Ramel v. Chasebrook Const. Co.

• Decision Date: 22 November 1961
• Docket Number: No. 2050,2050
• Citation: 135 So.2d 876
• Parties: William J. RAMEL and Leah Ramel, his wife, Appellants, v. CHASEBROOK CONSTRUCTION COMPANY, Inc., a Florida corporation; Chasebrook, Inc., an Ohio corporation; and S. J. Stone, Appellees.
• Court: Florida District Court of Appeals

Page 876

135 So.2d 876

William J. RAMEL and Leah Ramel, his wife, Appellants, v. CHASEBROOK CONSTRUCTION COMPANY, Inc., a Florida corporation; Chasebrook, Inc., an Ohio corporation; and S. J. Stone, Appellees.

No. 2050.

District Court of Appeal of Florida, Second District.

Nov. 22, 1961.

Rehearing Denied Jan. 5, 1962.

Ralph R. Quillian, Hollywood, for appellants.

Abrams & Anton, Hollywood, for appellees S. J. Stone and Chasebrook, Inc.

Stephen A. Spear, Ft. Lauderdale, for appellee Chasebrook Const. Co., Inc.

ALLEN, Acting Chief Judge.

This is an appeal from a final order wherein the trial judge, sitting without a jury, at the close of plaintiffs' case dismissed the cause upon motion of defendants' counsel for directed verdict. Appellants, plaintiffs in the lower court, seek a reversal of said order of dismissal, contending that there is ample evidence which was introduced in their behalf to establish a prima facie case against all of the defendant-appellees.

The action was in tort for fraud and deceit for alleged fraudulent representations made to plaintiffs concerning the construction of a home which was sold to plaintiffs by defendant Chasebrook Construction Company, Inc. Chasebrook, Inc., its president Stone, and one Garson, president of Chasebrook Construction Company, Inc., were made parties defendant. Defendant Garson, though he was not served, did appear at the trial. He is not, however, a party to this appeal. It was alleged that although the construction and sale of the house to plaintiffs were performed in the name of Chasebrook Construction Company, Inc., such actions were in truth and in fact those of defendants Chasebrook, Inc., Stone and Garson as well.

It appears that defendant Stone was a principal stockholder and dominant officer and director of Chasebrook, Inc.; that defendant Garson is also a stockholder, officer and director in said corporation; and that Stone was a director in Chasebrook Construction Co., Inc., until he resigned which was shortly before the events material to this cause took place. Defendant Garson and his wife, who is also Stone's daughter, are the principal directors and stockholders of said Chasebrook Construction Co., Inc.

Both of these corporations were involved in various phases of the development of a subdivision known as Sunset Isles. Chasebrook, Inc., through its president Stone, was apparently the prime mover in the development of Sunset Isles and held title to the various lots. In some instances these lots were sold directly to a prospective home buyer who would give a purchase money mortgage to Chasebrook, Inc., which in turn subordinated the purchase money mortgage to a construction loan procured by Chasebrook Construction Co., Inc., or any of several other builders in the subdivision selected by the buyer. After completion of the house, if subsequent refinancing was inadequate to cover the land, Chasebrook, Inc., retained the second mortgage. In other instances the lots were sold directly to the builders who would build thereon for speculation. Upon the sale of a house, the purchase money mortgage held by Chasebrook, Inc., would be paid off by the builder out of the proceeds of the sale. This evidently was the type of transaction that preceded the sale of the house to plaintiffs by Chasebrook Construction Co., Inc.

The sale of the house to plaintiffs was negotiated primarily by salesmen but prior to the consummation thereof plaintiffs came into contact with both defendants Stone and Garson. At the trial plaintiffs testified that prior to the purchase they both inspected the house; and that defendants Stone and Garson, stated, among other things, that the house was well constructed and well built. After plaintiffs paid the $28,500 purchase price they moved into the house on September 15, 1958. Several months later the pool and patio began pulling away from the house foundation. The west wall of the house developed cracks between 1/16th and 1/8th inch in thickness in a radiating pattern beginning at the point where the patio originally was joined to the house foundation. The lower two feet of the rear wall of the house has developed an outward bulge and portions of the foundation have sunk or settled away from the house. Defendant Garson promised that the defects would be repaired but he left town without performing any repairs.

