17 Wash. 458 | Wash. | 1897
Lead Opinion
The opinion of the court was delivered by
to recover damages for deceit and fraudulent misrepresentations by appellant in the sale of a water and light plant to respondent. The respondent, the city of Tacoma, is a municipal corporation of the first class, and the appellant a private corporation organized under the laws of the state, having its principal place of business in the city of Tacoma, and holding from the city a franchise to furnish water and light to the inhabitants of the city for reasonable compensation. Por several years before the sale of its water and electric light plant to the city, appellant owned a system of waterworks which was used for the purpose of supplying the city and its inhabi
The complaint substantially charges that appellant, for the purpose of inducing respondent to purchase its property at the price stated, and with intent to deceive and defraud respondent, prior to the sale by appellant’s officers, agents, servants and employees, falsely represented to respondent and .its agents and officers that appellant’s waterworks and sources of water supply included the flow from certain springs known as Thomas and Patterson springs, and represented to respondent that the permanent daily
The answer of appellant denies all the allegations of fraud and misrepresentation charged in the complaint, and affirmatively sets up that it afforded every opportunity for an examination of its property before sale, and that respondent employed a competent and fully qualified civil and hydraulic engineer before the sale to make an examination of appellant’s property, including the sources of water supply, and that the engineer, Rudolph Hering, made such examination and reported to the city council full information as to the kind, character and situation of the property, including the sources of water supply; and denies
Respondent replying admits that it employed the engineer Rudolph Hering, that he made some examination of the property of appellant and that he made a report to the city council, but alleges that he relied entirely upon the representations made to him by appellant concerning all the matters stated in his report, and denies that the report contained full information of the kind, character and situation of the property, including the sources of water supply, and denies that the respondent purchased the property relying upon the knowledge of its officers, agents, employees and engineers employed by it to- make an examination of the properties, but relying on the representations of appellant.
After all the evidence was in, the superior court withdrew from the consideration of the jury all questions except misrepresentations to respondent relative to the quantity of water actually flowing from Thomas and Patterson springs, the quantity of iron pipe then laid, the quantity of land at “ Site for Station A,” and the value of the property sold; and the court stated that all other misrepresentations charged in the complaint were withdrawn, and that appellant could not recover unless on the ground of misrepresentations in the particulars mentioned. The superior court among other instructions gave the following:
“ The elements of the wrong for which the plaintiff seeks to recover are as follows:
“ 1st. That the defendant has made a representation in regard to a material fact;
“ 2d. That such representation is false;
“ 3d. That such representation was not actually believed*465 by the defendant’s [appellant’s] officers on reasonable grounds to be true.
“ 4th. That it was made with the intent that it should be acted upon;
5th. That it was acted upon by the plaintiff to its damage; and
“ 6th. That in so acting on it the plaintiff was ignorant of its falsity and reasonably believed it to be true.”
These essential elements of the cause of action were then very elaborately explained and limited and their application shown by the court. The jury found for respondent and assessed damages in the sum of $787,500. A motion for a new trial was made by appellant and overruled, and judgment entered on the verdict, from which judgment and order overruling the motion for a new trial appeal was taken. The case was determined by this court on the 5th of January, 1897, and is reported in 16 "Wash. 288 (47 Pac. 738), and the judgment of the superior court reversed. A petition and argument for re-hearing was thereupon filed by respondent, and, upon answer by appellant, a re-hearing directed by the court and the case again argued.
1. Counsel for respondent have discussed to some extent the testimony tendered by them in the superior court which was excluded, and have mentioned some exceptions which were taken by them to the rulings of the superior court during the progress of the trial, but it has been frequently observed here that such objections cannot be considered unless appeal is taken therefrom. The learned counsel for the appellant have, with much earnestness, insisted that the contract, the subject of this controversy, must in its execution be viewed as a contract between private corporations and individuals, and that the same rules of estoppel prevail against a municipal corporation when demanding damages for fraudulent misrepresentations in
“ Contracts of corporations, whether public or private, stand on the same footing with the contracts of natural persons, and depend on the same circumstances for their validity and effect.”
But the supreme court of the United States in the case of United States v. Barlow, 132 U. S. 271 (10 Sup. Ct. 77), in discussing the recovery back of money paid out by a department of the government, quotes with approval Baron Parke in Kelly v. Solari, 9 Mees. & W. 51, 58:
“ Where money is paid to another under the influence of a mistake, that is, upon the supposition that a specific fact is true which would entitle the other to the money, but which fact is untrue, and the money would not have been paid if it had been known to the payer that the fact was untrue, an action will lie to recover it back, and it is against conscience to retain it,” and says:
“ Beasons for the application of the rule are much more potent in the case of contracts of the government than of contracts of individuals; for the government must necessarily rely upon the acts of agents, whose ignorance, carelessness or unfaithfulness would otherwise often bind it, to the serious injury of its operations.”
“ In order to guard the public against losses and injuries arising from the fraud or mistake or rashness or indiscretion of their agents, the rule requires of all persons dealing with public officers the duty of inquiry as to their power and authority to bind the government; and persons so dealing must necessarily be held to a recognition of the fact that government agents are bound to fairness and good faith as between themselves and their principal.”
But it is not essential, in the disposal of the case at bar, to state whether it is a wholesome rule, sanctioned by .authority, to hold each person dealing with the agents of a public corporation responsible for his knowledge of the fairness, good faith and fidelity with which the agent of the public discharged his trust. We think this principle here may be referable to the consideration of the testimony in the case. When fraud is alleged as an inducement to the ■execution of the contract, among the circumstances always pertinent to the inquiry is the status of the respective parties; whether in intelligence; skill and capacity they are upon an equal footing; whether the more wary has overreached the unwary. Municipal coporations are not primarily instituted for general business purposes. They are local governments, chiefly instituted for police protection, the conservation of order and the protection of public morals and health. Their entry into the field of trade is very limited and incidental to their other purposes. They .are not constituted for money-making, and thus their legislative powers, ordinarily exercised by the city council, .are not necessarily exercised by trained and experienced business men. The city council is not constituted for the ■same purpose as the board of directors of a private business ■corporation, which is created solely for the purpose of making money, and has special training for the one object;
2. The necessity for a purchaser in an action against the vendor for fraudulent representations to prove whether he examined the property, and, if he did not, to state why such examination was not made, is urged by counsel for appellant to be one of the most important questions in the ease, and it is said that one having eyes must open them and see, and having ears, must hear. This is true, and numerous decisions of the courts require that a purchaser of property, where the means of examination are at hand, should observe; but it will be noticed that ordinarily the facts in each ease control its decision, and usually the duty of observation is stated with reference to simpler transactions, and property more conveniently seen, than in the case at bar. But suppose no examination were made. Pollock on Torts (Webb’s Am. ed.), p. 377, says:
" Tet another case is that the plaintiff has at hand the means of testing the defendant’s statement, indicated by the defendant himself, or otherwise within the plaintiff’s power, and either does not use them or uses them in a partial and imperfect manner. Here it seems plausible at first sight to contend that a man who does not use obvious means of verifying the representations made to him does not deserve to be compensated for any loss he may incur by relying on them without inquiry. But the ground of this kind of redress is not the merit of the plaintiff, but the demerit .of the defendant; and it is now settled law that one who chooses to make positive assertions without warrant shall not excuse himself by saying that the other party need not have relied upon them. He must show that his representation was not in fact relied upon.”
“ In short, nothing will excuse a culpable misrepresentation short of proof that it was not relied on, either because the other party knew the truth, or because he relied wholly on his own investigation, or because the alleged fact did not influence his action at all. And the burden of this proof is on the person who has been proved guilty of material misrepresentation. He may prove any of these things if he can. It is not an absolute proposition of law that one who, having a certain allegation before him, acts as belief in that allegation would naturally induce a man to act, is deemed to have acted on the faith ■of that allegation. It is an inference of fact, and may be excluded by contrary proof. But the inference is often irresistible.”
Bishop on Hon-Contract Law, § 337, says:
“Blindly misled. — That the defrauded party is too credulous and blindly misled, may perhaps, in some extreme cases, be a defense to this action, but it is not always or generally so. The true principle is believed to be, that the test of the representation is its actual effect on the particular mind, whether it is a strong and circumspect one or one weak and too relying.”
Bigelow on Fraud, p. 524, observes:
“If the representation were of a character to induce action, and did induce it, that is enough. It matters not, it has well been declared, that a person misled may be said, in some loose sense, to have been negligent (in reality negligence is beside the case where the misrepresentation was calculated to mislead, and did mislead); for it is not just that a man who has deceived another should be permitted to say to him, ‘You ought not to have believed or trusted me,’ or ‘ You were yourself guilty of negligence.’ This indeed appears to be true even of cases in which the injured party had in fact made a partial examination.”
