Stambovsky v. Ackley – Case Brief Summary

Summary of Stambovsky v. Ackley, 169 A.D.2d 254 (NY App. Div. 1991).

Facts

Helen Ackley (D) knew a house was haunted when she sold it to Stambovsky (P) but did not disclose it. Stambovsky later learned that the house had a reputation for being haunted. Ackley had actually perpetrated the rumor by reporting various occurrences to Reader’s Digest and the local press.

Stambovsky brought suit to have the contract rescinded. The trial court dismissed the complaint and Stambovsky appealed.

Issue

  • Under what circumstances may nondisclosure of information by the seller of a house to the buyer entitle the buyer to rescind a contract for sale?

Holding and Rule

  • If a seller knows of a condition that is unlikely to be discovered by a careful and prudent buyer and impairs the value of the contract, nondisclosure of this condition represents a basis for rescission under equity.

In this case, Ackley deliberately publicized that her house was haunted. Having informed the public at large that the house was haunted, she owned no less a duty to the buyer. Ackley was estopped from denying the existence of ghosts and poltergeists and as a matter of law, the house was haunted.

Although New York follows the caveat emptor rule and the buyer is required to inspect the house for any defects, in this case the buyer probably would not have been able to discover that the house was haunted had he inspected it. Since Ackley knew about the poltergeist problem but did not disclose it, and Stambovsky had no other way to discover it, he was awarded rescission of the contract for sale. The court held that the caveat emptor doctrine only acts against those who do not exercise their rights and who fail to take due care. In this case there was no clue or objective standard for determining how a buyer could discover that a house is haunted.

Disposition

Judgment reversed. Stambovsky was entitled to rescind the contract for sale.

See Wood v. Boynton for a leading contracts case brief in which the court held that the contract for sale of an uncut diamond for $1 could not be rescinded absent a showing of fraud. Both parties claimed that they believed the gem was a topaz at the time of the sale.


Related posts: