54 Wash. 41 | Wash. | 1909
This is an action in equity to set aside and rescind a sale and cancel a warranty deed made by the respondents to the appellant, conveying certain tide land property situated in the city of Bellingham, Washington. The consideration for the sale was $1,500 in money, and eighteen hundred shares of the capital stock of appellant corporation. Contemporaneously with the filing of the complaint, respondents tendered the stock certificate and money to the amount of $1,500 into court, and tendered the amount of taxes appellant had paid on the land. The complaint alleges as grounds for rescission that respondents were induced to sell their property to the appellant through fraud consisting of divers and sundry fraudulent representations. As compactly stated by the respondents in their brief, their contention is that they were induced to part with valuable property at a consideration very much below its worth, through representations of the officers of the appellant showing a condition of appellant’s affairs contrary to the truth, without which inducement respondents would not have parted with their property. That is the substance of the complaint. To this complaint a demurrer was filed, to the effect that it did not state facts sufficient to constitute a cause of action. The demurrer was overruled. The defendant answered, denying the pertinent allegations of the complaint. A jury was called to pass upon certain questions of fact, and returned answers thereto as advisory to the court. The jury found all pertinent facts in favor of the plaintiffs. The court also made findings of fact and decreed a rescission of the sale. From this judgment, this appeal is taken.
A brief recital of the case is to the effect that, some time prior to 1904, appellant had been manufacturing acetylene gas machines, in Spokane, Washington. It acquired a patent on a furnace for manufacturing carbide, and O. W. Ames, president of appellant company, came to Bellingham, in September, 1904, to investigate possibilities for a furnace there. The company at that time held a note against one
It appears from the record in this case, that the principal reason urged to support the right of rescission is that the carbide furnace, which it is alleged was promised by the appellant, was never furnished; that the machinery, which it is alleged the appellant represented to be on the way, never arrived; that it was finally discovered that the company did not have the means which it represented it did have to establish the carbide plant; that a large portion of the capital stock which it represented to be in cash was in reality in an unsecured note given by one Muldowney, which was not an available asset. On the question of the alleged representations, the testimony is conflicting, Mr. Ames, the manager of the company,' swearing positively that the sale of the treasury stock was for the express and avowed purpose of obtaining means to procure the carbide furnace, and that no other representations were made by him.
The respondent Romaine was an attorney of standing and experience, learned in his profession, and evidently a bright, intelligent man. His standing and business capacity had been recognized by the community in which he lived, by his election to the office of mayor of the city of Bellingham. No fiduciary relation existed between him and Ames, the president and manager of the company, by whom he claims he was overreached'; so that, in that respect at least, they stood on an equal footing. Ames was introduced to Romaine about the 1st of June, 1905, and immediately appealed to him to take stock in the concern. The evidence shows that, from this time on, Romaine and Ames were in close relations, having many consultations concerning the enterprise, Romaine evidently believing, not only that an investment would be a good thing for him, but that the establishment of the plant would be a good thing for the city. He should, therefore, have been doubly careful in examining into the merits of the enterprise.
To briefly recapitulate, it will be seen that, before the sale was consummated, the promises alleged to have been relied upon had not been fulfilled, and yet the transfer was made. But massing that, after the sale was made, more than a year and a quarter had elapsed after the financial condition of the corporation had been made public and brought to the attention of the respondents, before this action of rescission was brought. Taking this in connection with the fact that the property in controversy is of a speculative value, being tide lands, it must be seen that the respondents have been guilty of gross laches in not seeking relief sooner. Other people’s rights 'have become involved, and respondents must not be allowed to speculate upon the success or failure of an enterprise before they determine whether they will cast their fortunes with it or cut loose from it.
All that we have said with reference to respondent Romaine applies, excepting as to his official capacity, equally to respondent Rogers. He unquestionably acted upon the advice of his father, who knew the history of the transaction from beginning to end. He was also working for the appellant company at the time he subscribed for the stock, and was guilty of the same laches in not sooner bringing his action for rescission. So far as concerns the representations made by Ames in relation to the value of the stock, and what it would probably be worth in the future, that was purely an expression of opinion, and must necessarily have been recognized as such.
Under all the testimony in the case, we are compelled to reverse the judgment with instructions to dismiss the action.