Oliver v. City Builders, Inc.

• Decision Date: 21 October 1974
• Docket Number: No. 47408,47408
• Parties: J. Delbert OLIVER and Katheryn C. Oliver v. CITY BUILDERS, INC., et al.
• Court: Mississippi Supreme Court

Page 466

303 So.2d 466

J. Delbert OLIVER and Katheryn C. Oliver v. CITY BUILDERS, INC., et al.

No. 47408.

Supreme Court of Mississippi.

Oct. 21, 1974.

Rehearing Denied Dec. 9, 1974.

Young, Young & Scanlon, O. Murray McNeely, Jackson, for appellant.

T. E. Davidson, Perry, Phillips, Crockett & Morrison, Jackson, for appellee.

SMITH, Justice:

J. Delbert Oliver and Katheryn C. Oliver have appealed from a judgment of the Circuit Court of Hinds County dismissing their suit, entered following the sustaining of a demurrer to the declaration filed by them against appellees, City Builders, Inc., and George Bailey and W. W. Bailey.

Facts stated in the declaration, and admitted by the demurrer, and to which we are limited, were: The Olivers purchased certain real estate from one Jansing (not a party to this litigation) on July 12, 1968. On the property conveyed to the Olivers by Jansing there was a house which had been constructed by appellees before they had conveyed the property to Jansing on January 6, 1966, more than two years prior to its acquisition by the Olivers. The declaration alleged that, some six months after Jansing conveyed the property to the Olivers, cracks began to appear in the floor and walls of the house, which were alleged to have resulted from faulty construction by appellees of the foundation of the house. It was alleged that because of this the Olivers were entitled to recover damages from appellees as the original builders.

The parties appear to be in accord in stating that, in real estate transactions, the doctrine of caveat emptor has heretofore applied, appellant asserting that, under 'the common law of England' the rule of caveat emptor had applied in such cases.

It is also clear that appellants recognize that, in order to prevail as remote purchasers of the property, the doctrine of caveat emptor must be abolished in such a case as their own. They urge this Court, therefore, to change the existing rule and to apply instead the products liability rule, or 'strict liability in tort,' against appellees who had built the house situated upon the land which they had purchased from Jansing. They assert that there has been a departure by courts throughout the country from the rule heretofore existing in real estate transactions and a substitution of the rule of 'strict liability in tort' that is 'reaching a thundering crescendo.'

Numerous cases from other jurisdictions are cited by appellants which, they assert, support that statement.

The only real issue, and the only issue actually briefed and argued on this appeal, therefore, deals with the changing of the existing law by this Court and the application of the rule of strict liability in tort, thereby creating a liability on the part of builders of permanent structures on real estate to those who may become remote purchasers thereof.

An examination of the numerous authorities cited by appellants discloses that the cases fall into two main categories. (1) Cases involving builder-vendor's direct vendee, in which the court has held the builder liable to the vendee to whom the builder directly conveyed it, that is, the first vendee, for defective construction, holding that there was, in such a case, an implied warranty, and (2) cases wherein there was damage or injury which resulted from installation of some manufactured product in a building (such as water heaters, air conditioners, furnaces and the like) which exploded, caught fire or otherwise caused damage or injury because of a defect in the product or in its improper installation.

In this case appellants are not purchasers from appellees. The property was conveyed to appellants by Jansing, not by appellees, more than two years after appellees had divested themselves of all right, title or interest in it. It was more than six months after appellants acquired title from Jansing that, it was alleged, defects began to appear. And, of course, this is not a case where damage or injury has been caused by a defective water heater, furnace or other manufactured product.

No attempt will be made in this opinion to give a synopsis of each of the very numerous cases cited by appellants. Two of the cases, which are from neighboring states, Wawak v. Stewart, 247 Ark. 1093, 449 S.W.2d 922 (1970) and Cochran v. Keeton, 287 Ala. 439, 252 So.2d 313 (1971) are typical and will be mentioned to show the very restricted extent to which the courts have been willing to abrogate the doctrine of caveat emptor, even where they have been willing to do so at all.

