Holland v. Lentz

• Jurisdiction: Oregon
• Court: Oregon Supreme Court
• Writing for the Court: Before McALLISTER; LUSK
• Citation: Holland v. Lentz, 397 P.2d 787, 239 Or. 332 (Or. 1964)
• Decision Date: 23 December 1964
• Parties: Brown R. HOLLAND and Margaret G. Holland, husband and wife, Respondents, v. Wesley L. LENTZ, Appellant, American Realty Co., an Oregon corporation, Defendant.

Page 787

397 P.2d 787

239 Or. 332

Brown R. HOLLAND and Margaret G. Holland, husband and wife Respondents, v. Wesley L. LENTZ, Appellant American Realty Co., an Oregon corporation, Defendant.

Supreme Court of Oregon, Department 1.

Argued and Submitted May 1, 1964.

Decided Dec. 23, 1964.

Denton G. Burdick, J., Portland, argued the cause for appellant. On the brief were Hutchinson, Schwab & Burdick, Portland.

James C. Niedermeyer, Portland, argued the cause for respondents. With him on the brief was Paul J. O'Hollaren, Portland.

Before McALLISTER, C. J., and ROSSMAN, SLOAN, GOODWIN, and LUSK, JJ.

LUSK, Justice.

This is an action in deceit in which the plaintiffs had a verdict and judgment against the defendant Wesley L. Lentz, who has appealed.

The case arises out of the sale of a dwelling house by Lentz to the plaintiffs. Plaintiffs charge that they were induced to purchase the property by false representations of the defendant concerning the condition of the premises. One such representation alleged was that the house 'was a new home and of good quality and that it was constructed in a good and workmanlike manner.' The amended complaint sets forth seven particulars in which this representation is claimed to be false, as follows:

'(1) That a substantial portion of the siding of said house has become unfastened from said house.

'(2) That the drains and downspouts and construction of the house are defective, causing drainage to wash away the soil and landscape surrounding the premises.

'(3) That the basement walls are defective, allowing water to flow into the basement and living quarters, causing damages to the contents therein.

'(4) That the construction of the roof and flashing surrounding the chimney of said house is defective, allowing water to flow inside of the house, damaging ceilings and walls.

'(5) That the wallboards covering the walls were insecurely fastened. causing the wallboard nails to become unfastened.

'(6) That the ventilation for the attic portion of the house is inadequate, preventing air flow necessary to the normal air-conditioning of the house. ¹

'(7) That the construction of the residence was defective in that there was no tar paper or similar substance installed under the siding of said residence.'

In addition, plaintiffs alleged the following specific misrepresentations:

'(1) That the east side of said house was insulated.

'(2) That the basement slab and the walls of said basement had been underlaid with visqueen.

'(3) That built-in appliances which were damaged would be repaired or replaced.

'(4) That the wallboard defects would be repaired.

'(5) That certain light fixtures which were broken or defectively installed would be replaced and relocated.

'(6) That tile in the entranceway to said house would be repaired.

'(7) That broken windows and air space between the foundation and windows and the frame of the house and window frames would be replaced and corrected.

'(8) That the front door would be refinished.

'(9) That certain landscaping and shrubbery would be installed about the premises.

'(10) That the roof and flashing would be repaired.

'(11) That tile would be installed in such a manner as to prevent the flow of water into the basement of the residence.

'(12) That a planter box on the easterly side of said residence would be replaced or repaired.'

Defendant's amended answer, besides denying all the allegations of fraud and damage, alleged a waiver of plaintiffs' right to rely on such charges based on their acceptance, after full knowledge of the facts, of concessions offered by the defendant from the purchase price of the property.

Evidence of damage under the 'benefit-of-the-bargain' rule was introduced by the plaintiffs, the case was submitted to the jury by the court under that theory, and the verdict was in the sum of $2,500.

Defendant moved for a directed verdict on the ground, among others, that none of the representations alleged is actionable. He contends that they are all mere expressions of opinion or promissory statements which do not afford a foundation for an action in deceit. We have concluded that the motion was properly denied, although we agree with counsel for defendant that neither the representation that the house was 'of good quality and that it was constructed in a good and workmanlike manner' nor the promissory statements alleged are actionable. We think, however, that the evidence concerning the representation as to insulation of the house was sufficient to carry the case to the jury, though the judgment must be reversed for errors committed upon the trial.

