Campbell v. Booth ( 1975 )

AKIN, Justice

(dissenting).

I respectfully dissent. The trial judge ruled correctly in instructing a verdict for the defendants for the following reasons: (1) plaintiffs neither pled nor proved the proper measure of damages in a suit for alleged fraud under Tex.Bus. & Comm.Code Ann. § 27.01 (Vernon 1968); (2) there is no evidence of probative value on the vital issue of alleged “fraudulent concealment” under the doctrine of Joske v. Irvine, 91 Tex. 574, 44 S.W. 1059 (1898).

1. Damages

Plaintiffs’ trial amendment included the following pertinent pleading: “That subsequent to obtaining possession of the house Plaintiffs became aware of the malodorous nature and condition of the carpet throughout the house to their damage in the amount of $1,755, being the difference between the value of the house as represented and its actual value in the condition in which it was delivered to Plaintiff, in that the carpeting in said house had a fair market value in Dallas County, Texas as represented of $1,755 and its actual value in the condition at the time of the delivery was 0.” [Emphasis added.] To support this pleading, plaintiffs introduced evidence of the cost of replacing all of the carpeting in the house and then applied a depreciation factor to arrive at the market value of the carpet. This pleading and evidence fail to comply with Tex.Bus. & Comm.Code Ann. § 27.01(b) (Vernon 1968) which states:

The measure of actual damages is the difference between the value of the real estate ... as represented and its actual value in the condition in which it is delivered at the time of the contract.

The special issues would be the market value of the real estate as represented and the market value of the real estate as received. Admittedly, the contract of sale would be some evidence of the market value of the real estate as represented; however, no evidence was introduced as to the market value of the real estate as received with the damaged carpet. Thus plaintiffs have failed to plead and prove a prima facie case on damages which would require the trial judge to submit the case to the jury. If the trial judge submitted this case to the jury, then the jury would have been left to sheer speculation as to the market value of the house as received.

In Frey v. Martin, 469 S.W.2d 316 (Tex.Civ.App.—Dallas 1971, writ ref’d n. r. e.), a fraud case remarkably similar to the one before us, this court held that it was necessary to both plead and prove the market value of the property as represented and the market value of the property as received. In that case the alleged fraudulent representation was that the apartment complex contained one hundred sixty-six units, the price of which was $10,000 per unit. Frey, the plaintiff, contended and proved that there were only one hundred sixty-two units and that, therefore, he was entitled to be compensated for the shortage of four units at the agreed rate of $10,000 per unit or a total damage of $40,000. As here, Frey attempted to apply a measure of damages compatible with a suit for damages resulting from a breach of contract. In rejecting this argument, this court speaking through Justice Bateman said:

In his brief and oral argument Frey applies a measure of damages compatible with a suit for damages resulting from a breach of contract, but this is wholly inappropriate and not permissible in this case where the petition makes it quite clear that the action is ex delicto — a suit in tort for a wrong consisting of fraud inducing the contract, for which the law applies a different measure of damages. Id. at 317.

This court then reviewed the measure of damages recoverable by a defrauded purchaser of real estate under the common law, under the former statute Vernon’s Annotated Civil Statutes, art. 4004, and the current statute Tex.Bus. & Comm.Code Ann. § 27.-01(b) (Vernon 1968). This court concluded that since Frey had not alleged or offered proof under either the statutory or common law measure of damages, there was no basis in law on which the court could have rendered a judgment in his behalf. Likewise, here plaintiffs have neither pled nor proved the market value of the property as received in its alleged damaged condition. Instead, plaintiffs pled and proved the market value of the carpet as represented and as received. The difference in the value of the carpet as represented and the value of the carpet actually received is not the equivalent of proof of market value of the real estate received as a whole. George v. Hesse, 100 Tex. 44, 93 S.W. 107 (1906).

In arriving at the market value of real estate, improvements, such as carpet attached to the floor, may be considered only to the extent that such improvements enhance or contribute to the value of the real estate as a whole. State v. Wheeler, 390 S.W .2d 339 (Tex.Civ.App.—Beaumont 1965, writ ref’d n. r. e.); Lower Nueces River Water Supply District v. Sellers, 323 S.W.2d 324 (Tex.Civ.App.—San Antonio 1959, writ ref’d n. r. e.); State v. Carpenter, 126 Tex. 604, 89 S.W.2d 979 (1936). It is error to permit a party to evaluate each improvement separately and then add the separate value of the improvements to the value of the real estate without the improvements to arrive at the market value of the property as a whole. Likewise, it is error to permit plaintiffs to evaluate the carpet separately and then subtract the value of the carpet from the real estate as a whole to arrive at the market value of the real estate as received.