In Wawak, a majority of the Arkansas Court held that a builder-vendor impliedly warranted a house to the first purchaser (the builder's own vendee, that is) against flooding of heat and air conditioning ductwork. The Court said:

The Stewarts brought this action for damages. The great question in the case, overshadowing all other issues, is whether there is any implied warranty in a contract by which the builder-vendor of a new house sells it to its first purchaser. (Emphasis added). (247 Ark. at 1094, 449 S.W.2d at 923).

A majority of the Arkansas Court concluded that such an implied warranty existed where a new house was sold by the builder to a first purchaser. That is the extent of the holding and there is nothing in Wawak to indicate that an implied warranty would be extended to a remote purchaser that is, a purchaser who did not buy from the builder. Indeed, no such question was before the Arkansas Court. Three of the seven justices dissented from that strictly limited departure from existing law. Mr. Justice Byrd, in a dissenting opinion, said:

I do not believe that the people of this State elected me to Legislate on the subject of implied warranties in the sale of real estate. The present Constitution of the State of Arkansas and also the proposed Constitution places such matters before the General Assembly and I think for good reason. When this matter comes before the General Assembly, interested parties, other than the parties to this litigation, with intimate knowledge of the problems involved in placing an implied warranty of fitness upon a house will have an opportunity to be heard. However, today's decision will just as surely affect the method and cost of doing business of persons not a party to this litigation as would such action by the General Assembly, but our rules of procedure do not permit such parties to even be heard on a petition for rehearing. (247 Ark. at 1114, 449 S.W.2d at 932).

In Cochran v. Keeton, supra, the Supreme Court of Alabama decided, and again the decision was by a divided court, to change the rule of caveat emptor as it applied 'in the sale of a new house by a builder-vendor.' The Alabama Court merely held, in that limited situation, that an implied warranty existed. The Alabama decision, was limited, as was that by the Arkansas Court, to the vendee of the builder-vendor. Also, since even so, it effected a radical change in existing real estate law, it was made to apply prospectively only. As in the Arkansas case it was founded upon the theory of the existence of an implied warranty between the builder and the builder's vendee.

It is not contended that this is a case involving a vendee of a builder-vendor. It is not a case where injury or damage has been caused by a defective manufactured product installed in a building. Therefore, we are not confronted with a situation such as those which were dealt with in either of the two main categories of cases cited by appellants as supporting their view that existing law should be changed.

It should be noted that, while the present litigation involves a dwelling, a rule applying the doctrine of strict liability in tort with respect to a dwelling necessarily would, in reason, require its application, with equal force, to structures of every kind standing upon, and which are part of, real estate. Thus, in case of a transfer of a tract of land by a vendor, however remote from the builder such vendor might be, the purchaser, however remote in title from the original owner he might be, would be able to require the builder of any structure standing upon it to respond in damages for any deficiency therein, whether the structure should be a dwelling, outhouse, barn, office or any other type of building. Material and workmanship which may go into a structure are of infinite variety. An original purchaser of land on which a building is situated, for reasons of economy or for any other reason, may be satisfied, and may accept it from the builder in any condition in which it may be. He may waive defects, and he may do so by his actions or by writing or orally or by the mutual assent of the parties. Circumstances may be such between the original purchaser and the builder, that the former may be estopped to complain of the quality, type, class or kind of construction or material, or as to the strength, durability and appearance of the structure.

It would be strange indeed if, when the original purchaser conveyed the property to another, that his vendee could resort to the builder for damages for deficiencies in workmanship or materials which the original purchaser from the builder had accepted.

These things, and others, distinguish a structure erected upon land, of which it becomes a part, from a manufactured device or product, to which the rule of strict liability in tort is properly applied. If it can be said that an implied warranty should exist as to the first purchaser from the builder, as in the Alabama and Arkansas cases, supra, such a warranty cannot be extended logically to remote purchasers. Real estate transactions require a written contract or deed, and a purchaser may insist upon having included therein any warranty or guaranty that he may desire as to buildings standing upon it, and, of course, he may refuse to purchase if the prospective vendor will not agree.

In those cases where the rule of caveat emptor has been abrogated to the limited extent of...