Rothberg v. Olenik

• Decision Date: 03 February 1970
• Docket Number: No. 94-69,94-69
• Citation: 262 A.2d 461,128 Vt. 295
• Court: Vermont Supreme Court
• Parties: Morris ROTHBERG and Ellen F. Rothberg v. Joseph OLENIK.

Page 461

262 A.2d 461

128 Vt. 295

Morris ROTHBERG and Ellen F. Rothberg v. Joseph OLENIK.

No. 94-69.

Supreme Court of Vermont.

Feb. 3, 1970.

Rosenberg & Rosenberg, Burlington, for plaintiff.

Paul, Frank & Collins, Burlington, for defendants.

Before HOLDEN, C. J., and SHANGRAW, BARNEY, SMITH and KEYSER, JJ.

KEYSER, Justice.

This case presents the question of whether there is a warranty implied by the law of this jurisdiction when a builder-vendor sells his newly constructed house to a buyer, that the house is built in a good and workmanlike manner and suitable for habitation.

The plaintiffs' suit is founded on a breach of an implied warranty against structural defects arising out of the purchase from the defendant as builder-vendor of the property in question. The defendant moved to dismiss the complaint on the ground that in this jurisdiction there is no implied warranty of fitness or any other implied warranty when a builder-vendor sells his house to a purchaser. The court granted the motion and the plaintiffs appealed from the judgment entered against them.

The stated question is one of novel impression in this jurisdiction and involves an issue not heretofore covered by our decisions. The problem is, however, far from novel in other jurisdictions and the cases show many developments have there taken place in comparatively recent years.

The motion to dismiss admits for the purpose of its consideration all facts well pleaded and it is not aided by facts not appearing in the pleading challenged by the motion. Berry v. Whitney, 125 Vt. 383, 385, 217 A.2d 41.

The defendant entered into a written contract with the plaintiffs on April 12, 1966, to sell them a new house which he then had under construction in South Burlington, Vermont. (A copy of the contract furnished the court is dated 1965). The plaintiffs took title and possession of the premises on May 25 1966. The following year the plaintiffs discovered that structural defects had appeared in the foundation. The walls were cracking and bulging; the foundation blocks were not tied togehter in a workmanlike manner so that the house was not secured to the foundation; the foundation walls lacked sufficient pilaster support for their length and height; and the lot was not graded properly nor the foundation properly water proofed which aggravated the damage to the foundation walls. The floors were uneven and hazardous and not finished in a workmanlike manner; also the entrance stairway was improperly constructed and unfinished. The defendant was requested to remedy these alleged defects but refused to do so.

The defendant relies upon the ancient doctrine of caveat emptor-let the buyer beware-to defeat plaintiffs' action and cites cases from jurisdictions which adhere to this rule.

At common law in the sale of chattels the rule of caveat emptor was generally applied where there was no express warranty and no fraud on the part of the seller inducing the sale. 46 Am.Jur., Sales, § 337. Caveat emptor is fundamentally based upon the premise that the buyer and seller deal at arm's length, or stand on equal footing, and that the buyer had available means and opportunity to gain information, or to have an efficient inspection, concerning the subject matter of the sale which were equal to those of the seller. 77 C.J.S. Sales § 315(c), p. 1159, notes 65-67.

A breach of an implied warranty of merchantibility was the basis for holding Chrysler liable for injury caused by a defective automobile in Henningsen v. Bloomfield Motors, Inc., 32 N.J. 358, 161 A.2d 69, 75 A.L.R.2d 1. The court said:

'The uniform (sales) act codified, extended and liberalized the common law of sales. The motivation in part was to ameliorate the harsh doctrine of caveat emptor, and in some measure to impose a reciprocal obligation on the seller to beware. * * * And of tremendous significance in a rapidly expanding commercial society was the recognition of the right to recover damages on account of personal injuries arising from a breach of warranty. (citing cases) The particular importance of this advance resides in the fact that under such circumstances strict liability is imposed upon the maker or seller of the product. Recovery of damages does not depend upon proof of negligence or knowledge of the defect.'

