Sponseller v. Meltebeke

• Decision Date: 08 November 1977
• Citation: 570 P.2d 974,280 Or. 361
• Parties: , 22 UCC Rep.Serv. 1182 Donald R. SPONSELLER, Appellant, v. Robert A. MELTEBEKE, Respondent.
• Court: Oregon Supreme Court

Page 974

570 P.2d 974

280 Or. 361, 22 UCC Rep.Serv. 1182

Donald R. SPONSELLER, Appellant, v. Robert A. MELTEBEKE, Respondent.

Supreme Court of Oregon, In Banc.

Argued and Submitted Oct. 4, 1977.

Decided Nov. 8, 1977.

John R. Teising, Eugene, argued the cause for appellant. With him on the briefs were Charles J. Huber and Hutchinson, Harrell, Cox & Teising, Eugene.

Randall E. Thwing, Eugene, argued the cause for respondent. With him on the brief were Thwing, Atherly & Butler, Eugene.

LENT, Justice.

On December 29, 1976, plaintiff, the purchaser of a used house, brought this action for damages against the defendant, the builder-seller of the house, for breach of implied warranty and fraud. Defendant demurred to the complaint. The demurrer was sustained on a number of grounds. The breach of warranty action was held barred by the running of the 10-year statute of ultimate repose, ORS 12.135. In addition, the trial court held that neither the breach of warranty count nor the fraud count stated facts sufficient to constitute a cause of action. The former ruling was based on the doctrine of privity; the latter, on the fact, as stipulated by the plaintiff and defendant ¹ in open court, that there was no direct representation made by the defendant to the plaintiff. When the plaintiff did not plead over, judgment was entered for the defendant. Plaintiff appeals, and we affirm.

The facts, as stated in the complaint, are as follows: On August 29, 1966, defendant sold the house in question, which defendant had recently constructed, to one John Herbert. Two years later Herbert sold the house to plaintiff. The footing and foundation inspections required by law were not made, and due to "adverse soil conditions" the foundation settled, causing damage to the house and fixtures. In addition, to support his fraud count, plaintiff alleged that defendant "represented to plaintiff, as purchaser of the house here involved, that all inspections as required by law had been properly performed."

In considering the sufficiency of a complaint upon demurrer, we must presume that plaintiff has stated his case as strongly as the facts will permit, and the complaint must therefore be construed most strongly against the plaintiff. Medford v. Pac. Nat'l. Fire Ins. Co., 189 Or. 617, 628, 219 P.2d 142, 222 P.2d 407 (1950).

Plaintiff admitted in open court that defendant had made no direct representation to the plaintiff. The complaint states that defendant's representation that all inspections required by law had been performed was made to the plaintiff "as a purchaser of the house here involved." Construing this allegation, as we must, most strongly against the plaintiff, we find that it is not sufficient to express the intent required by law on the part of the defendant that his "indirect" representation, if one was in fact made, be communicated to the plaintiff. Menefee v. Blitz, 181 Or. 100, 124-25, 179 P.2d 550 (1947). Therefore, plaintiff's fraud count did not state facts sufficient to constitute a cause of action, and the trial court did not err in sustaining defendant's demurrer thereto.

Plaintiff's other count, for breach of warranty, requires more extensive consideration. In the landmark case of Yepsen v. Burgess, 269 Or. 635, 641, 525 P.2d 1019, 1022 (1974), we joined the growing number of jurisdictions which have recognized, in the sale of new houses by a builder-vendor, an implied warranty "that the house is constructed in a reasonably workmanlike manner and is fit for habitation."

In Yepsen we expressly reserved a number of questions which were not presented by that case but were inherent in any recognition of new rights and liabilities. One such question was that subsumed under the general heading of statute of limitations.

This question is squarely presented by the present case.

Defendant's demurrer was based in part on the application to the facts of this case of ORS 12.135, which states in pertinent part:

"(1) An action to recover damages for injuries * * * to property arising from another person having performed the construction * * * of any improvement to real property * * * shall be commenced within two years from the date of such injury to the * * * property; provided that such action shall be commenced within 10 years from the substantial completion of such construction * * *."

On the face of plaintiff's complaint, it appears that the house in question was substantially completed by August 29, 1966. The present complaint was filed on December 29, 1976, more than 10 years later. Thus, if ORS 12.135 is applicable, it bars plaintiff's action for breach of warranty.

Plaintiff asserts that it is ORS 72.7250, the UCC statute of limitations provisions for breach of warranty for the sale of personal property, which applies, not ORS 12.135. ORS 72.7250 states in pertinent part:

"An action for breach of any contract for sale must be commenced within four years after the cause of action has accrued. By the original agreement the parties may reduce the period of limitation to not less than one year but may not extend it.

"(2) A cause of action accrues when the breach occurs, regardless of the aggrieved party's lack of knowledge of the breach. A breach of warranty occurs when tender of delivery is made, except that where a warranty explicitly extends to future performance of the goods and discovery of the breach must await the time of such performance the cause of action accrues when the breach is or should have been discovered." (emphasis added)

Plaintiff argues that since the warranty in this case "explicitly extends to future performance" and "the discovery of the breach must await the time of such performance," his cause of action accrued only upon his discovery of the defects complained of. The complaint indicates that the discovery occurred within four years of the filing of...