Kracl v. Loseke

461 N.W.2d 67 (1990)

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Nature of the Case

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Facts

D decided to sell their home and in February notices 'tunnels on the south wall' of the basement, but never actually saw termites in that area. Before putting their house on the market, D had their basement ceiling 'Sheetrocked' to cover floor joists which supported the first floor of their home. Most of the Sheetrock work, except for an area near the basement's north wall, was performed by Leo McNally in March 1984. The ceiling near the north wall was already Sheetrocked when McNally commenced his work. Another contractor had built a small room in D's basement prior to McNally's work. The basement room was approximately 4 by 6 feet, with a fully Sheetrocked ceiling which left no exposed wood. The walls for this basement addition also provided support for weakened joists covered by the Sheetrock at the north side of the basement. The additional support for the floor joists was necessary because, the floor joists were showing some deterioration, wood rot, and termites. P was told that 'the sheetrocking had been put up to help sell the property, spruce it up a little bit.' D told P that the house was in 'good condition.' There was no discussion concerning termites. D never mentioned the 'tunnels,' since, as he later maintained, he did not realize that termites had made the tunnels at the basement's south side. D did not indicate that the basement room supplied support for the floor joists and basement ceiling. P decided to buy and signed a contract which in part stated: 'The buyer has examined the above-described premises, and relies upon their own inspection of said premises, and not upon any representations made by the seller or agent of the seller. No warranty is implied or expressed by the seller; Termite inspection of the above-described premises shall be the responsibility of the buyers with regard to the making of arrangements for the inspection and for the payment of the costs of the inspection. If termites are found on the premises as a result of the inspection prior to the final settlement, costs incurred in the treatment for termites shall be the responsibility of the seller.' Closing was set for July 1. D was allowed to remain in possession of the house until February 1, 1985, since they were in the process of building a new home. After the July closing, D remained in the house until January 3, 1985, and paid P rent in the amount of $1,000. D actually obtained a termite inspection by Orkin Exterminating Company on October 17, 1984. That inspection revealed termites in the garage and beneath the basement steps of the house. D paid for Orkin's treatment of the house, and D told P Orkin 'had found a trace [of termite activity] in the garage, but there was nothing to worry about, they just went ahead and treated the house anyway.' D moved into the house and by discovered the termite damage to the wooden floor joists and after removing the remaining Sheetrock from the ceiling found additional termite damage in the south and west ends of the basement. Orkin was summoned and treated the problems. A contractor estimate to repair the damage already done was $24,000 and an additional $1,000 for a moving company to raise the house so that Scheppers could replace the floor joists. To replace the floor joists, it would be necessary to remove and later replace the house's chimney at a cost of $1,700. P sued D for rescission alleging that D had concealed the existence of termites in the house. D denied any fraudulent concealment and because it was more than two years after Ps first occupied the house P should be estopped from claiming any alleged misrepresentation by Ds and from seeking recovery thereon. Testimony estimated that it had taken termites at least 3 years to cause the damage to the floor joists that had been viewed in October 1985, that at the time the Sheetrock was installed in 1984, termite damage to the joists would have been visible, and that covering the basement ceiling with Sheetrock rendered the termite damage undetectable. The court ordered the contract rescinded, and ordered D to repay P $56,358.05 which had been paid under the contract of sale.