Cornwall v. Anderson

• Decision Date: 04 May 1915
• Docket Number: 12304.
• Citation: 148 P. 1,85 Wash. 369
• Parties: CORNWALL v. ANDERSON et al. POLLAND v. SAME.
• Court: Washington Supreme Court

148 P. 1

85 Wash. 369

ANDERSON et al. POLLAND v. SAME.

No. 12304.

Supreme Court of Washington

May 4, 1915

Department 1. Appeal from Superior Court, Spokane County; E. H Sullivan, Judge.

Actions by J. J. Cornwall and E. P. Polland against F. W. Anderson and another. Judgments for plaintiffs, and defendants appeal. Affirmed.

Hurn &amp Hurn, of Spokane, for appellants.

Graves Kizer & Graves, of Spokane, for respondents.

HOLCOMB J.

By stipulation between the parties the appeals in these two cases have been heard as one appeal. Each of the actions is a suit upon a promissory note in favor of the plaintiff and respondent, signed by W. W. Scott and appellants, D. Moylan and F. W. Anderson. The appellants defended separately, being represented by different counsel but their defense was the same and rested upon the same state of facts. By stipulation the actions were consolidated for trial and tried to the court without a jury. Scott was not made a party to either action. The defense of the appellants was duress. The facts in the case are these: Anderson is a man 44 years of age, and since he was about 20 years old has been a banker and money loaner. From 1901 to 1914 he lived at Davenport, Wash., and was cashier and the principal stockholder of the Lincoln County State Bank, owning $38,000 of its $50,000 capital stock. In 1914 he removed from Davenport to Spokane, where he is engaged in the mortgage and loan business. Appellant Moylan was engaged in the livery business in Davenport for a number of years, and prior to that was a farmer in that vicinity, but removed therefrom to Spokane, and is there engaged in the livery business. In 1910 Moylan, together with one Sommers, organized a domestic corporation with a capital stock of 1,000,000 shares of the par value of $1 each, naming it the Washington & California Investment Company, in which Anderson and Scott became original subscribers to stock, and the four named composed the original board of trustees of the corporation. Scott was made president, and Anderson secretary and treasurer. The stock was nominally subscribed for by Scott, Sommers, and Moylan, and the money required for the company's operations to commence business was raised by a loan made by Anderson. There is a great mass of testimony in the record as to how Moylan, Scott, and Sommers conducted an energetic campaign for the sale of stock among the farmers about Davenport, most of which is immaterial. The plan adopted, however, was that the stock should be sold in blocks of 2,000 shares, together with 10 acres of the company's California lands, for $2,000 per block, $500 payable in cash, the remainder in three equal annual installments. Each sale was evidenced by a contract, whereby the company undertook to convey the 2,000 shares of stock and a specifically described 10-acre tract of realty upon the making of the payments therein provided. Each of these contracts was referred to as a 'share' in the company. Anderson took no active part in the selling. In several instances intending purchasers went to him for advice as to the advisability of purchasing, and he sometimes gave his opinion as to the prospects of the company. Among the purchasers of 'shares' were the respondents, Polland and Cornwall, who not only bought several blocks of stock from the company, but also acquired other contracts from other purchasers of the company. About the latter part of 1912 some dissatisfaction arose among some of the stockholders as to the affairs and management of the company. Scott and a man named Snyder had been placed in charge of the property in California. It was discovered that the land which the company had contracted to sell to the individual stockholders with the stock--that is, the 10-acre tracts--had been sold to other persons who had taken possession of it, and that portions of the land which had been represented as being owned by the company were held only under a contract of purchase, and that portions of this had been declared forfeited because of the company's default in payment. Scott's management was criticized, among other reasons, because he was not accounting for all the income realized from the property. Polland and Smith had both gone to California late in 1912 to investigate the condition and affairs of the company for themselves. Returning early in 1913, they went to see Anderson concerning the situation. On February 5th they had a conversation with him in Davenport, and, at his request, met him the next day in Spokane, together with Moylan, where another conversation was had, the result of which was that an agreement was made whereby Smith, Cornwall, and Polland agreed to sell to Moylan and Anderson 16 shares of the stock in the corporation for the sum of $1,170 a share, payment to be made on or before 30 days from date in case a deal then pending on what was called the Reid ranch was closed. In case of failure to close the Reid deal inside of 30 days, the contract was to be null and void. The Reid ranch was a tract of about 6,000 acres owned by the company, a sale of which was then pending, and which all persons concerned believed would be consummated, and which would net a handsome profit for the company. A sale of the Reid ranch was not closed in 30 days, and the performance of the contract was, by agreement between respondents, Smith and appellants, extended for another 30 days. Polland made another trip to California, and returned about the 1st of April. On the 12th of April the parties again met in Spokane at the Victoria Hotel, and Polland and Smith then insisted that $500 should be added to the amount which they had theretofore agreed should be paid to them of $1,170 per share or block, for the time and expense of their second trip to California, which they claimed was because of the fault of Anderson and Moylan. They were in conference at intervals for two days, and the result of the conferences was that Anderson and Moylan executed the notes now sued upon on April 14, 1913. The notes, after being signed by Anderson and Moylan, were sent to Scott in California for his signature. Scott signed the notes and returned them on April 22d, and thereupon the assignments of the share contracts were made and placed in escrow with Freece & Pettyjohn, a firm of lawyers in Davenport, for delivery when certain conditions had been complied with. The notes fell due November 1, 1913. Anderson did not claim that anything was wrong with the transaction or make any objection to the validity of the notes until October 20, 1913, when he notified respondents he did not intend to pay them. Moylan made no effort to invalidate his notes until he made his answer in these cases. He says that when he made the notes he intended to pay them.

The answers of the appellants are substantially the same in both cases, and set up the defense of duress by threatening each of the appellants with arrest on prosecution on a false criminal charge unless he executed the notes, and also by unlawful confederation and conspiracy to falsely accuse appellant of a crime and threatening his prosecution and arrest for the purpose of compelling him against his will to buy certain stock owned by respondents in the Washington & California Investment Company, at a price fixed by them which was more than double its real value, and execute the notes sued on therefor, and that solely by reason thereof each appellant executed said notes, and that said notes are without consideration.

The evidence to the issue tendered by the appellants was almost wholly of interested parties as witnesses, and is to some extent conflicting. The trial court had the advantage of seeing and hearing the witnesses and judging of their demeanor upon the stand. The trial court found that the appellants executed the notes freely and voluntarily, and that in doing so they were not acting under duress. The respondents insist that we are concluded upon this finding of the trial court by reason of the fact that this court has so frequently held that the decision of a trial judge based upon conflicting testimony will not be disturbed unless palpably contrary to the weight of the evidence. But it is also true that in a case tried to the court without a jury this court is compelled to try the case de novo; and, as was said in Borde v. Kingsley, 76 Wash. 613, 136 P. 1172, this court will sustain the findings and judgment of the trial court when, and when only, we can say that we are satisfied that the evidence does not preponderate against the findings. To the same effect, see Baker v. Yakima Valley Canal Co., 77 Wash. 70, 137 P. 342; Zizich v. Holman Security Inv. Co., 77 Wash. 392, 137 P. 1028, 139 P. 57; Johnsen v. Johnsen, 78 Wash. 423, 139 P. 189, 1200; Mueller v. Vancouver, 81 Wash. 384, 142 P. 868; Becker v. Clark, 145 P. 65.

We have felt impelled, therefore, to make a painstaking and careful examination of the evidence in this case in order to ascertain whether or not the evidence clearly...