Hughes v. Holt, 287-79
| Citation | 435 A.2d 687,140 Vt. 38 |
| Decision Date | 15 July 1981 |
| Docket Number | No. 287-79,287-79 |
| Court | United States State Supreme Court of Vermont |
| Parties | Thomas L. HUGHES, Mary M. Hughes, and Mildred A. Decker v. Richard HOLT and Charlotte M. Holt, Berkley & Veller Real Estate, Burlington Savings Bank, and Norman E. Wright. |
McCarty & Rifkin, P. C., Brattleboro, for plaintiffs.
Fitts, Olson, Carnahan, Anderson & Bump, Brattleboro, for Holts.
Allan R. Keyes of Ryan, Smith & Carbine, Ltd., Rutland, for Berkley & Veller.
Kristensen, Cummings, Rosi & Murtha, Brattleboro, for Burlington Savings Bank.
Richards & Lawlor, P. C., Springfield, for Wright.
Before BARNEY, C. J., and LARROW, BILLINGS, HILL and UNDERWOOD, JJ.
The plaintiffs purchased a house and eight acres of land in Guilford, Vermont, in 1975, that turned out to be termite infested. As part of their attempt to correct the situation blasting was done by a contractor, and the house collapsed. The plaintiffs then instituted suit against the Holts, who sold them the house; Berkley & Veller Real Estate, the real estate brokers who listed the house; Norman Wright, a real estate appraiser who valued the house for mortgage purposes; and the Burlington Savings Bank, which financed the purchase. Trial was by jury, and verdicts were returned against all of the defendants in the amount of $30,000, later lowered by remittitur to reflect the value of the eight acres.
The evidence disclosed that the Holts listed their two-story frame house for sale with Berkley & Veller Real Estate. The listing showed the condition of the house as "excellent." The Holts showed the plaintiffs through the house several times, pointing out the work they had done on the house over the ten year period they had owned it. No mention was made of termite damage. The house was forty-five years old and had a partial cellar. The plaintiffs eventually bought the house for $30,000 in November, 1975.
The mortgage was taken by the Burlington Savings Bank, and their appraiser, Norman Wright, had set the value of the house at $31,000. His appraisal did not note any termite damage.
About six months after the purchase the plaintiffs discovered extensive termite damage, and on two occasions observed the termites swarming about the house. They called an exterminator, who identified the insects as termites and found extensive evidence of infestation and also what he perceived to be efforts at covering up termite damage, apparently by the previous owners. The exterminator recommended that the sills of the house be raised up off the ground onto a block foundation. It was at that point that the contractor was employed, followed by the blasting that preceded the collapse.
The litigation against the various defendants varied as to its legal basis. The action against the Holts as sellers sounded in fraud. Against the real estate broker, Berkley & Veller Real Estate, the gravamen was negligent misrepresentation and also fraud.
Negligence was urged against the bank and its appraiser. As finally charged to the jury, the plaintiffs' claim was that the appraiser was negligent in estimating the value of the property for mortgage purposes, and that that negligence was imputable to the bank.
Although there are cases where a bank goes beyond its role as mortgagee and gets involved in a capacity beyond that of a mere lending agency so that a duty relationship analogous to that of a seller or broker may come into being, Connor v. Great Western Savings & Loan Association, 69 Cal.2d 850, 447 P.2d 609, 73 Cal.Rptr. 369 (1968), this is not such a case.
The plaintiffs assert reliance on the action of the appraiser and the bank to their detriment. The facts are to the contrary. The appraisal report was for the exclusive use of the bank, and right or wrong in content, it was confidential. This being so, it certainly was not intended to, and could not, operate as any sort of representation to the buyers about the quality of the building to be purchased. The plaintiffs had neither met the appraiser nor seen the report prior to closing. More importantly, it was the testimony, and the unquestioned fact, that the plaintiffs had executed the purchase and sale agreement before the appraisal was ever done.
To establish a claim based on the appraisal, either against the appraiser or the bank, the plaintiffs had to show that the appraisal was a proximate cause of their injury and loss. River v. State, 133 Vt. 11, 13, 328 A.2d 398, 399 (1974). This, as already noted, the evidence entirely...
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