In Thrasher v. Walsh, 228 S.W. 961 (Tex.Civ.App.—San Antonio 1921, writ dism’d), plaintiff sued to recover damages alleged to have been caused by a defective roof on the house purchased by plaintiff, who was induced to make such purchase by the false representation that the roof had been repaired and made rainproof. There, plaintiff sought damages for the cost of repairing the roof and replacing damaged wallpaper. From a judgment in favor of plaintiff, the court of civil appeals reversed and remanded, stating that the measure of damages is the difference in the amount paid for the property and the value of the property as received, rather than simply the replacement value of the wallpaper and the amount required for repair of the roof, citing George v. Hesse, supra.

The majority opinion attempts to distinguish Frey and Thrasher on two bases: (1) that each involved an exchange of real estate rather than a sale of real estate, and (2) that each did not involve an instructed verdict. I cannot agree with this rationale. It is a distinction without a difference. Furthermore, the fact that this is an appeal from an instructed verdict does not relieve plaintiffs of the burden of pleading and proving the proper measure of damages.

2. Fraudulent Concealment

I agree with the majority that, in reviewing the record on appeal from an instructed verdict, the evidence is to be considered in the light most favorable to plaintiffs’ case, discarding contrary evidence and inferences. The Supreme Court, however, recognized at an early date in Joske v. Irvine, 91 Tex. 574, 44 S.W. 1059 (1898), that when the evidence offered to prove a vital fact is so weak as to do no more than create a mere surmise or suspicion of its existence, such evidence is in legal effect no evidence and will not support a verdict or judgment. Seideneck v. Cal. Bayreuther Associates, 451 S.W.2d 752 (Tex.1970); Western Telephone Corp. v. McCann, 128 Tex. 582, 99 S.W.2d 895 (1937); Texas & N.O. R.R. v. Warden, 125 Tex. 193, 78 S.W.2d 164 (1935); see Calvert, “No Evidence” and “Insufficient Evidence” Points of Error, 38 Tex.L. Rev. 361 (1960). The evidence of fraudulent concealment here is so weak as to do no more than create a mere surmise or suspicion of its existence and, therefore, falls within the doctrine of Joske v. Irvine, supra.

Plaintiffs allege that defendants fraudulently concealed the condition of the carpet from plaintiffs. With reference to fraudulent concealment, plaintiffs have suggested two theories: (a) that scented candles were burned during their three inspection tours of the house, thereby masking the odor of the alleged urine and (b) that the plaintiffs had used a powerful deodorant known as “Odors Away” plus Airwicks to conceal the alleged odor. Plaintiffs conclude from these inferences and the actual presence of the malodorous carpet that defendants fraudulently concealed the condition of the carpet from plaintiffs. I cannot agree.

(a) Scented Candles

There is no direct evidence that candles were burned during any inspection by plaintiffs. The following testimony of Mr. Campbell is the strongest testimony in this record with reference to burning candles.

Q. Do you recall whether or not the candles were burning when you saw the house?

A. On our first trip through or on our trip through.

Q. Where were these and what were they? Could you describe them for the court and jury, please, sir?

A. I only noticed one of them. My wife and the agent that was showing us the house observed it. [Emphasis added.]

Campbell testified further that he did not detect any odor prior to signing the contract, whether dog urine, scented candles or a deodorizer. Mrs. Campbell, who visited the house three times, confirms her husband’s testimony that at no time did she smell any odors. With reference to scented candles, Mrs. Campbell’s testimony is silent. The only other testimony with reference to the presence of scented candles was the testimony of one of the defendants, Mr. Booth. Booth testified that his real estate agent recommended, among other things, that they burn candles to give the house a “homey look.” He testified that there were approximately three candles in the den and one in the breakfast room. According to Booth, only the candle in the breakfast room was scented with a fragrance known as “vanilla” while the ones located in the den did not have a scent. He is not certain but states the candles in the den may have been burning when Mr. and Mrs. Campbell came back the second time to look at the house. He draws this conclusion because “it was the usual practice.” Other testimony came from a Mr. Durham, a witness who was engaged in professional carpet cleaning. Mr. Durham testified that scented candles could mask odors in the air. At no time, however, did he testify that scented candles would entirely kill the odor of canine urine; in fact, he states that nothing would eliminate such odor. Clearly, if the odor had been masked by scented candles, Mr. and Mrs. Campbell most assuredly would have smelled some odor — i. e. a vanilla smell or other scent used to mask the alleged canine urine odor.

(b) Other Deodorant

Plaintiffs’ second contention of fraudulent concealment concerns the use of deodorants. It is undisputed in the record that an Airwiek was used by the Booths in each bathroom and in the kitchen. They testified that this was the usual practice but could not say that there were Airwicks in use in the bathrooms or in the kitchen at the times relevant to this litigation. The Campbells’ only testimony was that they found several Airwicks in the bathroom and in the kitchen when they moved into the house and began cleaning. This was also the first time they smelled the strong canine urine odor.

