Beaulaurier v. Washington State Hop Producers, Inc.

• Decision Date: 21 March 1941
• Docket Number: 28130.
• Citation: 111 P.2d 559,8 Wn.2d 79
• Parties: BEAULAURIER et al. v. WASHINGTON STATE HOP PRODUCERS, Inc.
• Court: Washington Supreme Court

111 P.2d 559

8 Wn.2d 79

BEAULAURIER et al. v. WASHINGTON STATE HOP PRODUCERS, Inc.

No. 28130.

Supreme Court of Washington, En Banc.

March 21, 1941

Action to cancel and rescind marketing contracts by A. E Beaulaurier and others against the Washington State Hop Producers, Inc., wherein defendant filed a cross-complaint. From a judgment for defendant, plaintiffs appeal, and defendant cross-appeals.

Reversed and remanded, with instructions.

Appeal from Superior Court, Yakima County; Arthur McGuire, judge.

H. A LaBerge and Charles R. Lyon, both of Yakima, for appellants.

Cheney & Hutcheson, of Yakima, for respondent and cross-appellant.

SIMPSON Justice.

This is an action in equity to cancel and rescind marketing contracts entered into between plaintiffs and defendant.

The first amended complaint, upon which the trial was had, based a plea for recovery upon three causes of action. In the first cause of action plaintiffs alleged that they were members of defendant co-operative corporation and that defendant refused to allow them to withdraw therefrom in accordance with the provisions of a by-law which allowed members so to do by serving a notice of withdrawal upon the giving of ten days' notice and paying sums due the corporation. The second cause of action alleged fraud in the securing of plaintiffs' membership and marketing contracts. In the third cause of action plaintiffs alleged a breach of their marketing contracts in that the defendant allowed eleven members to cancel and rescind their contracts with the corporation.

In its answer defendant denied the allegations contained in the complaint, save and except those general allegations relating to its corporate capacity and the facts regarding plaintiffs' membership in the corporation.

For a further answer and cross-complaint, defendant alleged that plaintiffs had not complied with their contracts relative to the delivery of hops as required by the marketing agreements provided for in those contracts.

Defendant prayed for a decree requiring a compliance with the terms of the contracts and for an attorney's fee in the sum of $1,500. The reply pur in issue the allegations of defendant's answer and cross-complaint. The cause, tried to the court, resulted in a judgment for defendant. Plaintiff and defendant have appealed.

The court found that appellant A. E. Beaulaurier's contract had been obtained by fraudulent means in that Before and at the time he signed the marketing agreement it was represented to him that unless seventy-five per cent of the hop growers signed marketing agreements the corporation would not be formed. The court found: 'That said plaintiff Beaulaurier was one of the persons who signed the petition to amend the by-laws, Exhibit No. 3. On January 16 1939, the defendant received by mail a notice signed by said plaintiff Beaulaurier in purported compliance with said proposed amendment to said by-laws in which said Beaulaurier gave notice of his withdrawal from membership in defendant co-op. That said Beaulaurier, as a member of said co-op, in December, 1938, signed and executed said Exhibit 3 for the purpose of exercising his rights as a member of the co-operative to change its by-laws, and thereafter he gave notice to said co-op in purported compliance therewith as to his withdrawal from said membership. That by signing said Exhibit No. 3 and by giving notice of withdrawal thereunder said Beaulaurier affirmed his membership contract with the defendant and thereby waived the fraud that had been practiced upon him, which fraud must have been known to him prior to the latter part of December, 1938, at which time he signed said Exhibit 3. Said Beaulaurier never gave any declaration of rescission of his marketing agreement or membership contract until the commencement of this action in April, 1939.'

From the facts to which we have just referred, the court concluded that appellant A. E. Beaulaurier had '* * * fully waived any and all fraud and misrepresentation committed upon him by the defendant or any of its solicitors or representatives, and prior to the commencement of this action affirmed his membership contract and his marketing contract with the defendant.'

No fraud was found to have been perpetrated upon the other appellants herein.

In its judgment, the court dismissed appellants' complaint, and then provided that appellants should forthwith deliver to respondent their hops produced during the year 1939, and that, in addition, A. E. Beaulaurier and wife should deliver twenty-one bales of hops grown in the year 1938. A further provision of the decree restrained appellants from selling any of their 1939 crop to other than respondent, and then gave judgment against plaintiffs for the sum of $500 as attorney's fees.

