Since Bardwell, however, Pennsylvania courts have distinguished actions for misrepresentation from contract actions and have allowed testimony regarding fraud despite the parole evidence rule. Rempel v. Nationwide Insurance Co., supra. Also see Sunseri v. RKO-Stanley Warner Theatres, Inc., 248 Pa.Super. 111, 374 A.2d 1342 (1977) and the cases cited therein. As already noted, Plaintiffs have brought an action for misrepresentation and seek the more limited damages that attend fraud actions rather than a remedy based on the contract. Therefore, the testimony of Plaintiffs is admissible.
The report of R. M. Douthett of Douthett's Appraisal Service is the only evidence before the Court of the value of the property described in the deed to the Millers at the time of the conveyance to them. Douthett estimates that the value of the property at that time was $ 90,000. The Millers paid the Bares $ 95,000, and, therefore, may recover $ 5,000 on their action for misrepresentation of the boundaries.
In contrast to his representations concerning the boundaries of his property, Edward Bare's statement that there were no major problems with the property, made to the Millers by way of Tupper and Pohlig, was a deliberate attempt to mislead the Millers as to the condition of the house. In Borelli v. Barthel, 205 Pa.Super. 442, 211 A.2d 11 (1965), the purchasers of a house alleged that the vendors told them the house "was in A-1 condition and needed no repairs." While inspecting the premises, the purchasers observed only three floor posts in the basement supporting the upper floors and were told that the plaster board which covered the floor joists was installed only to improve the appearance of the ceiling. When they returned to the house after settling for the property and receiving the deed, the purchasers discovered six floor posts in the basement instead of three, and after removing the plaster board from the ceiling, they found that the floor joists were infested with termites. The Superior Court held that these allegations, if proven, would support a cause of action for deceit because the misrepresentations concerning the condition of the premises were knowingly made, material, and justifiably relied on by the purchasers to their detriment. The court also held that the doctrine of caveat emptor was not applicable since the truth or falseness of the vendor's statement could not be readily determined by the buyers. See also, DeJoseph v. Zambelli, 392 Pa. 24, 139 A.2d 644 (1958) (rescission); Lake v. Thompson, 366 Pa. 352, 77 A.2d 364 (1951) (rescission).
The situation before us is analogous to the Borelli case. Bare himself characterized Donald Miller as a cautious man and he realized clearly that the water problem in the recreation room might affect the Millers' decision on buying the property. When asked by Don Pohlig whether there was anything major wrong with the house, Edward Bare replied that there were holes in some of the screens and a leaky faucet. Regardless of how minor Edward Bare thought the water problem in the recreation room was, he could not have regarded it as being less important than the screens or faucets. Nor could the Millers have discovered the problem on their own, since the weather was dry when they were inspecting the house and the damage from prior flooding was concealed by the work bench. Therefore, we conclude that Edward Bare deliberately concealed the water problem and misrepresented the condition of the house in order to induce the Millers to buy the property.
Victims of fraud may elect to recover damages for deceit as compensation for the loss they have suffered. Associated Hardware Supply Co. v. Big Wheel Distributing Co., 355 F.2d 114 (3rd Cir. 1966); Tilghman v. Dollenberg, supra. In this case, the Millers seek damages in the amount necessary to repair the drainage system in order to prevent further flooding. The testimony of Defendants' expert witness as to the cost of doing so was highly speculative. At the time the Millers discovered the water problem, J. E. Krajovic, Vice President of Mariani & Richards, Inc., made an inspection and provided them with an estimate that repair of the downspouts and waterproofing of the house would cost $ 3,110.00. A detailed breakdown of the estimate, based on notes Krajovic made in 1976, was provided to the Court. Plaintiffs' Exhibit 13. We find that this is a reasonable basis for recovery, and, therefore, will award damages to the Millers in that amount in connection with this intentional misrepresentation. No damages will be allowed, however, on the gas line claim since the Bares were not aware of its defective condition themselves until after the closing had taken place.
Defendants' counsel argued that regardless of any liability which Edward Bare may incur for his misrepresentations, his wife, Margaret, cannot be held liable. Under Pennsylvania law, there is a presumption with respect to property held by the entireties that either spouse has the power to act for both without specific authority, so long as the benefits of such action inure to both. J. R. Christ Construction Co. v. Olevsky, 426 Pa. 343, 348, 232 A.2d 196, 199 (1967). The effect, then, is that Edward Bare was acting as a principal and as his wife's agent in selling the Sample Road property. Margaret Bare's liability, therefore, is to be determined under traditional notions of agency law. The general rule is that a principal is liable for his agent's misrepresentations made within the scope of his authority even though amounting to fraud and deceit. Pennsylvania, however, has not followed this rule. Proof of scienter on the part of the principal at the time of the misrepresentation is an essential element under Pennsylvania law to hold the principal on fraud and deceit practiced by his agent. Littler v. Dunbar, 166 Pa.Super. 271, 70 A.2d 365, Rev'd on other grounds 365 Pa. 277, 74 A.2d 650 (1950); Shane v. Hoffmann, 227 Pa.Super. 176, 324 A.2d 532 (1974).
"A principal, is not, therefore liable for his agent's false representations where he has not authorized nor participated in them nor knowingly permitted the agent to make them."
Shane v. Hoffmann, supra, at 537.
The facts in this case, however, clearly distinguish it from the Littler decision in which the Pennsylvania rule was enunciated. In Littler, a sales agent showed the property to the plaintiff buyer without the actual knowledge of or notice to the defendant seller. Margaret Bare, on the other hand, was present when her husband indicated there were no major problems with the house. Mrs. Bare was well aware of the drainage problem hidden by the work bench, and thus, by her silence, "participated" in the fraud perpetrated by her husband.
Margaret Bare's liability for her husband's misrepresentation of the boundary line may be less apparent but has nonetheless been established. Her testimony was that she had thought she and her husband owned all the land represented by Edward Bare. Surely, she was aware that her husband was pointing out these boundaries to prospective buyers. Under the facts then, Margaret Bare "authorized", "participated in", or "knowingly permitted" Edward Bare's representations as to the boundary lines. Margaret Bare did not know that these statements were false representations. In fact, this Court has found that neither Edward nor Margaret Bare were aware of the actual boundary lines. However, Mrs. Bare was a landowner, and the teaching of LaCourse v. Kiesel, supra, is that landowners are bound to know basic facts concerning their property. This Court therefore holds that there is sufficient proof of scienter on Mrs. Bare's part to hold her for the fraud and deceit of her husband, E. Edward Bare.
Thus, both E. Edward Bare and Margaret Bare will be liable for the damages awarded hereinabove on the claims of misrepresentation of the boundaries and the condition of the house relative to the water problem.
The question of punitive damages and counsel fees, which were claimed in the Complaint, is not before the Court, since neither was claimed in the Plaintiff's Pretrial Statement, Supplemental Pretrial Statement, nor at the Pretrial Conference.
AND NOW, to-wit, this 12th day of October, 1978, after non-jury trial and due consideration of the evidence presented, the arguments and briefs of counsel, and for the reasons set forth in the Opinion filed herewith,
IT IS ORDERED, ADJUDGED AND DECREED that judgment be and the same is hereby entered in favor of the Plaintiffs, Donald K. and Barbara L. Miller, his wife, and against the Defendants, E. Edward Bare and Margaret E. Bare, his wife, in the sum of $ 8,110.00.
© 1992-2004 VersusLaw Inc.