With reference to the use of deodorizers the following testimony of Mr. Campbell was the only testimony that could possibly be construed as even a scintilla of evidence as to deodorants. This testimony of Mr. Campbell on cross-examination is as follows:

Q. Well, if that is true, how do you say that the Booths concealed the smell in the house if all of these experts and cleaning deodorizers and air conditioning and all of this didn’t help and it still smelled bad, how did the Booths conceal it?

[[Image here]]

A. There was [sic] basically three approaches that we feel were involved in it. Number one, there was Air-wick around all over the place.

Q. There was?

A. Yes, sir, little pull-up deals.

[[Image here]]

Q. All right. Now Mr. Campbell, where in the house are you able to testify that there was Airwiek?

A. I think probably the best way would be after they left we came in the house like there was some in the bathroom and some in the kitchen and there were candles that had been around. There was one candle.

Q. I was asking you about Airwick at this point. There was Airwick in the bathroom?

A. Yes.

Q. And Airwick in the kitchen?

A. That is correct.

Q. Is that all?

A. Just these pull-ups types.

Q. Were they pulled up?

A. Yes, sir.

Q. They didn’t get rid of the odor, did they?

A. I would have to say over a period of time they did not, but if you put enough in there apparently you do.

The thing that gave a lot of odor was a small jar that we discovered afterwards also, in the kitchen, just a little bitty jar about like this with a powerful deodorizer.

Q. Did you try that on the house?

A. Sure did.

Q. And it cleaned up like a whistle?

A. Just about like that. The man that brought that to our attention was the exterminator and he goes around houses and cleans.

[[Image here]]

Q. Do you recall my asking you questions . . . “That you don’t know that they used any deodorant?”

“Answer: I don’t know how. All I know is that it did not smell unduly when I came through so how they aired it out, I don’t know.

“Question: You don’t know of anything specifically that was done that you feel defrauded you other than what you think was done?

“Answer: It would have to be what I think yes, sir.”

Q. Do you recall those questions and answers?

A. Yes, I sure do.

[[Image here]]

Q. Your answer was, “I don’t know how. All I know is it did not smell unduly when I came through, so how they aired it out, I don’t know.” Is that still your testimony? Is that still correct?

A. I do know we had those other things around so that would have to be an assumption that that was the method.

Q. That is your assumption, right?

A. That is correct.

Q. Okay. What else? Was there anything else that you can think of that was used?

A. I think we mentioned the candles, these little Airwicks—

Q. Candles? Maybe we did mention candles. When you went through the house you testified on direct examination that you noticed a candle, is that correct?

A. Just in the general sense. I never thought about them. Everybody has got them.

[[Image here]]

Q. Do you know whether or not this candle was burning when you went therel

A. I didn’t pay that much attention. [Emphasis added.]

A deodorant known as “Odors Away” was left in the kitchen drawer by the Booths. The uncontroverted testimony by the Booths was that they had never used “Odors Away” except for a period of time some year and a half prior to the time in question when they used this deodorant in their child’s diaper pail. Mr. Durham, plaintiffs’ expert witness on carpet cleaning, however, testified that “Odors Away” was not sufficiently strong to totally eliminate or mask canine urine odor.

Considering this testimony in the light most favorable to plaintiffs, this evidence creates no more than a mere surmise or suspicion of the existence of any fraudulent concealment and is, therefore, of no legal effect. Hence, it will not support a verdict or judgment and falls within the ambit of the rule first announced in Joske v. Irvine, supra.

This is true because the burden of proof is upon plaintiffs to establish by competent evidence a prima facie case of fraudulent concealment. Such burden is not sustained by showing the damages may have resulted from the acts of "defendants. Plaintiffs must show that the vital fact here — fraudulent concealment — directly follows as a reasonable inference from the basic facts and circumstances proved. When it is necessary to aid the proven facts and circumstances by conjecture, plaintiffs have failed in their burden of proof. In Western Telephone Corp. v. McCann, supra, the Texas Supreme Court quoted with approval the following rule from the case of Byerly v. Consolidated Light, Power & Ice Co., 130 Mo.App. 593, 109 S.W. 1065, 1067 (1908):

