89 Wash. 286 | Wash. | 1916
Appellants sued to rescind a contract and sale entered into between the husband and respondent Thomas A. Ireland, on October 25, 1910.
Under the contract, appellants conveyed a certain lot and a brick block thereon in Chewelah, Washington, and respondents, in payment therefor, transferred to appellants 5,000 shares of common stock of the Skeena Valley Land Company, paid $250 in cash, and assumed a mortgage of $1,100 on the Chewelah real estate. The grounds for rescission are alleged false and fraudulent representations made by respondent Thomas A. Ireland for the purpose of inducing appellants to enter into the contract and sale, and which were so relied upon.
The representations of fraud are these:
(1) . Statements of fact made by respondent Thomas A. Ireland to appellant Frank M. Jarvis concerning the price paid by respondent for the common stock of the Skeena Valley Land Company transferred to appellants, and of cash offers made to respondent for the purchase thereof then pending.
(2) That the Skeena Valley Land Company was then and there the owner of approximately 10,000 acres of land in the Skeena river valley, British Columbia, adjacent to the town of Hazelton.
(3) That such lands were first-class, level, agricultural lands, susceptible of cultivation and adapted to the raising of good crops of grain and fruit.
(4) That the 5,000 shares of stock entitled the holder thereof to select from the lands above mentioned and have conveyed to the holder of such stock 517 acres of first-class,
It is further alleged that the lands were over 1,000 miles from where the contract was made and could not be examined by appellants, and they had no means of ascertaining the truth or falsity of the statements and representations made by respondent, but relied upon the statements so made.
The trial court found for the respondents chiefly upon the grounds of the laches of appellants, based upon the incontrovertible facts disclosed that appellants discovered, if it were true, as early as November 23, 1910, that respondent’s representation as to cash offers for his stock was false, and that, therefore, the statute of limitations operated as a legal bar to that ground of rescission; that appellants knew, as early as the early part of 1912, that the land company did not 'own the land represented, but did not then take any steps to rescind; that, at that time, the land company had a large sum of money that could have been used in completing the acquisition from the British Columbia government of the lands for which the company had purchased options; that afterwards the secretary and treasurer of the land company, one Callahan, embezzled the funds of the company and absconded, after which occurrence appellants took steps to rescind. Whether or not the grounds of the court’s decision were correct or sufficient, we must now try the cause de novo upon the facts and the law. It is a well established principle, here and elsewhere, that fraud must not be presumed nor conjectured. Nath v. Oregon R. & Nav. Co., 72 Wash. 664, 131 Pac. 251; Pierce v. Seattle Elec. Co., 78 Wash. 167, 138 Pac. 666.
I. As to the first charge of misrepresentation, on November 23, 1910, Jarvis wrote a letter to Ireland stating, among other things, that one Mahoney, one of the men respondent had referred to as having been willing to buy his stock for about $7,300, had denied it to Jarvis, and that Ireland -had
This testimony fully disproves the first charge of misrepresentation ; but if it did not, its discovery in November, 1910, and nonaction by appellant until February, 1914, when this action was commenced, fully bars any action upon that discovery of fraud, by the legal limitations as well as by equitable laches. It is conceded that the rule is that fraud may consist of the vendor representing as true that which he did not know to be true and which was not in fact true; but if the vendor represented to the vendee that he had no personal knowledge of the facts, but asserted them upon information received from other parties, he would not be liable for any false representations. English v. Grinstead, 12 Wash. 670, 42 Pac. 121; Davidson v. Jordan, 47 Cal. 351.
II. The most important particularization of fraud is that concerning the location, quality, and value of the Skeena river valley lands, for they were very remote from the location of the parties and it would be assumed that the vendee had no opportunity then to investigate them, and might rely upon the express representations of the vendor. This false inducement, if made, was the most material, and includes the second and part, at least, of the third and fourth charges of misrepresentation and fraud. We, therefore, examine the
The case presented is somewhat similar to that of Romaine v. Excelsior Carbide & Gas Machine Co., 54 Wash. 41, 103 Pac. 32. We are not disposed to say that the elements of laches exist as completely in this case as in that. Possibly the rights of no “other people” became involved in this case, except the rights of other and subsequent purchasers of stock in the company, which appellant aided in controlling after he became a shareholder. Approximately the same time elapsed after Jarvis discovered, or should have discovered, the alleged worthlessness of the company, as in the Romaine case.
Every case for rescission of a contract for actionable fraud depends largely upon the particular facts of the case. In this case, we cannot escape the conclusion that the facts, and the logical inferences deducible therefrom, greatly preponderate in favor of respondents.
As to the representations themselves, the evidence for respondents outweighs that for appellants. After reading the entire evidence carefully, it convinces us that Ireland’s representations were not positively made, nor with intentional deceit. We find nothing tending to show that he knew them to be false, or that he did not honestly believe them to be true, or that he had reason to doubt or disbelieve the sources of his information. Ireland was not a promoter of the enterprise. On Jarvis’ own showing, it is plain that Ireland had never been, or professed to have been, on the land, and therefore had no personal knowledge of it save its very general location, but made his statements upon reports received from others, of which Jarvis well knew. By his own showing, also, Jarvis telephoned to Callahan, the secretary, general manager and chief promoter of the company, to come out from Spokane, where he had his place of business, to Hillyard, a suburb, where Jarvis lived, and talked the company’s assets and prospects over very fully, and said he believed the state
In addition to the above circumstances, it is clear, as stated by the trial judge, that Jarvis knew, in the latter part of 1911, or early part of 1912, by reason of his being a director of the company, that the company had only options to purchase the land which it was supposed to own; he also knew that payments of cash of considerable amount, and notes to a larger amount, had been taken by this corporation for subscriptions to its capital stock, and that it was the intention of the company that the funds thus raised, and to be raised, were to be used in completing the purchase of the lands, yet he took absolutely no steps, as director, to see that these
The foregoing reasoning and deductions of the trial judge are correct.
Appellants should not recover.
Judgment affirmed.
Morris, C. J., Bausman, Main, and Parker, JJ., concur.