their particular home, appellants contend that this warranty was breached because they were not supplied with an adequate source of potable water.

Appellee Gaster's argument, accepted by the lower court, is two-fold: (1) the deed of appellants' lot carried with it the rights to subsurface water and if any warranties as to its quality were to come into existence, these qualities had to be expressly stated in the deed (which they were not); and (2) that any implied warranty that a structure will be completed in a workmanlike manner and be reasonably fit for the purpose intended extends only to completing a functional well and does not extend to the purity of the water produced by the well.

Appellants urge this Court to view the instant transaction as the sale of a 'single-package' by the builder-vendor, as opposed to a situation involving two isolated transactions, viz., (1) the conveyance of the lot by deed and (2) the construction of the house according to contract. The lower court treated the transaction severably, stating that '(t)he single-package theory pushed for by (appellants), falls into the deep pit of caveat emptor. . . .'

The record plainly shows that the appellee was a real estate developer and was the builder-vendor of appellants' residence. ^[10] Although the sale of the lot and home was consummated in a two-step process, it is clear that the basic agreement between the parties was that appellee would furnish appellants, for an agreed consideration, a home located in appellee's development. In fact, appellants could not have moved into the development had they not agreed to purchase Both the house and lot from appellee. Accordingly, we direct our attention to whether any warranties are implied by a builder-vendor when he sells a 'single-package'--a new house and a lot--to his customer.

The common law doctrine of Caveat emptor, the antithesis of implied warranty, historically applied to sales of both real and personal property in this Commonwealth, although its application to personal property sales has been restricted by the enactment of the Uniform Commercial Code, Act of October 2, 1959, 12A P.S. § 1--101 et seq. Generally speaking, the rule is that in the absence of fraud or misrepresentation a vendor is responsible for the quality of the property being sold by him only to the extent for which he expressly agrees to be responsible. ^[11] See, e.g., Wolf v. Christman, 202 Pa. 475, 51 A. 1102 (1902); Pringle v. Rogers, 193 Pa. 94, 44 A. 275 (1899); Shisler v. Baxter, 109 Pa. 443 (1885); Lord v. Grow, 39 Pa. 88 (1861); Bailey v. Gibson, 20 Pa.Super. 429 (1902). The theory of the doctrine is that the buyer and seller deal at arm's length, each with an equal means of knowledge concerning the subject of the sale, and that therefore they buyer should be afforded only those protections for which he specifically contracts. Appellant argues that while this postulate may have continuing validity with regard to real estate transactions generally, it is unrealistic as applied to sales of new homes by a builder-vendor.

There are but few Pennsylvania decisions concerned with attaching implied warranties to the sale of a new home. In Stewart v. Trimble, 15 Pa.Super. 513 (1901) and Raab v. Beatty, 96 Pa.Super. 574 (1929) our Superior Court held that a builder-vendor impliedly warrants good workmanship in the completion of what was at the time of sale a partially constructed building. Neither of these decisions involved an implied warranty of habitability, ^[12] but an English case substantially similar to Raab v. Beatty, Supra, has been cited as the basis for a series of American decisions holding that the sale by its builder-vendor of a new home in the process of construction is accompanied by implied warranties of workmanlike construction and habitability. Miller v. Cannon Estates, Ltd. (1931) 2 K.B. 113. This chain of cases from other jurisdictions includes glisan v. Smolenske, 153 Colo. 274, 387 P.2d 260 (1963); Weck v. A:M Sunrise Construction Co., 36 Ill.App.2d 383, 184 N.E.2d 728 (1962); but see Coutrakon v. Adams, 39 Ill.App.2d 290, 188 N.E.2d 780 (1963); Vanderschrier v. Aaron, 103 Ohio App. 340, 140 N.E.2d 819 (1957); Jones v. Gatewood, 381 P.2d 158 (Okl. 1963); Hoye v. Century Builders, 52 Wash.2d 830, 329 P.2d 474 (1958). See also Perry v. Sharon Development Co., (1937) 4 All E.R. 390 (C.A.). The thesis of all these decisions is succinctly summarized in a quotation from Miller v. Cannon Hill Estates, Supra, at 121:

'(T)he whole object, as both parties know, is that there shall be erected a house in which the intended purchaser shall come to live. It is the very nature and essence of the transaction between the parties that he will have a house put up there which is...