## Facts

- A landowner leased farmland to a company for a 25-year term to construct and operate a drive-in theater.
- After taking possession, the tenant claimed the land was boggy and swampy, making it unsuitable for the intended construction.
- The tenant alleged the condition was latent and that the landlord knew of it but did not disclose it during lease negotiations.
- The tenant stopped paying rent.
- The landlord sued for unpaid rent; the tenant filed a cross-complaint seeking relief based on alleged fraud/misrepresentation by nondisclosure.

## Issues

1. Whether a tenant states a claim against a landlord for nondisclosure of a latent physical condition allegedly making leased land unsuitable for the tenant’s contemplated use, or whether caveat emptor bars such a claim absent an express covenant, affirmative misrepresentation, or active concealment.
2. Whether the tenant’s cross-complaint pleaded fraud/misrepresentation with sufficient factual particularity to survive a demurrer.

## Decision

- The Indiana Court of Appeals affirmed the order sustaining the landlord’s demurrer to the tenant’s cross-complaint.
- The court held that caveat emptor governed the lease of unimproved land for a commercial purpose absent an express covenant of suitability.
- The court concluded that the tenant’s allegations amounted to nondisclosure without a duty to speak and did not plead actionable fraud or an implied warranty theory.
- The cross-complaint was treated as legally insufficient and was dismissed when the tenant refused to plead further.

## Legal Principles

- In leases of real property, particularly unimproved land, the tenant generally takes the premises as found; the landlord does not impliedly warrant fitness for the tenant’s intended purpose.
- Mere silence by a landlord about a condition does not constitute fraud absent a duty to disclose, a special basis creating a duty to speak, or active concealment.
- A claim of fraud must be pleaded with factual specificity, not conclusory assertions of “misrepresentation” based solely on nondisclosure.

## Conclusion

The court enforced traditional lease rules: without an express suitability covenant or well-pleaded affirmative fraud, a commercial tenant could not avoid rent obligations by alleging the landlord failed to disclose a latent condition rendering the land unsuitable for the tenant’s planned use.


Anderson Drive-In Theatre, Inc. v. Kirkpatrick, 110 N.E.2d 506 (Ind. Ct. App. 1953)