We sanction the contention of plaintiff that the causal connection need not be shown by direct and positive evidence, but may be shown by other facts and circumstances, and that in the consideration of a demurrer to the evidence every reasonable inference should be indulged in favor of the plaintiff. But the rule is elemental that the burden remains with the plaintiff to the end of the case to establish by proof, not only the fact of the negligence averred, but also to show a direct connection between such negligence and the injury. Where the ultimate fact is not susceptible of direct proof, its existence must directly follow as a reasonable conclusion from its basic facts and circumstances, and it may be stated as an axiomatic rule that whenever court or jury are left by the evidence in a situation where, in order to find the ultimate fact alleged, they must piece out the facts adduced with conjecture or supposition, the plaintiff must be held to have failed in his proof. Where the evidence shows the injury might have been caused by the negligent act, but, in its aspect most favorable to plaintiff, is just as consistent with the inference that the injury might have been produced by another cause, to send the case to the jury would be to accord them the right to make an arbitrary choice between equally probable but unproved conclusions, and thus the verdict, if for the plaintiff, would be based not entirely on evidence, but in part on mere speculation and conjecture. This would mean a reversal of the rule imposing the burden of proof on the plaintiff, since the defendant, in order to prevent the jury from making him the victim of conjecture, would be forced to assume the burden of showing that his negligence did not produce the injury.

Here, fraudulent concealment is not the only reasonable inference to be drawn. For example, it is just as reasonable to conclude that the damage to the carpet was caused by the “steamatic” cleaning process used by the plaintiffs as it is to conclude that plaintiffs’ damage resulted from “fraudulent concealment” of canine urine. Indeed, it was some six weeks after defendants had vacated the house and approximately one week after the carpets had been steamati-eally cleaned that plaintiffs’ witness Mr. Cobb testified that the carpeting in two places was saturated with canine urine to the extent that pure canine urine could be wrung from the carpeting. It is undisputed, at least at the time the plaintiffs replaced the carpet, that the original carpet was damaged. I cannot accept plaintiffs’ argument that since the carpet smelled, it was the result of “fraudulent concealment” by defendants. Such conclusion does not necessarily follow from the facts proved.

This is especially true when the conclusion to be inferred is fraud. Our courts have long held that fraud is not to be presumed but must be proved by clear and convincing evidence. Hawkins v. Campbell, 226 S.W.2d 891 (Tex.Civ.App.—San Antonio 1950, writ ref’d n. r. e.); Hazle v. McDonald, 449 S.W.2d 343 (Tex.Civ.App.—Dallas 1969, no writ).

This court in Moore & Moore Drilling Co. v. White, 345 S.W.2d 550 (Tex.Civ.App.—Dallas 1961, writ ref’d n. r. e.), speaking through our Chief Justice, affirmed an instructed verdict for defendant in a fraud case for alleged failure to disclose material facts. In Moore & Moore Drilling Co., Chief Justice Williams set forth the elements of actionable fraud as follows:

Actionable fraud has certain fundamental characteristics; (1) there must be a misrepresentation as to material facts, either positive untrue statements, or concealment or failure to disclose facts within the knowledge of the parties sought to be charged, and as to which the law imposed upon such party a duty to disclose; (2) the complaining party must be shown to have relied upon the alleged misrepresentation to his damages; and (3) the complaining party must, himself, not have failed to exercise reasonable care to protect himself — in other words, in a “caveat emptor” situation he must not have shut his eyes and ears to matters equally open and available to him upon reasonable inquiry and investigation. Appellee correctly argues that disparaging inferences do not arise from lawful acts. And inferences cannot be made [the] basis for recovery, particularly when it is equally possible to infer a favorable motive, as an unfavorable one. [Emphasis added.] Id. at 555.

When Chief Justice Williams refers to not having shut eyes and ears to matters equally open and available upon reasonable inquiry I might respectfully add: nor close the nose to odor.

At the time the Campbells inspected the house, prior to the purchase contract being signed, they knew that the Booths had three dogs and two cats. They were aware that the cats and at least one of the dogs were kept in the house. The evidence here presents the classic caveat emptor situation. Not only did the Campbells know that the Booths had these dogs and cats but the contract of sale contained the following provisions:

This contract is made and entered into subject to the purchaser having five (5) working days from the date of acceptance of this contract in which to make inspections of the [hjeating, [a]ir [conditioning, visible [p]lumbing, and [ejlectrical [a]ppli-ances. Purchaser to pay for inspection; seller to pay for repairs if any. Seller agrees to deliver property free and clear of termites and termite damage. A letter from a licensed, bonded exterminating company attesting to this fact will suffice.

This clause, coupled with the fact that the Campbells were aware that the Booths had both dogs and eats and the fact that Mr. Campbell was in the real estate business, should have placed them on reasonable notice to inspect the carpeting for alleged animal urine damage. Plaintiffs were on notice of this possibility, had ample opportunity to inspect the carpet, and should have done so.

I conclude, therefore, that there was no evidence of probative value of any fraudulent concealment upon which a jury verdict could be based. The trial judge was, therefore, correct in withdrawing this case from the jury and instructing a verdict in favor of defendants.

For the reasons stated herein, I cannot concur in the majority opinion. The judgment of the trial court should be affirmed.