159 Ga. App. 262 | Ga. Ct. App. | 1981
Lead Opinion
The appellants, Mr. and Mrs. Holmes, appeal from the trial court’s grant of appellees’ motion to dismiss. Mr. and Mrs. Holmes bought a new house from appellees, who were the builders, and in
On appeal, the appellants contend the trial court erred as a matter of law in holding that the contractual duty of a vendor-builder to construct a dwelling in a skillful and workmanlike manner is merged into and does not survive the delivery of the deed. Plaintiffs-appellants argue that the doctrine of caveat emptor and the question of merger of prior agreements into á subsequent deed are dependent upon the intent of the parties( Helmer v. Hegidio, 133 Ga. App. 168, 169 (210 SE2d 332)), and that they have causes of action for breach of contract and negligence against the builder-vendor of a new house, citing Howell v. Ayers, 129 Ga. App. 899 (202 SE2d 189). Appellees principally rely upon Collier v. Sinkoe, 135 Ga. App. 732, 733 (218 SE2d 910) for the defense of caveat emptor, and cite Amos v. McDonald, 123 Ga. App. 509, 510 (181 SE2d 515) as authority for merger in that “[except for express warranties] agreements for the construction of a house to be placed on the property at the time of purchase are merged in the deed unless expressly exempted therefrom or unless they come under the collateral agreement theory . .. with certain exceptions relating to fraud and misrepresentation . . . .” Appellees thus argue that since appellants did not plead or show fraud or misrepresentation, they are without cause to sue.
The contract in this case is a form contract, dated June, 1978, between appellants and appellee Jack Worthey to buy and sell “ all that tract of land” of a certain description and address, with special stipulations added on whereby appellees were required to construct a house pursuant to certain specifications. Held:
1. We reverse.
In Welding Prod. v. Kuniansky, 125 Ga. App. 537, 538 (188 SE2d 278), this court said: “Under the law of this State, absent fraudulent concealment of known defects, a seller-builder who conveys the realty and improvements thereon after completion is not liable to the purchaser thereof for property damages allegedly resulting from negligent construction.[Cits.]” (Emphasis supplied.) In Amos v.
In most Georgia cases dealing with the subject of a builder-seller’s liability for defects in construction of a house, the extrapolation is made, implicitly or expressly, that since there is no implied warranty of fitness in the sale of a house, the doctrine of caveat emptor applies and therefore there can be no action for negligence. See for instance Dooley v. Berkner, 113 Ga. App. 162 (147 SE2d 685). Some Georgia cases have mixed the principles of merger and caveat emptor to defeat a homebuyer’s action based on defective construction (see Amos v. McDonald, supra); some have confused principles of negligence (tort) with principles of merger (contract) (see Reynolds v. Wilson, 121 Ga. App. 153, 156-157 (173 SE2d 256); some have hinged the question of merger to whether agreements were to be performed, in point of time, after delivery of the deed (see Cullens v. Woodruff, 137 Ga. App. 262 (223 SE2d 293); Reynolds v. Wilson, supra; and McKee v. Cartledge, 79 Ga. App. 629, 632 (54 SE2d 665)). And in Walton v. Petty, 107 Ga. App. 753 (131 SE2d 655), we went so far as to say that in the absence of express warranties of fitness Reserved in the deed, no action can be brought even for fraud in concealment of defects, since there are no implied warranties as to the condition of the house and the rule of caveat emptor applies.
From all this it can be seen that Georgia law in this field has not progressed beyond general common law concepts of the sale of real estate (land), i.e., is “not yet fully developed” (Pindar, Ga. Real Estate Law, § 18-23 (2d Ed.)) and that the question of a homebuyer’s remedy against the builder-seller of a defective house is weighted against the homebuyer unless he can clearly show fraud, or in rarer cases, an imminently dangerous condition (see Whiten v. Orr Const. Co., 109 Ga. App. 267, 269 (136 SE2d 136)), or that the plain intention of the parties was to create an express warranty of fitness or contractual duty which would in time of performance survive the delivery of the deed.
