Pleasant Grove Builders, Inc. v. Phillips

• Decision Date: 23 February 1962
• Docket Number: No. 15940,15940
• Citation: 355 S.W.2d 818
• Parties: PLEASANT GROVE BUILDERS, INC., Appellant, v. Thomas C. PHILLIPS et ux., Appellees.
• Court: Texas Court of Appeals

Page 818

355 S.W.2d 818

PLEASANT GROVE BUILDERS, INC., Appellant, v. Thomas C. PHILLIPS et ux., Appellees.

No. 15940.

Court of Civil Appeals of Texas, Dallas.

Feb. 23, 1962.

Rehearing Denied March 23, 1962.

Jack Keller, Dallas, for appellant.

Esir Tobolowsky and E. D. Hurt, Dallas, for appellees.

DIXON, Chief Justice.

Appellees Thomas C. Phillips and wife Billie Jean Phillips sued appellant Pleasant Grove Builders, Inc., for damages, for fraud under Art. 4004, Vernon's Ann.Civ.St., and in the alternative for damages for breach of implied obligation and implied warranty in the sale of real estate.

Appellees purchased a house from appellant through Ralph Lyles, a real estate broker. They allege that Lyles falsely represented that the house was constructed with good workmanship and good materials, which representations induced them to sign a written contract for the purchase of the property, the sale afterwards being consummated pursuant to said contract. Lyles is not a party to appellees' suit.

The consideration paid by appellees was $12,700 as follows: the transfer to appellant of equities then owned by appellees in two pieces of real estate at an agreed value of $2,200; the execution by appellees of a first lien note in the amount of $9,000 payable to Guaranty Federal Savings & Loan Association, the proceeds of which loan were paid to appellant; and the execution by appellees of a second lien note in the amount of $1,500 payable to appellant.

Appellees further allege that after they had moved into the house and had occupied it for some time they discovered defects which showed that it had not been constructed with good workmanship and good materials. Their petition and the testimony offered in their behalf describe these defects in great detail.

In connection with their suit under Art. 4004, V.A.C.S. appellees pled that the reasonable cash market value of the property as represented was $12,700, and that the actual value of the property as delivered was $9,936.72, a difference of $2,763.28.

In connection with their alternative plea of failure of implied obligation and implied warranty, appellees alleged that the reasonable cost of remedying the defects was $2,763.28.

A jury returned a verdict finding that (1) Ralph Lyles had represented to appellees that the house had been constructed with good workmanship and good materials, (2) which representation was material, (3) was false, (4) was made for the purpose of inducing appellees to purchase the house, (5) was believed and relied on by appellees, (6) otherwise they would not have signed the contract to purchase, but (7) Lyles in making the representations had not acted wilfully.

The jury further found that the reasonable cash market value of the house as represented was $12,000, the actual value as delivered was $10,000; the premises were defective at the time of delivery; and the reasonable cost of remedying the defects was $2,000.

Based on the jury verdict judgment was rendered in favor of appellees for $2,000.

In its first and second points on appeal appellant asserts that (1) the judgment is not supported by the evidence and, (2) the judgment is contrary to the law. Both points are too general to be entitled to our consideration. Phillips v. Le Gallez, Tex.Civ.App., 329 S.W.2d 922; Redman v. Cooper, Tex.Civ.App., 160 S.W.2d 318, 319; Universal Life Ins. Co. v. Wallace, Tex.Civ.App., 149 S.W.2d 662. Therefore we shall make no holding with reference to the first and second points.

Appellant's third, fourth, fifth, sixth, seventh, eighth, ninth, twelfth, thirteenth and fourteenth points in substance assert that (3) there was no issue submitted to the jury on the question of agency of Lyles and it was improper for the trial judge to make an implied finding of agency; (4) there was no evidence connecting appellant directly or indirectly with any representations made by Lyles; (5) there is no evidence or finding of the jury that appellant had any knowledge of any representations with reference to good workmanship and good material, or that appellant in any way condoned or ratified said representations; (6) there is no evidence or finding of the jury that appellant or any of its legally qualified officers made any such representations; (7) as a matter of law a real estate salesman such as Lyles has no implied or apparent authority to bind the owner by making the alleged representations; (8) the alleged representations of Ralph Lyles were mere sales talk; (9) the rule of caveat emptor should apply because appellees had bought and sold other houses and should have ascertained the defects in the house which were open and obvious; (12) there is no evidence or finding by the jury that Lyles had apparent authority to make the representations in question; (13) there was no evidence that appellees relied on any act or representations of Pleasant Grove Builders and (14) there was no issue submitted as to how and in what manner the alleged representations made by Ralph Lyles were false.

The undisputed evidence shows that Lyles was acting as agent for appellant, but with the limited authority of a real estate broker. Since the fact of the limited agency was conclusively established by the evidence, there was no need to submit an issue to the jury on the subject. Appellant's third point is overruled.

Appellee Phillips testified that while out driving in his automobile looking at property he and his wife saw the house in controversy. In the front yard they saw a sign of a real estate agent, Lyles, advertising the house for sale. They knew Lyles, having previously bought real estate through him. The house was open so appellees went inside, inspected the house and liked it; thereafter they communicated with Lyles and entered into negotiations which led to their signing the contract to purchase. Some time later the deal was consummated by the transfer of the property to appellees in consideration of which they executed the first and second lien notes and transferred to appellant their equities in two pieces of real estate then owned by appellees.

Lyles claimed no authority to act for appellant in any other capacity than as a real estate broker. There is no evidence that he had expressed or implied authority to bind appellant by the representations in question. When appellees informed Lyles of their desire to transfer to appellant their two equities in other properties as down payment on the purchase price, Lyles told them he would have to take the matter up with 'Ted', who turned out to be Ted Frossart, Vice-President of appellant. The written contract signed by appellees, a printed form with blank spaces to be filled in, has places for the signature of the purchaser and seller and the agent, it contains no express warranty.

The facts in this case are strikingly similar to those in the case of Loma Vista Development Co. v. Johnson, 142 Tex. 686, 180 S.W.2d 922. In that case our Supreme Court held that a real estate broker in the absence of a particular agreement enlarging his authority, is only a special agent who has no authority to bind his principal by representations. His authority is limited to finding a purchaser ready, able and willing to buy on terms acceptable to the seller. It was held expressly that the seller, under such circumstances, is not liable under Art. 4004, V.A.C.S. We think such holding must control our decision here. Accordingly appellant's fourth, fifth, sixth, seventh, eighth, twelfth, thirteenth and fourteenth points are sustained insofar as they relate to appellees' cause of action based on Art. 4004, V.A.C.S. Appellant's ninth point is overruled.

There remains the question whether the judgment against appellant should be affirmed under appellees' alternative plea and the jury's findings in connection with appellees' allegations of a breach by appellant of its 'implied obligation and/or implied warranty' that the house in question had been constructed and finished with good workmanship and good materials.

The jury found that the premises were defective at the time the property was delivered to appellees, and the reasonable cost of remedying and correcting the defects to be $2,000.

In the case of Loma Vista Development Co. v. Johnson, supra, our Supreme Court states that the holding there in favor of the defendant is...