{ "id": 8560755, "name": "ROBERT J. GRIFFIN and wife, FRANCES C. GRIFFIN v. WHEELER-LEONARD & CO., INC.; LONNIE E. WHEELER; M. D. FLETCHER, JR. and wife, BONNIE T. FLETCHER, and M. D. FLETCHER CONSTRUCTION COMPANY, INC.", "name_abbreviation": "Griffin v. Wheeler-Leonard & Co.", "decision_date": "1976-06-17", "docket_number": "No. 71", "first_page": "185", "last_page": "203", "citations": [ { "type": "official", "cite": "290 N.C. 185" } ], "court": { "name_abbreviation": "N.C.", "id": 9292, "name": "Supreme Court of North Carolina" }, "jurisdiction": { "id": 5, "name_long": "North Carolina", "name": "N.C." }, "cites_to": [ { "cite": "206 S.E. 2d 313", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1974, "opinion_index": -1 }, { "cite": "22 N.C. App. 823", "category": "reporters:state", "reporter": "N.C. App.", "year": 1974, "opinion_index": -1 }, { "cite": "22 N.C. App. 328", "category": "reporters:state", "reporter": "N.C. App.", "year": 1974, "opinion_index": 0 }, { "cite": "209 S.E. 2d 776", "category": "reporters:state_regional", "reporter": "S.E.2d", "weight": 3, "year": 1974, "pin_cites": [ { "page": "783" }, { "page": "783" } ], "opinion_index": 0 }, { "cite": "286 N.C. 51", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8563350 ], "year": 1974, "opinion_index": 0, "case_paths": [ "/nc/286/0051-01" ] }, { "cite": "8 A.L.R. 3d 550", "category": "reporters:specialty", "reporter": "A.L.R. 3d", "year": 1966, "opinion_index": 0 }, { "cite": "116 S.E. 2d 454", "category": "reporters:state_regional", "reporter": "S.E.2d", "weight": 2, "year": 1960, "pin_cites": [ { "page": "458" } ], "opinion_index": 0 }, { "cite": "253 N.C. 214", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8623711 ], "year": 1960, "opinion_index": 0, "case_paths": [ "/nc/253/0214-01" ] }, { "cite": "126 S.E. 2d 135", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1962, "opinion_index": 0 }, { "cite": "257 N.C. 396", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8568064 ], "year": 1962, "opinion_index": 0, "case_paths": [ "/nc/257/0396-01" ] }, { "cite": "186 S.E. 2d 161", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1972, "opinion_index": 0 }, { "cite": "280 N.C. 385", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8572119 ], "year": 1972, "opinion_index": 0, "case_paths": [ "/nc/280/0385-01" ] }, { "cite": "179 S.E. 2d 396", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1971, "opinion_index": 0 }, { "cite": "278 N.C. 153", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8559876 ], "year": 1971, "opinion_index": 0, "case_paths": [ "/nc/278/0153-01" ] }, { "cite": "202 S.E. 2d 585", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1974, "opinion_index": 0 }, { "cite": "284 N.C. 723", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8564881 ], "year": 1974, "opinion_index": 0, "case_paths": [ "/nc/284/0723-01" ] }, { "cite": "39 S.E. 2d 375", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1946, "opinion_index": 0 }, { "cite": "226 N.C. 537", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8622145 ], "year": 1946, "opinion_index": 0, "case_paths": [ "/nc/226/0537-01" ] }, { "cite": "134 S.E. 2d 381", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1964, "opinion_index": 0 }, { "cite": "261 N.C. 256", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8572812 ], "year": 1964, "opinion_index": 0, "case_paths": [ "/nc/261/0256-01" ] }, { "cite": "206 S.E. 2d 313", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1974, "opinion_index": 0 } ], "analysis": { "cardinality": 1278, "char_count": 42871, "ocr_confidence": 0.62, "pagerank": { "raw": 5.481166226651911e-07, "percentile": 0.9458406648418498 }, "sha256": "1198aa488c4db198245d4253c07fcc54b02ac8418e7df0d41e95d747e02ab0d3", "simhash": "1:3b5a3de86fb5aa0e", "word_count": 7215 }, "last_updated": "2023-07-14T22:57:34.654413+00:00", "provenance": { "date_added": "2019-08-29", "source": "Harvard", "batch": "2018" }, "casebody": { "judges": [ "Justices Copeland and Exum did not participate in the consideration or decision of this case." ], "parties": [ "ROBERT J. GRIFFIN and wife, FRANCES C. GRIFFIN v. WHEELER-LEONARD & CO., INC.; LONNIE E. WHEELER; M. D. FLETCHER, JR. and wife, BONNIE T. FLETCHER, and M. D. FLETCHER CONSTRUCTION COMPANY, INC." ], "opinions": [ { "text": "SHARP, Chief Justice.\nPlaintiffs base their contention that the Court of Appeals erred in affirming the trial court\u2019s directed verdict for defendants Lonnie E. Wheeler, Wheeler-Leonard Co., Inc., M. D. Fletcher, Jr., and wife, Bonnie T. Fletcher upon the following grounds:\nFirst, the evidence tending to establish a breach of an express warranty by Wheeler and Wheeler-Leonard, Inc., was sufficient for submission to the jury.\nSecond, the evidence tending to show a fraudulent nondisclosure of material facts by Wheeler and Wheeler-Leonard, Inc., while acting as broker for Fletcher in negotiating the sale of residential property to plaintiffs was sufficient to take that issue to the jury.\n. Third, there was substantial evidence of a breach of implied warranty by defendants Fletcher and wife, entitling plaintiffs to go to the jury on that issue.\nThe foregoing contentions will be considered in the order listed.\nAccording to plaintiff Griffin\u2019s testimony, prior to the signing of the purchase contract, Wheeler made the following statements with reference to water in the crawl space and the ability and reputation of the contractor who built the house:\n\u201cI did make a comment to Mr. Wheeler about what I saw in the crawl space. When I got back into the house, I asked him about the water underneath and he just made the comment that it was probably left over from construction and it should dry up in a short time now that everything- was covered over and water couldn\u2019t get in there any more.\u201d\n\u201cI asked him questions on quality of the house and how these things were done in North Carolina. The warranties, guarantees, and things like that, and he responded in the affirmative to all of my questions.