Wawak v. Stewart

• Decision Date: 02 February 1970
• Docket Number: No. 5--5016,5--5016
• Citation: 449 S.W.2d 922,247 Ark. 1093
• Parties: Billy J. WAWAK, Appellant, v. Robert O. STEWART et al., Appellees.
• Court: Arkansas Supreme Court

Page 922

449 S.W.2d 922

247 Ark. 1093

Billy J. WAWAK, Appellant, v. Robert O. STEWART et al., Appellees.

No. 5--5016.

Supreme Court of Arkansas.

Feb. 2, 1970.

Rehearing Denied March 9, 1970.

Tanner & Wallace, No. Little Rock, for appellant.

U. A. Gentry and Wright, Lindsey & Jennings, Little Rock, for appellees; Stubblefield & Matthews, Joe Purcell, Atty. Gen., Don Langston, Mike Wilson, Milton Lueken, Asst. Attys. Gen., Little Rock, as amicus curiae.

GEORGE ROSE SMITH, Justice.

The defendant-appellant Wawak, a house builder, bought a lot in North Little Rock in the course of his business, built a house on it, and sold it to the appellees Stewart for $28,500. The heating and air-conditioning ductwork had been embedded in the ground before the concrete-slab floor was poured above that ductwork. Some months after the Stewarts moved into the house a serious defect manifested itself, in that heavy rains caused water and particles of fill to seep into the ducts and thence through the floor vents into the interior of the house, with consequent damage that need not be described at the moment.

The Stewarts brought this action for damages. The great question in the case, overshadowing all other issues, is whether there is any implied warranty in a contract by which the builder-vendor of a new house sells it to its first purchaser. The trial court sustained the theory of implied warranty and awarded the Stewarts damages of $1,309.

The trial court was right. Twenty years ago one could hardly find any American decision recognizing the existence of an implied warranty in a routine sale of a new dwelling. Both the rapidity and the unanimity with which the courts have recently moved away from the harsh doctrine of caveat emptor in the sale of new houses are amazing, for the law has not traditionally progressed with such speed.

Yet there is nothing really surprising in the modern trend. The contrast between the rules of law applicable to the sale of personal property and those applicable to the sale of real property was so great as to be indefensible. One who bought a chattel as simple as a walking stick or a kitchen mop was entitled to get his money back if the article was not of merchantable quality. But the purchaser of a $50,000 home ordinarily had no remedy even if the foundation proved to be so defective that the structure collapsed into a heap of rubble.

Several law review articles, of which the earliest was published in 1952, forecast the new developments. Their titles suggest their contents: Dunham, Vendor's Obligation as to Fitness of Land For a Particular Purpose, 37 Minn.L.Rev. 108 (1952); Bearman, Caveat Emptor in Sales of Realty--Recent Assaults Upon the Rule, 14 Vanderbilt L.Rev. 541 (1961); Haskell, The Case For an Implied Warranty of Quality in Sales of Real Property, 53 Georgetown L. Jour. 633 (1965); Roberts, The Case of the Unwary Home Buyer: The Housing Merchant Did It, 52 Cornell L.Q. 835 (1967). In 1963 a new edition of Williston's Contracts added its weight to the movement, pointing out a practical advantage in the new point of view: 'It would be much better if this enlightened approach were generally adopted with respect to the sale of new houses for it would tend to discourage much of the sloppy work and jerry-building that has become perceptible over the years.' Williston, Contracts, § 926A (3d ed. 1963).

In the past decade six states have recognized an implied warranty--of inhabitability, sound workmanship, or proper construction--in the sale of new houses by vendors who also built the structures. Carpenter v. Donohoe, 154 Colo. 78, 388 P.2d 399 (1964); Bethlahmy v. Bechtel, 91 Idaho 55, 415 P.2d 698 (1966); Schipper v. Levitt & Sons, 44 N.J. 70, 207 A.2d 314 (1965); Waggoner v. Midwestern Dev. Co., S.D., 154 N.W.2d 803 (1967); Humber v. Morton, Texas, 426 S.W.2d 554, 25 A.L.R.3d 372 (1968); House v. Thornton, Wash., 457 P.2d 199 (1969). The near unanimity of the judges in those cases is noteworthy. Of the 36 justices who made up the six appellate courts, the only dissent noted was that of Justice Griffin in the Texas case, who dissented without opinion.

