On appeal from the Superior Court of New Jersey, Law Division, Morris County.
Fritz, Botter and Ard. The opinion of the court was delivered by Ard, J.A.D.
[159 NJSuper Page 5] This appeal involves an action by the purchasers of a new residential home against the builder-vendor. The primary issue presented is whether, under the circumstances
of this case, the purchasers are entitled to bring such an action on the grounds of a breach of an implied warranty of fitness or habitability.
Defendants Mr. and Mrs. Mianecki (vendors), appeal from verdicts in favor of plaintiffs Mr. and Mrs. McDonald (purchasers), after a bifurcated trial on liability and damages. The damage verdict amounted to $32,000. The vendors had also filed third-party actions against several parties. All were dismissed by the judge before the jury began deliberations except as against Deran Sales, Inc. The jury returned a verdict of "no cause for action" in favor of Deran Sales, Inc. Thereafter the vendors' motion for judgment n.o.v. or a new trial was denied.
The parties entered into a contract whereby vendors agreed to construct a new residential dwelling for purchasers and to convey title to them for the sum of $44,500. The house was to be serviced by well water. There were no express warranties in the agreement concerning the potability of the well water.
In an effort to reduce costs the parties agreed to have purchasers paint the interior while the house was being constructed. While using the well water to clean brushes, purchasers noticed that the sinks became stained. The vendors explained that this was a new well and perhaps there were still impurities in the water.
The vendors were required to have the water tested before a certificate of occupancy would be issued. The test indicated a high iron content and a filter was recommended. A water conditioner was installed by Deran Sales, Inc., whose representative advised that the water conditioner would correct the iron condition. Following its installation, the water was again tested by Duncan Medical Laboratory and found to be drinkable. A certificate of occupancy was issued.
Title was closed on November 15, 1972. A deed with the usual guarantees of title was delivered. There is no allegation by the purchasers that the deed contained an express warranty of construction, fitness or habitability.
The purchasers moved into the house on November 17, 1972. Mrs. McDonald had already cleaned the sinks and removed the stains with a product (Rust Raze) purchased from vendors. However, once the water use was resumed, the stains reappeared and the fixtures were stained a "chocolaty brown." The purchasers also noticed a knocking and spouting in the pipes when the shower was used. Mr. Mianecki explained that this was probably due to air in the pipes which would subside in time. The knocking did not stop notwithstanding two attempts by a plumber to correct the condition. An attempt was also made to eliminate the staining problem by back-flushing the water conditioner, but to no avail. The drilling contractor was called back to check the system and correct the malfunctions. Again, no improvement was noticed.
Also, in November 1972 the purchasers' washing machine stopped working. Prior to the breakdown entire loads of wash were being permanently stained. In March 1973 the dishwasher went out of order.
It was then discovered that "air" was in the water conditioning system. A manually operated petcock valve was installed. This reduced the banging but the staining continued. The vendors constantly worked on the system, employing the plumber, water conditioning man and the well driller in an unsuccessful effort to discover the source of the problem.
While working on the initial problems another problem appeared. Fine sand was found in the water supply. The well pump was raised in an effort to cure this problem. Meanwhile, the purchasers were continuously working on the fixtures. Despite repetitive cleaning, the staining persisted.
From January 1973 the purchasers were constantly in touch with the vendors as the water problem became progressively worse. The water had an offensive odor. It fizzled like "Alka-Seltzer" when allowed to stand. In addition to the fixtures mentioned, the water stained the bathroom ceramic title and the stainless steel shower door. By March 1973 the purchasers and their family stopped using the water for personal use. Bottled water was purchased or water
was carried from the purchasers' neighbors. The water condition fluctuated from day to day.
During these several months the purchasers were in constant contact with Henry Deraney, owner of Deran Sales, Inc. (water conditioning company). The problem baffled Deraney, and he took considerable interest in it. He tested the water continually and, like the purchasers, noticed considerable fluctuations in the quality of the water.
