Title: Theis v. Heuer

State: indiana

Issuer: Indiana Supreme Court

Document:

280 N.E.2d 300 (1972)
E. Frederick THEIS, Jr. and Mary Lynne Theis, Appellants,
v.
James F. HEUER and Freda M. Heuer, Appellees.
No. 172S6.

Supreme Court of Indiana.
January 14, 1972.
David V. Miller, Evansville, for appellants.
James E. Marchand, Evansville, for appellees.
HUNTER, Acting Chief Justice.
Upon due consideration of the Appellees' "Petition for Transfer", all briefs in support thereof (including Amicus Curiae Brief of the Home Builders Association of Indiana, Inc.) and of all briefs in opposition thereto, the Supreme Court does now order said cause transferred to this Court and hereby adopts the opinion of the Appellate Court dated June 14, 1971 as its opinion, to be published in the Indiana Reports as adopted from the Appellate Court.
SHARP, Judge.
This action was commenced by the filing of a complaint for property damage by the plaintiffs-appellants, E. Frederick Theis, Jr. and Mary Lynne Theis, against the defendants-appellees, James F. Heuer and Freda M. Heuer. The complaint is in two paragraphs and generally alleges that on *301 the 6th of December, 1968, the plaintiffs purchased from the defendants a residential dwelling in the City of Evansville, Indiana. At the time of said purchase said dwelling was new and had not been previously inhabited. That said residential dwelling was constructed by the defendants for the purpose of sale and was thereafter sold by the defendants in a defective condition, which defective condition constituted an unreasonable danger to the health and property of the plaintiffs because certain sewer lines leading from said residence and the drain tile placed by the defendants about said residence during its construction were so laid and placed as to cause water and sewage to back up into said residential dwelling during periods when heavy rains occur and resulting in the collection of water and sewage on the first floor of said residential dwelling as high as three or four inches on occasion. Said complaint further alleges that said residential dwelling was sold to the plaintiffs and reached the plaintiffs without substantial change in said defective condition. Said complaint further alleges that at the time of the purchase of said residential dwelling neither of the plaintiffs was possessed of any knowledge of the aforesaid conditions and that the plaintiffs had no knowledge of any fact which would have put them on notice of said defective conditions and that said plaintiffs did not have any reasonable means of personally detecting said defective conditions by reason of the latent nature thereof.
The first paragraph of the plaintiffs' complaint embodies the concept of strict products liability and the theory of implied warranty. The second paragraph of the complaint seeks recovery on the basis of actionable negligence on the part of the defendants during the construction process.
The defendants responded to the two paragraphs of the complaint by filing a motion to dismiss on the basis that neither paragraph of said complaint stated a claim upon which relief could be granted. The trial court granted the defendants' motion to dismiss and entered judgment thereon and the plaintiffs advised the trial court that they did not intend to plead over or file an amended complaint. This appeal is from the granting of the defendants' motion to dismiss by the trial court.
We must first consider whether or not the plaintiffs' complaint in this case was sufficient to withstand a motion to dismiss under Trial Rule 12(B) (6) under the new Indiana Rules of Procedure which became effective January 1, 1970. Recently Division One of this Court had occasion to deal with this very question extensively in an opinion by Judge Lowdermilk in the case of Farm Bureau Insurance Company v. Clinton et al., Ind. App., 269 N.E.2d 780 (1971). No good purpose would be served by repeating or quoting extensively from that opinion but we believe that it is directly applicable to this case. In addition to the authorities cited in Farm Bureau Insurance Company v. Clinton the Federal authorities on the Federal Rule which is identical to our Trial Rule 12(B) (6) are well synthesized and summarized in Volume I A, Federal Practice and Procedure, Barron and Holtzoff (Wright Ed.), § 356, which states in pertinent part as follows:
