Max L. Kuniansky v. D. H. Overmyer Warehouse Co., Inc., D. H. Overmyer Warehouse Co., Inc. v. Max L. Kuniansky

406 F.2d 818
CourtCourt of Appeals for the Fifth Circuit
DecidedFebruary 10, 1969
Docket25948_1
StatusPublished
Cited by7 cases

This text of 406 F.2d 818 (Max L. Kuniansky v. D. H. Overmyer Warehouse Co., Inc., D. H. Overmyer Warehouse Co., Inc. v. Max L. Kuniansky) is published on Counsel Stack Legal Research, covering Court of Appeals for the Fifth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Max L. Kuniansky v. D. H. Overmyer Warehouse Co., Inc., D. H. Overmyer Warehouse Co., Inc. v. Max L. Kuniansky, 406 F.2d 818 (5th Cir. 1969).

Opinions

FISHER, District Judge:

This appeal challenges the district court’s holding that the defendant Ku-niansky as builder-contractor was liable for breach of contractual warranty respecting foundation construction for a warehouse built for the plaintiff Over-myer. Kuniansky alleges the trial court erred in finding a lease contract and a separate contemporaneously executed option-to-purchase to be a single complete agreement enabling Overmyer to rely on warranties in the lease after exercising the option; that conveyance of the deed from Kuniansky to Overmyer did not extinguish previous contractual warranties; and that the six year statute of limitations was not a bar to the action. Overmyer, as cross-appellant, contends the trial court erred in assessing and computing damages on a loss-of-value basis rather than on a cost-of-replacement basis, in not allowing $14,276 as further damages incurred in preventing collapse of the building, and in not allowing attorneys fees under Georgia Code, See. 20-1404. We affirm as to all points except that concerning computation of damages.

The trial court was eminently correct in finding that building specifications were not followed during construction. Briefly, the facts are that the terrain upon which the 120,000 square feet warehouse was to be constructed was a steep slope requiring an extensive fill on the back side. The plans called for this fill to be compacted to 95% under supervision and approval of a named engineer. The fill was neither compacted to 95% nor was the process supervised. Upon discovery that the fill was improperly compacted and unknown to Overmyer an alternative method was devised whereby pilings were sunk into the fill and a grade beam placed thereon to serve as a foundation support. This was completely ineffectual, however, in that the pilings were too short to penetrate the fill into the virgin soil below. Thus, the pilings began to gradually shift along with the improperly compacted fill causing the rear and side walls to crack and separate. These defects appeared incipiently after Overmyer took possession of the premises, but their full extent was not discovered until after the option was exer[820]*820cised. Damage became extensive, and to the date of trial, Overmyer was forced to spend $14,276 in rebuilding and shoring up portions of the rear wall with exterior braces. None of such repairs have effectively cured the difficulty, however, but only delayed possible collapse.

The ultimate question of Kuniansky’s liability hinged upon the trial court’s determination of three questions relating to contract interpretation, merger of covenants, and limitations. First, Kunian-sky argued that Overmyer as a purchaser rather than as lessee could not claim the benefit of Kuniansky’s covenant to build according to specifications inasmuch as the option to purchase agreement did not contain such, nor did it expressly adopt the covenants or specifications in the lease agreement. Kuniansky curiously urged the court to conclude that the parties intended to agree that the warehouse would be warranted according to specifications for purposes of the lease but not for purposes of sale.

The trial court found that both agreements pertained to the construction, leasing and purchasing of a warehouse in accordance with Overmyer’s needs, and consequently applied the Georgia rule that where multiple instruments pertaining to the same transaction and subject matter are executed contemporaneously, they will be taken as forming together one agreement. Read v. Gould, 139 Ga. 499, 77 S.E. 642 (1912). The trial court reasoned that by construing the instruments together the full intent of the parties could be perceived, and the whole contract should be considered in the construction of any part. The court further found that in executing separate agreements the parties did not contemplate separate warranties, but rather that separate agreements were typical in modern tax-oriented and capital-influenced transactions.

We hold the court’s decision considering the instruments together to be correct. Moreover, we think there was ample evidence in the option agreement itself to warrant the court’s conclusion that the parties intended the covenants of workmanship to be applicable.1

Secondly, Kuniansky argued that Overmyer could not rely on the construction covenants in that they merged into the deed from Kuniansky to Overmyer, and since there was no express warranty in the deed, they were extinguished by the transfer. Kuniansky cited the general Georgia rule that absent expressed intent to the contrary, covenants of an antecedent contract for purchase and sale of realty merge into a subsequent deed involving the same property. The court observed that covenants of workmanship ordinarily survive the subsequent deed, cf. Kollen v. High Point Forest, Inc., 104 Ga.App. 713, 123 S.E.2d 10 (1961). Further, the court held that furnishing the deed was simply one of several obligations of Kuniansky and was not inconsistent with the contract. Thus, there was intended no merger.

Again the trial court seems to be on a sound basis. Covenants of workmanship are stipulations for which the conveyance of a deed can in no way be said to constitute performance thereof. We hold, therefore, the trial court was correct in concluding that construction rights under the contract were not extinguished by merger into the deed.

Finally, Kuniansky argued that regardless of whether the instruments were one agreement or whether the covenants merged into the deed, Overmyer could not recover because the claim was barred by the six year statute of limitations.2

This lawsuit was brought on March 10, 1965. The agreements were executed April 3, 1958. Overmyer began partial occupance with rent effective on one por[821]*821tion on October 15, 1958, and on another November 1, 1958. Overmyer wrote Ku-niansky on March 27, 1959, formally accepting the lease for rental purposes, and exercised the option to purchase on September 30, 1959.

Under Georgia law, it is unnecessary that a party be aware of his cause of action or that he have actually suffered damage before the statute begins to run. Thus, the statute begins to run as soon as a complete cause of action occurs. Kuniansky represented that this condition occurred in the summer of 1958 during construction. That is, the cause of action arose as soon as the workmen departed from the plans and specifications. Overmyer, on the other hand, argued there could be no cause of action until the option was exercised. The court took neither position and held that the earliest date suit could have been brought was when the lease became effective. The court found this date to be March 27, 1959, the date Overmyer formally accepted the building for purposes of the lease, which was within 17 days of the expiration of six years from the date this action was brought. The court concluded that the lease contemplated a formal acceptance of the premises,3 and that mere occupancy pending acceptance was insufficient to effect the lease.4

We lean toward the position taken by the appellee, Overmyer, that the statute did not begin to run until the option was exercised. However, we agree with the trial judge that in no event could the statute have begun to run before the lease went into effect. Further, we do not consider the court’s finding March 27, 1959 the effective date for the lease clearly erroneous.

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Bluebook (online)
406 F.2d 818, Counsel Stack Legal Research, https://law.counselstack.com/opinion/max-l-kuniansky-v-d-h-overmyer-warehouse-co-inc-d-h-overmyer-ca5-1969.