Today the doctrine of caveat emptor as related to sales of personal property has been severely limited in its application, or, to use the language of the defendant, 'largely done away with.' The doctrine of caveat emptor is one of judicial origin and, since our statutes are silent on the subject, no restriction rests on our courts for delimiting the application of the rule. This limitation is well pointed up in the development of the law in the products liability field. See Green Mountain Mushroom v. Brown, 117 Vt. 509, 95 A.2d 679; DiGregorio v. Champlain Valley Fruit Co. 127 Vt. --, 255 A.2d 183. And liability has been further extended by this Court to a food processor even though privity of contract was lacking. O'Brien v. Comstock Foods, Inc., 125 Vt. 158, 212 A.2d 69. Similarly, it was held in Schipper v. Levitt & Sons, Inc., (1965) 44 N.J. 70, 207 A.2d 314, 321, that when a manufacturer markets its defective products which cause injury, they may be held accountable under ordinary negligence as well as under expanding principles of warranty or strict liability.

The trend of 19th century decisions is stated in Story on Sales:

'(T)he tendency of all the modern cases on warranty is to enlarge the responsibility of the seller, to construe every affirmation by him to be a warranty, and frequently to imply a warranty on his part, from acts and circumstances, wherever they were relied upon by the buyer. The maxim of caveat emptor seems gradually to be restricted in its operation and limited in its dominion, and beset with the circumvallations of the modern doctrine of implied warranty, until it can no longer claim the empire over the law of sales, and is but a shadow of itself. * * *'

The Supreme Court of the United States in an early case (1884) applied the doctrine of implied warranty, the antithesis of caveat emptor, to a real property situation involving false work and pilings driven into the bed of the Maumee River preparatory to erecting an iron bridge. Kellogg Bridge Company v. Hamilton, 110 U.S. 108, 3 S.Ct. 537, 28 L.Ed. 86. The Bridge Company, defendant below, had constructed some of the false work of scaffolding and then contracted with Hamilton to complete its contract for the erection of the bridge. Insufficiency developed in the false work done by the Company causing damage to Hamilton which he sought to recover from the Bridge Company. The Supreme Court said at page 118 of 110 U.S., at page 544 of 3 S.Ct. at page 90 of 28 L.Ed.:

'All the facts are present which, upon any view of the adjudged cases, must be held essential in an implied warranty. The transaction was, in effect, a sale of this false work, constructed by a company whose business it was to do such work; to be used in the same way the maker intended to use it, and the latent defects in which, as the maker knew, the buyer could not, by any inspection or examination, at the time discover; the buyer did not, because in the nature of things he could not, rely on his own judgment; and, in view of the circumstances of the case, and the relations of the parties, he must be deemed to have relied on the judgment of the company, which alone of the parties to the contract had or could have knowledge of the manner in which the work had been done. The law, therefore implies a warranty that this false work was reasonably suitable for such use as was contemplated by both parties. * * *'

The crucial question here is whether the doctrine of caveat emptor applies to the sale of a new house by a builder-vendor and it must be resolved on the basis of the particular facts presented in the case.

While we have no decisions of this Court directly in point with the case at bar, two of our reported cases show liability rested on the application of implied warranty. Jackson v. Rogers, 120 Vt. 138, 134 A.2d 620, was a contract action brought to recover damages of the defendant for failure to build a house according to the specifications and in conformity to usual building standards. The trial court charged the jury in part as follows: 'Where no standard is spelled out in a building contract such as this as to the standard of workmanship to be applied to the construction and assembling of the materials by the builder, the Law implies a standard which is set forth as a 'good workmanlike manner' or 'good workmanlike construction' as that standard is established by the practices in the immediate vicinity. This means that that standard forms a term of this contract, as a matter of Law, and I so instruct you, just as if it were written in the document.' We held that since no exception was taken to this charge, 'it became the law of the (case).' Pages 143-144, 134 A.2d page 623.

In Sheldon v. Northeast Developers, 127 Vt. 15, 238 A.2d 775, the plaintiff homeowner sued to recover damages against the defendant builder for the cost of repairing structural defects which developed in the foundation walls and cellar floor. The writ contained two counts. The first count was for breach of contract that the house to be built would be fit for the particular intended use; the second count was for negligence in the construction of the building. The case was submitted to the jury on count one, breach of contract, on a charge that permitted recovery only for damages consequent to any defective foundation and concrete work for which the defendant was responsible. The jury returned a verdict for the plaintiff. Defendant's appeal related only to the extent of the damages recoverable and was overruled.

Although these two cases do not reach the issue before us, they do point in the direction of a non-recognition by the trial court of the...