Griffin v. Wheeler-Leonard & Co., Inc.

• Decision Date: 17 June 1976
• Docket Number: No. 71,WHEELER-LEONARD,71
• Citation: Griffin v. Wheeler-Leonard & Co., Inc., 225 S.E.2d 557, 290 N.C. 185 (N.C. 1976)
• Court: North Carolina Supreme Court
• Parties: Robert J. GRIFFIN and wife, Frances C. Griffin, v.& CO., INC., et al.

Page 557

225 S.E.2d 557

290 N.C. 185

Robert J. GRIFFIN and wife, Frances C. Griffin, v. WHEELER-LEONARD & CO., INC., et al.

No. 71.

Supreme Court of North Carolina.

June 17, 1976.

Powe, Porter, Alphin & Whichard, P.A. by J. G. Billings, Durham, for plaintiffs-appellants.

Blackwell M. Brogden, Durham, for defendants-appellees.

SHARP, Chief Justice:

Plaintiffs base their contention that the Court of Appeals erred in affirming the trial court's directed verdict for defendants Lonnie E. Wheeler, Wheeler-Leonard Co., Inc., M. D. Fletcher, Jr., and wife, Bonnie T. Fletcher upon the following grounds:

First, the evidence tending to establish a breach of an express warranty by Wheeler and Wheeler-Leonard, Inc., was sufficient for submission to the jury.

Second, the evidence tending to show a fraudulent nondisclosure of material facts by Wheeler and Wheeler-Leonard, Inc., while acting as broker for Fletcher in negotiating the sale of residential property to plaintiffs was sufficient to take that issue to the jury.

Third, there was substantial evidence of a breach of implied warranty by defendants Fletcher and wife, entitling plaintiffs to go to the jury on that issue.

The foregoing contentions will be considered in the order listed.

According to plaintiff Griffin's testimony, prior to the signing of the purchase contract, Wheeler made the following statements with reference to water in the crawl space and the ability and reputation of the contractor who built the house:

'I did make a comment to Mr. Wheeler about what I saw in the crawl space. When I got back into the house, I asked him about the water underneath and he just made the comment that it was probably left over from construction and it should dry up in a short time now that everything was covered over and water couldn't get in there any more.'

'I asked him questions on quality of the house and how these things were done in North Carolina. The warranties, guarantees, and things like that, and he responded in the affirmative to all of my questions.'

In response to a question about the contractor who built the house, Wheeler told Griffin that 'he was a good contractor and he built good homes and that they were substantial.'

We need not consider whether the admission of some or all of the foregoing testimony violated the rule against the admission of parol evidence which contradicts the terms of a written instrument (the purchase contract) since it was admitted without objection by defendants. See 2 Stanbury's N.C. Evidence § 251, n. 2 (Brandis Rev. 1973).

Although denying that prior to the signing of the purchase contract he had made any statement regarding the water problem in the crawl space, Wheeler testified that a few days after the signing of the contract and before the closing of the transaction, in a telephone conversation, Griffin had asked him about the water under the house, and he had replied, 'Mr. Griffin, I don't know. It could be because it is coming from the rainy weather. I don't know, but let's let it dry up. Let it dry up and if it doesn't dry up, then call me back.'

Are these statements, if made by Wheeler, sufficient (1) to constitute an express warranty that the residence he was attempting to sell plaintiffs, when completed, would be constructed in a workmanlike manner and, specifically, that water in the crawl space underneath the house would create no problems and (2) to support recovery by plaintiffs against Wheeler, Wheeler-Leonard, Inc., or the Fletchers, if a breach is shown? (As to an agent's liability on contracts entered into on behalf of his principal see Howell v. Smith, 261 N.C. 256, 134 S.E.2d 381 (1964); Walston v. Whitley & Co., 226 N.C. 537, 39 S.E.2d 375 (1946).) Taking plaintiffs' evidence as true and considering it in the light most favorable to them (as we are required to do in considering the sufficiency of the evidence to withstand the motion for a directed verdict, Anderson v. Butler, 284 N.C. 723, 202 S.E.2d 585 (1974); Kelly v. Harvester Co., 278 N.C. 153, 179 S.E.2d 396 (1971)), we conclude that the answer is NO.

