Easton v. Chaffee

• Decision Date: 01 May 1941
• Docket Number: 28091.
• Court: Washington Supreme Court
• Parties: EASTON v. CHAFFEE.

113 P.2d 31

8 Wn.2d 509

EASTON v. CHAFFEE.

No. 28091.

Supreme Court of Washington

May 1, 1941

Department 1.

Action by E. A. Easton against Stephen E. Chaffee for damages for fraud. From a judgment in favor of defendant, notwithstanding the verdict of the jury, and from an order granting a new trial, in event of reversal of judgment non obstante veredicto, plaintiff appeals.

Judgment reversed, and order granting a new trial affirmed.

Appeal from Superior Court, Yakima County; Robert J. Willis, judge.

J. P Tonkoff, of Yakima, for appellant.

Clark &amp Grady, of Yakima, and Stephen E. Chaffee, of Sunnyside, for respondent.

BLAKE Justice.

This case comes up on appeal by plaintiff from a judgment entered in favor of defendant, notwithstanding the verdict of the jury, and from an order granting a new trial.

The principal question to be determined is whether the cause of action set up in the second amended complaint is grounded in fraud or upon a breach of contract. If the gist of the action rests upon breach of contract, it is barred by the statute of limitations. If the action grounds in fraud, the statute has not run against it, for the amended complaint contains allegations to the effect that plaintiff discovered the fraud within three years of the time he filed suit.

The case was tried and submitted to the jury upon the theory that fraud was the gist of the action. After reconsidering the matter upon the motion for judgment notwithstanding the verdict, the trial court came to the conclusion that the action was for breach of contract, and that the statute of limitations had run against it. This was the sole ground upon which the motion was granted. At the same time, the court entered an order granting defendant's motion for a new trial, to be effective in the event of reversal of the judgment non obstante.

For the purpose of determining the character of the cause of action the essential allegations of the amended complaint may be summarized as follows:

The plaintiff was the owner of a tract of land in Sunnyside Valley Irrigation District in Yakima county. The defendant is a lawyer, with offices in Sunnyside, whom plaintiff had consulted on several occasions prior to February, 1934, and in whom plaintiff had 'full and complete confidence.' January 5, 1932, a foreclosure was had against plaintiff's tract of land for delinquent assessments levied by Sunnyside Valley Irrigation District. A Treasurer's deed for the land was executed and delivered to the district June 5, 1932.

At the time of foreclosure and delivery of the deed, there were general taxes against the land in excess of $900. Prior to February, 1934, plaintiff was indebted to the First National Bank of Sunnyside in the sum of $1,455.51, which indebtedness was secured by a mortgage on the land in question. He was also indebted to C. Speck, Inc., in the sum of $603.48. Some time prior to February, 1934, the bank, in order to protect its security and plaintiff's equity, procured a conveyance of the property to itself from Sunnyside Valley Irrigation District. Plaintiff, according to the allegations of the complaint, had no knowledge or information concerning the foreclosure and conveyances to the district and the bank until September, 1936.

In the meantime, on or about February 3, 1933, defendant went to plaintiff's home 'for the purpose of advising the plaintiff concerning the status of his property. * * *' He 'falsely and fraudulently' represented to plaintiff that the latter was owner in fee simple of the real estate in question, and that there was a considerable amount of taxes ' due, owing, and unpaid' agains the property. Defendant requested plaintiff to permit him, the defendant, to represent plaintiff in procuring a reduction of such taxes, whereupon plaintiff signed an instrument which was represented to be an authorization to defendant to represent the former 'Before the County officials, to procure a reduction of said taxes * * *.' The instrument turned out to be a verification to a complaint which defendant, as attorney for plaintiff, filed in the superior court of Yakima county on February 5, 1934. The action set up was against Yakima county, and its object was to effect and adjudicate a reduction of taxes that stood on the tax rolls against plaintiff's land. A judgment was entered the same day purporting to reduce the amount of taxes due to the amount of $917.49. The taxes, however, had previously been cancelled. The judgment, therefore, but served to re-establish a tax lien against plaintiff's land in the above amount. It is alleged that 'the falsity of said words and acts of the defendant were not discovered by this plaintiff until the first day of September, 1936.'

In the meantime, the defendant 'advised and induced * * * plaintiff to apply for a loan from the Federal Farm Mortgage Corporation of Spokane' for the purpose of paying his taxes, his indebtedness to the bank and C. Speck, Inc., and the attorney's fees due defendant. Defendant undertook to, and did, procure a loan for plaintiff in the amount of $2,800. Of this, $1,401.52 went to the bank; $917.49 to the county for taxes; and $211.92 to defendant for attorney's fees. The amount being insufficient to pay all plaintiff's pre-existing debts, defendant persuaded plaintiff to execute a $600 note to C. Speck, Inc., secured by a chattel mortgage on his livestock. There are allegations of fraudulent representations and misconduct on the part of defendant in connection with this transaction. We think, however, for the purpose of determining the character of the cause set up in the second amended complaint, that it is not necessary to recite them here. The culmination of it all was that plaintiff had to sell his livestock, which was his principal source of income, in order to pay the note to C. Speck, Inc. Deprived of his source of income, he could not keep abreast of his obligations under the mortgage to the Federal Farm Mortgage Corporation, so he lost his place on foreclosure.

Upon the foregoing facts, which were supported by his proof, appellant insists that he made out a case grounded in fraud. To begin with, he argues that the deed from the county treasurer to the irrigation district cancelled the lien of the general taxes under the decision of this court in North Spokane Irrigation District v. Spokane County, 173 Wash. 281, 22 P.2d 990. His conclusion is that the representations to the contrary, which induced him to employ respondent as his attorney for the purpose of procuring a reduction of such taxes, were false.

That appellant relied upon these representations and, in consequence, suffered damage, can hardly be questioned. We have, therefore, all the basic elements for an action grounded in fraud--(1) false representations, (2) reliance upon them by appellant (3) to his damage. That appellant had a right to rely upon the representations, there can be no doubt, although it may be contended that the statements constituted an opinion upon the law rather than representation of fact. Prior dealings between the parties in the relationship of attorney and client, created a situation of trust and confidence which justified appellant in relying upon the statements made by respondent and charged the latter with legal responsibility for them, even though they may have been expressions of opinion as to the law. ...