\u201d\nIn response to a question about the contractor who built the house, Wheeler told Griffin that \u201che was a good contractor and he built good homes and that they were substantial.\u201d\nWe need not consider whether the admission of some or all of the foregoing testimony violated the rule against the admission of parol evidence which contradicts the terms of a written instrument (the purchase contract) since it was admitted without objection by defendants. See 2 Stansbury\u2019s N. C. Evidence \u00a7 251, n. 2 (Brandis Rev. 1973).\nAlthough denying that prior to the signing of the purchase contract he had made any statement regarding the water problem in the crawl space, Wheeler testified that a few days after the signing of the contract and before the closing of the transaction, in a telephone conversation, Griffin had asked him about the water under the house, and he had replied, \u201cMr. Griffin, I don\u2019t know. It could be because it is coming from the rainy weather. I don\u2019t know, but let\u2019s let it dry up. Let it dry up and if it doesn\u2019t dry up, then call me back.\u201d\nAre these statements, if made by Wheeler, sufficient (1) to constitute an express warranty that the residence he was attempting to sell plaintiffs, when completed, would be constructed in a workmanlike manner and, specifically, that water in the crawl space underneath the house would create no problems and (2) to support recovery by plaintiffs against Wheeler, Wheeler-Leonard, Inc., or the Fletchers, if a breach is shown? (As to an agent\u2019s liability on contracts entered into on behalf of his principal see Howell v. Smith, 261 N.C. 256, 134 S.E. 2d 381 (1964); Walston v. Whitley & Co., 226 N.C. 537, 39 S.E. 2d 375 (1946).) Taking plaintiffs\u2019 evidence as true and considering it in the light most favorable to them (as we are required to do in considering the sufficiency of the evidence to withstand the motion for a directed verdict, Anderson v. Butler, 284 N.C. 723, 202 S.E. 2d 585 (1974); Kelly v. Har vester Co., 278 N.C. 153, 179 S.E. 2d 396 (1971)), we conclude that the answer is No.\nWheeler\u2019s statements, even assuming he was authorized to make them, were not sufficient to constitute an express warranty, on his own behalf, on behalf of Wheeler-Leonard, Inc., or on behalf of the Fletchers. All that Wheeler said with reference to water in the crawl space was that it was \u201cprobably\u201d left over from construction and that it \u201cshould\u201d dry up in a short time now that everything was covered over and water couldn\u2019t get in there any more. Thus, Wheeler did not expressly say, nor did his words reasonably imply, that he personally assumed a contractual obligation by warranting a dry crawl space.\nThe statement attributed to Wheeler, that the contractor who built the house \u201cwas a good contractor and he built good homes and that they were substantial,\u201d likewise falls far short of constituting an express warranty with respect to the house which plaintiffs purchased. This statement amounted to no more than a general testimonial that the contractor built good, substantial homes. Indeed, the statement did not specifically refer to the particular house which plaintiffs purchased. We would have to strain unduly to find in Wheeler\u2019s statement a contractual warranty with respect to plaintiffs\u2019 house. Cf. N. C. Gen. Stat. \u00a7 25-2-312 (2) which provides: \u201cIt is not necessary to the creation of an express warranty that the seller use formal words such as \u2018warrant\u2019 or \u2018guarantee\u2019 or that he had a specific intention to make a guaranty, but an affirmation merely of the value of the goods or a statement purporting to be merely the seller\u2019s opinion or commendation of the goods does not create a warranty.\u201d Compare Performance Motors, Inc. v. Allen, 280 N.C. 385, 186 S.E. 2d 161 (1972).\nWith reference to the alleged fraud of defendant Wheeler, it is well settled that where there is a duty to speak the concealment of a material fact is equivalent to fraudulent misrepresentation. Setzer v. Insurance Co., 257 N.C. 396, 126 S.E. 2d 135 (1962); Brooks v. Ervin Construction Co., 253 N.C. 214, 116 S.E. 2d 454 (1960). See also 4 Strong\u2019s N. C. Index 2d, Fraud \u00a7 3 (1968) and Annot., Liability of Vendor\u2019s Broker or Agent to Purchaser for Misrepresentation as to, or Nondisclosure of, Physical Defects of Property Sold, 8 A.L.R. 3d 550 (1966).\nPlaintiffs rely upon Brooks v. Ervin Construction Co., supra, a case in which the defendant-builder had sold the plaintiffs a house and lot. The defendant had constructed the house over a large hole which it had filled with debris and then covered over with clay. The defendant knew, or should have known, that a house built on \u201cdisturbed soil\u201d will settle and material damage result. In reversing a judgment of nonsuit, this Court said: \u201cSince this defect in the lot and the house built centered over it was not apparent to plaintiffs and not within the reach of their diligent attention and observation, defendant was under a duty to disclose this information to plaintiffs. Plaintiffs\u2019 evidence makes out a case of actionable fraud sufficient to carry the case to the jury.\u201d Id. at 219, 116 S.E. 2d at 458.\nThe Brooks case, however, does not require a reversal of the directed verdict in favor of Wheeler and Wheeler-Leonard, Inc. In this case defendant Wheeler did not build the Griffin house. There is no evidence whatever that Wheeler knew that the Griffin house had been constructed so that there would, or likely would, be a continuing water problem in the crawl space. The fact that Wheeler knew the condition of the soil in Bluestone Estates and knew of its poor porosity does not mean that he knew the house had, in fact, not been properly constructed to allow for that condition. Plaintiffs\u2019 own witness, Pickett, testified that the foundation of the house could have been constructed so that there would have been no continuing water problem beneath the house. Further, he outlined the measures which could still be taken to eliminate this condition and gave his estimate of their costs.