Hall v. Mathewson, 26771.

• Decision Date: 21 December 1937
• Docket Number: 26771.
• Citation: 74 P.2d 209,192 Wash. 651
• Parties: HALL v. MATHEWSON.
• Court: Washington Supreme Court

74 P.2d 209

192 Wash. 651

HALL v. MATHEWSON.

No. 26771.

Supreme Court of Washington

December 21, 1937

Department 2.

Appeal from Superior Court, King County; Clay Allen, Judge.

Action by Laura Hall against William Mathewson, wherein the defendant filed a cross-complaint. From a judgment for the plaintiff for less than the amount sought, the defendant appeals, and the plaintiff files a cross-appeal.

Reversed with instructions.

Fred C. Brown, of Seattle, for appellant.

Henry Clay Agnew and Lloyd Holtz, both of Seattle, for respondent.

BEALS Justice.

In her complaint, plaintiff alleged that on or about May 9, 1935 plaintiff and defendant entered into an exchange agreement and that pursuant to this agreement, by appropriate instruments of conveyance, they thereafter exchanged certain real and personal property; that plaintiff conveyed to defendant an apartment house in the town of Coeur d'Alene, Idaho, together with all furniture, fixtures and equipment used in connection therewith, subject to $12,400, which encumbrances included 'mortgage, contract, tax and interest'; that defendant conveyed and transferred to plaintiff three tracts of real estate in the city of Seattle, assigned to plaintiff a certificate of purchase issued by the sheriff of King county in the case of Mathewson v. Peterson, together with 'An assignment of a deficiency judgment in the original amount of $2,137.24 and interest thereon at the rate of eight per cent per annum from May 26, 1934, until paid, in the case of William Mathewson, substituted for Hazel Kirk v. L. A. Peterson, individually and as administrator of the estate of Lars Peterson, deceased, No. 262695, in the superior court of the state of Washington, for King county,' and also assigned three mortgages described in the complaint.

Plaintiff further alleged that, prior to the consummation of the exchange agreement, defendant warranted and represented to plaintiff that the deficiency judgment hereinabove referred to was a good, valid, and existing judgment against the judgment debtors named therein for the amount indicated; that the judgment was collectible in full, including interest; and that plaintiff was induced by these statements to enter into the exchange agreement. It was further alleged that, at the time of the execution of the exchange agreement, the defendant in fact did not have a valid and existing deficiency judgment, to plaintiff's damage in the sum of $2,137.24, for which amount plaintiff demanded judgment.

Defendant answered, admitting the transfer to him of the property in Idaho, and that he transferred to plaintiff other property, together with an assignment of all his right, title, and interest 'in a purported deficiency judgment' in the action referred to in plaintiff's complaint. By way of an affirmative defense, defendant pleaded that the judgment debtor named in the judgment referred to, L. A. Peterson, was insolvent, and that any judgment against him was worthless, and also that, Before the exchange agreement between the parties was consummated, plaintiff's agent examined the files in the action in which the judgment was rendered, and accepted the assignment of the judgment with full knowledge of any defect therein. Defendant also asserted certain counterclaims, two of which were allowed, in small amounts, with which we are not concerned.

Plaintiff having replied by appropriate denials, the action was tried to the court, and resulted in the entry of findings of fact and conclusions of law in plaintiff's favor, followed by a judgment against defendant in the sum of $1,237.35, from which judgment defendant has appealed. Plaintiff cross-appealed, claiming that the court should have awarded her judgment in an amount equal to the face of the judgment. In this opinion, plaintiff will be referred to as respondent, and defendant as appellant.

Appellant contends that the trial court erred in denying his motion for dismissal of the case at the conclusion of respondent's evidence; in refusing to sign findings of fact, conclusions of law, and judgment proposed by appellant; and in signing those proposed by respondent. Appellant's contentions may be resolved into the questions of whether or not the findings are supported by the evidence, and whether or not the court erred in rendering judgment against appellant.

