Fisher v. Thumlert

• Decision Date: 08 March 1938
• Docket Number: 26802.
• Citation: 194 Wash. 70,76 P.2d 1018
• Parties: FISHER v. THUMLERT (BRYANT et al., Interveners.
• Court: Washington Supreme Court

76 P.2d 1018

194 Wash. 70

FISHER v. THUMLERT (BRYANT et al., Interveners.

No. 26802.

Supreme Court of Washington

March 8, 1938

Department 2.

Appeal from Superior Court, Yakima County; A. W. Hawkins, Judge.

Suit by Woodrow M. Fisher against Dan Thumlert removing proceedings instituted by the defendant to foreclose a chattel mortgage to the superior court, and praying that the mortgage be declared invalid. The defendant cross-complained for foreclosure of the mortgage. Charles M. Bryant and L. O Janeck intervened. From the judgment, the defendant appeals.

Reversed with directions.

Cheney & Hutcheson and Walter J. Robinson, Jr., both of Yakima, and Dwight N. Stevens, of Seattle, for appellant.

Charles F. Bolin and E. L. Bennett, both of Toppenish, and Arthur Kirschenmann, of Wapato, for respondent.

ROBINSON Justice.

On October 15, 1936, John L. Torrens entered into a written contract to sell the 1936 apple crop from one of his orchards to Charles M. Bryant. At the foot of the contract was a pencil notation: 'Cash when apples are billed.' It seems, however, that the parties agreed that the apples were to be washed and prepared for market by Bryant and paid for when sold. They were delivered to Bryant and stored in a warehouse rented by Bryant called the 'Richey-Gilbert Warehouse.'

On October 31, 1936, Bryant borrowed $450 from Dan Thumlert. The loan was evidenced by Bryant's 8 per cent. note, payable on or Before December 1, 1936, and secured by a chattel mortgage upon property described as follows: 'One Bryant Fruit washer and 3,000 boxes of Winesaps and Rome Beauty apples located in the Bryant Warehouse at Zillah Washington.'

The mortgage was in due form, and was filed with the auditor of Yakima county on November 9th.

Subsequently, Torrens assigned his contract to Fisher, reciting that the assignment was made for 'the purpose of collection.' Fisher instituted an action against Bryant to recover the purchase price of the apples. On January 5, 1937, Bryant, Torrens, and Fisher, in an effort to compromise that action, entered into a written contract in which it was agreed that Bryant and Fisher should sell the apples and Fisher should apply the proceeds in the manner therein specified, including the payment of the Thumlert mortgage. While Fisher was arranging to sell the apples, Thumlert started to foreclose his mortgage by summary notice and sale. Fisher then instituted the present suit, removing the foreclosure proceedings to the superior court and praying that the mortgage be declared wholly invalid as to the apples for lack of sufficient description. Thumlert cross-complained for foreclosure.

The sale of the apples was completed by stipulation of the parties and the proceeds deposited in the registry of the court to await the result of the action. Bryant was adjudicated a bankrupt on February 2, 1937, and Janeck, his trustee, intervened in the action and claimed the proceeds as assets of the bankrupt's estate. Fisher, by amendment, set up the additional contention that the mortgage was invalid, on the ground that, at the time of the purchase of the apples by Bryant, Bryant was acting as a commission merchant and did not have a license to act as such under the laws of the state of Washington, that the contract by which he purchased the apples from Torrens was wholly void, and that the mortgage given by Bryant to Thumlert was void for the same reason. He further took the position that the three-party contract between himself, Torrens, and Bryant, entered into on January 5, 1937, was a mere compromise agreement which Bryant had breached, and that it was no longer of any force and effect.

Upon the trial of the case, the court entered findings of fact, conclusions of law, and decree denying the foreclosure of the mortgage as to the apples, on the ground that the sale to Bryant was void, since Bryant did not have a license to act as a commission merchant, and, being void, Bryant had no interest or title in the apples which he could mortgage to Thumlert. The decree directed that the proceeds of the sale of the apples deposited in the registry of the court be turned over to Torrens, less certain deductions not material here. The decree further provided that Thumlert should have judgment against Bryant for interest, costs, and attorney's fees, and foreclosed the mortgage as to the washing machine. Janeck, the intervening trustee in bankruptcy, was dismissed from the action. Thumlert alone prosecutes this appeal.

The good faith of the appellant in taking the mortgage was in no way impeached or called into question. We think the lower court erred in holding it invalid as to the apples. While it was unlawful for Bryant to act as a commission merchant without a license, as required by statute, it does not follow that his contract with Torrens was void, in the sense that it was a nullity.

Professor Williston, in his work on 'Contracts,' Revised Edition, § 1630, says:

'It is commonly said that illegal bargains are void. This statement, however, is clearly not strictly accurate. It is more correct to say that 'a party to an illegal bargain generally can neither recover damages for breach thereof, nor, by rescinding the bargain, recover the performance that he has rendered thereunder or its value.' * * *

'To deny a wrongdoer damages or the return or value of his performance, though an equally guilty defendant thereby escapes punishment and may be enriched, tends to diminish the number of illegal bargains. To go farther and assert that all unlawful agreements are ipso facto no contracts and void is opposed to many decisions and unfortunate in its consequences, for it may protect a guilty defendant from paying damages to an innocent plaintiff. Doubtless a statute may and sometimes does make a bargain absolutely void, but even though a statute so states in terms, 'void' has sometimes been held to mean 'voidable,' and unless no other conclusion is possible from the words of a statute it should not be held to make agreements contravening it totally void.'

Page on the Law of Contracts says, at section 688: 'If the statute which forbids the act and imposes the penalties discloses a legislative intent to provide completely for its violation, the courts do not add an additional penalty which will affect other persons, often innocent, by making contracts void.'

The texts quoted are upheld by a great number of decided cases. Perhaps the leading case is Harris v. Runnels, 53 U.S. 79, 12 How. 79, 13 L.Ed. 901. Ewell v. Daggs, 108 U.S. 143, 2 S.Ct. 408, 27 L.Ed. 682, is typical of cases wherein the word 'void' is construed to mean 'voidable' only.

In Mann v. United Motor Boston Co., 226 Mass. 495, 116 N.E. 239, it is said that, while it is well-settled that the law will not aid either party to an illegal contract to enforce it against the other, and after such a contract has been executed and carried into effect, a party thereto who has paid money or delivered property in pursuance of its terms cannot recover back what he has parted with, this...