Waggoner v. Midwestern Development, Inc.

• Decision Date: 15 December 1967
• Docket Number: No. 10368,10368
• Citation: 154 N.W.2d 803,83 S.D. 57
• Parties: Cecil L. WAGGONER and Blanche A. Waggoner, Plaintiffs and Appellants, v. MIDWESTERN DEVELOPMENT, INC., Defendant and Respondent.
• Court: South Dakota Supreme Court

Page 803

154 N.W.2d 803

83 S.D. 57

Cecil L. WAGGONER and Blanche A. Waggoner, Plaintiffs and Appellants, v. MIDWESTERN DEVELOPMENT, INC., Defendant and Respondent.

No. 10368.

Supreme Court of South Dakota.

Dec. 15, 1967.

Whiting, Lynn, Freiberg & Shultz, Horace R. Jackson, Rapid City, for plaintiffs and appellants.

Costello, Porter, Hill, Banks & Nelson, Rapid City, Bangs, McCullen, Butler & Foye, Rapid City, for defendant and respondent.

ROBERTS, Judge.

On April 22, 1960, Cecil and Blanche Waggoner, husband and wife, purchased a new residence in Sunrise Heights Addition in Rapid City, received the usual deed of conveyance and thereafter occupied it as their home. They brought this action against the builder-vendor for damages resulting from water seeping into the basement of the house.

The complaint sets forth three counts, alleging negligence in the first count, fraudulent concealment and deceit in the second, and breach of implied warranty in the third. The trial court before the taking of any evidence granted a motion to dismiss count three. The court as to the other counts granted a motion for directed verdict made at the conclusion of the evidence of the plaintiffs. From the judgment dismissing the action, plaintiffs appeal.

Appellants contend that the trial court erred (1) in directing the verdict for the defendant claiming that the evidence in the language of counsel showed that 'Midwestern knew that a spring fed pond was filled without sealing off the springs or providing for drainage, the springs being adjacent to the site where Midwestern constructed the home it sold to the Waggoners * * * and Midwestern at the time it sold the home to Waggoners failed to disclose the facts with regard thereto, the facts being then physically concealed from the Waggoners, and not ascertainable from reasonable inspection' and (2) in dismissing count three based upon breach of implied warranty of fitness alleging that Midwestern knew that the Waggoners purchased the house for use as a home and the same proved unfit for that purpose.

The house was a completed structure prior to sale. No question is presented concerning any representation made during the purchase negotiations. It appears that there were heavy rains during May and June 1962 and that the water table rose sufficiently to cause water to seep in around the edges of the basement floor. Cracks in the basement floor developed permitting further infiltration. This condition continued during the summer and fall of 1962 and prevailed again in the summers of 1963 and 1965.

The area known as Sunrise Heights Addition situate in the western part of Rapid City, prior to development, was a draw extending easterly from a timbered limestone ridge and the ground to the north and south of the draw sloped upward. The bottom of the draw is the approximate location of the now Baldwin Street with residences including that purchased by plaintiffs built on lots adjacent to the street. Witnesses testified that prior to development there was a pond fed by springs in the vicinity of the Waggoner residence. The owner and developer of the area before the beginning of the construction of houses filled the springs with nearby dirt and rock and graded over the fill in the process of contouring the surface for the street and lots.

John Paul Gries, professor of geology at the South Dakota School of Mines and Technology, basing his opinion upon borings and observations made on and in the vicinity of the Waggoner premises, testified that in his opinion the water appearing in the basements of the houses in the area came from an 'elevated' water table resulting from the filling in of the springs and that this condition will continue with seasonal modifications.

Lyle Marsh, an experienced building contractor, was the vice president and managing officer of defendant Midwestern Development, Inc. The evidence shows that on October 2, 1958, Midwestern entered into an agreement with the owner and developer of the area in question for the purchase of lots for the construction of houses. It appears that the building sites were to be acquired on a fully developed basis in compliance with FHA requirements. Mr. Marsh testified that at the time of the purchase of the building sites in October 1958, he 'looked at' the area; that there had been excavation on both sides of Baldwin Street; that there were staked out locations in the area; that Midwestern constructed eleven or twelve houses along Baldwin Street in the vicinity of the Waggoner property; and that during 1959 and the spring of 1960, he was in the area at least bi-weekly overseeing construction.

