Bustamante v. ManaleBustamante v. Manale
Defendant appeals from a judgment which, by awarding $25,000 to plaintiff, reduced by $25,000 the price of a defective house defendant built and sold to plaintiff
Defendant‘s brief expressly envisions that his liability upon avoiding the sale be “limited to a restoration of the purchase price and a reimbursement of the reasonable expenses occasioned by the sale.” Defendant claims the limited liability under
Plaintiff neither appealed nor answered defendant‘s appeal. We therefore cannot modify the judgment to make it more favorable to plaintiff.
Thus, ignoring the possibility of reducing the $25,000 award to plaintiff, this appeal by defendant alone presents one basic question: may the seller obtain avoidance of a sale upon suit by the buyer for a reduction in price and for damages?
We conclude that this case is no exception to
Pursell v. Kelly, 1963, 244 La. 323, 152 So.2d 36, 39-40, n. 4, foresaw this case from defendant‘s view:
In our recent cases (see Lemonier v. Coco, 237 La. 760, 112 So.2d 436, citing McEachern v. Plauche Lumber & Construction Co., Inc., 220 La. 696, 57 So.2d 405 and Wilfamco, Inc. v. Interstate Electric Co., 221 La. 142, 58 So.2d 833) it has been concluded that, in actions for quanti minoris involving the sale of realty, the measure of recovery is the amount necessary to convert the unsound structure into a sound one. The reason given for this exception is that the usual rule—that the measure of recovery is the difference between the value of the thing sold in its defective condition and its value as warranted (see Iberia Cypress Co. Ltd. v. Von Schoeler, 121 La. 72, 46 So. 105 and other cases)—cannot be applied in cases of this sort inasmuch as the difference in value of real estate is not readily or easily ascertainable unless there has been an immediate resale of the property.
In the event it were held in the instant case that defendant was liable for a reduction in price, application of the afore-mentioned method of measuring recovery would appear to be highly inequitable for this would require defendant to pay the costs, amounting to almost $10,000, to repair a building valued at only $12,000 at the time of the sale. In instances where the costs of the repairs are far out of proportion with the price paid for the property, it would seem that a rescission of the sale would be the only just and proper remedy when the vendee has shown that he is able to place his vendor in substantially the same position as he was prior to the sale.
Our facts are that the defects in the house‘s pilings and slab are so serious that, as a practical matter, the house cannot economically be made sound. The only testimony on cost is from one contractor who
Evidently the trial judge did not wish to override the plaintiff‘s preference not to have the sale set aside. But he recognized the untenability of awarding $100,000 (or even $50,000) as a “price reduction” in a $50,500 sale. He therefore granted, in effect, a price reduction perhaps as large as he deemed legally permissible (a question not at issue on this appeal).
The trial judge‘s resolution of the problem was not ideal but we know no better. Inflation has priced comparable houses considerably higher in the intervening five years, and to return the price would not enable plaintiff to buy a comparable house today. A proper judgment would award the buyer the $50,500 price plus the mortgage interest paid—perhaps plus legal interest on both from judicial or earlier demand, Alexander v. Burroughs Corp., La.1978, 359 So.2d 607, on the theory that the use of this house was so inconvenient as not to be an equivalent for interest. Even if the $50,500 thus increased by double interest would amount to the price of a comparable house today, our buyer would have to pay off his advantageous 8.5% mortgage and thus would presumably have to borrow an equal amount (about $40,000) at today‘s rates of perhaps 15%. It is thus wholly understandable that the buyer might prefer to keep the defective house even though the reduction in price does not suffice to repair the defects. We refuse to order avoidance of the sale because the buyer cannot be restored to his pre-sale position as the action of redhibition intends.
Finally, we note defendant‘s argument that he is not in the position of a manufacturer (charged with knowledge of defects and thus liable for damages and attorney fees, see Alexander, supra) because he did not himself build the house but had another build it. We assume that one who had a house built for his own use by a contractor, but then sold it, should not be charged with the builder‘s imputed knowledge of its defects. But defendant has with some frequency built or had built houses to sell and thus does that as a business; he does not have a written or even fixed-price contract with his builder, whose payment depended upon the sale of the house.
We therefore find no difference between defendant‘s position and that of the builder who employs subcontractors but who is nevertheless charged with knowledge of the defect in the subcontractor‘s work, as in Schamens v. Crow, La.App. 2 Cir., 1976, 326 So.2d 621.
Affirmed.
GULOTTA, Judge, dissenting.
I dissent. Although I would affirm the damages and attorney‘s fees awarded by the trial court, I am of the opinion that plaintiff is further entitled to a rescission of the sale and a refund of his purchase price plus reasonable expenses occasioned by the sale.
The testimony is clear that the house was beyond repair because of redhibitory defects. In such instance, a good-faith seller must “restore the purchase price, and reimburse the reasonable expenses occasioned by the sale....” See
I further conclude plaintiff is entitled to monetary damages as well as rescission and restitution of the purchase price. The record supports the conclusion that Manale either knew or should have known of the vices of construction. Manale testified that he had the house constructed solely for the purpose of selling it. Although Manale was not a contractor, he relied on the expertise of one Warner who was to share in the profit and who also participated with him in other home building ventures. Manale, therefore, falls into the category of “vendor-builder” in the same position as a “manufacturer” bound by the article on redhibition.2 As a builder or manufacturer charged with the knowledge of the defects, Manale is responsible, in addition to rescission, for restitution of the purchase price, damages and attorney‘s fees.
Bustamante purchased this house in April, 1976 and is apparently living and residing in the residence under adverse conditions. Under the circumstances, considering the loss in escalated value of real property if it had been purchased without defects, together with plaintiff‘s inconvenience, I do not find a $25,000.00 monetary award an abuse of the trial court‘s discretion. I find no abuse further in the $5,000.00 award for attorney‘s fees. Although Bustamante seeks an increase above the $25,000.00 monetary award made to him by the trial judge, he has neither appealed nor answered the appeal and this court would be powerless to increase the damage award.
Having so concluded, I would affirm the monetary judgment in favor of plaintiff in the sum of $25,000.00, plus $5,000.00 in attorney‘s fees, but I would further order that the sale of the property located at 2404 Transcontinental Drive in Metairie, Louisiana, purchased by plaintiff on April 23, 1976 be rescinded and set aside and that defendant return to plaintiff the $50,500.00 purchase price.
For these reasons, I respectfully dissent.
Notes
“The seller, who knows the vice of the thing he sells and omits to declare it, besides the restitution of price and repayment of the expenses, including reasonable attorneys’ fees, is answerable to the buyer in damages.”