After the situation grew worse with the house developing more cracks and the foundation, patio and pool continuing to settle and pull away from the house, the defendant Stone stated to the plaintiff wife: '* * * you can pat me on the back, on my mother's grave this shall be fixed. This shall be repaired. * * *' However, no repairs were ever made. The plaintiffs consulted with various engineers and a realtor and, after learning of the lack of proper piling under their house, the instant suit was filed. The foregoing facts are as summarized from both plaintiffs' testimony.

Robert Graves, a real estate expert appraiser, testified as to the settling of the foundation along the south and west side of the house; that the foundation for the pump for the pool was broken in two from settling; that it would require $9,000 to repair the house and that it had only a $13,000 to $14,000 speculative market price due to its condition.

Gordon W. Cusick, a construction engineer employed by defendants, testified that he was erecting a sea wall behind the property when the plaintiffs' house was being constructed and that his men were in knee deep muck in the area where the plaintiffs' pool was subsequently constructed. Cusick stated that he suggested to defendant Garson that piling should be installed but Garson refused to heed his advice by saying that piling was not needed. Cusick also testified that the pool is sinking and pulling the patio with it and that the house foundation is settling. Specifically, Cusick stated that there was no piling or support or foundation under the house other than the muck. Cusick's testimony further revealed that he had, pursuant to instructions by defendant Garson, sealed some cracks in the house prior to its occupancy by plaintiffs.

There is other testimony in the record supporting the factors discussed thus far as well as prior knowledge on the part of Stone of the defective foundation. In view of the facts known to defendants that the house, patio, and pool were erected on a muck foundation after being warned not to do so by an engineer employed by defendants, the essential question is, does the statement by Stone that the house was well constructed constitute actionable misrepresentation? In this case the defendants held themselves out as land developers and contractors with apparent knowledge of proper construction methods.

The defendants contend that no positive representations were made concerning the structural foundation of the house and pool; and that since plaintiffs inspected the property prior to the purchase they have no right now to complain. These contentions might well have some merit as to defects which were discernible upon a visual inspection. Smith v. Hollingsworth, 85 Fla. 431, 96 So. 394. It is well settled that where one claims that fraudulent representations have been made to him, he is charged with knowledge of all facts that he could have learned through diligent inquiry. Stokes v. Victory Land Co., 99 Fla. 795, 128 So. 408; 14 Fla.Jur. Fraud and Deceit, § 37. We are concerned, however, in the instant case, with facts regarding a defective foundation laid upon knee deep muck unsupported by piling or other appropriate structural reinforcement. It should be noted that a statement of a party having exclusive or superior knowledge may be regarded as a statement of fact although it would be considered as opinion if the parties were dealing on equal terms. See cases cited at 14 Fla.Jur., Fraud and Deceit, §§ 14, 28; 10 F.L.P., Fraud and Deceit, § 3; 56 A.L.R. 429. The defect in the instant case was buried below the surface of the land and was not apparently visible or discoverable without excavation of the property. Failure to learn of such defect in such a situation certainly should not be fatal to recovery for misrepresenting that the house was 'well constructed.' See cases collected in an Annotation entitled: 'Fraud predicated upon vendor's misrepresentation of physical condition of real property,' 174 A.L.R. 1010, 1033, et seq.

No case from this jurisdiction has been found on a similar set of facts and many of the cases from other jurisdictions present stronger proof of positive representations on the part of the sellers. In Pinger v. Guaranty Investment Co., Mo.App.1957, 307 S.W.2d 53, the seller's agent represented that the house was built on solid rock. After the house began settling the purchasers were successful in recovering damages in fraud from the sellers which award was affirmed on appeal. Similarly, in Lincoln v. Pohly, Tex.Civ.App.1959, 325 S.W.2d 170, the Court upheld a recovery in fraud against the seller-contractor on the basis that the contractor had a duty to construct and finish the house with good workmanship and good materials not only because of express representations that he would do so, but also because of implied obligation to do so and the failure to so construct the house rendered him liable to the vendee for damages.

The Vendor, in Smith v. Bifano, Tex. Civ.App.1959, 330 S.W.2d 473, represented to the vendee that he had compensated for the fill dirt in building the foundation for the house. After a few months the house began to settle, crack, and fall away from the eaves and sheetrock walls. The plaintiff recovered a verdict but it was set aside and judgment entered for the vendor. On appeal the verdict was reinstated on the ground that the false representation as to compensating for fill dirt constituted actionable fraud.

In Ashburn v. Miller, 1958, 161 Cal.App.2d 71, 326 P.2d 229, 231, the vendors represented that the lot was a 'solid...