We have determined that this past development of law is insupportable and is not in harmony with public policy considerations of this state or with modern business realities. It is aptly pointed out in 25 ALR3d “Liability of Builder-Vendor or Other Vendor of New Dwelling for Loss, Injury, or Damage occasioned by Defective Condition Thereof,” § 2 (a), p. 390, that “the large scale, almost assembly line, production of houses on tracts owned and
An interesting statement in Georgia law dramatically illustrates that last point and the significance of it. In Reynolds v. Wilson, supra, p. 153, we said: “The sale of the dwelling, of necessity, arose out of the sale of realty on which the dwelling was constructed,” and proceeded to reason the case as if this were so. But the obvious reality of that case is that those suburban DeKalb County homebuyers had not primarily bought a piece of land, but had primarily bought a dwelling to which, of necessity, a piece of realty was attached, and from a seller who was obviously in the business of building and selling dwellings. We therefore must look askance at that case and all the others like it, for to the extent that it is compelled to distort the realities of the situation to justify its reasoning, it proves its own weakness. In his special concurrence in Amos v. McDonald, supra, pp. 511-512, Judge Deen of this court expressed distress that in cases of this type the doctrine of caveat emptor has been revived “in all its viciousness, disregarding the rulings of a number of jurisdictions . .. that where the defect is latent and the vendee could not reasonably have discovered it his action will not be barred because ‘the common law as a vehicle of justice ... possesses an infinite capacity to grow, to keep abreast of current requirements, and to be alert to changing needs and mores.’ [Cits. ] (‘The law should be based on current concepts of what is right and just and the judiciary should be alert to the never-ending need for keeping its common law principles abreast of the times.’ ” See also Wilhite v. Mays, 140 Ga. App. 816, 818 (232 SE2d 141).
I. Merger
The recent decision in P. B. R. Enterprises v. Perren, 243 Ga. 280 (253 SE2d 765) disposed of cases where prior oral promises are made to complete a house after its purchase and where oral express warranties are given, by holding that such oral promises and agreements, not having been expressly included in the sales contract, merge into and are extinguished by the deed. (Compare, however,
The notion that the doctrine of merger of contracts operates to defeat an action against the builder-seller for breach of contract (in failing to construct the dwelling in a fit and workmanlike manner, see Howell v. Ayers, supra), arose from the principle that prior stipulations of a contract to convey property are merged in the final and formal contract, which is the deed. Augusta Land Co. v. Augusta R. &c. Co., 140 Ga. 519, 522 (79 SE 138). It is of course good law to say that “when a deed is delivered and accepted as performance of a contract to convey, the contract is merged in the deed.” (Emphasis supplied.) Augusta Land Co., supra. The deed is the consummation of the agreement to sell the land, including what is on it. Augusta Land Co., supra; see Jordan v. Flynt, 240 Ga. 359, 361 (240 SE2d 858); Cullens v. Woodruff, supra, p. 262. But application of this principle of merger to the transactions between a homebuyer and a builder-seller, where the contract to sell clearly contains provisions for construction or improvements, raises serious problems. It is not enough to say that these provisions do not merge into the deed in cases where a warranty is provided which survives the deed in point of time (see Helmer v. Hegidio, supra; and see especially Postell v. Hearn, 104 Ga. App. 765, 766-768 (123 SE2d 13) and Knight v. Hedden, 112 Ga. App. 847, 850 (146 SE2d 556)), or where certain work is to be completed after delivery of title to the property ( Cullens v. Woodruff, supra; Reynolds v. Wilson, supra, p. 156; McKee v. Cartledge, supra). Such exceptions based purely on time of performance seem to us a superficial distinction which very often defeats the homebuyer’s case by effecting a merger into the deed in cases where the sales contract was obviously not just a contract to convey land and improveftients, but was a contract to convey and a contract to build. Stipulations and provisions for building and construction of a house, whether to be performed or completed before or after the transfer of the deed, are clearly not a mere agreement to convey.