Lentz is a real estate broker. The house in controversy was one of a number of new houses in a real estate development known as 'Holly Hills Addition.' It was located across the street from Lentz' residence. Since September 1, 1960, Lentz had been engaged in selling these homes for a concern called Contract Builders, Inc., which had built them. On September 20, 1960, Lentz and his wife entered into a contract with Contract Builders, Inc., for the purchase of the house in controversy for $21,000, of which $1,000 was paid in cash and the balance was agreed to be paid in monthly payments of not less than $170.

Mr. and Mrs. Holland, the plaintiffs, called upon the defendant in answer to a newspaper advertisement and were shown the house by him on October 20, 1960. On the same day the parties executed an 'earnest money receipt' under which plaintiffs agreed to pay $23,500 for the house. $500, 'as earnest money,' was paid by a promissory note given at the time of the execution of the instrument. The purchasers agreed to pay $5,500 'upon acceptance of title and delivery of deed' and to pay the balance of $17,500 by the assumption of an existing mortgage which bore interest at the rate of six per cent per annum. The agreement contained a provision that it was subject to the purchasers' completion of the sale of a house owned by them on or before December 1, 1960, and it was stipulated that if the sale was not closed purchasers would occupy the premises 'on 1 yr lease option at $24,500.00 at $175 mo.' Plaintiff took possession on November 1, 1960, on November 8 received the money from the sale of their house, and on December 10, paid the defendant $6,000, and at the same time, according to their testimony, executed an agreement assuming the mortgage. Under date of December 1, 1960, the legal owner, Contract Builders, Inc., executed and acknowledged a warranty deed conveying the property to the plaintiffs. The deed was delivered to the plaintiffs.

At the time defendant showed the house to the plaintiffs they called his attention to a number of minor defects which, according to the plaintiffs, he assured them would be corrected. He also told them that it was a well-built house. Mrs. Holland testified:

'Q Now, when you went through the house with Mr. Lentz and your husband, did Mr. Lentz make any general representations as to the quality of the house?

'A Yes.

'Q Would you state to the Court what Mr. Lentz stated generally as to the quality of the house?

'A Yes. He said this was a fine house, it was very good. And I asked him who the builder was and he told me and I said, 'I've never heard of of him.' And he said, 'Well, I can vouch that he's a very good builder.' He said, 'We only let the finest builders build out here.' He said 'You can look around and see the fine homes we have.' And he said, 'This is a good quality,' he said, 'the best.'

'Q Did he say it was a well-built house?

'A Yes, it was. He said it was.'

Mr. Holland testified that Lentz stated that the homes in the area were 'built by the very best of builders' and that 'this was a well-built home, that in the bracket that I paid for it, it should be.'

With respect to insulation Mrs. Holland testified:

'Q Now, did Mr. Lentz make any representations about how the house was insulated?

'A Yes.

'Q What did he say?

'A My husband asked him if the house was insulated.

'Q And what did he say?

'A He said, 'In the ceiling and on the East wall.' And my husband said, 'Just the East wall?' And he said, 'Yes.' He said, 'That's all you needed out here in this location.'

'Q Now, did Mr. Lentz make any representations whether there was insulation paper under the siding of the house?

'A Definitely.

'Q And where did he say this? That evening?

'A Yes, because my husband asked him if he had had the building paper on because he said he wasn't interested in a home without building paper at all because we've lived in that East wind for nine years and we know what a home is without building paper insulation. And he said it did contain it. He said, 'All the builders put the insulation paper on, or the building paper.''

Upon the same subject Mr. Holland testified:

'He stated to me that in the homes built out there, the East wall was the only section where the insulation should be, and I agreed with him, that would be fine. And the outside of the siding that--I asked him if they had the regular building paper under it and he said, 'Sure."

Mr. Holland further testified that when the siding pulled away from the house he took off three or four more boards to see if there was paper there and there was no paper.

Roy E. Nelson, a general contractor, testified that his estimated cost of removing the siding, applying paper and putting the siding back on and repainting was $1,279.

The evidence discloses that after heavy rains came in November, 1960, water entered the living rooms and basement of the house. Plaintiffs testified that the defendant promised to repair the roof and install tile and to make other repairs of defects, mostly of minor character, which came to light after the plaintiffs took possession, and that these promises were not kept.

There is uncontradicted evidence that after plaintiffs complained to Lentz about these conditions the subcontractor who put the roof on the house did repair work on the...