\nHad plaintiff shown (1) that, at the time he signed the contract with plaintiffs, defendant Wheeler knew, or had reason to believe, that the builder had not properly waterproofed the foundation of the house, and (2) that defendant Wheeler had withheld this fact from plaintiffs, such nondisclosure would have come within the rule applied in the Brooks case. However, all the testimony bearing upon this point, that offered by plaintiffs as well as by defendants, tended to show that, at the time of his transactions with plaintiffs, Wheeler thought the water accumulation underneath the house was a mere incident of construction and, once dried out, there would be no further water accumulation under the house.\nWe hold that the evidence adduced did not entitle plaintiffs to have the issue of misrepresentation by Wheeler and Wheeler-Leonard, Inc., submitted to the jury. Whether the evidence in the record was sufficient to have supported an amendment of the complaint and submission of the issue of fraudulent nondisclosure as against defendant Fletcher is not before us. Plaintiffs neither sought to amend their complaint before trial to allege such a theory against Fletcher; nor do they presently contend that the issue was tried below by the implied consent of the parties as provided in N. C. Gen. Stat. \u00a7 1A-1, Rule 15(b).\nThe third question is whether the issue of defendants Fletchers\u2019 liability to plaintiffs for the alleged breach of implied warranty should have been submitted to the jury.\nThis question is answered by our decision in Hartley v. Ballou, 286 N.C. 51, 209 S.E. 2d 776 (1974), a case which was pending on appeal in this Court, but undecided, at the time the Court of Appeals rendered its decision in the instant case. Griffin v. Wheeler-Leonard & Co., 22 N.C. App. 328, 206 S.E. 2d 313 (1974).\nThe rule adopted by this Court as governing implied warranty in the sale of a dwelling by the builder-vendor was stated by Chief Justice Bobbitt as follows:\n\u201c[I]n every contract for the sale of a recently completed dwelling, and in every contract for the sale of a dwelling then under construction, the vendor, if he be in the business of building such dwellings, shall be held to impliedly warrant to the initial vendee that, at the time of the passing of the deed or the taking of possession by the initial vendee (whichever first occurs), the dwelling, together with all its fixtures, is sufficiently free from major structural defects, and is constructed in a workmanlike manner, so as to meet the standard of workmanlike quality then prevailing at the time and place of construction; and that this implied warranty in the contract of sale survives the passing of the deed or the taking of possession by the initial vendee.\u201d Id. at 62, 209 S.E. 2d at 783.\nThe implied warranty of the builder-vendor does not, of course, extend to defects of which the purchaser had actual notice or which are or should be visible to a reasonably prudent man upon an inspection of the dwelling. Where, however, there is a breach of the implied warranty, the vendee can maintain an action for damages for such breach \u201ceither (1) for the difference between the reasonable market value of the subject property as impliedly warranted and its reasonable market value in its actual condition, or (2) for the amount required to bring the subject property into compliance with the implied warranty.\u201d Id. at 63, 209 S.E. 2d at 783.\nAll the evidence tended to show that an extended period of wet weather and heavy rains had preceded plaintiffs\u2019 purchase of the property. As Griffin testified \u201c. . . it had been raining constantly, and the backyard also was one giant mud puddle . . . everything around here was saturated\u201d; so he \u201csaw nothing wrong\u201d with Wheeler\u2019s statement that the crawl space \u201cshould dry up\u201d shortly after the rain stopped. Under all the circumstances here disclosed we cannot say as a matter of law that plaintiffs could not have reasonably acted on this assumption.\nAlthough plaintiffs were unware of the admittedly poor porosity of the soil in the Bluestone Estates Subdivision, the condition of the soil was not the latent defect here involved but the absence of adequate construction measures to cope with that condition of the soil so as to prevent rainfall from puddling beneath the house. The condition of the foundation of the house and lack of sufficient waterproofing were defects which a jury could find would not have been discernible to a reasonably prudent person upon inspecting the property at the time of negotiating its purchase. Furthermore plaintiffs\u2019 evidence tended to show that at the time of trial two other defects \u2014 the failure of the top window sashes of several windows to stay up properly and the passage of water underneath the garage door whenever it rained \u201cfairly hard\u201d \u2014 had not been corrected. In addition there was evidence sufficient to go to the jury that a dwelling with these defects did not meet the standard of workmanlike construction then prevailing in Durham County. Thus, the jury could find the house was neither free from major structural defects nor constructed in a workmanlike manner and that therefore it did not meet the prevailing standard of workmanlike quality. Failure to meet this standard would constitute a breach of the implied warranty regardless of whether the house could be deemed \u201clivable.\u201d\nFinally, we consider the effect of the last paragraph in the purchase contract, executed on a standard contract form published by the North Carolina Association of Realtors. Plaintiffs signed this contract as \u201cbuyer,\u201d and the signature on the \u201cseller\u201d line is \u201cW. F. Construction Co., Inc., by Lonnie E. Wheeler, Pres.\u201d The last paragraph is as follows: \u201cBuyer hereby acknowledges that he has inspected the above described property, that no representations or inducements have been made other than those expressed herein, and that this contract contains the entire agreement between all parties hereto.