Johnson v. Healy

• Court: Connecticut Supreme Court
• Writing for the Court: Before COTTER; PETERS
• Citation: Johnson v. Healy, 176 Conn. 97, 405 A.2d 54 (Conn. 1978)
• Decision Date: 05 September 1978
• Parties: Ronald K. JOHNSON v. John J. HEALY.

Page 54

405 A.2d 54

176 Conn. 97

Ronald K. JOHNSON v. John J. HEALY.

Supreme Court of Connecticut.

Argued June 8, 1978.

Decided Sept. 5, 1978.

Donald H. Tamis, Bridgeport, with whom, on the brief, was Joseph N. Perelmutter, Seymour, for appellant-appellee (defendant).

Neal B. Hanlon, for appellee-appellant (plaintiff).

Before COTTER, C. J., and LOISELLE, BOGDANSKI, LONGO and PETERS, JJ.

PETERS, Associate Justice.

This case arises out of the sale of a new one-family house by its builder, the defendant John J. Healy, to the plaintiff, Ronald K. Johnson. The plaintiff bought the house, located in Naugatuck, in 1965, for $17,000. Between 1968 and 1971, the house settled in such a way as to cause major displacements in various foundation walls, and substantial damage to the sewer lines. In 1971, the plaintiff instituted this law suit alleging misrepresentation and negligence on the part of the defendant builder-vendor. The court below found for the plaintiff on the claims of misrepresentation, for the defendant on the claims of negligence, and assessed damages. Both parties have appealed from these conclusions of law, and from the assessment of damages.

I

The claims of misrepresentation are based on the following facts, which are amply supported by the evidence below. As part of the negotiations leading to the contract of sale of the house, the plaintiff inquired about the quality of its construction. The defendant replied that the house was made of the best material, that he had built it, and that there was nothing wrong with it. These representations were relied upon by the plaintiff and induced him to purchase the house. The damage which the house sustained because of its uneven settlement was due to improper fill which had been placed on the lot beneath the building at some time before the defendant bought the lot, as a building lot, in 1963. On the basis of these findings, the trial court concluded that the defendant had made an express warranty coextensive with the doctrine of implied warranty of workmanship and habitability in cases involving the sale of new homes by a builder.

The defendant assigns as error the trial court's refusal to find additional facts claimed to be admitted or undisputed. As we have repeatedly held, this court will not add findings of fact which are not material and could not affect the result reached below. Rushchak v. West Haven, 167 Conn. 564, 566, 356 A.2d 104 (1975); Xerox Corporation v. Board of Tax Review, 175 Conn. 301, 397 A.2d 1367.

The defendant also assigns as error the trial court's conclusion that the defendant bore responsibility for a condition of which he had no knowledge, actual or constructive. The trial court found that the defendant's representations, although innocent, amounted to an express warranty of workmanlike construction and fitness for habitation. Since those representations reasonably induced reliance in the purchase of the house, the defendant was held liable despite the absence of written warranties concerning the fitness or condition of the home in the contract of sale or the deed of conveyance.

The scope of liability for innocent misrepresentation has varied with time and with context, in American law generally and in this court. Traditionally, no cause of action lay in contract for damages for innocent misrepresentation; if the plaintiff could establish reliance on a material innocent misstatement, he could sue for rescission, and avoid the contract, but he could not get affirmative relief. See Restatement (Second), Contracts §§ 304, 306, and Introductory Note to Chapter 13 (Tentative Draft No. 11, 1976). In tort, the basis of responsibility, although at first undifferentiated, was narrowed, at the end of the 19th century, to intentional misconduct, and only gradually expanded, in this century, to permit recovery in damages for negligent misstatements. Prosser, Torts (4th Ed. 1971) § 107. At the same time, liability in warranty, that curious hybrid of tort and contract law, became firmly established, no later than the promulgation of the Uniform Sales Act in 1906. In contracts for the sale of tangible chattels, express warranty encompasses material representations which are false, without regard to the state of mind or the due care of the person making the representation. For breach of express warranty, the injured plaintiff has always been entitled to choose between rescission and damages. Although the description of warranty liability has undergone clarification in the Uniform Commercial Code, which supersedes the Uniform Sales Act, ¹ these basic remedial principles remain unaffected. At the same time, liability in tort, even for misrepresentations which are innocent, has come to be the emergent rule for transactions that involve a commercial exchange. See Restatement (Second), Torts § 524A (1958); Prosser, Torts (4th Ed. 1971) § 107, pp. 710-14.