Considering the complaint on its face with all inferences most favorable to the plaintiff the following salient facts stand out:
The plaintiffs purchased a new residence from the defendants; the defendants had constructed the residence; the residence had not been inhabited by any other person or persons prior to the purchase of the residence; said residence was constructed by the defendants for purposes of sale and that the same was sold in a defective condition, which defective condition impaired the intended use of said residence, namely, inhabitation; plaintiffs were not aware of such defective condition and were not possessed of any knowledge or notice by which they could have reasonably discovered the same; that by reason of such defective condition the plaintiffs have suffered damages in the form of expenses and damages and in the form of a decrease in the fair market value of said residence.
We believe that the amended complaint in this case states a claim for which relief might be granted and that the defendants were put on notice as to sufficient facts and the basis for recovery alleged by the plaintiffs.
Both parties have provided this court with excellent briefs and both parties presented very thoughtful and helpful oral arguments in this case.
The appellees rely very heavily upon the decision of Tudor v. Heugel, 132 Ind. App. 579, 178 N.E.2d 442 (1961). In Tudor the purchaser of the home brought suit against both the vendor-builder and the realtor who had sold the home for the vendor-builder for various defects including a defective drainage system. In Tudor the complaint admitted that the plaintiff had inspected the premises and discovered none of the defects but there was a further allegation that the plaintiff had relied on the skill and judgment of the realtor whom she knew well to be a licensed realtor. In that case the Appellate Court affirmed the judgment of the Vanderburgh Probate Court in sustaining a demurrer to the complaint. This court in 1961 in the Tudor case clearly held that the doctrine of caveat emptor applies to ordinary real estate transactions and that neither the seller nor the realtor could be held liable where there was no allegation that either made false representations concerning the new house being sold or express warranty pertaining to the same.
We might engage in some meaningless logic chopping in an attempt to distinguish this case from Tudor. However, we believe that in the context of the development of the law in the intervening decade since 1961 that Tudor represents bad law and should be overruled. Neither this court nor our Supreme Court are wedded to a wooden concept of stare decisis which causes adherence to past decisions when the reason for such decisions no longer exist. See Troue v. Marker, Ind., 252 N.E.2d 800 (1969), McLochlin v. Miller, 139 Ind. App. 443, 217 N.E.2d 50 (1966), Rouse v. Paidrick, 221 Ind. 517, 49 N.E.2d 528 (1943), Harris v. Y.M.C.A., 250 Ind. 491, 237 N.E.2d 242 (1968), Brinkman v. City of Indianapolis, 141 Ind. App. 662, 231 N.E.2d 169 (1968).
The rule of caveat emptor has been severely criticized. For example, in Humber *304 v. Morton, Tex., 426 S.W.2d 554 (1968), the Supreme Court of Texas at 426 S.W.2d 562 stated:
In Schipper v. Levitt & Sons, Inc., 44 N.J. 70, 207 A.2d 314 (1965), the Supreme Court of New Jersey at 207 A.2d 326 said:
In overruling the Tudor case we look to a modern trend of well-reasoned authorities. In Wawak v. Stewart, Ark., 449 S.W.2d 922 (1970), the Supreme Court of Arkansas stated:
The rule imposing an implied warranty for fitness for human habitation was first adopted in the United States by an Appellate Court in Ohio in Vanderschrier v. Aaron, 103 Ohio App. 340, 140 N.E.2d 819, 821 (1957), where a defective sewer line caused flooding in the basement of the house. In that case the purchase was accomplished during the construction process and the Ohio Court declared that "* * * [U]pon the sale of a house in the course of erection, there is an implied warranty that the house will be finished in a workmanlike manner."
One year later in Hoye v. Century Builders, 52 Wash. 2d 830, 329 P.2d 474 (1958), where the defendant represented itself to be an experienced builder of homes, the plaintiff's family moved into the residence after completion, and it was discovered that there was a discharge of raw sewage which condition stubbornly resisted correction, the Supreme Court of Washington held that the builder's contract to build a house for the plaintiff impliedly warranted that the product would be fit for human habitation.
