McInnis & Co. v. Western Tractor & Equipment Co.

• Decision Date: 10 February 1966
• Docket Number: No. 37903,37903
• Citation: 410 P.2d 908,67 Wn.2d 965
• Court: Washington Supreme Court
• Parties: McINNIS & COMPANY, Inc., a corporation, Respondent & Cross-Appellant, v. WESTERN TRACTOR & EQUIPMENT COMPANY, a corporation, Appellant.

Page 965

67 Wn.2d 965

410 P.2d 908

McINNIS & COMPANY, Inc., a corporation, Respondent & Cross-Appellant, v. WESTERN TRACTOR & EQUIPMENT COMPANY, a corporation, Appellant.

No. 37903.

Supreme Court of Washington, Department 1.

Feb. 10, 1966.

Rehearing Denied April 7, 1966.

Cartano, Botzer & Chapman, Robert A. O'Neill, Seattle, for appellant.

Matsen, Clark, Cory & Matsen, Newman H. Clark, Seattle, for respondent.

HALE, Judge.

This is the second appeal arising from the sale of a LeTourneau-Westinghouse tractor-scraper unit by defendant Western Tractor & Equipment Company to plaintiff McInnis & Company. On the first appeal, heard En banc, we reversed and remanded the cause for further evidence on issues of fraud and damages. McInnis & Co. v. Western Tractor & Equip. Co., 63 Wash.2d 652, 388 P.2d 562 (1964).

Our opinion affirmed the trial court's findings and conclusions that the tractor-scraper unit was not new, unused, and the latest model as represented to be by the seller, but we held that the buyer, because of merger and disclaimer clauses in the signed agreement exonerating the seller from any warranties not in writing, could not recover for breach of warranty. Id. at 656, 388 P.2d at 564. Since the court found breach of warranty and suggested actionable fraud as well, our remand allowed the parties to present further evidence on the question of fraud.

We also said that the court had applied a doubtful measure of damages and remanded on that point with respect to all items of damage. We directed that damages be fixed in accordance with the Benefit-of-the-bargain rule--a rule which allows the difference between actual value of the property at the time of sale and the value it would have had if the representations concerning it had been true. 24 Am.Jur., Fraud & Deceit, § 277; Hoke v. Stevens-Norton, Inc., 60 Wash.2d 775, 375 P.2d 743 (1962); Nailor v. Western Mortgage Co., 54 Wash.2d 151, 338 P.2d 737, 72 A.L.R.2d 938 (1959). We likewise expressed doubt concerning the damage awarded for travel expenses to and from Okinawa in the sum of $1,309.15 and living and other expenses of $800 incurred during plaintiff Merville W. McInnis' six-week stay there.

At the second trial, the court had before it, by stipulation, the entire record of the first trial and additional evidence submitted by each party, and this time affirmatively found the nine separate requisites of actionable fraud in the sale as enumerated in Webster v. L. Romano Eng'ring Corp., 178 Wash. 118, 34 P.2d 428 (1934). The trial court found that defendant had represented the tractor-scraper unit to be new, unused and the latest model. It found too that the machinery had been used 68 hours in demonstrations, its hourly timing meter set back to zero, and that its manufacturer had brought out one later model containing a few slight changes. Even though this court might see in this transaction a breach of warranty only and no actionable fraud, we observe that the evidence abundantly sustains the trial court on the question of fraud and, therefore, will not discuss the point further.

Pursuant to our directions in the first appeal (63 Wash.2d 652, 658, 388 P.2d 562), the trial court on the second trial sought to apply the benefit-of-the-bargain rule as the measure of damages in the sale of the tractor: It accepted the purchase price $19,250, as the value of the machine in the condition as represented by the seller and fixed its actual value at $11,000 in accordance with the testimony of Merville W. McInnis, president of the purchasing corporation, who, together with his son, Malcolm McInnis, the company vicepresident, negotiated the purchase of the machine. On the theory that M. W. McInnis stood in the rule of owner and that the owner of a chattel, even though having no expert knowledge on the subject, may express an opinion as to its value, the trial court admitted Mr. McInnis' testimony concerning value despite his repeated statements that he knew little of either the technical operation of such machinery or its market value. Ordinarily, the opinion of an owner as to the market value of his chattel, even standing alone without supporting evidence, is sufficient to support a jury verdict. Ingersol v. Seattle-First Nat. Bank, 63 Wash.2d 354, 387 P.2d 538 (1963); Cody v. Herberger, 60 Wash.2d 48, 371 P.2d 626 (1962). But defendant contends that McInnis had so little knowledge of the subject as to take his opinion outside this rule.

Defendant made no objection either that the officer of a corporate purchaser or owner may not assume the role of owner, and we neither consider nor rule upon such a question. The answer, when such question arises, we assume, will be affected in a large measure by the size, nature and character of the corporation, the degree of supervision exercised by the officer and the extent of his participation in the acquisition and use of the chattel. Defendant's objection to McInnis' testimony on value goes directly to the latter's competency to testify at all on this subject in light of his repeated statements that he had no knowledge of the machine's technical qualities, little of its operation, and virtually no knowledge of its market value.

Mr. McInnis, in his case in chief, had testified that his firm had never before handled a tractor-scraper of this or similar type; that he did not even know the machine was equipped with an hour meter to measure the hours of operation; that he had never been in or identified with the machinery business; and that he had not inspected the machine carefully before purchasing it because, in the light of his inadequate knowledge, such an inspection would have been pointless.

He said that he could not have discerned the difference between a new and slightly used machine or one annual model from another. When pressed for an answer as to value in Seattle at the time of delivery, he said between $10,000 and $11,000, and the court accepted the higher figure as evidence of market value in its actual condition. Deducting the $11,000 from the $19,250, the court found damages in the sum of $8,250 as a basic figure, in accordance with the benefit-of-the-bargain rule.

Defendant's objections to Mr. McInnis' testimony must, we think, be held to run against the weight rather than the admissibility of his opinion as the owner of the tractor-scraper unit. The record shows sufficient familiarity with the value of the machine to at least render his opinion admissible as an owner. He joined his son in going to defendant's plant to look the machine over before proceeding with the sale. He saw the machine in defendant's yard and discussed its price and method of payment before completing the deal. He, in company with defendant's representatives, walked around the equipment, and they pointed out its mechanical...