Highmont Music Corp. v. J. M. Hoffmann Co.

• Decision Date: 09 November 1959
• Parties: HIGHMONT MUSIC CORP., a Pennsylvania Corporation, v. J. M. HOFFMANN CO., a Pennsylvania Corporation, Appellant.
• Court: Pennsylvania Supreme Court

155 A.2d 363

397 Pa. 345

HIGHMONT MUSIC CORP., a Pennsylvania Corporation, v. J. M. HOFFMANN CO., a Pennsylvania Corporation, Appellant.

Supreme Court of Pennsylvania.

November 9, 1959.

Valera Grapp, Charles L. Seif, Max V. Schoonmaker Pittsburgh, for appellant.

Roslyn M. Litman, Litman & Litman, Pittsburgh, for appellee.

Before CHARLES ALVIN JONES, C. J., and BELL, BENJAMIN R. JONES COHEN, BOK and McBRIDE, JJ.

McBRIDE Justice.

The only question is whether the court below should have granted the defendant's motion for judgment non obstante veredicto. The case was fairly tried in the court below and ably argued here.

Plaintiff, a corporation, (hereinafter called Highmont) wanted to operate a retail phonograph record store in Pittsburgh. In order to rent a suitable storeroom in downtown Pittsburgh, it contacted a real estate broker who assigned its agent to negotiate a lease. The agent immediately supplied a list of available downtown storerooms. One of the properties suggested was 639 Liberty Avenue. That property was and is owned by the defendant corporation (hereinafter called Hoffmann). This building was constructed between 50 and 100 years ago and was acquired by Hoffmann as long ago as 1922. The building had been under lease to an art dealer for some considerable length of time but was vacant at the time Highmont's representatives and the real estate agent (who admittedly was acting for defendant) entered into negotiations. It was made known from the outset by Highmont that certain requirements were essential. Among those specifically enumerated was that the storeroom must have a strong floor and that a certain limited amount of money could be spent by Highmont for the purpose of any necessary improvements. During the course of the negotiations Hoffmann's agents made statements of fact concerning the condition of the premises. They represented that the floors were very strong; that they would support any weight; that the building was excellent and would not need much money to improve it so that it could be used by Highmont. ^[1] Subsequently a lease of the premises for five years, prepared by Hoffmann's real estate agent, was entered into between Highmont and Hoffmann. A rider attached to the lease contained the provisions that 'Tenant agrees to accept the premises in their present condition and make all necessary repairs, improvements and alterations at their own cost and expense' and that the plaintiff leases the premises 'in its present condition and to make all necessary repairs, improvements or alterations at their own cost and expense to the interior of the premises.'

Highmont relied upon the statements made by the real estate agent concerning the condition of the building, particularly in relation to the strength of the floors. Upon taking possession it proceeded to carry into effect its plans for installing certain modern fixtures and equipment and hired an architect and contractor for this purpose. No sooner had the work on the building been started and a portion of the floor and ceiling coverings removed when important defective conditions were discovered. It was found that the floors of the building were not suitable for the weight necessary for Highmont's use; that many of the joists in the building did not span from wall to wall and were not constructed properly; that some joists were split, burned, charred and otherwise defective and the floors of the building were not capable of supporting any kind of business permitted under the City Code; and that at some places the floor was not sufficiently safe even for persons to stand upon. Upon inspection by city officials, in compliance with the safety provisions of the City Code, various parts of the building were condemned as unfit and dangerous for occupancy. Highmont, after discovering these defects and after extensive repairs in an attempt to correct the conditions, elected to sue for damages rather than to rescind and terminate the lease.

The case was tried and submitted to the jury on the theory that there were latent defects of which the landlord had knowledge and the tenant did not, and that the landlord's failure to disclose the existence of such latent defects as well as the affirmative misrepresentation, constituted fraud. The tenant, in such case may, at his election, rescind and terminate the lease or sue for such damages as he sustains in consequence thereof. Summary of Pennsylvania Jurisprudence, Landlord and Tenant, § 66. See also Emery v. Third National Bank of Pittsburgh, 308 Pa. 504, 162 A. 281, and Emery v. Third National Bank of Pittsburgh, 314 Pa. 544, 171 A. 881.

The question raised on this appeal is whether plaintiff's evidence is of sufficient quality to warrant the submission of the case to a jury on the basis of fraud. Fraud is not presumed; it must be proved. Evidence of fraud must be 'clear, precise and indubitable' and the question of determining whether the evidence presented is of that quality is a question of law. Gerfin v. Colonial Smelting & Refining Co., Inc., 374 Pa. 66, 97 A.2d 71, 72. Where, however, the evidence meets this standard, it is for the jury to determine which evidence is true.

As is pointed out in the opinion of the court below the defendant does not seriously controvert that its building was in the condition plaintiff described after the discovery of the latent defects, nor did it contend that the money spent by plaintiff was unnecessary. Its primary contention is that plaintiff could have seen the defects as well as the defendant; that the statements as to the floors were only expressions of opinion and that plaintiff did not rely on those statements in signing the lease.

The evidence is clear that the defects which caused plaintiff to expend great sums of money were not discoverable upon reasonable observation. A person may rely upon representations made regarding those facts which are not visible upon a reasonable inspection. Lake v. Thompson, 366 Pa. 352, 77 A.2d 364. It is not necessary that absolute proof of knowledge or of concealment be shown, for if the defendant had no...