Stambovsky v. Ackley 572 N.Y.S.2d 672 (N.Y. Sup. Ct. App. Div. 1991)

Jeffrey Stambovsky, a resident of New York City, contracted to purchase a house in the Village of Nyack, New York, from Helen Ackley. The house was widely reputed to be possessed by poltergeists, which Ackley and members of her family had reportedly seen. Ackley did not tell Stambovsky about the poltergeists before he bought the house. When Stambovsky learned of the house's reputation, however, he promptly commenced this action for rescission. The trial court dismissed his complaint, and Stambovsky appealed.

Rubin, Justice    The unusual facts of this case clearly warrant a grant of equitable relief to the buyer who, as a resident of New York City, cannot be expected to have any familiarity with the folklore of the Village of Nyack. Not being a " local," Stambovsky could not readily learn that the home he had contracted to purchase is haunted. Whether the source of the spectral apparitions seen by Ackley are parapsychic or psychogenic, having reported their presence in both a national publication (Reader's Digest) and the local press (in 1977 and 1982, respectively), Ackley is estopped to deny their existence and, as a matter of law, the house is haunted. More to the point, however, no divination is required to conclude that it is Ackley's promotional efforts in publicizing her close encounters with these spirits which fostered the home's reputation in the community. In 1989, the house was included in a five-home walking tour of Nyack and described in a November 27th newspaper article as a " riverfront Victorian (with ghost)." The impact of the reputation thus created goes to the very essence of the bargain between the parties, greatly impairing both the value of the property and its potential for resale.

[The court discussed the fact that NewYork law does not recognize a remedy for damages incurred as a result of the seller's mere silence, applying instead the doctrine of caveat emptor. The court then proceeded to discuss the availability of rescission.]

From the perspective of a person in the position of the plaintiff, a very practical problem arises with respect to the discovery of a paranormal phenomenon: "Who you gonna call?" as the title song to the movie Ghostbusters asks. Applying the strict rule of caveat emptor to a contract involving a house possessed by poltergeists conjures up visions of a psychic or medium routinely accompanying the structural engineer and Terminix man on an inspection of every home subject to a contract of sale. The doctrine of caveat emptor requires that a buyer act prudently to assess the fitness and value of his purchase. It should be apparent, however, that the most meticulous inspection and the search would not reveal the presence of poltergeists at the premises or unearth the property's ghoulish reputation in the community. Therefore, there is no sound policy reason to deny Stambovsky relief for failing to discover a state of affairs which the most prudent purchaser would not be expected to even contemplate.

Where a condition which has been created by the seller materially impairs the value of the contract and is peculiarly within the knowledge of the seller or unlikely to be discovered by a prudent purchaser exercising due care, nondisclosure constitutes a basis for rescission as a matter of equity. Any other outcome places upon the buyer not merely the obligation to exercise care in his purchase but rather to be omniscient with respect to any fact which may affect the bargain. No practical purpose is served by imposing such a burden upon a purchaser. To the contrary, it encourages predatory business practice and offends the principle that equity will suffer no wrong to be without a remedy.

In the case at bar, Ackley 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. Application of the remedy of rescission is entirely appropriate to relieve the unwitting purchaser from the consequences of a most unnatural bargain.

Judgment modified in favor of Stambovsky, reinstating his action seeking rescission of the contract.