Bunck v. McAulay

• Decision Date: 22 March 1915
• Docket Number: 12244.
• Citation: 84 Wash. 473,147 P. 33
• Parties: BUNCK et ux. v. McAULAY et ux.
• Court: Washington Supreme Court

147 P. 33

84 Wash. 473

BUNCK et ux. v. McAULAY et ux.

No. 12244.

Supreme Court of Washington

March 22, 1915

Department 1.Appeal from Superior Court, King County; King Dykeman Judge.

Action by Henry L. Bunck and wife against Angus McAulay and wife.From a judgment for plaintiffs, defendants appeal.Affirmed.

Milo A Root and Gay & Kelleran, all of Seattle, for appellants.

Ryan &amp Desmond, of Seattle, for respondents.

MOUNT J.

This action was brought by the purchasers of the lease and furniture of a hotel against the vendor for damages because of alleged fraudulent representations.The cause was tried to the court and a jury, and resulted in a verdict of $7,500 in favor of the plaintiffs.A judgment was entered upon the verdict, from which judgment the appeal is prosecuted.

The defendants had owned the hotel lease and furniture since February, 1912.For some time prior to June 1, 1913, the plaintiffHenry L. Bunck had negotiated with the defendantAngus McAulay for the purchase of the lease and furniture of the hotel.About that date the deal was consummated, and the plaintiffs purchased at the agreed price of $18,500, which was paid as follows: The plaintiffs transferred a tract of land in Chehalis county to the defendants at a valuation of $4,000, paid $2,800 in cash, and gave a mortgage for $900 on another piece of property.They also gave back to the defendants a mortgage for $10,200 on the furniture in the hotel.They received a credit of $600 on account of commissions paid to the real estate agent who brought the parties together.

The plaintiffs allege in their complaint that they were wholly inexperienced in the hotel business, which the defendants well knew; that the defendantAngus McAulay fraudulently represented that the hotel had for a long time been earning a net income of over $1,000 per month; that there were a large number of transient guests; that the defendantAngus McAulay exhibited the register containing the names of the guests, and misrepresented the number of rooms rented to permanent guests, the amount of the rental received therefor, and that the guests would remain permanently in the hotel; that the representations were made to induce the plaintiffs to purchase; that they relied upon these representations, and had no opportunity to investigate or obtain knowledge thereof; that the hotel had not earned $1,000 net per month, nor any other sum, but had been operated at a loss; that the names on the hotel register so exhibited had been fraudulently and falsely placed thereon for the purpose of defrauding the plaintiffs; that many of the hotel guests were co-conspirators of the defendants, paid no rent, and kept their rooms for the purpose of defrauding the plaintiffs; that the real value of the property was $8,300, whereby the defendants had been and were damaged in the sum of $10,200.

The defendants, in answer to the complaint, after denying generally the charges of fraud and overreaching, alleged affirmatively that the plaintiffs were to pay $2,800 in cash, $900 in a solvent real estate mortgage, transfer 80 acres of land represented by the plaintiffs to be worth $4,000, and which was, in fact, worth only $1,000, to execute the $10,200 mortgage described in the complaint, and to be allowed the said sum of $600 cash paid to the agent; that the plaintiffs made their own inquiries and relied thereon; that one Van Dusen was a part owner in the hotel by conveyance of an interest from the plaintiffs, and was therefore a necessary party; and that the plaintiffs negotiated a second mortgage to the Northern Bank & Trust Company of Seattle in the sum of $3,000.

A demurrer to this affirmative matter was sustained for the reason that the facts therein stated might all be shown under a general denial.Whereupon the defendants filed an amended answer substantially the same as the original, except omitting the affirmative matter.

A number of errors are assigned which we will consider in the order as stated in the appellants' brief.In the instructions to the jury the court stated the measure of damages to be:

'The difference between the purchase price of said hotel and its value at the time of the sale.'

It is conceded that the purchase price was sufficiently shown, for both parties agree that it was to be $18,500.But it is argued by the appellants that there was no proof of the actual value at that time.The evidence, however, tended to show that the value of the furniture in the hotel at that time, if new, would be worth about $8,500, but that in its condition at that time was worth much less than that sum.The evidence also tended to show that the lease upon the premises extended for a period of something more than a year, and also that there was no profit in the business; that, instead of making a profit, it was a losing venture at the time the sale was made.It is apparent, we think, that the jury was authorized to find upon this evidence, if they believed it to be true, that the value of the property sold to the plaintiffs was much less than the agreed price, which was based upon false and fraudulent representations relied upon by the plaintiffs.We are satisfied, therefore, that there was sufficient evidence to go to the jury upon the question of value at the time of sale.

The court instructed the jury as follows:

'The fact that the plaintiffs may or may not have given a chattel mortgage to the Northern Bank & Trust Company is immaterial, and in no wise relieves him from the obligation to pay the purchase price of said hotel, nor does it relieve the defendants from their obligations to pay damages for any misrepresentations they, or either of them, may have made to plaintiffs, if you find from a fair preponderance of the evidence that the defendants made any misrepresentations, and that the plaintiffs relied thereupon or were expected so to do by the defendants, and were damaged, then your verdict would be for the plaintiffs.'

It is argued by the appellants that this instruction is erroneous because of the use of the words 'or were expected so to do.'These words are singled out of this instruction.Standing alone, they might be considered erroneous.But the court had already just previously instructed the jury as follows:

'The court further instructs you that, if you find from a fair preponderance of

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