Wagner Const. Co., Inc. v. Noonan

• Decision Date: 13 May 1980
• Docket Number: No. 3-180A23,3-180A23
• Citation: 403 N.E.2d 1144
• Parties: WAGNER CONSTRUCTION CO., INC., Defendant-Appellant, v. Charles NOONAN, Plaintiff-Appellee.
• Court: Indiana Appellate Court

Page 1144

403 N.E.2d 1144

WAGNER CONSTRUCTION CO., INC., Defendant-Appellant, v. Charles NOONAN, Plaintiff-Appellee.

No. 3-180A23.

Court of Appeals of Indiana, First District.

May 13, 1980.

William A. Elliott, La Porte, for defendant-appellant.

RATLIFF, Judge.

STATEMENT OF THE CASE

Wagner Construction Company, Inc. (Wagner) appeals from a small claims judgment in the amount of $632.66 entered against it by the La Porte County Court, La Porte Division, in favor of Charles Noonan, which judgment is predicated upon an alleged breach of implied warranty of habitability. We reverse.

FACTS

Wagner constructed a new dwelling house for Elmer and Anna Hill. In June, 1978, approximately five (5) years following the completion of the house, Noonan purchased the house from the Hills. Noonan commenced occupancy of the house on June 26, 1978. On July 4, 1978, a problem arose concerning the septic tank system, causing raw sewage to back into the basement and accumulate upon the basement floor. Noonan called a plumbing contractor (Geisler) who opened the septic tank lead-in piping and, noticing a bow or dip in the pipe, routed out the pipe to the septic tank. At that point, Geisler believed there was some sort of blockage at the septic tank level. However, as a result of the procedure employed by Geisler, the septic system was opened and was usable until a similar occurrence on January 13, 1979. Noonan again called Geisler, and the same procedure was repeated. A week later the problem recurred, and again Geisler was called to repeat the procedure of opening the sewer line to the septic tank. At this time, Geisler recommended digging to the septic tank in order to ascertain the exact nature of the difficulty, but because it was winter, such was not done. When the same thing happened again in April, excavation was performed, the septic tank opened, and it was discovered that the lead-in pipe extended some three (3) feet into the septic tank. Wagner admits that this was defective construction and such defect was the cause of the troubles experienced by Noonan. Noonan had no knowledge of any septic tank malfunctions when he purchased the house, his first awareness of such being the July 4, 1978, incident. Noonan testified that he had bills in excess of $400.00 for repairing the septic system plus other expenses. ¹

Noonan was the only witness in his behalf. There is no testimony by Noonan that he ever notified Wagner of the sewage backing up or requested him to remedy the matter. David Wagner, president of the corporation, testified that his first knowledge of Noonan's septic tank problem was derived from the filing of this action. Wagner did testify that in November 1978 Noonan called him and asked what could be done about changing some drainage pipes inside the house, but that he was not made aware of the nature of the problem. Further, Wagner testified that he was never contacted in regard to making any repair, that he was not requested to come to the house to inspect, and that he was never given an opportunity to make any repair.

ISSUES

1. Whether the extension of the Implied Warranty of Fitness For Habitation to a second purchaser in the absence of privity of contract is contrary to law.

2. Whether a breach of the Implied Warranty of Fitness For Habitation may be applied against the builder, when the builder was not notified of the problem by the second purchaser and consequently had no opportunity to cure or correct the problem.

3. Whether the judgment of the Court was for an excessive amount and whether said judgment was supported by sufficient evidence.

4. Whether a period of five years is an excessive time period to extend the Implied Warranty of Fitness For Habitation against the original builder.

5. Whether there exists sufficient evidence in the record to prove that the defect herein was serious enough to warrant application of the Implied Warranty of Habitability.

DECISION

Prior to our discussion of the issues presented, we note that this is an appeal from small claims court. Noonan, the plaintiff and appellee, appeared pro se in that proceeding and has not filed an appellee's brief in this court. Where an appellee fails to file a brief, if the appellant's brief presents a prima facie showing of reversible error, the judgment will be reversed. Costanzi v. Ryan, (1978) Ind.App., 370 N.E.2d 1333; Michels v. Young Metal Products, Inc., (1971) 148 Ind.App. 502, 267 N.E.2d 572; Mitchell v. Lawson, (1969) 145 Ind.App. 141, 250 N.E.2d 259.