\u201d Defendants contend that since the list of items on Attachment # 1 to the contract did not include water in the crawl space and in the garage or loose window sashes that they have no responsibility for these defects.\nThe implied warranty here under consideration, applicable to a dwelling sold by a builder, arises by operation of law, not by specific factual agreement between the parties. Without question, however, a builder-vendor and a purchaser could enter into a binding agreement that such implied warranty would not apply to their particular transaction.\nDoes the language in the last paragraph of the purchase contract constitute an agreement between defendant Fletcher and plaintiffs that no implied warranty is applicable to their transaction? The answer is clearly No.\nOn its face this last paragraph purports to exclude only those \u201crepresentations or inducements\u201d which are not set out in the written contract. The implied warranty of workmanlike quality of construction does not exist by reason of a representation or inducement made by the builder-vendor, nor does it exist by reason of a representation or inducement made by the builder\u2019s sales agent, the real estate broker. Instead, it exists by operation of law.\nThe words, \u201cthis contract contains the entire agreement between all parties hereto\u201d may be regarded as sufficient to exclude a matter which one of the parties might contend was in fact agreed to prior to the signing of the contract. However, standing alone, these words are not sufficient to exclude an implied warranty, which is applicable only by operation of law. Such an exclusion, if desired by the parties to a contract for the purchase of a residence, should be accomplished by clear, unambiguous language, reflecting the fact that the parties fully intended such result. Cf. N. C. Gen. Stat. \u00a7 25-2-316.\nFurther, it is relevant to note that defendant Fletcher (builder-vendor) was not one of the \u201cparties\u201d to the purchase contract. He did not sign the contract and nowhere in it is there any reference to him.\nIn summary, we hold that plaintiffs were entitled to go to the jury on the issue whether defendant M. D. Fletcher, Jr., breached the implied warranty of a builder-vendor. While defendant Bonnie T. Fletcher also signed the deed of conveyance to plaintiffs as a grantor and vendor of the property, the record contains no evidence that she was in the construction business or had any part in building the residence on Lot No. 9. Therefore, no issue arose as to her liability for any breach of the implied warranty of a builder-vendor.\nAs to defendants Lonnie E. Wheeler, Wheeler-Leonard & Co., Inc., and Bonnie T. Fletcher, the decision of the Court of Appeals is affirmed. As to defendant M. D. Fletcher, Jr., the judgment of the Court of Appeals is reversed. Accordingly, the cause is remanded to the Court of Appeals for entry of a judgment vacating the judgment of the trial court as to defendant M. D. Fletcher, Jr., and remanding the cause to the District Court for trial de novo as to him.\nAffirmed in part;\nReversed in part;\nRemanded.\nJustices Copeland and Exum did not participate in the consideration or decision of this case.", "type": "majority", "author": "SHARP, Chief Justice." } ], "attorneys": [ "Powe, Porter, Alphin & Whichard, P. A. by J. G. Billings for plaintiff appellants.", "Blackwell M. Brodgen for defendant appellees." ], "corrections": "", "head_matter": "ROBERT J. GRIFFIN and wife, FRANCES C. GRIFFIN v. WHEELER-LEONARD & CO., INC.; LONNIE E. WHEELER; M. D. FLETCHER, JR. and wife, BONNIE T. FLETCHER, and M. D. FLETCHER CONSTRUCTION COMPANY, INC.\nNo. 71\n(Filed 17 June 1976)\n1. Sales \u00a7 5; Vendor and Purchaser \u00a7 6\u2014 statements by real estate agent \u2014 no express warranty\nStatements by a real estate agent that water in the crawl space of a house he was attempting to sell plaintiffs was \u201cprobably\u201d left over from construction and that it \u201cshould\u201d dry up in a short time now that everything was covered over and water couldn\u2019t get in there anymore were insufficient to constitute an express warranty that water in the crawl space would cause no problems.\n2. Sales \u00a7 5; Vendor and Purchaser \u00a7 6\u2014 statement by real estate agent \u2014 no express warranty\nA statement by a real estate agent that the contractor who built a house the agent was attempting to sell plaintiffs \u201cwas a good contractor and he built good homes and that they were substantial\u201d did not constitute an express warranty that the house would be constructed in a workmanlike manner.\n3. Fraud \u00a7 3\u2014 concealment of material fact\nWhere there is a duty to speak, the concealment of a material fact is equivalent to fraudulent misrepresentation.\n4. Fraud \u00a7 12; Vendor and Purchaser \u00a7 6\u2014 cause of water accumulation \u2014 nondisclosure by real estate agent \u2014 insufficient evidence of fraud\nThe evidence did not entitle plaintiffs to have submitted to the jury an issue of fraudulent nondisclosure by defendant real estate agent of the cause of water accumulation in the crawl space under a house where there was no evidence that the agent knew that the house had been constructed so that there would, or likely would, be a continuing water problem in the crawl space, and all the evidence tended to show that, at the time of the transactions with plaintiffs, the agent thought the water accumulation was a mere incident of construction and, once dried out, there would be no further water accumulation under the house.\n5. Sales \u00a7 6; Vendor and Purchaser \u00a7 6\u2014 sale of house \u2014 implied warranty of builder-vendor\nIn every contract for the sale of a recently constructed dwelling or a dwelling then under construction, the vendor, if he be in the business of building such dwellings, shall be held impliedly to warrant to the initial vendee that, at the time of the passing of the deed or the taking of possession by the initial vendee (whichever first occurs), the dwelling, together with all its fixtures, is sufficiently free from major structural defects, and is constructed in a workmanlike manner, so as to meet the standard of workmanlike quality then prevailing at the time and place of construction.