It appears that appellant, William Mathewson, some time prior to the agreement with respondent, instituted an action Before the superior court for King county against L. A. Peterson, individually and as administrator of the estate of Lars Peterson, asking for judgment upon a note for $2,500, executed by L. A. Peterson, individually and as administrator, and asking also for the foreclosure of a mortgage given to secure the note, covering real property in King county. The action was originally instituted by Hazel Kirk (William Mathewson's niece and agent), as plaintiff, but, Before the entry of judgment, Mr. Mathewson was substituted as party plaintiff, the same counsel continuing as his attorney. The complaint prayed for judgment against L. A. Peterson, individually and as administrator, for the sum of $2,600, principal and accrued interest, together with interest to the date of judgment; for other sums, including attorney's fees; that the mortgage referred to in the complaint be adjudged to be a valid lien on the premises described therein, and be foreclosed; and that the property be sold in the manner provided by law. Plaintiff also asked for a deficiency judgment against L. A. Peterson, personally, and for incidental and general relief.

April 7, 1934, a decree of foreclosure was entered, directing that the property be sold according to law, and that a sheriff's deed issue to the purchaser at execution sale, if no redemption be made. The order of sale was regularly issued and the property sold to the plaintiff, Mathewson, for $1,000, the return reciting that 'there remains a deficiency balance of $2,137.24.' Thereafter appellant, as above stated, delivered to respondent an assignment reading as follows:

'In consideration of Ten Dollars ($10.00) and other good and valuable considerations to me in hand paid, I do hereby sell, assign and transfer to Laura Hall all of my right, title and interest in the judgment in the above entitled cause, for her use and benefit, hereby authorizing her to collect and enforce payment thereof in my name, or otherwise, but at her costs and charges, said judgment being for the sum of Twenty-six Hundred Dollars ($2600.00), with interest from the 7th day of April, 1934, and costs in the sum of $13.00, and attorney fees in the sum of $200.00, and being entered in Execution Docket of said superior court in volume 116, at page 290.

'Dated this 15th day of May, 1935,'

which was regularly filed in the case.

The decree providing for no deficiency judgment, it was thereafter sought to amend the decree by adding thereto a paragraph awarding appellant, as plaintiff in that action, a judgment over against the defendants in the action for any deficiency remaining after the application of the proceeds of the mortgaged property to the amount of the judgment. This matter was twice (once in respondent's name as assignee) presented to the superior court, and resulted in denials of the relief applied for. For the purposes of this action, it stands admitted, as adjudicated, that in the foreclosure action against L. A. Peterson the plaintiff in that action (appellant here) had no deficiency judgment, but had merely a judgment foreclosing his mortgage against the property covered thereby.

On the trial, it was expressly conceded by respondent that appellant, at the time of the exchange between the parties, believed that he had a deficiency judgment against the Peterson estate. At the same time, respondent also disclaimed any contention that appellant had guaranteed the collectibility of the judgment, her counsel stating: 'We concede that if we had got the deficiency judgment and could not have collected it, we would have no cause of action.' These statements by respondent narrowed the issues and simplified the trial.

It is not easy to understand all of the details leading up to the consummation of the transaction between the parties, as disclosed by the evidence. It appears that respondent owned an equity in an apartment house in Coeur d'Alene, Idaho, which she was purchasing under contract. The balance due on the contract, together with a mortgage and some taxes due, amounted to a large sum. Appellant owned several parcels of real estate in Seattle, subject to encumbrances, several mortgages, and the certificate of purchase issued by the sheriff in the action above referred to against Peterson and the Peterson estate. Appellant had listed these properties with the brokerage firm of Richey & Heian, who represented both appellant and respondent in the exchange, having received a commission from each. Respondent herself took no part in the transaction, having been represented by her brother-in-law and attorney in fact, Mr. R. O. Mylroie, who testified that he was a broker of long experience, and had been handling respondent's property for ten years. It clearly appears that Mr. Mylroie was accustomed to handling transactions such as that between the parties to this action. Mr. Mylroie had represented respondent in procuring the Coeur d'Alene property, which she received in exchange for a Seattle apartment house, for which she had traded another piece of real estate in the same city. Mr. Mylroie had represented respondent in all of these deals.

Respondent was anxious to trade the Coeur d'Alene apartment house as her contract of purchase was not in very good standing. Messrs. Richey & Heian informed Mr. Mylroie concerning the properties...