Appellant/Plaintiff: Jeffrey M. Stambovsky
Respondent/Defendant: Helen V. Ackley et al.
Court and Date
Appellate Division 1st Department of the Supreme Court of New York - July 18, 1991
This is an appeal of a decision by the Supreme Court of New York. The plaintiff, Mr. Stambovsky, sued to rescind a contract to purchase a house from Ms. Ackley. The reason Mr. Stambovsky wanted to rescind the contract was because, unbeknownst to him at the time of the sale, the house was haunted. The Supreme Court dismissed his complaint. The Appellate Court reinstated the cause of action, arguing that the seller had a duty to disclose the reputation of the house to an out-of-town buyer.
Facts and Holding
Mr. Stambovsky appealed the dismissal of his complaint by the Supreme Court of New York. The initial complaint sought to rescind a contract to purchase a house from the seller defendant, which the buyer plaintiff later discovered had a reputation for being haunted by ghosts. The ghostly reputation of the house impacted both the value of the property and its resale potential.
Under the caveat emptor doctrine, a buyer may only seek rescission if they acted prudently and exercise due care to assess the fitness and value of the purchased property. In this case, the plaintiff met his obligation by conducting a reasonable inspection of the premises and searching the available public records concerning the title. According to the record, the appellant was not a “local” and had no familiarity with the folklore of the Village of Nyack, New York, where the property is located. Therefore, the fact that he was unaware of the house’s haunted reputation did not show that he failed to exercise due care.
In the words of the Court: “...It should be apparent, however, that the most meticulous inspection and the search would not reveal the presence of [ghosts] at the premises or unearth the property's ghoulish reputation in the community. Therefore, there is no sound policy reason to deny plaintiff relief for failing to discover a state of affairs which the most prudent purchaser would not be expected to even contemplate…”.
The Court established that the spectral reputation of the house came from the defendant's promotional efforts in publicizing her close encounters with these spirits. The Court held that, whether the source of the "spectral apparitions" seen by the defendant was parapsychic or psychogenic, the defendant could not deny their existence because she was the one who reported their presence in both a national publication and the local press. This made the house haunted as a matter of law.
By failing to inform the buyer of the house’s haunted reputation, the seller defendant took unfair advantage of the buyer's ignorance of a reputational condition about which he was unlikely to inquire. The court noted that the defendant informed the public-at-large, to whom she had no legal relationship, about the supernatural occurrences on her property. Therefore, she owed no less a duty to her contracting counterparty, the buyer plaintiff. Thus, enforcement of the contract would be offensive to the court's sense of equity.
Based on all the above, the Appellate Court concluded that, under equity principles, the plaintiff was allowed to seek rescission of the contract and recover his down payment. The Appellate Court modified the judgment of the Supreme Court, reinstating the cause of action seeking rescission of the contract.
[Last updated in July of 2023 by the Wex Definitions Team]