In considering the ruling on motion for directed verdict, we view the evidence in the light most favorable to the plaintiffs, the parties against whom the verdict was directed, and determined whether there was evidence which would have supported a verdict in their favor. Hansen v. Isaak, 70 S.D. 529, 19 N.W.2d 521; Snell v. Watts, 77 S.D. 534, 95 N.W.2d 453.

Appellants contend that when contractors engaged in building houses for sale to the public construct negligently so that latent defects result, they are liable to purchasers in damages for injuries caused by their negligence. This state by statute has provided: 'Every person is responsible for injury to the person, property, or rights of another caused by his willful acts or caused by his want of ordinary care or skill, subject in the latter cases to the defense of contributory negligence.' SDC 47.0304. The liability thus defined results not only from willful acts, but also from want of ordinary care in the management of property. An elemental requirement to liability founded on negligence is the existence of a duty of care owed by the wrongdoer to the person injured or to a class of which he is a member. It is argued that while the house in the instant case was not constructed specifically for plaintiffs, they were members of a class of prospective purchasers for whom the house was built and that defendant's negligence caused injuries 'to another' within the terms of the statute.

Respondent urges, however, that an owner of land who is not charged to have been guilty of fraud ceases to be liable in negligence for its condition when he parts with title, possession and control. The rationale for this view appears from the language of the court in Levy v. C. Young Construction Co., Inc., 46 N.J.Super. 293, 134 A.2d 717: 'As defendant notes, the policy reasons underlying the rule that the acceptance of a deed without covenants as to construction is the cut-off point so far as the vendor's liability is concerned, are rather obvious. Were plaintiffs successful under the facts presented to us, an element of uncertainty would pervade the entire real estate field. Real estate transactions would become chaotic if vendors were subjected to liability after they had parted with ownership and control of the premises. They could never be certain as to the limits or termination of their liability.' The courts of several jurisdictions have recently departed from the original nonliability rule expressing the view that there is no sound reason for a distinction between the liability of a person who erects houses for sale to the public and the manufacturer who supplies dangerous or defective chattels. This conforms to the reasoning of the product liability cases stemming from the landmark case of MacPherson v. Buick Motor Co., 217 N.Y. 382, 111 N.E. 1050 ¹. See also Prosser on Torts (2nd Ed.) § 85, p. 517; Belote v. Memphis Development Company, 208 Tenn. 434, 346 S.W.2d 441; Caporaletti v. A-F Corp., 137 F.Supp. 14; Fisher v. Simon, 15 Wis.2d 207, 112 N.W.2d 705; Annot., 58 A.L.R.2d 865; Stewart v. Cox, 55 Cal.2d 857, 362 P.2d 345.

We are here concerned with negligence liability. A duty of care owed by the defendant to the injured persons or to a class of which they were members is essential to liability. Anderson v. Chicago & N.W. Ry. Co., 59 S.D. 543, 241 N.W. 516. Assuming that plaintiffs are entitled to legal protection against the defendant's conduct, in order to establish liability they must show a breach of the duty and resulting injury. One cannot be said in any manner to neglect or refuse to perform a duty unless he has knowledge or be reasonably chargeable with knowledge that an act or omission involves peril or harm to another. Ford v. Robinson, 76 S.D. 457, 80 N.W.2d 471; Rikansrud v. City of Canton, 79 S.D. 592, 116 N.W.2d 234; Restatement of Torts §§ 289, 298; Annot., 100 A.L.R.2d 942.

Plaintiffs argue that in buying their home they relied on the skill and judgment of Midwestern; that at the time plaintiffs viewed the home and bought it, the structure, yard, street paving, gutter and sidewalks were complete; and that there was nothing in the appearance of the premises to suggest underground water which would infiltrate the basement. We may assume for the purpose of decision that defendant owed plaintiffs a duty of care in construction. It does not appear that defendant knew of the existence of the spring and the underground water. The record does not establish that there was anything in the appearance of the area that would have alerted a reasonably prudent person to the presence of the condition here involved.

The case of Sabella v. Wisler, 59 Cal.2d 21, 27 Cal.Rptr. 689, 377 P.2d 889, relied on by appellants is clearly distinguishable. The plaintiffs in that case purchased a home from defendant, a contractor and experienced builder of houses. Settling caused extensive damage to the dwelling. It was held that the purchasers had a right of action against the vendor-builder on the basis of concealment of a latent defect known to him and unknown to the purchasers. The defendant in that case having made excavations for foundation footings for the house was alerted to the existence of fill material and the insufficient compaction. The harm of building the house on the filled ground...