Obde v. Schlemeyer
| Decision Date | 30 June 1960 |
| Docket Number | No. 35230,35230 |
| Citation | 353 P.2d 672,56 Wn.2d 449 |
| Court | Washington Supreme Court |
| Parties | Fred OBDE and Mary Obde, husband and wife, Respondents, v. Robert L. SCHLEMEYER and Cleone L. Schlemeyer, husband and wife, Appellants. |
George W. Young, Spokane, for appellants.
Patrick H. Murphy, Spokane, for respondents.
Plaintiffs, Mr. and Mrs. Fred Obde, brought this action to recover damages for the alleged fraudulent concealment of termite infestation in an apartment house purchased by them from the defendants, Mr. and Mrs. Robert Schlemeyer. Plaintiffs assert that the building was infested at the time of the purchase; that defendants were well apprised of the termite condition, but fraudulently concealed it from the plaintiffs.
After a trial on the merits, the trial court entered findings of fact and conclusions of law sustaining the plaintiffs' claim, and awarded them a judgment for damages in the amount of $3,950. The defendants appealed. Their assignments of error may be compartmentalized, roughly, into two categories: (1) those going to the question of liability, and (2) those relating to the amount of damages to be awarded if liability is established.
First, as to the question of liability: The Schlemeyers concede that, shortly after they purchased the property from a Mr. Ayars on an installment contract in April 1954, they discovered substantial termite infestation in the premises. The Schlemeyers contend, however, that they immediately took steps to eradicate the termites, and that, at the time of the sale to the Obdes in November 1954, they had no reason to believe that these steps had not completely remedied the situation. We are not convinced of the merit of this contention.
The record reveals that when the Schlemeyers discovered the termite condition they engaged the services of a Mr. Senske, a specialist in pest control. He effected some measures to eradicate the termites, and made some repairs in the apartment house. Thereafter, there was no easily apparent or surface evidence of termite damage. However, portions of the findings of fact entered by the trial court read as follows:
No error has been assigned to the above findings of fact. Consequently, they will be considered as the established facts of the case, Lewis v. Scott, 1959, 154 Wash.Dec. 509, 341 P.2d 488. The pattern thus established is hardly compatible with the Schlemeyers' claim that they had no reason to believe that their efforts to remedy the termite condition were not completely successful.
The Schlemeyers urge that, in any event, as sellers, they had no duty to inform the Obdes of the termite condition. They emphasize that it is undisputed that the purchasers asked no questions respecting the possibility of termites. They rely on a Massachusetts case involving a substantially similar factual situation, Swinton v. Whitinsville Savings Bank, 1942, 311 Mass. 677, 42 N.E.2d 808, 141 A.L.R. 965. Applying the traditional doctrine of caveat emptor--namely, that, as between parties dealing at arms length (as vendor and purchaser), there is no duty to speak, in the absence of a request for information--the Massachusetts court held that a vendor of real property has no duty to disclose to a prospective purchaser the fact of a latent termite condition in the premises.
Without doubt, the parties in the instant case were dealing at arms length. Nevertheless, and notwithstanding the reasoning of the Massachusetts court above noted, we are convinced that the defendants had a duty to inform the plaintiffs of the termite condition. In Perkins v. Marsh, 1934, 179 Wash. 362, 37 P.2d 689, 690, a case involving parties dealing at arms length as landlord and tenant, we held that,
'Where there are concealed defects in demised premises, dangerous to the property, health, or life of the tenant, which defects are known to the landlord when the lease is made, but unknown to the tenant, and which a careful examination on his part would not disclose, it is the landlord's duty to disclose them to the tenant before leasing, and his failure to do so amounts to a fraud.'
We deem this rule to be equally applicable to the vendor-purchaser relationship. See 15 Tex. Law Review (December, 1936) 1, 14-16, Keeton: Fraud--Concealment and Non-Disclosure. In this article Professor Keeton also aptly summarized the modern judicial trend away from a strict application of caveat emptor by saying:
'It is of course apparent that the content of the maxim 'caveat emptor,' used in its broader meaning of imposing risks on both parties to a transaction, has been greatly limited since its origin. When Lord Cairns stated in Peek v. Gurney that there was no duty to disclose facts, however morally censurable their non-disclosure may be, he was stating the law as shaped by an individualistic philosophy based upon freedom of contract. It was not concerned with morals. In the present stage of the law, the decisions show a drawing away from this idea, and there can be seen an attempt by many courts to reach a just result in so far as possible, but yet maintaining the degree of certainty which the law must have. The statement may often be found that if either party to a contract of sale conceals or suppresses a material fact which he is in good faith bound to disclose then his silence is fraudulent.
'The attitude of the courts toward non-disclosure is undergoing a change and contrary to Lord Cairns' famous remark it would seem that the object of the law in these cases should be to impose on parties to the transaction...
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...economic loss rule. Further, although under existing case law the plaintiffs' fraudulent concealment claim based on Obde v. Schlemeyer, 56 Wash.2d 449, 353 P.2d 672 (1960) is not barred by the economic loss rule, that claim fails here because the Alejandres cannot meet their burden to show ......
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