The case involves two parties, a buyer and a seller, who entered into a contract for the purchase of real property. Prior to the sale, the seller had been made aware that the property had a reputation in the community as a haunted house, and took steps to encourage this belief. The buyer, who was out of state, was unaware and was not notified. Thereafter, the buyer sued for rescission of the contract and recovery of his deposit, claiming the hauntedness of the property was adversely affected its value and should have been disclosed. The seller sued for specific performance, and the lower court held in favor of the seller.
Question of Law
The question before the court was whether the seller, having actual knowledge of an adverse condition associated with the property, voids the contract by failing to disclose the same to the unsuspecting buyer. The law within that jurisdiction generally held caveat emptor, placing the responsibility on the buyer to find any defects in the property, and so the court needed to determine whether caveat emptor relieved seller of responsibility.
Defendant seller deliberately fostered the public belief that her home was possessed. Having undertaken to inform the public-at-large, to whom she has no legal relationship, about the supernatural occurrences on her property, she may be said to owe no less a duty to her contract vendee. It has been remarked that the occasional modern cases which permit a seller to take unfair advantage of a buyer’s ignorance so long as he is not actively misled are “singularly unappetizing” . . . Where, as here, the seller not only takes unfair advantage of the buyer’s ignorance but has created and perpetuated a condition about which he is unlikely to even inquire, enforcement of the contract (in whole or in part) is offensive to the court’s sense of equity.