The case of Rathbone v. Frost, 9 Wash. 162 (37 Pac. 298), was an action by plaintiff upon a written contract
“It is true it may have been a little careless on the part of I'rost not to have examined the second instrument with reference to the conditions of the first; but it is upon careless people ordinarily that frauds are perpetrated. If it was not the intention of the respondent to obtain by the change a benefit which was not contained in the first agreement, then it has secured a contract which was not intended either by it or Drost, and if it was its intention to obtain this additional benefit, it evidently obtained it by sharp practice, and when sharp practice is analyzed fraud will usually be fo-und to be its principal constituent element. "We do not think the law should uphold men in their attempts to overreach others who are unsuspecting, and who rely upon the honor and integrity of those with whom'they axe dealing.”
If some examination is made by the purchaser, but not thorough and complete examination, shall the vendor be allowed to receive and retain the benefit derived from a fraudulent misrepresentation relied upon by the injured party? Ve apprehend the rule relating to estoppel of the complainant in civil actions for fraudulent misrepresenta
“Appellant contends that Wooding did not rely upon the representations of defendant as to the character and quality of the metal, but that he submitted them to be assayed and relied principally on the report; and he argues that where a party undertakes to investigate for himself he is bound by the result of such investigation. We think it is quite well settled that the false representations need not be the only moving cause which induces another to part with his property.”
The supreme court of Massachusetts, in Holst v. Stewart, 161 Mass. 516 (42 Am. St. Rep. 442, 37 N. E. 755), observes:
“ But in the application of this rule, the circumstances of each case should be considered to determine whether the plaintiff has been guilty of such inexcusable negligence as should preclude him, under a general rule of public policy, from having a remedy against one who has fraudulently abused his confidence.”
In Fargo Gas & Coke Co. v. Fargo Gas & Electric Co., 4 N. D. 219 (59 N. W. 1066), the property purchased consisted of a gas plant and mains and all other classes of property which go tO' make up such a plant, and also an arc electric light plant with poles, wires and other fixtures, distributed over parts of the city of Eargo. The fraudulent representations were of two classes; one class related to the physical condition of the plant, embracing statements as to the number of miles of wire, the number of poles, the gas mains and as to the condition of the plant in other respects; the other class related to the net earnings of the plant for the previous year, and the price charged customers for gas and electric light. The lower court refused to give the following instruction offered by plaintiff:
*472 “If you find that, during the negotiations, statements were made by the plaintiff as to the earnings of the plant, the defendant had a right to rely upon these statements; and if they were so relied on, and were false, and the defendant suffered injury thereby, the defendant would be entitled to recover the damages which it suffered in consequence thereof.”
The supreme court, in reversing the judgment below, said:
“ It should have been left to the jury to determine whether the means were at hand to discover the falsity of the statements made, in view of the character of such statements and the nature of the property sold. The defendant, as a matter of law, had a right to rely implicitly upon the statements made by plaintiff touching the character of this plant. So long as defendant did not actually know the representations to be false, it was under no obligation to investigate to determine their truth or falsity.”
The supreme court of the United States in Stewart v. Wyoming Cattle Co., 128 U. S. 383 (9 Sup. Ct. 101), declares the rule:
“ The gist of the action is fraudulently producing a false impression upon the mind of the other party; and if this result is accomplished, it is unimportant whether the means of accomplishing it are words or acts of the defendant, or his concealment or suppression of material facts not equally within the knowledge or reach of the plaintiff.”
This case was where an examination had been made, by an experienced agent of the cattle company, of large herds of cattle on the ranche and misrepresentations had been made to him and to the company which were relied upon, and the court held that, notwithstanding such examination had been made, yet, from the nature of the property, defendant was responsible in damages for misrepresention of material facts which were relied upon by the plaintiff.
Where the purchaser may know the truth by looking, or where the truth is shown, him, he is not misled, but where he relies upon the statements of the vendor, and has no knowledge that such statements are false, he can, when they are false, and he has been reasonably prudent, recover damages. If no knowledge of their falsity is presented to him, the purchaser may rely implicitly upon the statements of the vendor, if such statements are not so openly and palpably false that their untruth is apparent to an ordinarily prudent person.