\n6. Sales \u00a7 6; Vendor and Purchaser \u00a7 6\u2014 sale of house \u2014 implied warranty \u2014 visible defects\nThe implied warranty of a builder-vendor does not extend to defects of which the purchaser had actual notice or which are or should be visible to a reasonably prudent man upon an inspection of the dwelling.\n7. Sales \u00a7 6; Vendor and Purchaser \u00a7 6 \u2014 sale of house \u2014 breach of implied warranty \u2014 damages\nWhere there is a breach of the implied warranty of a builder-vendor, the vendee can maintain an action for damages for such breach either (1) for the difference between the reasonable market value of the subject property as impliedly warranted and its reasonable market value in its actual condition, or (2) for the amount required to bring the subject property into compliance with the implied warranty.\n8. Sales \u00a7 17; Vendor and Purchaser \u00a7 6\u2014 breach of implied warranty by builder-vendor \u2014 sufficiency of evidence\nPlaintiffs\u2019 evidence was sufficient for the jury on the issue of breach of implied warranty by the builder-vendor of a house sold initially to plaintiffs where it tended to show: water accumulated in the crawl space under the house; an extended period of wet weather and heavy rains had preceded plaintiff\u2019s purchase of the house; plaintiffs relied on a statement by the real estate agent that the water was probably left over from construction and should dry up shortly after the rain stopped; the water accumulation was actually caused by inadequate waterproofing of the foundation to cope with water drainage caused by poor porosity of the soil where the house was built; the top window sashes of several windows would not stay up properly; water passed underneath the garage door whenever it rained fairly hard; and a dwelling with the aforesaid defects did not meet the standard of workmanlike construction then prevailing in the county.\n9. Sales \u00a7 6; Vendor and Purchaser \u00a7 6\u2014 contract of purchase \u2014 provision not exclusion of implied warranty\nA provision in a contract of purchase of a dwelling \u201cthat no representations or inducements have been made other than those expressed herein, and that this contract contains the entire agreement between all parties hereto\u201d did not constitute an agreement between the builder-vendor and the purchaser that no implied warranty was applicable to their transaction.\n10. Sales \u00a7 6; Vendor and Purchaser \u00a7 6\u2014 wife of builder-vendor \u2014 no liability for implied warranty\nWhile the wife of the builder-vendor of a dwelling signed the deed of conveyance to plaintiffs as a grantor and vendor of the property, no issue arose as to her liability for any breach of the implied warranty of a builder-vendor where the record contained no evidence that she was in the construction business or had any part in building the dwelling.\nJustices Copeland and Exum did not participate in the consideration or decision of this case.\nOn certiormri to review the decision of the Court of Appeals, reported in 22 N.C. App. 823, 206 S.E. 2d 313 (1974), which found no error in the judgment entered by Chief District Court Judge Moore on 22 October 1973, District Court of Durham County, docketed and argued as Case No. 72 at the Fall Term 1974.\nPlaintiffs instituted this action for damages allegedly sustained in connection with their purchase of a new residence, constructed on Lot 9, Block A, Section II of Bluestone Estates, a subdivision in Durham County containing approximately 99 lots.\nAt one time all the land in Bluestone Estates was owned by W. F. Construction Company, \u201ca land development corporation to hold land and to sell it for the purpose of constructing houses, new homes.\u201d The W. F. Construction Company is not a party to this suit. At all times pertinent to this litigation, defendant Lonnie E. Wheeler was the president of W. F. Construction Company and owned one-half of its stock. The other half was owned by defendant M. D. Fletcher, Jr. (Fletcher), who was also a corporate officer. On 13 November 1970 title to the lot on which the house in suit was built (Lot No. 9) was in Fletcher and wife, Bonnie T. Fletcher. Fletcher, who described himself as a \u201cbuilder of good quality homes\u201d and \u201cin the construction business on a full-time basis,\u201d built the house which he and his wife conveyed to plaintiffs by deed dated 18 December 1970. The money from that sale went to Fletcher and his wife.\nDefendant Wheeler-Leonard & Company, Inc. (Wheeler-Leonard, Inc.) is a \u201cbroker of insurance and real estate.\u201d It had no interest in the residence which defendants Fletcher sold plaintiffs. However, as the W. F. Construction Company\u2019s sales agent for all the new houses in Bluestone Estates, it negotiated the sale to plaintiffs through its employee, defendant Lonnie E. Wheeler (Wheeler). For his services Wheeler-Leonard, Inc. received a commission of 5% on the purchase price. Wheeler, a salaried employee, owned one-third of the stock of Wheeler-Leonard, Inc.\nPlaintiffs alleged that, after occupying the residence in suit, they discovered construction defects which rendered its value substantially less than the purchase price. They based their claim against Fletcher and wife (builder-vendors) upon a breach of implied warranty. As against Wheeler-Leonard, Inc. and Wheeler (brokers), their asserted claim rests upon express warranty and \u201cmisrepresentation.\u201d Plaintiffs alleged a .claim against \u201cM. D. Fletcher Construction Company, Inc.\u201d for negligence in the construction of the house on Lot No. 9. The record, however, suggests that there is no such corporation as \u201cM. D. Fletcher Construction Company, Inc.