Karle v. Seder
| Decision Date | 26 January 1950 |
| Docket Number | 31048. |
| Citation | 35 Wn.2d 542,214 P.2d 684 |
| Parties | KARLE v. SEDER et al. |
| Court | Washington Supreme Court |
Department 1
Action by Lavern A. Karle against William E. Seder, Nat Gottlieb doing business as Pacific Realty Company, and R. E. McIntyre for constructive fraud in the sale of partnership property.
The Superior Court, Spokane County, Louis F. Bunge, J., entered a judgment for plaintiff against defendants for $3,363.03, and the defendants appealed.
The Supreme Court, Donworth, J., held that the trial court's findings for plaintiff were sustained by the evidence.
Judgment affirmed.
E. A Cornelius, Spokane, Royce & Hurley, Spokane, for appellants.
Justin C. Maloney, Spokane, for respondent.
This is an action to recover damages for constructive fraud in connection with the sale of partnership property.
The complaint alleged actual fraud on the part of the defendants but the trial court in its memorandum opinion stated that the proof had failed to show actual fraud and that constructive fraud only was involved in the case.
The case came on for trial Before the court without a jury. In addition to the testimony of the parties and their witnesses, twenty-one papers and documents bearing upon the transaction, which is the subject matter of this action, were admitted in evidence. At the conclusion of the trial the court took the case under advisement and later filed its memorandum opinion holding in favor of the plaintiff. Upon findings of fact later entered in accordance with this opinion, the court granted plaintiff judgment against all three defendants in the amount of $3,363.03.
The defendants moved for a new trial on six statutory grounds supported by the affidavit of a proposed new witness whose statements were denied by a counter-affidavit of the plaintiff. This motion having been heard and denied by the trial court, the defendants have appealed from the judgment against them. Appellants make ten assignments of error, the first five being that the trial court erred in making findings of fact III to VII, inclusive, and the eighth being the refusal to enter appellants' proposed findings. In considering these assignments we shall summarize the evidence upon which the findings are based. There was much conflicting testimony as to the material facts which the court resolved in favor of respondent.
Appellant Gottlieb, at all times material to the controversy, was engaged in the real estate business in Spokane under the name of Pacific Realty Company and appellant McIntyre was employed by him as a salesman. The respondent and appellant Seder were engaged in business as equal partners under the name of Bubble Inn Tavern in the city of Spokane. During the summer of 1947 the personal relations between these partners became seriously strained for reasons having no connection with the partnership business and thereafter they did not speak to each other except when business transactions made it imperative. On September 7, 1947, the partners listed for sale their partnership property with appellant Gottlieb by a written listing agreement, exclusive for thirty days, which provided for a commission of $1500 and a sale price of $30,000. No sale of the tavern having been consummated within that time, by oral agreement, the listing was continued in effect except as to its exclusive provisions. During the period subsequent to September 7, 1947, appellants Gottlieb and McIntyre continued their efforts to effect a sale of the partnership property.
During the last week in January, 1948, appellant McIntyre brought Mr. and Mrs. Chamberlain to the tavern and introduced them to respondent as prospective purchasers but no business was discussed at that time. On February 2, 1948, Mr. and Mrs. Chamberlain came to the office of Pacific Realty Company to discuss the purchase of the partnership property. After talking with appellant McIntyre, they executed an agreement with Pacific Realty Company for the purchase of the Bubble Inn Tavern for $25,000, payable in monthly installments, plus the value of the inventory and these purchasers thereupon paid to Pacific Realty Company $500 as earnest money. This agreement consisted of a printed form in which certain blank spaces were filled in with pen and ink. It contained a provision to the effect that it was subject to Pacific Realty Company's raising an additional $3000 to be applied as part of the $4500 to be paid to the seller upon delivery of possession of the tavern. This agreement was not shown to the respondent by appellants nor were the terms thereof disclosed to him by any of them.
