Ferguson v. Alfred Schroeder Development Co.

• Decision Date: 06 September 1983
• Docket Number: No. 46232,46232
• Citation: Ferguson v. Alfred Schroeder Development Co., 658 S.W.2d 62 (Mo. App. 1983)
• Parties: James S. FERGUSON and Shirley M. Ferguson, his wife, Plaintiffs-Respondents, v. ALFRED SCHROEDER DEVELOPMENT CO., Defendant-Appellant.
• Court: Missouri Court of Appeals

Page 62

658 S.W.2d 62

James S. FERGUSON and Shirley M. Ferguson, his wife Plaintiffs-Respondents, v. ALFRED SCHROEDER DEVELOPMENT CO., Defendant-Appellant.

No. 46232.

Missouri Court of Appeals,

Eastern District,

Division Five.

Sept. 6, 1983.

Charles W. Niedner, St. Charles, for defendant-appellant.

Phillip T. Ayers, St. Ann, for plaintiffs-respondents.

GEORGE M. FLANIGAN, Special Judge.

Plaintiffs James S. Ferguson and Shirley M. Ferguson, husband and wife, brought this action against defendant Alfred Schroeder Development Company, based on structural defects in a new house which plaintiffs purchased from defendant, the builder-seller. A jury awarded plaintiffs $9,000 and defendant appeals from the ensuing judgment.

Defendant's first point is that the petition is insufficient to state a claim upon which relief can be granted. Defendant's second point is that the trial court erred in giving Instruction 5, plaintiffs' verdict-directing instruction. Defendant advances the same argument in support of both points. That argument is that "the implied warranty of fitness for a particular purpose is not applicable to a cause of action arising out of the sale of a house." For the reasons which follow, this court holds that the petition was sufficient and that there was no prejudicial error, on any ground assigned by defendant, in giving the instruction.

In its landmark opinion in Smith v. Old Warson Development Company, 479 S.W.2d 795 (Mo. banc 1972), the supreme court held that "implied warranties of merchantable quality and fitness exist in the purchase of a new home by the first purchaser from a vendor-builder." The case involved latent structural defects. The court also held: Implied warranties of "merchantable quality" and "reasonable fitness for use" are derived from the common law; the doctrine of implied warranty may be utilized to recover the difference between the value of the product as warranted and its actual value; reasonableness of quality or fitness is essentially a fact issue for the jury although, of course, there must be sufficient evidence to justify a finding of lack of reasonable quality and fitness; the builder-vendor is not required to construct a perfect house; the test is one of reasonableness of quality; the duration of liability is also premised on a standard of reasonableness.

When a challenge to the sufficiency of a petition is made for the first time on appeal, "the pleading will be held good unless it wholly fails to state a claim.... In this determination, the petition will be liberally construed...." Fallert Tool & Engineering Co. v. McClain, 579 S.W.2d 751, 756 (Mo.App.1979). Under Missouri practice, no technical forms of pleadings are required and the averments must be simple, concise and direct. A petition must contain a short and plain statement of the facts showing that the pleader is entitled to relief, together with a demand for judgment. See Rules 55.04 and 55.05. ¹

The allegations of the petition included those set forth in the next three paragraphs.

Defendant is engaged in the development and building of subdivisions and residences. On July 23, 1975, plaintiffs, as buyers, and defendant, as seller, entered into a written contract for the sale of a "single family residence." The contract, entitled "Construction Contract" and incorporated in the petition, described defendant as "builder." It provided for the sale of "certain real estate and property" situated on a certain lot in a subdivision in St. Charles, Missouri, "being a three-bedroom brick veneer dwelling with an attached two-car brick veneer garage, being or to be erected on said lot...."

On September 5, 1975, plaintiffs paid defendant the purchase price and received the deed. Defendant knew that plaintiffs would use the premises as a family residence and defendant impliedly warranted that the residence was constructed in a skillful and workmanlike manner and was free from defects in workmanship and materials. Plaintiffs relied upon defendant's skill and judgment and on the implied warranty. The residence was not suitable or fit for such purpose in that the foundation was so constructed as to allow water to enter the basement and accumulate on the basement floor, two doors were improperly installed so as to allow water to enter the residence, the garage floor cracked and settled and allowed water to collect and interfered with plaintiffs use of the garage, and the driveway and front walk cracked and settled.