\u201d and that Fletcher built the residence in suit \u201cacting as a sole proprietorship.\u201d\nAt the close of plaintiffs\u2019 evidence, upon the motion of Mr. Blackwell M. Brogden, attorney for all the defendants, the court dismissed the action against \u201cM. D. Fletcher Construction Company, Inc.\u201d Plaintiffs did not appeal that ruling.\nPlaintiffs\u2019 evidence tended to show the following facts:\nIn November 1970 plaintiff Robert J. Griffin (Griffin) moved his family from Southern Valley, Nevada, to Durham County, North Carolina. In the course of seeking a residence in a development convenient to the Research Triangle Park (where he worked), Griffin met Wheeler about 12 November 1970. Wheeler then showed him the house in Bluestone Estates which he later purchased. The house was one-story with a crawl space underneath. Griffin testified:\n\u201cThe first time I was there . . . [w]e did look under the crawl space. Under the crawl space it was wet, very wet. There was standing water underneath the house. ... It had been very wet and rainy. They told me that it had rained constantly for almost the entire month. Mr. Wheeler wasn\u2019t with me when I looked at the crawl space. He was inside the house. You can\u2019t look into the crawl space of the house from the inside of the house. The property is sloped and the crawl space entrance is on the low side of the house in the back. I did make a comment to Mr. Wheeler about what I saw in the crawl space. When I got back into the house, I asked him about the water underneath and he just made the comment that it was probably left over from construction and that it should dry up in a short time now that everything was covered over and water couldn\u2019t get in there any more.\u201d\n\u201cHe said it was merely left over from construction and that it would probably dry up. I asked him questions on quality of the house and how these things were done in North Carolina. The warranties, guarantees, and things like that, and he responded in the affirmative to all of my questions.\u201d\n\u201cI asked him about the contractor who built the house and he said the contractor was a good contractor. There was a big sign there that said Fletcher Construction Company. ... He said he was a good contractor and he built good homes and that they were substantial.\u201d\nOn the following day plaintiffs obtained the key from Wheeler\u2019s office and made a thorough inspection of the house in question. Wheeler was not with them on this occasion. Thereafter they decided to buy it and, on 18 November 1970, they signed a contract to purchase the property for $29,400.00, provided they would be able to secure the necessary financing. Prior to signing the contract of purchase, plaintiffs discussed with Wheeler a list of uncompleted items which they had prepared on their second inspection of the premises. The house had not been shown to them as completed. \u201cThere were still some construction things to do. But the house was 99 per cent or more complete.\u201d The list of eighteen uncompleted items (none of which are now in issue) was incorporated in the contract as \u201cAttachment # 1\u201d in a paragraph headed \u201cOther conditions.\u201d\nPlaintiffs, Griffin and wife, signed the contract on the lines indicated for \u201cbuyer\u201d and, on the line designated \u201cseller,\u201d Wheeler signed \u201cW. F. Construction Company by Lonnie E. Wheeler, Pres.\u201d (Wheeler testified that he was then inadvertent to the fact that he had previously deeded Lot No. 9 to Fletcher and wife.) This contract of purchase, on the standard printed form used by Wheeler-Leonard, Inc., contained the following provision:\n\u201cBuyer hereby acknowledges that he has inspected the above described property, that no representations or inducements have been made other than those expressed herein, and that this contract contains the entire agreement between all parties hereto.\u201d\nGriffin further testified that, at the time of signing the contract in Wheeler\u2019s office:\n\u201cI mentioned the water under the house and I also mentioned the fact that there was no light in the upstairs. I don\u2019t know if that\u2019s on this list [Attachment # 1] or not, but there should be a light in the attic and there was not. We mentioned that and we mentioned clean up of the property where there had been construction. This list was supposed to be completed construction items. This was not objections we had to other things. When we mentioned the water to Mr. Wheeler again, he mentioned that it should dry up. He made no statements about the water that we had observed under the crawl space of the house other than it should dry up shortly as soon as the\u2014 it had been raining constantly and the back yard also was one giant mud puddle, but I couldn\u2019t see any problem with this, because it had been raining. I mean everything around here was saturated and so I saw nothing wrong with that.\u201d\nAbout two days after the purchase contract was signed, plaintiffs moved into the house under an agreement to pay $4.00 per day rent until the transaction was closed. The trans-i action was closed on 28 December 1970. The deed to plaintiffs, dated 18 December 1970, was signed by M. D. Fletcher, Jr., and wife, Bonnie T. Fletcher, as the owners in fee of the property. It was acknowledged and recorded on 28 December 1970.\nThereafter, for more than two years prior to the institution of this action on 3 August 1972, plaintiffs were in frequent communication with defendants Wheeler and Fletcher, and with Fletcher\u2019s construction foreman, Micky Ellis, with reference to remedying defects in the property, several of which were not on the list of items listed in Attachment # 1 to the purchase contract. However, at no time did plaintiffs ever have any contact with Mrs. Fletcher. For almost a year nothing was done. In consequence of an inspection by the county building inspector, Fletcher put vents in the attic, where the temperature was 123\u00b0 on a 78\u00b0 day, and drainage tile was placed around the foundation of the house.