A few excerpts from those recent opinions will illustrate what seems certain to be the accepted rule of the future. In the Schipper case the New Jersey court had this to say:

The law should be based on current concepts of what is right and just and the judiciary should be alert to the neverending need for keeping its common law principles abreast of the times. Ancient distinctions which make no sense in today's society and tend to discredit the law should be readily rejected * * *. We consider that there are no meaningful distinctions between Levitt's (a largescale builder-seller) mass production and sale of homes and the mass production and sale of automobiles and that the pertinent overriding considerations are the same.

Caveat emptor developed when the buyer and seller were in an equal bargaining position and they could readily be expected to protect themselves in the deed. Buyers of mass produced development homes are not on an equal footing with the builder vendors and are no more able to protect themselves in the deed than are automobile purchasers in a position to protect themselves in the bill of sale. Levitt expresses the fear of 'uncertainty and chaos' if responsibility for defective construction is continued after the builder vendor's delivery of the deed and its loss of control of the premises, but we fail to see why this should be anticipated or why it should materialize any more than in the products liability field where there has been no such result.

A similar point of view was expressed in the House case by the Washington Supreme Court:

As between vendor and purchaser, the builder-vendors, even though exercising reasonable care to construct a sound building, had by far the better opportunity to examine the stability of the site and to determine the kind of foundation to install. Although hindsight, it is frequently said, is 20--20 and defendants used reasonable prudence in selecting the site and designing and constructing the building, their position throughout the process of selection, planning and construction was markedly superior to that of their first purchaser-occupant. To borrow an idea from equity, of the innocent parties who suffered, it was the builder-vendor who made the harm possible. If there is a comparative standard of innocence, as well as of culpability, the defendants who built and sold the house were less innocent and more culpable than the wholly innocent and unsuspecting buyer. Thus, the old rule of caveat emptor has little relevance to the sale of a brandnew house by a vendor-building to a first buyer for purposes of occupancy.

We apprehend it to be the rule that, when a vendor-builder sells a new house to its first intended occupant, he impliedly warrants that the foundations supporting it are firm and secure and that the house is structurally safe for the buyer's intended purpose of living in it. Current literature on the subject overwhelmingly supports this idea of an implied warranty of fitness in the sale of new houses.

The Supreme Court of Texas joined in the widespread criticism of the doctrine of caveat emptor in the Humber opinion:

If at one time in Texas the rule of caveat emptor had application to the sale of a new house by a vendor-builder, that time is now past. The decisions and legal writings herein referred to afford numerous examples and situations illustrating the harshness and injustice of the rule when applied to the sale of new houses by a builder-vendor, and we need not repeat them here. Obviously, the ordinary purchaser is not in a position to ascertain when there is a defect in a chimmey flue, or vent of a heating apparatus, or whether the plumbing work covered by a concrete slab foundation is faulty.

The caveat emptor rule as applied to new houses is an anachronism patently out of harmony with modern home buying practices. It does a disservice not only to the ordinary prudent purchaser but to the industry itself by lending encouragement to the unscrupulous, fly-by-night operator and purveyor of shoddy work.

In 1957 an intermediate New Jersey court refused to recognize implied warranties in the sale of realty. Levy v. C. Young Constr. Co., 46 N.J.Super. 293, 134 A.2d 717, affirmed on other grounds 26 N.J. 330, 139 A.2d 738 (1958). That case is no longer the law in New Jersey, owing to the New Jersey Supreme Court's decision in the Schipper case, but we should add that the intermediate court's arguments were fully answered by the Supreme Court of Idaho in Bethlahmy v. Bechtel, supra:

The reasoning of the majority in the New Jersey decision that chaotic uncertainty would pervade the entire real estate field if sellers were subject to liability for implied warranty of fitness, and that the rules of caveat emptor would work no harshness on purchasers of real estate, is fallacious, unrealistic and unjust when applied to the facts of the case before us. In the situation here the imposition of an implied warranty of fitness would work no more uncertainty or chaos than the warranties commonly applied in sales of personal property. Likewise, the statement by the New Jersey court that the plaintiffs had an opportunity to protect themselves by exacting warranties in the contract and reserving them in the deed, has no application to the facts of the case at bar. A buyer who has no knowledge, notice, or warning of defects, is in no position to exact specific warranties. Any written warranty demanded in such a case would necessarily be so general in terms as to be difficult to enforce. It would be like the verbal warranty by defendant in this case, that the house would be a 'quality home.'

As might be expected, we have been presented with the timeworn, threadbare argument that a court is legislating whenever it modifies common-law rules to achieve justice in the light of...