Wolford v. Freeman
| Decision Date | 22 December 1948 |
| Docket Number | 32500. |
| Citation | 35 N.W.2d 98,150 Neb. 537 |
| Parties | WOLFORD et ux. v. FREEMAN et ux. |
| Court | Nebraska Supreme Court |
Syllabus by the Court.
1. A principal who authorizes an agent to conduct a transaction for him, intending that the agent shall make representations to another in the course of it which the principal knows to be untrue, is liable for such misrepresentations as if he himself had made them intentionally; if, although he does not intend that the agent shall make misrepresentations, he should know that the agent will do so, the principal is liable as if he himself had made them negligently.
2. If, with the intent to deceive, either party to a contract of sale conceals or suppresses a material fact, which he is in good faith bound to disclose, this is evidence of and equivalent to a false representation, because the concealment or suppression is in effect a representation that what is disclosed is the whole truth.
3. As between vendor and purchaser, where material facts and information are equally accessible to both, and nothing is said or done which tends to impose on the purchaser or to mislead him, the failure of the vendor to disclose such facts does not amount to actionable fraud; but where such facts are known by the vendor and he knows them to be not within reach of the reasonably diligent attention, observation, and judgment of the purchaser, and they are such as would readily mislead the purchaser as to the true conditions of the property, the vendor is bound to disclose such facts.
4. A contract procured by the intentional suppression or concealment of material facts touching the very substance of it by one party, which facts, if they had been disclosed would have prevented the other party from entering into it may be rescinded by the party deceived, and the guilty party is not entitled to its enforcement.
5. Whenever suppressio veri or suggestio falsi occur, and more especially both together, they afford a sufficient ground to set aside any release or conveyance.
6. Where a contract of purchase of real estate provides that the purchaser acknowledges that he has been advised as to the settling of a structure on the premises purchased and 'is buying same as is,' the 'as is' phrase is limited to the knowledge of the settling of the structure and means that plaintiff purchased with knowledge of its then condition in that regard.
7. Where a contract of purchase of real estate provides that the purchaser acknowledges that he has been advised as to the settling of a structure on the premises purchased and 'is buying same as is,' the provision does not prevent fraudulent representations relied on by the buyer from invalidating the contract.
Votava McGroarty & Sklenicka, of Omaha, for appellants.
Pilcher & Haney and Donald S. Krause, all of Omaha, for appellees.
Heard before SIMMONS, C. J., PAINE, CARTER, MESSMORE, YEAGER, CHAPPELL, and WENKE, JJ.
In this action plaintiffs seek to rescind an executed contract for the purchase of a house and lot because of fraud, and to recover the purchaser price. The trial court decreed recission and entered judgment for the purchase price paid, less the rental value while held by plaintiffs. Defendants appeal. We affirm the judgment of the trial court.
The plaintiffs are husband and wife. Reference herein to the plaintiff will be to Roy E. Wolford, the husband. Plaintiff is a real-estate agent and had engaged in buying and selling property on his own account. The defendants are husband and wife. Reference herein to the defendant will be to Benjamin G. Freeman, the husband.
The cause is here for trial de novo. The record establishes these facts largely without serious dispute. The defendant and his son were builders on their own account. The defendant purchased the lot involved in the summer of 1944. At that time according to one witness there was a ravine or gully some 6 or 8 feet in depth through the back part of the lot. The defendant describes this as a hole 5 or 6 feet deep and 20 feet in width. The records of the city of Omaha show that there was a fill running from 16 to 20 feet deep in the street in front of the lot. The defendant's son examined this record and advised defendant of it. The son testified that he know the depression could extend into the lot and might be either shallower or deeper on the lot.
The defendant then had a basement dug on the lot to a depth of 5 1/2 feet. The defendant testified that this basement was dug in solid yellow clay. The contractor who made the excavation said that it was 'awful' black earth. A base was dug for the foundation of the house around the outer edge and for a supporting center wall 8 inches deep and 20 inches wide. At intervals of about 8 feet in the trench around the outer edge 8-inch diameter holes were made, 6 feet in depth. These holes were filled with concrete as were the trenches. Reinforcing steel was placed therein. The approved plans referred to later herein show a structure 26 feet by 32 feet in size. The invoice covers 330 linear feet of one-half-inch reinforcing bars. A foundation resting on 6-foot pilling was the result. The defendant and his son testified that they stopped digging the holes for the piling at the 6-foot depth because they though they had reached solid ground.
Defendant testified that he put the piling under the foundation for his own protection. As to the reason for the piling, defendant answered yes to these questions on cross-examination: 'Well, hen, the fact is that you were suspicious or felt that this house was being built on filled ground, isn't that correct?' and 'Well, I will ask you once more, if the contractor is suspicious, and has reason to believe that the house is not on solid ground, then to protect himself, why, he goes ahead and puts down piling, is that what you wish to say?'
On September 25, 1944, the defendant applied to the city of Omaha for a building permit and at the same time submitted plans for the structure which he proposed to build on the premises. He permit was granted and the plans approved the same day. It appears from the evidence that the basement had been excavated before the application and plans were submitted. Whether or not the foundation had been constructed at that time does not appear, save that the invoice for reinforcing steel is dated August 18, 1944, and includes a charge for delivery.
The building code of the city of Omaha provides in section 223:
The plans as to the foundation submitted by the defendant to the city did not indicate that the structure was to be built on filled earth, made no reference to piling that had been or would be placed under the foundation, and were such as only were approved for structures to be built on a footing of sound soil. There is no showing of revised plans being submitted later to the city.
On this foundation the defendant built a basement wall of concrete blocks and on those a one-story house of tile and brick veneer. The house was completed in 1945, and thereafter rented to a tenant.
By contract dated March 27, 1946, and by deed dated May 3, 1946, defendants through an agent sold the property for $9,500 to a Mr. Michael, who went into possession in May 1946. Shortly after the purchase cracks appeared in various parts of the house and later in the foundation. Mr. Michael made test borings and satisfied himself that the house had been built on filled ground. It is not shown that Mr. Michael told defendant of the tests made. However, Mr. Michael in September 1946, tendered the premises back to defendant and demanded a return of his purchase money. By contract dated December 2, 1946, rescission was had. The contract recited in a whereas provision that Mr. Michael demanded rescission because the house was settling and cracking, and was structurally unsound due to the fact that it was erected on filled ground without piling or other sufficient foundation, contrary to the building code. A provision typed into the original agreement and lined out recited that the defect was known to defendants and their agents when the contract was executed. Defendants signed the contract. On the witness stand defendant testified that the Michael transaction was rescinded so far as he knew because Mr. Michael wanted his money back. Mr. Michael vacated the premises in March 1947.
Defendant then had a construction company do some repair work on the cracks in the structure. Black mortar was used. Defendant had another workman remove the black mortar and replace it with a brownish mortar as nearly as possible the color of the original mortar in the structure. He also had the basement walls waterproofed 4 feet down on the outside, and cement structures were put around the foundation to direct water from the house. Defendant testified that he did this because he presumed the water was getting under the foundation and causing the settling. He also had the cracks on the inside of the house filled with plaster and the entire house redecorated.
In April 1947, defendant listed the house for sale through another agent at an asking price of $11,500. This agent advertised that house in the newspapers on April 20, 1947.
The evidence of the defendant is that he told the agent he wanted a prospective purchaser to have notice of the fact that the house had settled and of the cracks. There is no evidence that he told his new agent of the...
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