In Carpenter v. Donohoe, 154 Colo. 78, 388 P.2d 399, 402 (1964), the Supreme Court of Colorado stated:
In Bethlahmy v. Bechtel, 91 Idaho 55, 415 P.2d 698 (1966), the Supreme Court of Idaho, in a discussion of both implied warranty and caveat emptor, stated:
In Rogers v. Scyphers, 251 S.C. 128, 161 S.E.2d 81, 83 (1968) the Supreme Court of South Carolina held that a party who is engaged in the business of building and selling new dwelling houses is liable to the purchasers for personal injuries as a result of defective construction caused by builder's negligence. In reaching the result the court commented:
See also Waggoner v. Midwestern Development, Inc., 83 S.D. 57, 154 N.W.2d 803 (1967); Rothberg v. Olenik, Vt., 262 A.2d 461 (1970); Weeks v. Slavick Builders, Inc., 24 Mich. App. 621, 180 N.W.2d 503 (1970)[1]; Weck v. A:M Sunrise Construction Co., 36 Ill. App.2d 383, 184 N.E.2d 728 (1962); Jones v. Gatewood, Okl., 381 P.2d 158 (1963); Mulhern v. Hederich, 163 Colo. 275, 430 P.2d 469 (1967); Glisan v. Smolenske, 153 Colo. 274, 387 P.2d 260 (1963).
Both the abolition of the concept of caveat emptor and the concept of implied warranty of fitness find support in current legal literature. See: Property  Implied Warranty of Fitness in the Sale of a New House, 71 W.Va.L.Rev. 87 (1968); The Case of the Unwary Home Buyer: The Housing Merchant Did It, 52 Corn.L.Q. 835 (1967); Caveat Emptor in Sales of Realty  *306 Recent Assaults Upon the Rule, 14 Vand.L. Rev. 541 (1961); The Case for An Implied Warranty of Quality in Sales of Real Property, 53 Geo.L.J. 633 (1965).
We therefore hold that Tudor v. Heugel, 132 Ind. App. 579, 178 N.E.2d 442 (1961), can no longer be considered the law of this State with reference to implied warranty of fitness in regard to the purchase of a new residence and the concept of caveat emptor as related thereto.
The first paragraph of the plaintiffs' complaint is sufficient to withstand a motion to dismiss in that it relies on the concept of implied warranty of fitness for inhabitation in the sale of a new house by the builder-vendor to the immediate purchaser.
In regard to the paragraph of the complaint based on negligence the appellants have directed us to Fisher v. Simon, 15 Wis.2d 207, 112 N.W.2d 705, 711 (1961), which is very close to the facts here. In it the Supreme Court of Wisconsin stated:
In this same context Dean Prosser has stated in The Law of Torts (3d ed. 1964) at page 693-695:
For other cases which are in accord with Fisher v. Simon, supra, see: Inman v. Binghamton Housing Authority, 3 N.Y.2d 137, 164 N.Y.S.2d 699, 143 N.E.2d 895, 59 A.L.R.2d 1072 (1957); Dow v. Holly Mfg. Co., 49 Cal. 2d 720, 321 P.2d 736 (1958); Totten v. Gruzen, 52 N.J. 202, 245 A.2d 1 (1968); Leigh v. Wadsworth, Okla., 361 P.2d 849 (1961); Talley v. Skelly Oil Co., 199 Kan. 767, 433 P.2d 425 (1967); and Rogers v. Scyphers, 251 S.C. 128, 161 S.E.2d 81 (1968).
We believe the second paragraph of plaintiffs' complaint is sufficient to withstand a motion to dismiss in that it relies on a negligence concept.
*307 Therefore, the action of the trial court in sustaining appellees-defendants' motion to dismiss was in error and should be and hereby is reversed. Reversed and remanded with instruction to overrule said motion to dismiss.
HOFFMAN, C.J., and STATON and WHITE, JJ., concur.
[1]  There is a parallel development in the law which is relevant but not necessary for our decision here. It is in the area of landlord-tenant. Modern case law is now finding an implied warranty of habitability by a landlord to his tenant. In Academy Spires, Inc. v. Brown, 111 N.J. Super. 477, 268 A.2d 556, 559 (1970), the Supreme Court of New Jersey said: "In a modern society one cannot be expected to live in a multi-storied apartment building without heat, hot water, garbage disposal or elevator service. Failure to supply such things is a breach of the implied covenant of habitability." See also, Javins v. First National Realty Corporation, 138 U.S.App.D.C. 369, 428 F.2d 1071 (1970); Marini v. Ireland, 56 N.J. 130, 265 A.2d 526 (1970), and Inman v. Binghamton Housing Authority, 3 N.Y.2d 137, 164 N.Y.S.2d 699, 143 N.E.2d 895 1957).