In Connecticut law, strict liability for innocent misrepresentation in the sale of goods is well established. As long ago as Bartholomew v. Bushnell, 20 Conn. 271 (1850), this court held (p. 275) that "(i)f a man sell a horse to another, and expressly warrant him to be sound, the contract is broken, if the horse prove otherwise. The purchaser, in such case, relies Upon the contract; and it is immaterial to him, whether the vendor did, or did not, know of the unsoundness of the horse. In either case, he is entitled to recover all the damages, which he has sustained." For similar reasons, strict liability for innocent misrepresentation was imposed in a construction contract in E. & F. Construction Co. v. Stamford, 114 Conn. 250, 158 A. 551 (1932). In Stamford, the defendant's erroneous description of subsurface conditions materially affected the plaintiff's excavation costs. This court held the misrepresentation to be actionable, even though there was no allegation of fraud or bad faith, because it was false and misleading, "in analogy to the right of a vendee to elect to retain goods which are not as warranted, and to recover damages for the breach of warranty. (Citations omitted.)" Id., 258, 158 A. 553. Stamford quotes, with approval, from 3 Williston, Contracts § 1512, p. 2689 (1920): " 'If a man makes a statement in regard to a matter upon which his hearer may reasonably suppose he has the means of information, . . . and the statement is made as part of a business transaction, or to induce action from which the speaker expects to gain an advantage, he should be held liable for the consequences of reliance upon his misstatement.' " Id., 259, 158 A. 554. Bartholomew and Stamford together make it clear that liability for innocent misrepresentation is not a novelty in this state, that such liability is based on principles of warranty, and that such warranty law is not confined to contracts for the sale of goods.

Extension of warranty liability for innocent misrepresentation to a builder-vendor who sells a new home is, as a matter of policy, consistent with the developing law of vendor and purchaser generally. In the not too distant past, it is true, Caveat emptor dominated the law of real estate. See, e. g., Levy v. C. Young Construction Co., Inc., 46 N.J.Super. 293, 134 A.2d 717 (1957), affirmed on other grounds, 26 N.J. 330, 139 A.2d 738 (1958). In this state, however, Caveat emptor has not been allowed to stand in the way of imposition of liability for negligent misrepresentations. See Warman v. Delaney, 148 Conn. 469, 172 A.2d 188 (1961), and Richard v. A. Waldman & Sons, Inc., 155 Conn. 343, 232 A.2d 307 (1967). Furthermore, Scribner v. O'Brien, Inc., 169 Conn. 389, 363 A.2d 160 (1975), recognized the propriety of claims for negligence, express warranty, and, in dictum, implied warranty, and thus effectively and explicitly ended the role of Caveat emptor in sales of new homes by builder-vendors.

On the facts of the case before us, as the trial court concluded, liability for innocent misrepresentation is entirely appropriate. Although the defendant vendor had built no houses other than this one, this information was not disclosed to the buyer until the sale had been concluded; the defendant had been otherwise engaged in the real estate business for about thirty years. Although indefinite, the defendant's statement that there was "nothing wrong" with the house could reasonably have been heard by the plaintiff as an assertion that the defendant had sufficient factual information to justify his general opinion about the quality of the house. In context, this statement of opinion could reasonably have induced reliance. See Restatement (Second), Contracts §§ 310, 311 (Tentative Draft No. 11, 1976).

II

The claims for negligence in construction depend upon a showing by the plaintiff that the defendant knew, or should have known, that the subsurface conditions of the building were substandard, and thus required special plans for the footings and the foundation of the house that he was building. The trial court found that the defendant had no actual knowledge of the soil defects, a finding which the plaintiff does not directly attack. The issue therefore is the defendant's constructive notice of the lot's instability despite its apparent content of standard bank run gravel. It is significant that the building inspector, who approved the construction plans, was found to have had no notice. At the time of this building project, test borings to determine soil suitability were not customary for residential construction. Although there was testimony which might have supported a different finding, the trial court was not...