Appellants' assignments of error are that the court erred (1) in holding that the plaintiff A. E. Beaulaurier had waived fraud practiced upon him and was estopped from asserting such fraud; (2) in entering a mandatory injunction requiring appellants to forthwith deliver their hops to defendant; (3) in dismissing appellants' amended complaint; (4) in entering a judgment of specific performance requiring appellants to deliver the hops produced by them in 1938 and 1939; and (5) in granting respondent a judgment against appellants in the sum of $500 as attorney's fees.

The facts are as follows: Respondent, a hop marketing co-operative corporation, was organized by the filing of articles of incorporation December 2, 1937. Shortly thereafter appellants, in company with one hundred other hop growers, became members thereof by signing marketing contracts. The contracts provided that for a period of ten years the members would deliver to and market and sell their yearly crop of hops through the respondent association under conditions and terms contained in the marketing contracts entered into between the members and the co-operative corporation.

Appellants refused to deliver to respondent the crops grown during the year 1939, and, in addition, appellants Beaulaurier refused to deliver twenty-one bales of their 1938 crop.

It is proper to note, Before discussing other issues, that the allegations contained in appellants' first cause of action cannot receive support, because of the fact that the by-law to which appellants refer was never approved by a sufficient number of the members of respondent co-operative.

Appellants press upon us error of the trial court in holding that appellant A. E. Beaulaurier had waived that fraud which the court found had been practiced upon him by representatives of respondent corporation.

Appellant Beaulaurier contends that he was induced to sign the marketing contracts because of the false representations that the corporation would not be formed unless seventy-five per cent of the hop growers of Washington, Oregon, and California would become members of the co-operative organization formed for the purpose of marketing hops.

We will assume, without deciding, that appellant A. E. Beaulaurier was induced to sign the marketing agreement by fraudulent representation. It then remains to be decided whether appellants waived that fraud.

In December, 1938, appellants signed a petition, as shown by Exhibit No. 3, to amend the by-laws in the following manner: 'Any member may withdraw in any year, beginning with the year 1939, by giving ten days written notice to the Board of Trustees of said Company, any time prior to the 15th days of January of such year, beginning with January 15th, 1939. That upon the expiration of the ten days from the delivery of said notice in person or by registered U.S. Mail, and the payment of said withdrawing grower to said Company of all sums due and owing from said member to it, confining said payment on account of notes of the grower to the Company only, the membership of such member so withdrawing shall cease and all marketing contracts signed by said grower so withdrawing be cancelled and returned to him, and all hops of said grower in any pool remaining unsold are automatically released to the grower.'

Appellants took part in the meeting at which the amendment was proposed, and, although the proposed amendment failed to pass, appellant Beaulaurier, January 14, 1939, notified respondent by letter that he withdrew as a member of the respondent corporation in conformity with the provisions of the by-law filed with the company in December, 1938.

Counsel for appellants contend that respondent cannot take advantage of the waiver and estoppel for the reason that it was not pleaded by respondent.

It is the rule that estoppel and waiver are affirmative defenses and must be pleaded. Walker v. Baxter, 6 Wash. 244, 33 P. 426; Olson v. Springer, 60 Wash. 77, 110 P. 807; Johns v. Clother, 78 Wash. 602, 139 P. 755; Russell v. Mutual Lumber Co., 134 Wash. 508, 236 P. 96; Shafer Bros. Land Co. v. Universal Pictures Corp., 188 Wash. 33, 61 P.2d 593.

In this case evidence relative to acts which the court found constituted the waiver of fraud was presented without objection on the part of appellants. In such cases, we have held that the pleadings should be treated as amended to conform to the evidence, and that the court will consider the question of waiver and estoppel if there is evidence showing such fact. Hubbard v. Hartford Fire Ins. Co., 135 Wash. 558, 238 P. 569, 240 P. 565; Johnson v. Grays Harbor R. & Light Co., 142 Wash. 520, 253 P. 819; Godefroy v. Reilly, 146 Wash. 257, 262 P. 639; Thurber v. Clark, 154 Wash. 485, 282 P. 911; Du Pont Cellophane Co. v. Kinney, 181 Wash. 140, 42 P.2d 441; Anderson v. Anderson, 199 Wash. 696, 93 P.2d 290.

The court properly considered the evidence relative to waiver and estoppel.

It is apparent that appellant Beaulaurier, with...