A day or two later another agreement on an identical printed form and also dated February 2, 1948, was executed by Pacific Realty Company and by the purchasers providing for the sale of the partnership property for the sum of $25,000 plus the value of the inventory and containing a provision relating to the operation of pinball machines which were located in the tavern but were owned by appellant Seder. This agreement (which was apparently intended to replace the other instrument of the same date) acknowledged the receipt of $500 as earnest money and provided for the further payment of $4500 upon acceptance of the sale by the seller. The balance of $20,000 was payable at the rate of $500 or more per month, including interest computed at five per cent per annum. No reference was made to the raising of any funds by Pacific Realty Company. The value of the inventory was later fixed at $1726.07.
This agreement was accepted by appellant Seder as seller but was not shown to respondent nor were its terms disclosed to him by appellants.
Prior to the execution of the last mentioned agreement by the Chamberlains, appellant Gottlieb submitted to respondent another 'Agreement to Purchase' (prepared on an identical printed form as the two agreements heretoBefore described) in which the name of the purchaser was left blank. This agreement called for the sale of the Bubble Inn Tavern for twenty thousand dollars including inventory payable as follows: $500 down, $4,500 upon acceptance by the seller and $15,000 in cash upon delivery of possession.
At the time respondent executed this agreement he was told by appellant Gottlieb that the Chamberlains were the prospective purchasers and that, if appellant Seder did not sign it as a co-owner and seller, the deal would be 'off.' Later, appellant Seder signed this agreement in two capacities--as the purchaser and as one of the sellers.
When respondent on February 27, 1948, was called to the Pacific Realty office to close the sale there was submitted to him for signature a bill of sale and lease assignment running to appellant Seder--not to the Chamberlains. He inquired the reason for this and was told that the Chamberlains were having difficulty in raising the necessary funds and that appellant Seder was going to carry part of the contract. Respondent did not execute these instruments at that time because the money to pay him was not then available. On the evening of the same day respondent saw appellant Seder at the tavern and asked him why he was to convey the partnership property to him and was told that the Chamberlains could not raise all the necessary funds to take the entire tavern property and were acquiring respondent's half interest and appellant Seder was carrying the balance of the contract. Appellant McIntyre had previously made similar statements to respondent.
In the latter part of February respondent read an item in a local newspaper relating to the filing of various bulk sales affidavits which indicated that the Chamberlains had purchased the Bubble Inn Tavern from appellant Seder for 'about $25,000.' Respondent then telephoned appellant McIntyre requiring about the correctness of this item and was assured by him that it was a misprint in the paper. Appellant McIntyre denied that such a conversation ever took place.
None of the appellants at any time advised respondent that appellant Seder had arranged to sell the partnership property to the Chamberlains on a conditional sale contract for $25,000 plus the value of the inventory ($1726.07).
On February 28 respondent went to the office of Pacific Realty Company to close the sale. He then executed the bill of sale and lease assignment in favor of appellant Seder and received a statement showing the sale price to be $20,000. He was paid his half of this amount less $750 commission to Pacific Realty Company for effecting the sale and less $3195 which he owed appellant Seder on two notes (and three minor expense items), the net amount received by him being $5950.85.
Prior to this date the Chamberlains had paid to Pacific Realty Company for the credit of appellant Seder pursuant to their agreement to purchase the tavern a total of $5000 and on March 1, 1948, they paid $589.23 on account of the inventory. On the same day that respondent conveyed the tavern to appellant Seder (February 28) the Chamberlains executed a conditional sale contract with him for the purchase of the entire partnership property for $25,000 plus the value of the inventory in accordance with their agreement to purchase, dated February 2, 1948. They took possession of the tavern on March 1, 1948.
Pacific Realty Company accounted to appellant Seder for the $5000 and the $589.23 received from the Chamberlains and paid him $4815.85 (which apparently was used in paying respondent his $5950.85). Their statement to Seder was on the basis of a $25,000 sale.
About March fourth or fifth respondent went to the tavern and in the course of a conversation with Mr. Chamberlain then for the first time learned that appellant Seder had sold the partnership property to the Chamberlains for $25,000 instead of $20,000.
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