The real merger-exception rule in the sale of realty is that
The rational basis for the merger rule is that where parties enter into a final contract all prior negotiations, understandings, and agreements “on the same subject”are merged into the final contract, and are accordingly extinguished. See 17 AmJur2d 952, Contracts, § 483. We therefore think that although it is always the case that the question of merger is one of intention of the parties ( Bryant v. Turner, 150 Ga. App. 65, 66 (256 SE2d 667)), where the antecedent contract or contracts clearly provide for agreements or stipulations to build or construct as welbas an agreement to convey, it is plain that the actual transfer of the deed, which is performance only of the agreement to convey does not extinguish any duties and obligations arising out of the agreement to build. In such a case where clearly the builder-seller Was to build as well as sell, the duties and obligations with regard to construction do not merge into the deed passing title, and the intention of the parties ought not to be in question.
In this case the defendants builder-sellers are sued on a count for breach of contract by virtue of their failure to install a suitable and workmanlike roof. The contract, which purports to be a contract for sale of a lot of land alone, contains written stipulations requiring defendants to construct a certain specified house thereon. While generally the question of intent to merge is for the jury, it is beyond argument that the agreement to build is collateral to the agreement to sell, that it imposes obligations on the seller other than those relating to title and possession, and that the mere sale or conveyance of the lot of land alone — or of the lot of land and an unfinished house — would
II. Caveat Emptor
An initial point for consideration is the misapprehension of some authorities that the principle of merger might in some way defeat the builder-seller’s liability under negligence law to use reasonable care and diligence in constructing the improvements (see, e.g., Reynolds v. Wilson, supra). The fact is that merger.is a contract law principle that antecedent agreements on the same subject matter are presumed to be included in the final contract. It is an apple to the orange of negligence law, and has no application to the duty of care which has its source in the law of torts and not in the law of contracts. Kuhr Bros. v. Spahos, 89 Ga. App. 885, 887-888 (81 SE2d 491), overruled on other grounds in Whiten v. Orr Const. Co., supra; Woodward v. Miller, 119 Ga. 618 (46 SE 847); MacPherson v. Buick Motor Co., 217 N. Y. 382 (111 NE 1050). The principle of merger surely may be a defense to a count for breach of contract, but certainly not to a count for negligence.
The issues we address in the instant case are not in conflict with the very recent case of P. B. R. Enterprises v. Perren, 158 Ga. App. 24 (279 SE2d 292), decided after remand and trial of the case pursuant to the Supreme Court’s decision in P. B. R. Enterprises v. Perren, 243 Ga. 280, supra. In P. B. R. the defendants may have known of certain defects in the house purchased and, although knowing the buyers were acting under a misapprehension of important facts, failed to enlighten the buyers. The Supreme Court held this may constitute an action for fraud by “passive concealment,” a third more apathetic form of fraud created as a further exception to caveat emptor by this
In this case no allegations of fraud are made and there is no evidence of it. We are confronted with an allegation in Count 2 by the appellant homebuyers that the appellees builder-seller were “negligent in the performance of contractual duty,” in that they did not construct the roof of the dwelling in a skillful, careful, diligent and workmanlike manner. It ought to be clear from our discussion above, however, that an allegation of failure to perform a contract in a skillful and workmanlike manner is an action under the contract, as a breach. This the plaintiff established in Count 1 of his complaint. We see Count 2 of the complaint, therefore, as an action in negligence, which might exist side by side with a count for breach of contract and for which privity is not required (see Woodward v. Miller, supra and see esp. MacPherson v. Buick Motor Co., supra). Moreover, the parties have argued it as a count for negligence, and the appellees succeeded in its dismissal in the trial court on grounds of caveat emptor, which, principle does not extinguish duties and obligations grounded in contracts.