Wheeler's statements, even assuming he was authorized to make them, were not sufficient to constitute an express warranty, on his own behalf, on behalf of Wheeler-Leonard, Inc., or on behalf of the Fletchers. All that Wheeler said with reference to water in the crawl space was that it was 'probably' left over from construction and that it 'should' dry up in a short time now that everything was covered over and water couldn't get in there any more. Thus, Wheeler did not expressly say, nor did his words reasonably imply, that he personally assumed a contractual obligation by warranting a dry crawl space.

The statement attributed to Wheeler, that the contractor who built the house 'was a good contractor and he built good homes and that they were substantial,' likewise falls far short of constituting an express warranty with respect to the house which plaintiffs purchased. This statement amounted to no more than a general testimonial that the contractor built good, substantial homes. Indeed, the statement did not specifically refer to the particular house which plaintiffs purchased. We would have to strain unduly to find in Wheeler's statement a contractual warranty with respect to plaintiffs' house. Cf. N.C.Gen.Stat. § 25--2--313(2) which provides: 'It is not necessary to the creation of an expres warranty that the seller use formal words such as 'warrant' or 'guarantee' or that he have a specific intention to make a warrant, but an affirmation merely of the value of the goods or a statement purporting to be merely the seller's opinion or commendation of the goods does not create a warranty.' Compare Performance Motors, Inc. v. Allen, 280 N.C. 385, 186 S.E.2d 161 (1972).

With reference to the alleged fraud of defendant Wheeler, it is well settled that where there is a duty to speak the concealment of a material fact is equivalent to fraudulent misrepresentation. Setzer v. Insurance Co., 257 N.C. 396, 126 S.E.2d 135 (1962); Brooks v. Ervin Construction Co., 253 N.C. 214, 116 S.E.2d 454 (1960). See also 4 Strong's N.C. Index 2d, Fraud § 3 (1968) and Annot., Liability of Vendor's Broker or Agent to Purchase for Misrepresentation as to, or Nondisclosure of, Physical Defects of Property Sold, 8 A.L.R.3d 550 (1966).

Plaintiffs rely upon Brooks v. Ervin Construction Co., supra, a case in which the defendant-builder had sold the plaintiffs a house and lot. The defendant had constructed the house over a large hole which it had filled with debris and then covered over with clay. The defendant knew, or should have known, that a house built on 'disturbed soil' will settle and material damage result. In reversing a judgment of nonsuit, this Court said: 'Since this defect in the lot and the house built centered over it was not apparent to plaintiffs and not within the reach of their diligent attention and observation, defendant was under a duty to disclose this information to plaintiffs. Plaintiffs' evidence makes out a case of actionable fraud sufficient to carry the case to the jury.' Id. at 219, 116 S.E.2d at 458.

The Brooks case, however, does not require a reversal of the directed verdict in favor of Wheeler and Wheeler-Leonard, Inc. In this case defendant Wheeler did not build the Griffin house. There is no evidence whatever that Wheeler Knew that the Griffin house had been constructed so that there would, or likely would, be a continuing water problem in the crawl space. The fact that Wheeler knew the condition of the soil in Bluestone Estates and knew of its poor porosity does not mean that he knew the house had, in fact, not been properly constructed to allow for that condition. Plaintiffs' own witness, Pickett, testified that the foundation of the house could have been constructed so that there would have been no continuing water problem beneath the house. Further, he outlined the measures which could still be taken to eliminate this condition and gave his estimate of their costs.

Had plaintiff shown (1) that, at the time he signed the contract with plaintiffs, defendant Wheeler knew, or had reason to believe, that the builder had not properly waterproofed the foundation of the house, and (2) that defendant Wheeler had withheld this fact from plaintiffs, such nondisclosure would have come within the rule applied in the Brooks case. However, all the testimony bearing upon this point, that offered by plaintiffs as well as by defendants, tended to show that, at the time of his transactions with plaintiffs, Wheeler thought the water accumulation underneath the house was a mere incident of construction and, once dried out, there would be no further water accumulation under the house.

We hold that the evidence adduced did not entitle plaintiffs to have the issue of misrepresentation by Wheeler...