In March 1973 the vendors opened the petcock valve on the water conditioner and lit a match to the escaping air on a hunch by Deraney who suspected the presence of gas. The "air" ignited. It was later shown to be methane gas. Another valve was put on the water conditioner to prevent the gas from building up in the system.
The purchasers contacted local and state agencies in an effort to relieve these problems. Among the agencies contacted were the Bureau of Potable Water, State Department of Health, the local sanitarian and the local board of health. No one was able to solve the problem.
Deraney was baffled by the gas in the system and testified it was unique in his experience. His laboratory ran a number of tests on the water. The tests were interpreted by John Wilford, who was the Chief of Potable Water, Department of Environmental Protection. He was an expert in the area of potable water and was familiar with the water standards of New Jersey. After his tests he concluded that the water did not meet state standards. He found the water contained concentrations of impurities which rendered it hazardous to the health of the consumer and corrosive to the water supply system. It was his opinion that the water was not fit to drink or use.
Wilford sent a letter to Mine Hill Township on June 20, 1973 in which he said that the purchasers' water was not potable for aesthetic as well as chemical reasons. The condition was considered an emergency. After receiving the letter the township sent the purchasers a letter on July 19, 1973 which in part advised them that their water did not meet
the state potable standards and suggested some possible solutions to the problem. There was a suggestion of a hookup between the purchasers' house and a private water company, but the expense was $7,200. This was rejected by the purchasers as too costly. Moreover, the feasibility of such a project was never fully developed during the trial.
Relations between the parties deteriorated as the water difficulties increased. By May 1973 Mrs. McDonald told Mr. Mianecki that they did not want anything to do with him and to stay away because they had lost confidence in him. After May 15, 1973 there was no direct contact with the vendors.
The vendors claimed that after the gas was discovered the purchasers failed to cooperate with them; thus, while they were trying to solve purchasers' problem they were told to stay off the property. The vendors opined that the only reason the water situation was not corrected was because of the breach in communications.
The purchasers moved out of the house in September 1975. They had filed suit much earlier, and the matter was tried before a jury on the question of liability in January 1976. The jury found the vendors liable by reason of a breach of implied warranty of habitability. The jury rejected counts based on breach of contract and fraud.
The trial on damages followed immediately. Mr. McDonald testified that he had paid $45,342.62 for the house, which was encumbered by a mortgage of $35,000. He denied that he flatly rejected an offer to tie into vendors' well and testified that the proposal to tie into the private water company was too expensive. It was undisputed that there was no city water in the area. There was some discussion at town meetings that to extend water through purchasers' street would cost at least $6,000 a home plus tie-in charges. However, nothing concrete was proposed by the municipal officials.
Mr. McDonald acknowledged that he never asked the vendors to take the house back and testified that they offered to buy the home back for $50,000 on January 14, 1976. He
further testified he construed this offer to be in full settlement of his damage claims and therefore it was rejected. On the second day of trial, January 20, 1976, the purchasers sold the house for $35,000. The new buyer agreed to pay 50% of the delinquent taxes and mortgage payments in default. In accepting this offer the McDonalds were not precluded from continuing their damage claims against the vendors. Their claims were for the diminution of the value of the real property, damages to the personal property, as well as compensation for the inconvenience and interference with their normal living. Typical of the testimony concerning damages was the assertion that dishes, clothes, silverware and bedding were stained and ruined. They further claimed the dishwasher and clothes washer became inoperable due to the impurities in the water.
A real estate expert testified that without any water problems and resulting damage, the house would be worth $57,600. With the water problems, the house was worth $36,847. The jury returned a verdict in favor of the purchasers in the amount of $32,000.
In their argument on appeal the vendors make the following contentions of error:
Point I The court erroneously charged the jury on implied
warranty of habitability.
Point II The court erroneously admitted into evidence the
Point III The court erred in the admission of ...