We are not concerned here with an action for breach of implied warranty although the action for breach of implied warranty has been equated and confused with the action for negligence (see, e.g., Dooley v. Berkner, supra), in fact they are not at all the same thing. While courts have said there is no implied warranty in the physical condition of the house built, the action for negligence is provided by law and it “becomes particularly important when for any reason a warranty cannot be found.” Prosser, Law of Torts 648, Ch. 18, § 95 (3d Ed.)
An action for negligence exists in Georgia against manufacturers in products liability cases, against independent contractors by owners of real estate, and as between owners of land, independent contractors and injured third persons (see 25 ALR3d 391). We have
We agree with the analysis made at 25 ALR3d 391, “Defective Home-Vendor’s Liability,” § 2 (a): “[T]he decided trend of modern decisions is to make a distinction with respect to a vendor who is also the builder of a new structure, and that where the vendor is also the builder, he is today, by the weight of modern authority, held liable for damages ... occurring after the surrender of title and possession---Similarly, it has been said that the trend of recent judicial decisions is to invoke the doctrine of implied warranty of fitness in cases involving sale of new houses by the builder; that the old rule of caveat emptor does not satisfy the demands of justice in such cases; that the purchase of a home is not an everyday transaction for the average family, and in many instances is the most important transaction of a lifetime; and that to apply the rule of caveat emptor to an inexperienced buyer, and in favor of a builder who is daily engaged in the business of building and selling houses, is manifestly a denial of justice.
“Where a vendee buys a development house from an advertised model, he clearly relies on the skill of the developer and on its implied representation that the house will be erected in a reasonably workmanlike manner and will be reasonably fit for habitation, and since he has no architect or other professional adviser of his own, he has no real competency to inspect on his own, his actual examination is, in the nature of things, largely superficial, and his opportunity for obtaining meaningful protective changes in the conveyancing documents prepared by the builder-vendor is negligible.
“Obviously the ordinary purchaser is not in a position to ascertain when there is a defect in a chimney flue, or vent of a heating apparatus, or whether the plumbing work covered by a concrete slab foundation is faulty, so that the caveat emptor rule as applied to new houses is an anachronism out of harmony with modern home-buying practices, and does a disservice not only to the ordinary prudent
We conclude there is no reason that builders and sellers of dwellings should not be held liable for negligence in the proper case. Nor is there any logic in the anomalous results of Amos v. McDonald, supra, where it was more or less said that the doctrine of caveat emptor would have prevented recovery against McDonald if he had been a builder-vendor (and, in fact, it apparently had been alleged that he really was the builder-vendor), but that since McDonald was merely the builder he could be liable on a count of negligence. (We do of course approve of that case insofar as it holds the builder alone can be liable on a count of negligence, and we think that the builder’s liability for defective construction must not be diverted merely because the property was conveyed through another entity.) We overrule cases such as Cullens v. Woodruff, Little v. Merck, Amos v. McDonald, Reynolds v. Wilson, Dooley v. Berkner, Whiten v. Orr Const. Co., and Walton v. Petty, supra, where and to the extent that they have held there is no action for negligence against a builder-seller; and we overrule as no longer expressive of an appropriate legal principle the statement in Welding Prod. v. Kuniansky, supra, p. 538, that “absent fraudulent concealment of known defects, a seller-builder... is not liable to the purchaser... for property damages allegedly resulting from negligent construction.”
In one of the earliest Georgia cases in this field of law, where the plaintiff homebuyer had sued the seller-builder in negligence, it was held to be a correct principle of law that “if there is a concealed defect in the [house], known to the seller, or which by the exercise of ordinary prudence should have been known by him, and which an ordinarily prudent examination would have discovered, the seller was bound to reveal it to the purchaser.” (Emphasis supplied.) Davis v. Hopkins, 50 Ga. App. 654, 656 (179 SE 213). This we find to be the oldest law on the subject and, on reflection, the best. It was slighted and distorted in Whiten v. Orr Const. Co., supra, p. 269, where the court held that the latent defects, to be actionable, had to be actually known to the builder-seller (but failing to include the words “should have been known”) so as to constitute fraud, but we intend to restore the case of Davis v. Hopkins, to its original stature.
