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Johnson v. Healy - 176 Conn. 97, 405 A.2d 54 (1978)

Rule:

If a man makes a statement in regard to a matter upon which his hearer may reasonably suppose he has the means of information, and the statement is made as part of a business transaction, or to induce action from which the speaker expects to gain an advantage, he should be held liable for the consequences of reliance upon his misstatement.

Facts:

This case arises out of the sale of a new one-family house by its builder, the defendant John J. Healy, to the plaintiff, Ronald K. Johnson. Johnson bought the house, located in Naugatuck, in 1965, for $17,000. Between 1968 and 1971, the house settled in such a way as to cause major displacements in various foundation walls, and substantial damage to the sewer lines. In 1971, Johnson instituted this law suit alleging misrepresentation and negligence on the part of Healy. The court below found for Johnson on the claims of misrepresentation, for Healy on the claims of negligence, and assessed damages. The trial court rendered judgment for Johnson, and both parties have appealed

Issue:

Was there an innocent misrepresentation when Healy made a statement, which could reasonably have been heard by Johnson, that there was nothing wrong with the house?

Answer:

Yes

Conclusion:

The court held that liability for innocent misrepresentation was entirely appropriate. Although Healy had built no houses other than the one for Johnson, that information was not disclosed to Johnson until the sale had been concluded. The court found that Healy's statement that there was nothing wrong with the house could reasonably have been heard by Johnson as an assertion that the builder-vendor had sufficient factual information to justify his general opinion about the quality of the house. The court recognized the extension of warranty liability for innocent misrepresentation to a builder-vendor who sold a new home to a purchaser. Further, the court found that the general rule for measurement of damages upon breach of warranty was to award the prevailing party such compensation that placed him in the same position he could have enjoyed had the property been as warranted. The court found that to the extent that reliance expenses were probative of losses incurred because of breach, they must be expenses demonstrably incident to breach. The court found that the trial court's award of damages was in error.

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