Further, although our reversal is based upon the second issue raised on appeal, we believe the other issues, except the third, to bear such a significant relation to that issue and to be of sufficient importance to make appropriate discussion of all issues raised in this appeal other than the third issue. We will discuss the issues in the following order: one, four, five, two, and three, since we believe such order presents the issues in the most logical manner.

Issue One

Wagner contends that extension of the implied warranty of fitness for habitation to the second purchaser of a residence in the absence of privity of contract is contrary to law. Such argument comes too late, for our Supreme Court has held that the protection of the implied warranty of fitness for habitation extends to such subsequent purchaser in the case of latent defects which become manifest after the purchase and which are not discoverable by the subsequent purchaser's reasonable inspection. Barnes v. Mac Brown & Co., (1976) 264 Ind. 227, 342 N.E.2d 619.

In 1971, Indiana joined the growing number of jurisdictions discarding the rule of caveat emptor and adopting the doctrine of implied warranty of fitness for habitation as applied to the purchase of a new dwelling house from a builder-vendor. Theis v. Heuer, (1971) 149 Ind.App. 52, 270 N.E.2d 764, transfer granted and opinion adopted (1972) 264 Ind. 1, 280 N.E.2d 300. ² Although this implied warranty of fitness for habitation has been restricted to the first purchaser by many courts, Indiana became one of the first states to extend the warranty to subsequent purchasers in Barnes v. Mac Brown & Co., supra. There our Supreme Court, in a majority opinion by Justice Arterburn, likened the purchase of a home to a purchase of personal property, citing J. I. Case Co. v. Sandefur, (1964) 245 Ind. 213, 197 N.E.2d 519. The Court in Sandefur had held that a purchaser of used farm machinery was not precluded by absence of privity of contract from suing the manufacturer. In Barnes the Court said at 264 Ind. 229, 342 N.E.2d 620-621:

"The logic which compelled this change in the law of personal property is equally persuasive in the area of real property. Our society is an increasingly mobile one. Our technology is increasingly complex. The traditional requirement of privity between a builder-vendor and a purchaser is an outmoded one. The facts of Theis v. Heuer, supra, did not require us to extend a builder-vendor's implied warranty of fitness for habitation beyond the first purchaser. We do so now.

"As with our treatment of the sale of personal property, the manufacturer of a home must be accorded reasonable freedom and protection. This extension of liability is limited to latent defects, not discoverable by a subsequent purchaser's reasonable inspection, manifesting themselves after the purchase. The standard to be applied in determining whether or not there has been a breach of warranty is one of reasonableness in light of surrounding circumstances. The age of a home, its maintenance, the use to which it has been put, are but a few factors entering into this factual determination at trial."

And further at 264 Ind. 230, 342 N.E.2d 621, the Court said:

"Finally, we again observe that the defect in question must be latent or hidden. The burden is upon the claimant to show that the defect had its origin and cause in the original builder-seller."

In adopting the rule of extension of the implied warranty of fitness for habitation to the second purchaser, relying upon Barnes v. Mac Brown, supra, the Supreme Court of Wyoming in Moxley v. Laramie Builders, Inc., (1979) Wyo., 600 P.2d 733, said, at 735:

"In Tavares v. Horstman, supra, this court fully discussed the socio-economic background and reasoning behind abandonment of the doctrine of caveat emptor and its accouterments in the sale of a dwelling as out of harmony with more compassionate and understanding views. The mores of the day have changed and the ordinary home buyer is not in a position to discover hidden defects in a structure. A home buyer should be able to place reliance on the builder or developer who sells him a new home, the purchase of which in so many instances, is the largest single purchase a family makes in a lifetime. Courts will judicially protect the victims of shoddy workmanship. Consumer protection demands that those who buy homes are entitled to rely on the skill of the builder and that the house is constructed so as to be reasonably fit for its intended use. The average purchaser is without adequate knowledge or opportunity to make a meaningful inspection of the component parts of a residential structure.

"We can find no reason not to apply the basic concepts leading to establishment of the rules of Tavares to builders generally, and to a purchaser subsequent to the first owner. . . ."

And further at 735-736:

"There is a paucity of precedent on the liability of a builder to a second buyer or owner. However, Barnes v. Mac Brown & Co., Inc., 1976, 264 Ind. 227, 342 N.E.2d 619, furnishes a reasonably workable rule. A builder's implied warranty of fitness for habitation runs not only in favor of the first owner but extends also to subsequent purchasers. However, this implied warranty is limited to latent defects which are not discoverable by the subsequent purchasers by reasonable inspection and which become manifest only after the purchase. . . .

"The purpose of a warranty is to...