\nNotwithstanding, water puddled continuously in the crawl space under the house and constituted plaintiffs\u2019 number-one problem. In consequence of perpetual dampness beneath the house the humidity inside the house was always exceptionally high. Water condensed on the windows to the extent that it streamed off the windowsills. In April 1971 Griffin wrote Fletcher that \u201ca stream ran through a hole on the low side of the [foundation] wall the last couple of times it rained.\u201d Surfacing water and gas from septic tanks also created problems. Effluent from plaintiffs\u2019 septic tank and the one next door ran across plaintiffs\u2019 yard. Green alga grew in its wake. Construction debris remained in the backyard, which was still unland-scaped.\nAt the trial Griffin testified that all defects had then been corrected \u201cexcept the water problem underneath the house and the situation where water runs underneath the garage door every time it rains fairly hard, and the window sashes were still loose.\u201d (The upper sash would fall when the window was unlocked or the lower sash was raised.) Moisture remained in the crawl space despite some efforts by defendants in January 1972 and March 1973 to correct the condition.\nGriffin further testified that before moving to North Carolina, while living in Nevada, he had become a licensed real estate salesman and, working part-time, he had \u201csold maybe 15-20 houses.\u201d In Southern Nevada, which has a very dry climate, he had never seen houses constructed with crawl spaces similar to those in the Durham area. Further, he did not know about the poor porosity of the clay subsoil in the southern part of Durham County and the special water drainage problems in the Bluestone Estates area until after he had moved into the house in suit.\nGriffin\u2019s complaint to the Durham-Chapel Hill Builders\u2019 Association Ethics Committee on 20 November 1971 caused its chairman, Mr. Stewart Pickett, to talk with Wheeler and to \u201cride by the property.\u201d The testimony of Mr. Pickett, an experienced general contractor who had been building residences in the Durham-Chapel Hill area for the past fifteen years, tended to show:\nThe house had obviously not been completed in its final details at the time he rode by on 22 November 1971. In response to. a second written complaint from Griffin advising him that the defects in his residence had not been remedied in early 1973, Pickett examined the crawl space and observed that \u201cthere was a moisture problem.\u201d A couple of weeks before the trial he again inspected the property and found dampness in the crawl space although it had not rained for several weeks. Finding no evidence of a spring or other source of subterranean water, he concluded that surface water runoff drained into the crawl space through or under the foundation wall. He outlined the measures he would take to prevent water from getting under the house and estimated the necessary work would cost approximately $2,200.00. He further testified that moisture in the crawl spaces beneath a dwelling will cause the floors to swell, create condensation problems in the walls and in the attic, and' make the windows sweat so that water will run down on the windowsills. If not corrected, such moisture will eventually cause the floor system to mildew, a situation which brings in termites and other insects. If the moisture is severe enough it may eventually cause the roof line to buckle.\nPlaintiffs\u2019 witness Wynne, the Durham County Building Inspector during the years 1970, 1971, and 1972, testified that he had made the preliminary inspection of the footings and framing of the Griffin residence when it was under construction; that final inspections are not made until after the property is occupied. In response to complaints from Griffin, who was then occupying the dwelling, he visited the property and found \u201csome things that needed to be taken care of.\u201d In consequence he went to Fletcher\u2019s office and told him that \u201csome things that needed to be taken care of were vents on the outside of the eaves of the house, underneath that, and then they had dampness underneath the house in the crawl space.\u201d Fletcher told Wynne that he had already ordered the vents and that he was going to take steps to correct the moisture in the crawl space.\nInspector Wynne further testified that Section 17 of the North Carolina Uniform Residential Building Code (\u201cin full force and effect in Durham County in the year 1970\u201d) provides: \u201cWhere the finished grade under the building is lower than the outside finished grade, adequate provisions must be made for drainage.\u201d Wynne stated that the crawl space under plaintiffs\u2019 house was below the outside finished grade; that Section 17 of the Building Code also provides that if the building inspector deems it necessary to do so, foundation walls below adjacent ground levels shall be rendered waterproof or damp-proof as conditions require; and that he had not required Fletcher to take any particular precautions as a result of his inspection of the footings and the framing of the Griffin house.\nDefendant Fletcher, who had been in the full-time construction business for seven years, was called by plaintiffs as an adverse witness. He testified in substance as follows:\nHe first saw plaintiffs a few days after the purchase contract was signed. Before the transaction was closed, he went with them to the property in order to go over the list of items to be completed; that nothing was said about water in the crawl space; that he knew the porosity of the soil in the Blue-stone Estates area was very poor, but he saw no reason to discuss that with the Griffins. Specifically he said: \u201cYes, it is fair to say that the porosity of the soil in the Bluestone Estates area is such that it doesn\u2019t really absorb water as well as some other areas in Durham County. It is the worst area in Durham County. It\u2019s true it\u2019s the worst area for septic tanks in Durham County.