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Century Display v. D.r. Wager Constr.

OPINION FILED MAY 16, 1978.

CENTURY DISPLAY MANUFACTURING CORP. ET AL., APPELLANTS AND CROSS-APPELLEES,

v.

D.R. WAGER CONSTRUCTION CO., INC., ET AL. — (UNITED STATES STEEL CORPORATION, APPELLEE AND CROSS-APPELLANT.)



Appeal from the Appellate Court for the First District; heard in that court on appeal from the Circuit Court of Cook County, the Hon. Mel R. Jiganti, Judge, presiding.

MR. JUSTICE RYAN DELIVERED THE OPINION OF THE COURT:

This action was filed in the circuit court of Cook County by plaintiffs, Century Display Manufacturing Corporation (Century), and Hartford Fire Insurance Company and Reliance Insurance Company, subrogees of Drovers National Bank of Chicago, trustee, against United States Steel Corporation (U.S. Steel), and two other defendants not involved in this appeal, to recover damages for fire loss to Century's property. Plaintiffs' complaint alleged both negligence (count II) and willful and wanton conduct (count III) by U.S. Steel. The court allowed U.S. Steel's motion for summary judgment and plaintiffs appealed. The appellate court affirmed the circuit court with respect to count II, but reversed and remanded as to count III. (46 Ill. App.3d 643.) We granted plaintiffs' petition for leave to appeal from that portion of the appellate court's order affirming summary judgment for U.S. Steel with respect to count II, and pursuant to our Rule 318 (58 Ill.2d R. 318) we have granted U.S. Steel's request to review the appellate court's order reversing summary judgment as to count III.

On April 28, 1970, U.S. Steel entered into a contract to sell to Century premises formerly known as U.S. Steel Chemical Division, which had been used for the manufacture of various organic coating products until 1967, when production at the plant ceased. Included in the sale of the building were various fixtures, including pipes and tanks which had been used for the transmission and storage of the materials and chemicals used in the manufacture of the coating products. Among the materials that had been contained in the tanks and pipes were asphalt solvents, kerosene, and several other flammable products.

Century went into possession of the premises on May 14, 1970. Soon thereafter, Century retained D.R. Wager Construction Company, Inc., to remodel portions of the building. On August 5, 1970, a fire broke out at the site where Wager was working on the premises. While the exact cause of the fire is undetermined, allegedly the flammable liquid still in the tanks and pipes was ignited in the course of Wager's work. The ensuing blaze ultimately destroyed the building and other property which Century had stored on the premises.

The plaintiffs sought recovery for damages to the property from Wager and its alleged agent, as well as from U.S. Steel. Count I of the complaint was directed against Wager and the alleged agent, who are not parties to the present appeal.

Counts II and III against U.S. Steel are premised upon sections 352 and 353 of the Restatement (Second) of Torts, both of which have been acknowledged by this court as stating the law in Illinois. (See Sparling v. Peabody Coal Co. (1974), 59 Ill.2d 491.) Section 352 sets forth the general proposition that a vendor of land is not liable for physical harm to a vendee or to others after the vendee has taken possession caused by a dangerous condition, which condition existed at the time the vendee took possession. (Restatement (Second) of Torts sec. 352 (1965); Anderson v. Cosmopolitan National Bank (1973), 54 Ill.2d 504.) Section 353 of the Restatement carves out an exception to the general rule of non-liability, applicable when the vendor conceals or fails to disclose to his vendee a condition which poses an unreasonable risk to persons on the land. Section 353 provides:

"(1) A vendor of land who conceals or fails to disclose to his vendee any condition, whether natural or artificial, which involves unreasonable risk to persons on the land, is subject to liability to the vendee and others upon the land with the consent of the vendee or his subvendee for physical harm caused by the condition after the vendee has taken possession, if

(a) the vendee does not know or have reason to know of the condition or the risk involved, and

(b) the vendor knows or has reason to know of the condition, and realizes or should realize the risk involved, and has reason to believe that the vendee will not discover the condition or realize the risk.

(2) If the vendor actively conceals the condition, the liability stated in Subsection (1) continues until the vendee discovers it and has reasonable opportunity to take effective precautions against it. Otherwise the liability continues only until the vendee has had reasonable opportunity to discover the condition and to take such precautions."

The appellate court held, and U.S. Steel urges in this court, that recovery for damage to property is not authorized under the law as stated in section 353 except in cases where a contractor-builder sells newly constructed residential property to a layman. It is defendant's contention that the term "physical harm," as contained in section 353, does not include damages to property but refers solely to recovery for personal injuries. However, section 7(3) of the Restatement (Second) of Torts (1965) states:

"The words `physical harm' are used throughout the Restatement of this Subject to denote the physical impairment of the ...


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