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Washington Supreme Court - 353 P.2d 672, 56 Wash. 2d 449
Tags: Contracts, Fraud, Fraudulent non-disclosure
tl;dr:
A couple bought a home with a substantial termite infestation which the sellers neglected to mention prior to the sale, despite their knowledge of it. The sellers were required to pay damages for their fraudulent non-disclosure.Video Summary
Case Summary
In Obde v. Schlemeyer (1960), the Washington Supreme Court dealt with a contract dispute over a termite-infested building. The buyers claimed that the sellers concealed the infestation and sued for damages, despite the contract not specifically addressing the issue.
The main question was whether the sellers had to reveal the infestation if the buyers didn't ask or if the contract didn't mention it. The court ruled that the sellers must disclose the problem since it was a significant, hidden defect that only they knew about and it couldn't be discovered with a routine inspection.
The ruling emphasized that the "buyer beware" principle doesn't apply in such instances, labeling the sellers' concealment as fraud. This case highlighted the importance of sellers acting honestly and disclosing known defects that could impact a buyer's decision, providing an exception to the "buyer beware" rule when there are hidden dangers. It shows that courts will protect buyers from sellers' fraudulent actions and allow them to seek damages even if they agree to the contract initially.
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The court found that the defendants had a duty to disclose the termite infestation to the plaintiffs when selling the apartment building, and their failure to do so constituted fraudulent concealment. The court upheld the trial court's decision to award damages to the plaintiffs, as the defendants did not take adequate steps to eradicate the termites. The court established that parties to a transaction have a duty to speak when justice, equity, and fair dealing demand it. The defendants' argument that the plaintiffs waived their right to recover damages was not accepted, as an action for fraud or deceit is independent of the contract. The plaintiffs were awarded damages of $3950.00. No error was found in the trial court's findings.
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