\u201d\nWhen asked why he did not tell plaintiffs about the poor porosity Fletcher replied, \u201cI didn\u2019t feel this was my job to tell them it was the worst area in Durham County. . . . The septic tank . . . had been installed. How did I know it was going to work or wouldn\u2019t, or would give problems later? I didn\u2019t know. It was put in in accordance with Durham County specification. . . . This particular lot the percolation test did pass, and that was the reason I was permitted ... to build this house. . . . Yes, it is true that sometimes, even when the property passes a percolation test, you still have problems with the septic tank. Yes, I have had septic tank problems with a few houses in other areas of Bluestone Estates before I met the Griffins.\u201d\nAfter plaintiffs moved into the house Fletcher became aware that water was accumulating under their house. He testified: \u201cI do admit, in part, that after the Griffins moved into the house there was water coming through the foundation wall and into the crawl space. I\u2019m not admitting that water was coming through the foundation wall. I don\u2019t know where it was coming from. I admit there was dampness and water under the house; I admit that. Yes, after a heavy rain, standing water. Well, I didn\u2019t measure it for depth. I don\u2019t know how deep it was. It was standing in puddles.\u201d In substance, Fletcher agreed with Mr. Pickett\u2019s itemization of the damages which moisture in the crawl space beneath a house could cause.\nFletcher testified that on two different occasions he had work done to correct the drainage problem. This work included putting a drain below the footings and waterproofing the foundation walls as he would have done a full basement. Finally, in January or February 1973, he dug a ditch around the house deeper than the footings and installed a \u201cfrench drain\u201d of pipe and rock, which was supposed to take the water to the back of the lot.\nFletcher said that he had built most of the houses located in the Bluestone Estates subdivision on a speculative basis, and defendant Wheeler, through his real estate company, Wheeler-Leonard, Inc., was the real estate agent who sold the houses on commission. Fletcher had built houses to VA, FHA or conventional loan specifications, depending on how he thought the house would be financed upon sale. He further stated that he had been taken off the approved builders\u2019 list for FHA and VA financing. He acknowledged familiarity with the North Carolina Uniform Building Code, specifically those provisions relating to waterproofing and damp-proofing of crawl space areas.\nDefendant Wheeler, a licensed real estate broker, testifying for himself, gave testimony which tended to show:\nWhen he accompanied plaintiffs on their first inspection visit to the property there were no discussions about water under the house or anything like that, and he made no warranties of any kind. When the purchase contract was signed on 13 November 1970 he made no representations, inducements or warranties, and there was no mention of water in the crawl space. There was only a discussion of the several items listed on Attachment # 1 to the contract form. He further testified: \u201cNo, at no time was I an agent of M. D. Fletcher, Jr. Pwas not his agent in the construction business. I acted in no capacity other than as officer of this corporation.\u201d\nDefendant Wheeler further testified that it is a fairly usual occurrence to get water in a crawl space during the construction of a house, indicating that could have been taken as the explanation of the presence of water there when plaintiffs first inspected the house. He specifically denied making any statement to plaintiffs about the problem of water in the crawl space until after they had moved into the house. He said that, about ten days before the transaction was closed, Griffin called him on the telephone and asked \u201cwhat the water was under there\u201d and he told him, \u201c \u2018Mr. Griffin, I don\u2019t know. It could be because it is coming from the rainy weather. I don\u2019t know, but let\u2019s let it dry up. Let it dry up and if it doesn\u2019t dry up, then call me back.\u2019 He did in January.\u201d\nWheeler also conceded that he knew the Bluestone Estates area was one of the worst in Durham \u201cwith respect to the porosity of the soil,\u201d and that he had not told plaintiffs \u201cthey were looking at a house in an area of The county that had known septic tank problems and known problems with respect to the porosity of the soil.\u201d Ordinarily, Wheeler testified, upon getting construction loans for speculative houses built by Fletcher in Bluestone Estates, title to the lot remained in the W. F. Construction Company, the developer of the subdivision. However, through some inadvertence in handling the construction loan papers on the Griffin house property, the lot had been deeded to Fletcher and his wife. They were, therefore, the record owners at the time of the sale to plaintiffs.\nAt the close of all the evidence, plaintiffs moved under G.S. 1A-1, Rule 15(b) to amend their complaint to allege (1) that they had entered into a contract with W. F. Construction Co., Inc., to purchase the house which was deeded to them by Fletcher and wife, and (2) that the house was built by M. D. Fletcher, Jr., acting as a sole proprietorship instead of by M. D. Fletcher Construction Company. The motion to amend was denied. Motions by defendants Wheeler-Leonard & Co., Inc., Lonnie E. Wheeler, M. D. Fletcher, Jr., and wife, Bonnie T. Fletcher, for directed verdicts were allowed.\nUpon plaintiffs\u2019 appeal, the Court of Appeals sustained the directed verdicts for defendants on the ground that, having failed to establish that the house was unfit for habitation, plaintiffs had failed to establish their right to recover. We allowed certiorari.\nPowe, Porter, Alphin & Whichard, P. A. by J. G. Billings for plaintiff appellants.\nBlackwell M. Brodgen for defendant appellees." }, "file_name": "0185-01", "first_page_order": 217, "last_page_order": 235 }