Plaintiffs on numerous occasions, within a reasonable time after discovery of the breach of warranty, notified defendant of the defects. The conditions have worsened and the residence is unfit to live in. The value of the residence in its defective condition was $25,000 less than its value as impliedly warranted. The prayer was for judgment in the amount of $25,000.

Defendant, in its argument in support of its first point, does not specify any factual allegation which should have been included. Defendant merely says, "Plaintiff sued defendant on a theory of breach of implied warranty of fitness for a particular use.... The appropriate cause of action should have been one for breach of the implied warranty of habitability."

The facts pleaded in the petition were sufficient to support a claim for relief under the Old Warson doctrine. Defendant's first point has no merit. Indeed this court surmises, from the overall tenor of defendant's brief, that defendant places its primary reliance upon its second point and advances its first point subsidiarily.

Defendant's second point challenges plaintiffs' verdict-directing instruction, Instruction 5, which reads:

"INSTRUCTION NO. 5

Your verdict must be for plaintiffs if you believe:

First, defendant sold the single family residence having a mailing address of 3117 Fox Hill Road, St. Charles, Missouri, and

Second, defendant then knew or should have known of the use for which the single family residence was purchased, and

Third, plaintiffs reasonably relied upon defendant's judgment that the single family residence was fit for such use, and

Fourth, when sold by defendant, the single family residence was not fit for such use, and

Fifth, within a reasonable time after plaintiffs knew or should have known the product was not fit for such use, plaintiffs gave defendant notice thereof, and

Sixth, as a direct result of such single family residence being unfit for such use, plaintiffs were damaged."

Instruction 5 was based on MAI 25.03 [1980 revision]--"Breach of Implied Warranty of Fitness for a Particular Purpose Under Uniform Commercial Code." Defendant's criticism of the instruction is that "the appropriate instruction model" is MAI 25.08 [1980 new]--"Breach of Implied Warranty of Merchantability Under Uniform Commercial Code."

MAI 25.03 stems from § 400.2-315 and MAI 25.08 stems from § 400.2-314. Those two statutes are of course a part of the Uniform Commercial Code. Sec. 400.2-314 deals with an implied warranty of merchantability and, as applicable here, goods to be merchantable "must be at least such as are fit for the ordinary purposes for which such goods are used." Sec. 400.2-315 provides: "Where the seller at the time of contracting has reason to know any particular purpose for which the goods are required and that the buyer is relying on the seller's skill or judgment to select or furnish suitable goods there is unless excluded or modified under section 400.2-316 an implied warranty that the goods shall be fit for such purpose."

The case at bar, which arises from the sale of a new, but latently defective, house and lot by the builder-vendor to the original occupants, is outside the U.C.C., and specifically outside § 400.2-315 and § 400.2-314 because those statutes pertain to the sale of "goods," as that term is defined in § 400.2-105, and that definition does not encompass a new house and lot. "Real estate transactions, except for fixtures in relation to secured transactions, are not covered by the [U.C.C.]." 15A Am.Jur.2d Comm.Code, § 2, p. 457.

In view of the fact that MAI does not contain "an instruction applicable in [this] particular case," Rule 70.02(e) comes into play. That rule reads: "Where an MAI must be modified to fairly submit the issues in a particular case, or where there is no applicable MAI so that an instruction not in MAI must be given, then such modifications or such instructions shall be simple, brief, impartial, free from argument, and shall not submit to the jury or require findings of detailed evidentiary facts."

Before Instruction 5 is discussed, it is in order to compare MAI 25.03 with MAI 25.08 in light of their respective statutory sources. MAI 25.03 requires six findings and MAI 25.08 requires only five findings. Although there are some language differences between the two instructions, findings numbered 1, 5 and 6 of MAI 25.03 are, for present purposes, substantially the same as findings numbered 1, 4 and 5, respectively, of MAI 25.08.

Findings 2, 3 and 4 of MAI 25.03 read:

"Second, defendant then knew or should have known of the use for which the (describe the article or product) was purchased, and

"Third, plaintiff reasonably relied upon defendant's judgment that the (describe the article or product) was fit for such use, and

"Fourth, when sold by defendant, the (describe the article or product) was not fit for such use, and ..." (Emphasis added.)

The foregoing findings of MAI 25.03 should be compared with findings 2 and 3 of MAI 25.08, which read:

"Second, when sold by defendant (describe the article or product) was not fit for one of its ordinary purposes, and ...

"Third, plaintiff used such (describe the article or product) for such a purpose, and ..." (Emphasis added.)

As their respective captions reflect, MAI 25.03 concerns itself with the breach of an implied...