Opinion
No. 20865. Department One.
November 10, 1927.
SALES (53) — RESCISSION BY BUYER — FRAUD — FALSE REPRESENTATIONS AND OPPORTUNITY TO INSPECT. The vendees of hotel and rooming house property, received in a trade, are entitled to rescission for fraud by gross misrepresentations of the monthly income and value of the property, known by the vendor to be false, although inspected by the vendees, who were farmers and wholly ignorant of the hotel and rooming house business.
Appeal from a judgment of the superior court for Thurston county, Wilson, J., entered May 23, 1927, upon findings in favor of the plaintiff, in an action for rescission and an accounting, tried to the court. Affirmed.
Julia Waldrip Ker and Roscoe R. Fullerton, for appellants.
H.B. Dickinson, Dean H. Dickinson, and Bigelow Manier, for respondents.
The plaintiffs, Mr. and Mrs. Nauman, prosecuted this action in the superior court for Thurston county, seeking rescission of an exchange of their farm in that county for certain hotel and rooming house business and personal property in Portland, Oregon, belonging to the defendants, Raddue and LeMoine; the setting aside of the conveyances made in the consummation of that exchange; and an accounting between the parties. The cause, being of equitable cognizance, proceeded to trial before the court sitting without a jury, which resulted in findings and judgment awarding to the plaintiffs rescission of the exchange, cancellation of the conveyances, and directing an accounting, as prayed for. From this judgment, the defendants have appealed to this court; counsel for the respective parties having stipulated that the accounting be held in abeyance until the disposition of this appeal.
The controlling facts, as found by the trial court, may be summarized as follows: Prior to January, 1927, the plaintiffs were the owners of the farm in question, and the defendants were the owners of the hotel and rooming house business and property in question. About November 5, 1926, the plaintiffs listed their farm for sale at a sale price of twelve thousand five hundred dollars with one Hallman, a real estate broker of Portland. Soon thereafter, the defendants listed their hotel and rooming house property for sale or trade with Hallman. In the further negotiations and consummation of the exchange, Hallman acted as agent for all parties, with the knowledge and consent of all parties.
On November 25th, Hallman, by letter to the plaintiffs, suggested to them an exchange of these properties and the probability of the defendants being willing to make such an exchange; at the same time sending to the plaintiffs a statement which had been prepared by the defendant Raddue purporting to show the net income of the defendants' hotel and rooming house property to be $359 per month; this statement manifestly being prepared by Raddue for the purpose of being used by Hallman in his efforts towards making disposition of the hotel and rooming house property for the defendants. Some further negotiations were carried on between the parties, the defendants coming to Thurston county to see the farm, and the plaintiffs going to Portland to see the hotel and rooming house property.
When the plaintiffs went to Portland, they saw and talked to the defendant Raddue, who assured them that the statement given to Hallman and by Hallman sent to the plaintiffs, showing the net income of the hotel and rooming house property to be $359 per month, was correct. The plaintiffs were shown the hotel and rooming house property by the defendant Raddue in a rather perfunctory and casual manner, the plaintiffs plainly being discouraged by Raddue from making a thorough examination. During the negotiations, the value of the hotel and rooming house property was also represented to the plaintiffs to be of much greater value and in much better condition than its actual value and condition.
Early in January, the exchange was consummated and conveyances made accordingly. About January 10th, the plaintiffs finally went into possession of the hotel and rooming house property, and soon thereafter discovered that the net income of the property had not been, and was not then, to exceed forty dollars per month, and that the value and condition of the property was not anywhere nearly equal to its value and condition as represented by the defendant Raddue. The plaintiffs are farmers, wholly inexperienced in hotel and rooming house business and properties, while the defendants are experienced in rooming house business and properties.
The representation made by Raddue in behalf of himself and co-defendant that the net income of the hotel and rooming house property was $359 per month was not true, being a grossly exaggerated statement of such net income, which was in fact not over forty dollars per month. The representation made by Raddue in behalf of himself and co-defendant as to the condition and value of the hotel and rooming house property was also grossly exaggerated. These representations were known by Raddue to be untrue, and were intentionally made by Raddue to the plaintiffs with such attending circumstances as induced the plaintiffs to rely upon them in making the exchange, and they did so rely upon them in making the exchange. The plaintiffs, soon after going into possession of the hotel and rooming house property and then first learning of the manner in which they had been deceived, promptly made demand upon defendants for rescission, which demand not being complied with, they promptly commenced this action.
We have carefully read all of the evidence, as abstracted by counsel, and deem it sufficient to say that we regard the findings of the trial court abundantly supported by the evidence, and conclude that we would not be at all warranted in reaching a different conclusion than that reached by the trial court in the disposition of the case up to the matter of accounting. It hardly needs citation of authority to demonstrate that, under the facts of this case, the plaintiffs are entitled to relief as awarded by the trial court. If so, the following of our decisions are conclusive in support of the judgment: Champneys v. Irwin, 106 Wn. 438, 180 P. 405; Warwick v. Corbett, 106 Wn. 554, 180 P. 928; Brown v. Hoffman, 116 Wn. 430, 199 P. 742.
The judgment is affirmed, and the case remanded to the superior court for further proceedings.
MACKINTOSH, C.J., MITCHELL, TOLMAN, and FRENCH, JJ., concur.