3. After judgment was entered in the superior court appellant moved to set aside the verdict and for a new trial. It is not deemed necessary to consider any of the various grounds upon which the motion was based other than the first, viz.: that the evidence was insufficient to justify the verdict. The trial was a fair one. The court below gave very plain and correct instructions to the jury, and such as can not be justly criticized to any extent. The trial of the cause occupied some two weeks in the superior court. The evidence taken, which is all brought here, covers over seventeen hundred pages of the statement of facts; and many witnesses testified. All the negotiations between appellant and respondent were very exhaustively inquired into. The material issues which were submitted to the jury by the court were each supported by testimony produced by respondent. The respondent had, in the fall of 1892, employed a competent and skilled hydraulic engineer of established reputation, Rudolph Hering, to examine generally and report upon a plan for an adequate water supply for the city of Tacoma, to be owned and operated by the city. October 22, 1892, his report was made to the mayor and chairman of the water committee,
Counsel for appellant have argued with much force that the testimony of appellant satisfactorily explained many apparent facts urged by respondent, but such explanations, and the weighing of testimony introduced by appellant, were for the jury. Much has been discussed before us of the difference between the statement purporting to be a fact, and the expression of an opinion. It may be said, however, relative to the daily flow of water from certain sources that the statement of a competent expert hydraulic engineer may oftentimes be accepted as a statement of fact, dependent on the language used and the impression it really made upon the party to whom made, which would be questions of fact for the jury. One method of arriving at value of properties of this nature is based upon their net earning capacity, which is considered equal to a capital the interest of which equals the net income from the works.
“ Whether a representation as to the value is merely an expression of opinion or belief, or an affirmation of a fact to be relied upon, is a question for the jury.” Simar v. Canaday, 53 N. Y. 298 (13 Am. Rep. 523); Hickey v. Morrell, 102 N. Y. 454 (7 N. E. 321, 55 Am. Rep. 824); Cheney v. Gleason, 125 Mass. 166; Picard v. McCormick, 11 Mich. 68; Nowlin v. Snow, 40 Mich. 699; Allen v. Hart, 72 Ill. 104; Cruess v. Fessler, 39 Cal. 336; Stewart v. Wyoming Cattle Ranche Co., 128 U. S. 383 (9 Sup. Ct. 101).
Statements of value are sometimes nothing more than the expression of the party’s own opinion, and there is a group of decisions in which they are so treated. On the other hand, statements of value may be affirmation of a specific material fact, and there is a group of decisions in which they are so treated and held to be fraudulent misrepresentations. There is no necessary conflict between these two groups of decisions. Kost v. Bender, 25 Mich. 515.
4. The trial court, which hears all the evidence and has the same facilities for weighing it as the jury, may exercise a larger discretion in setting aside the verdict than a
In Pederson v. Seattle, etc., Street Ry., Co., 6 Wash. 202 (33 Pac. 351), it was said:
“But, if, on due consideration of the evidence, it appears that the verdict is not supported hy any substantial proofs, it ought to he promptly and unhesitatingly set aside, and a new trial ordered.”
Guley v. Northwestern Coal, etc., Co., 7 Wash. 491 (35 Pac. 372), is cited hy appellant to sustain the motion for a new trial on the insufficiency of the evidence. The court said in view of the facts before it:
“ Credible witnesses cannot he set aside in this way, and a verdict supported on the uncorroborated testimony of a single witness, and he the party most interested.. Where the clear weight of the evidence is with either side, there is no substantial conflict, and the court should take the decision of the case from the jury.”
In that case, which was a suit for damages for negligence, the acts of negligence were testified to hy the plaintiff alone. It was against a coal company for injuries sustained on a car loaded with coal going down a steep grade. There was testimony of other witnesses that the superintendent of the coal company said, referring to plaintiff:
“ Don’t blame the hoy; I was to blame for it. I told him to brake the car down, and gave him the stick to brake it down with.”
There were several witnesses on the part of the defendant who testified as to plaintiff’s negligence contributing to the accident. Two of the judges of the court dissented from the conclusion of the majority and a strong dissenting opinion was filed. This case ivas commented upon in Brown v. Seattle City Ry. Co., 16 Wash. 465 (47 Pac. 890), as follows:
*480 “We do not think the views here expressed necessarily conflict with the decision of this court in Guley v. Northwestern Coal, etc., Co., 7 Wash. 491 (35 Pac. 372), as the court there used the expression that the ‘ clear ’ weight of all the evidence must be on one side to justify the court in taking the decision from the jury. But the court does not favor any extension of the rule announced in the case cited.”
