Ware v. Scott

• Citation: 220 Va. 317,257 S.E.2d 855
• Decision Date: 30 August 1979
• Docket Number: No. 771734,771734
• Parties: Charles C. WARE et al. v. Larry B. SCOTT et al. Record
• Court: Supreme Court of Virginia

Page 855

257 S.E.2d 855

220 Va. 317

Charles C. WARE et al. v. Larry B. SCOTT et al.

Record No. 771734.

Supreme Court of Virginia.

Aug. 30, 1979.

Sarah H. Ludwig, Roanoke (David B. Hart, Smeltzer & Hart, P. C., Roanoke, on briefs), for appellants.

Charles O. Cornelison, John B. Weld, Roanoke (Copenhaver, Ellett & Cornelison, Roanoke, on brief), for appellees.

Before I'ANSON, C. J., and CARRICO, HARRISON, COCHRAN, HARMAN, POFF and COMPTON, JJ.

POFF, Justice.

This is an appeal by the sellers of a house from a judgment awarding the buyers damages for fraudulent inducement. We decide whether the sellers are liable for damages resulting from their failure to disclose certain information, material to the contract of sale, acquired by them after the contract document was signed but before the sale was consummated.

We view the facts in the light most favorable to the buyers who prevailed below. Charles C. Ware and Iona A. Ware, his wife, listed their house for sale with a realtor. In early April 1973, Paige B. Scott, wife of Larry B. Scott, inspected the house and inquired whether "there had ever been any water problems". Mrs. Ware replied, "The only water we've had is some seepage around the chimney, but it has been repaired." She neglected to mention the fact that, in June 1972, storm water from an overflowing drainpipe at the rear of the lot had overturned a stone wall along one side of the property. Visiting the house later, Mr. Scott made a similar inquiry and was told by the Wares' daughter that he would have to talk with her parents. Advised by his wife that she had received satisfactory assurances on that score, Mr. Scott did not pursue the matter further. The parties signed a contract of sale April 23, 1973. Settlement, scheduled for May 30 but postponed at the Wares' request, was consummated July 1, and the Scotts took possession July 4.

When the Scotts moved in, there was "a ditch down the front yard" and the rock wall was damaged, but there was no visible damage to the house. The Scotts found a note signed by Mrs. Ware stating that there had been a "water problem" but that the wall and yard would be restored by Charles R. Simpson, Sr., the man who had constructed the house and drainage system. The damages were repaired, and the Scotts experienced no water problem until a year later.

On July 26, 1974, and again on August 23, 1974, the Scotts' house was flooded by water overflowing the drainpipe. They enlisted the aid of the fire department to pump out the water. The fire chief told the Scotts that he had been called to the same address for the same purpose a year earlier when water overflowing the drainpipe had damaged the stone wall and flooded the house.

Alleging fraudulent inducement, the Scotts filed a motion for judgment against the Wares claiming $4,784 for "damage to the structure and the furnishings of the residence". At trial, the evidence showed that the flood to which the fire chief referred had occurred May 23, 1973; that the Wares told their realtor what had happened; that the realtor, believing that Simpson would repair the damage, told the Wares "to forget about it"; that the Scotts agreed to postpone the closing because they had been told that the apartment into which the Wares were moving had not been completed; that the Scotts, who had not returned to the house before the closing and had found no damage to the house when they took possession, were unaware that the house had been flooded until they learned about it from the fire chief a year later; and that the Scotts would not have purchased the house had they known it was subject to flooding.

Sitting without a jury, the trial judge found that Mrs. Ware's statement to Mrs. Scott did not amount to an intentional misrepresentation but that the Wares' concealment of the May 23 flood and its consequences was fraudulent. Upon this finding the Scotts were awarded damages in the sum of $2,507.20.

The Wares argue that the May 23 flood "occurred After the contract for the sale of the house was signed; so the failure to reveal it could not possibly have been for the purpose of procuring the contract." It is true that, even though fraudulent, a misrepresentation made subsequent to, or a concealment of a fact arising after, Formation of a contract cannot constitute fraudulent inducement to enter into the contract; the misrepresentation or concealment must have been intended to induce and must, in fact, have induced the formation of the contract. Brame v. Guarantee Finance Company, 139 Va. 394, 408, 124 S.E. 477, 481 (1924); Max Meadows Land and Improvement Co. v. Brady, 92 Va. 71, 77, 22 S.E. 845, 847 (1895); Restatement (Second) of Torts § 525 (1977).

An action for fraudulent inducement need not, however, be limited to formation of the contract. Although formation was free of fraud, Performance of an executory contract may be fraudulently induced. Such is the case when...