Consistent with the Supreme Court’s decision in P. B. R., 243 Ga. 280, supra at p. 281 that “subject to certain exceptions, the doctrine of caveat emptor applies to the sale of realty, there are no implied warranties as to the physical condition of the property sold, [and] the purchaser buys at his own risk...” (emphasis supplied), we
We cannot go so far as to say (as the California court did in Sabella v. Wisler, 377 P2d 889, 893) that the doctrine of caveat emptor has no application to negligence cases of this kind. See also 25 ALR3d 391, quoted infra. To the homebuyers, we must still say “caveat emptor” (see P. B. R. Enterprises, 243 Ga. 280, supra, at p. 281), except in cases of fraud and except where a dwelling is sold containing latent defects which the builder in the exercise of ordinary care knew or should have known and which the buyer could not have reasonably discovered in the exercise of ordinary care on his own part. It is only right in such cases that the builder should be liable in negligence. As to this it makes no difference whether the dwelling is built or renovated specifically for the buyer, or whether it is built for sale generally to the public or class of persons of whom the buyer is a member, since privity is not required to found an action for negligence. See Woodward v. Miller, supra; and see esp. Sabella v. Wisler, supra; MacPherson v. Buick Motor Co., supra.
The homebuyers in this case stated a cause of action for negligence against the builder-seller defendants; accordingly, the trial court erred in dismissing the complaint as a matter of law merely because the plaintiffs did not allege fraud.
Judgment reversed.
Concurrence Opinion
concurring specially.
I concur in the judgment of the majority of this court reversing the judgment of the trial court. However, I do so only because this appeal is from the trial court’s judgment granting a motion to dismiss for failure to state a claim upon which relief can be granted under Section 12 (b) (6) of the Civil Practice Act (Code Ann. § 81A-112 (b) (6)). Since the record contains nothing other than the pleadings, the motion was not converted into a motion for summary judgment under Section 56 of the CPA (Code Ann. § 81A-156). The trial court’s order on the motion indicated that it considered only the complaint and exhibits and thus the ruling of the trial court cannot even be viewed as the resolution of a motion for judgment on the pleadings under Section 12 (c) of the CPA (Code Ann. § 81A-112 (c)). “A motion to dismiss a complaint should not be granted for failure to state a claim unless the complaint shows with certainty that the plaintiff would not be entitled to relief under any state of facts that could be proved in support of the claim.” American Nat. Bank &c. Co. v. Davis, 241 Ga. 333 (245 SE2d 291) (1978). “It must be remembered that the objective of the CPA is to avoid technicalities and to require only a short and plain statement of the claim that will give the defendant fair notice of what the claim is and a general indication of the type of litigation involved; the discovery process bears the burden of filling in details.” Dillingham v. Doctors Clinic, 236 Ga. 302, 303 (223 SE2d 625) (1976). Thus, for a dismissal of complaint under Code Ann. § 81A-112 (b) to be proper, it must appear clearly and without doubt that the complaint shows that the pleader cannot recover under any state of facts that may be developed by the evidence. It is not enough that the complaint fails to demonstrate that the pleader is entitled to recover.
When the principles inherent in the notice pleading concept are applied to the complaint in this case, it is clear to me that it was error for the trial court to dismiss the complaint as failing to state a claim upon which relief can be granted. However, I can neither agree with nor endorse the broad and sweeping language of the majority opinion and I cannot concur in the wholesale overruling of so many cases forming a part of the evolution of substantive law in this area. While, as stated, I believe that the plaintiffs are still in court at this stage of the litigation, the majority opinion purports to evince as the law of
I am authorized to state that Presiding Judge McMurray and Judge Banke join in this special concurrence.