We think the court, in Guley v. Northwestern Coal, etc., Co., went beyond the true rule in applying it to the facts of that case. In the case of Comegys v. American Lumber Co., 8 Wash. 661 (36 Pac. 1087), two of the judges dissented from the conclusion of the majority in reversing the judgment of the lower court for insufficiency of the evidence to sustain the verdict. In Roberts v. Washington National Bank, 11 Wash. 550 (40 Pac. 225), it was merely decided that in an equity cause findings of fact made by the court do not stand upon the same footing as the verdict of a jury, but it is the duty of the appellate court to examine de novo the proofs contained in the record. But upon the facts in that case two of the judges dissented from the conclusion of the court. The rule obtaining in this court has been very well expressed in Graves v. Griffith, etc., Co., 3 Wash. 742 (29 Pac. 344):
“An appellate court in a law case will not usurp the functions of a jury, or of a judge acting in the capacity of a jury, and reverse the judgment because the weight of testimony seems to be on the other side, or because, in a case of conflict of testimony, the jury believed the testimony of witnesses that it [the court] does not believe.” Puget Sound, etc., R. R. Co. v. Ingersoll, 4 Wash. 675 (30 Pac. 1097).
In Booth v. Columbia, etc., R. R. Co., 6 Wash. 531 (33 Pac. 1075), the court said:
*481 “We think there was some evidence which was properly-presented to the jury, . . . and that there was sufficient evidence, if not denied, to support a judgment. Whether or not it was successfully denied, is a question for the jury to pass upon.” Billon v. Folsom, 5 Wash. 439 (32 Pac. 216); Burden v. Cropp, 7 Wash. 198 (34 Pac. 834).
“ The verdict of a jury will not be disturbed on appeal, if there is any testimony which warrants their conclusion, however much the testimony to the contrary may preponderate.” Bucklin v. Miller, 12 Wash. 152 (40 Pac. 732).
“ The verdict of a jury will not be disturbed when there is evidence supporting it, although it might not be sufficient to convince the appellate court.” Robertson v. Woolley, 12 Wash. 326 (41 Pac. 48).
“ When the trial is before a jury, the court cannot weigh the testimony upon a motion for a non-suit for the reason that it cannot weigh it at any time.” Lambuth v. Stetson & Post Mill Co., 14 Wash. 187 (44 Pac. 148).
“When there is any evidence to warrant the verdict and the trial court has refused to set it aside, it will not be reversed on appeal. Miller v. Bean, 13 Wash. 516 (43 Pac. 636).
In the case of Brown v. Seattle City Ry. Co., supra, this court said, speaking of the testimony of the plaintiff upon which the allegations of the complaint were principally sustained:
“ It is true, her interests were involved in the result of the suit, and that was a matter for the jury to take into consideration. There was evidence to support the verdict, if the witness was credited by the jury. We do not think it is the function of the court to weigh the credibility of the witnesses; and, where there is substantial conflict in the testimony, the case is for the determination of the jury.”
Counsel for appellant have maintained with much earnestness here that the judge of the superior court was not
“ I will merely say this, that I became satisfied at the conclusion of the trial and am still satisfied that there was evidence tending to show or to prove the affirmative of every issue of fact that was submitted in the charge to the jury, and there, was such substantial evidence in the way of circumstances tending to prove every one of these that it was the duty of the court to submit them to the jury.”
It is true that court proceeds to discuss a personal acquaintance with the president of the city council and with some of the officers of appellant and to say that more than a legal presumption in favor of the innocence of those gentlemen had weight with it, and that it was altogether likely, if the judge had been called as a juror in the case, he might have been rejected. These remarks in the opinion of the superior judge seem to have been brought out by his view of a possible duty of the court with reference to the president of the city council as a member of the bar, and not as an expression of judicial opinion upon the validity of the verdict of the jury in the case which had been tried.
The sale of the water and light works and all property appertaining thereto was an entirety. There was no agreement between the parties upon the value of any specific portion or article. Therefore the correct rule for assessment of damages was stated by the court: The difference between the whole purchase price paid and the actual value of the whole property at the date of sale. There was competent testimony from which the jury could arrive at the amount found.
"Where the material facts of the case are supported by competent evidence, although it may be very conflicting
The judgment of tbe superior court is affirmed.
Scott, 0. J., and Dunbar, J., concur.
Dissenting Opinion
(dissenting). — After further consideration of tbe questions presented in this case, I am still convinced that tbe former conclusion of tbe court was right, and I am, therefore, constrained to dissent.