Morris v. Hillman Inv. Co.

• Decision Date: 07 January 1918
• Docket Number: 14267.
• Citation: 169 P. 837,99 Wash. 276
• Parties: MORRIS et al. v. HILLMAN INV. CO.
• Court: Washington Supreme Court

169 P. 837

99 Wash. 276

MORRIS et al. v. HILLMAN INV. CO.

No. 14267.

Supreme Court of Washington

January 7, 1918

Department 1. Appeal from Superior Court, King County; J. T. Ronald Judge.

Action by Wade Morris and wife against the Hillman Investment Company. Decree for plaintiffs, and defendant appeals. Affirmed.

Gay &amp Griffin, of Seattle, for appellant.

Turner & Hartge, of Seattle, for respondents.

WEBSTER J.

On May 6, 1912, the appellant entered into a contract in writing with J. D. McIntyre, by which it agreed to convey to McIntyre or his assigns certain real property situate in appellant's Pacific City addition to Seattle, Wash. The contract which was executed in duplicate recited a purchase price of $1,435.88, and acknowledged the sum of $750 as earnest money paid thereon. Provision was further made for monthly payments in the sum of $15, with interest in accordance with the terms and conditions of the contract which contained the usual forfeiture clauses in the event of default by the purchaser; conditioned also that the contract was not transferable except with the written consent of the vendor. A strict compliance with the terms of the contract with reference to the time and manner of making the monthly payments, as well as the assignment of the interest of the vendee thereunder, was waived by the subsequent conduct of the vendor. Each party was provided with a copy of the contract. The appellant retained its copy either in its possession or under its control until the trial of the cause in the lower court.

On May 7, 1912, without the written consent of the vendor, J. D McIntyre assigned, by an indorsement in writing on his copy of the contract, his interest therein to respondent Wade Morris, which copy of the contract, with the assignment thereon, was filed for record on June 3, 1912. The transaction whereby McIntyre transferred his interest in the property to respondent Wade Morris was had between McIntyre and E. I. Root, who is the father of respondent Mable I. Morris, wife of the assignee of said contract; McIntyre being indebted to Root in a considerable sum, transferring his interest in the contract to Morris at the request of Root, who, as a consideration therefor, released his claim against McIntyre to the amount of McIntyre's equity in the property. About this time Root wrote respondents who resided in Kansas that he had a place for them upon which there was a small balance due, and that if they would move to Washington he would give them his interest in the property. In response to the invitation the respondents moved upon the premises described in the contract on March 21, 1913, where they have since lived, improving and occupying the place as their home.

Early in the summer of 1913 respondents received and examined the copy of the contract which had theretofore been filed for record, with the assignment thereon from McIntyre to Wade Morris. Relying upon the terms of the contract which showed on its face the payment of $750 of the purchase price of $1,435.88 for the land, they performed labor and placed valuable improvements thereon in excess of the sum of $400. In addition thereto, respondents paid on the contract to appellant in principal and interest the sum of $112, and taxes in the further sum of $102.10; while McIntyre seems to have made one monthly payment of $15 soon after the contract was executed.

Having tendered to appellant all sums due in accordance with the terms of the contract, which tender was refused by appellant, the respondents paid the amount of the tender into the registry of the court and brought this action on October 3, 1916, for specific performance. The appellant answered, controverting the amount which the plaintiffs claimed due on the contract, and alleging affirmatively that at the time of entering into the agreement, by the mutual mistake of McIntyre and the defendant, it was stated in the contract that $750 had been paid upon the purchase price of the property described therein, although as a fact no money had been paid on the purchase price of $1,435.88; and, further, that the McIntyres and the plaintiffs were in default in the payments required by the contract. A reformation of the instrument and a forfeiture thereunder was prayed for. The reply raised the issues of laches and equitable estoppel. Upon these issues the cause was tried and a decree rendered in favor of plaintiffs adjudging specific performance of the contract and directing a conveyance of the premises to the plaintiffs. The defendant has appealed. There were no findings made by the trial court, but these facts, in addition to those hereinbefore stated, are supported by a preponderance of the evidence.

The contract upon which this action is based was made in lieu of a former one between appellant and one Pearson for the same premises, whose rights thereunder had been assigned to McIntyre. The purchase price of $1,435.88 named in the new contract represented the balance due after deducting from the selling price stated in the old contract all payments made thereon by Pearson, aggregating the sum of $750. In drawing the new contract, the manager of appellant who executed the instrument in its behalf by mistake inserted therein a credit payment of $750 on the purchase price of $1,435.88, so that the contract on its face showed a balance of $685.88, when it should have shown a balance of $1,435.88; however, both copies of the contract were alike in this respect. The appellant maintained in its office a sales ledger, wherein was kept a separate account showing the selling price of the property and all payments made thereon by Pearson, as well as those made on the new contract to McIntyre. A comparison of its copy of the contract with the ledger account would have revealed the mistake.

It is urged by appellant that Root knew the true amount due on the Pearson contract, and that the $750 payment acknowledged by the McIntyre contract had never been made, but the record does not support this contention; on the contrary, it fairly shows that his relations with the transaction between the appellant and McIntyre were not such as to advise him of the status of the accounts between them, and that in communicating to respondents the amount of the purchase price he relied upon the written contract in good faith and without any knowledge of the mistake which had been made by the appellant. After respondents moved upon the premises and received from Mr. Root the copy of the contract, relying upon the amount due on the purchase price as shown by the contract, they made improvements to the house, rebuilt the fences, set out an orchard of 100 trees, and otherwise expended in labor and materials thereon the undisputed sum of $429.49; also paying on the contract the additional sum of $112, and in taxes the further amount of $102.10. This they would not have done if they had been aware of the mistake in the contract, or had known that the $750 payment on the purchase price therein stated had in fact not been made.

On January 27, 1914, respondent Mabel I. Morris called at the office of appellant and paid to its manager Mr. E. S. Bateman the sum of $10, which was credited upon respondents' copy of the contract by appellant. Other payments were thereafter made by respondents to appellant which were received and retained by it with full knowledge that respondents were in possession of the premises, cultivating and improving the same as the assignee of the McIntyre contract. Early in the fall of 1914 respondent Wade Morris called at appellant's office to inquire about the status of the account. When he was informed by appellant's bookkeeper of the balance of the account as shown by the sales ledger, which did not show the $750 payment at the time the contract was made, Morris stated to the bookkeeper that he had a contract that was issued to McIntyre and assigned to him which on its face showed a payment of $750 earnest money, whereupon he was advised by the bookkeeper to bring the contract in some time and let him see it. This Morris did in August, 1916, after having received a letter from appellant, stating the balance due on the contract was in the principal sum of $1,383.88, and interest in the additional sum of $290.12. Upon the exhibition of his contract to the bookkeeper at this time, a credit of $750 was entered by appellant on its ledger account as of the date of the contract. The original ledger sheet, which is before us as an exhibit in the case, shows this credit payment as 'earnest money.' Appellant's manager, subsequent to the making of the entry by the bookkeeper, inserted in red ink the word 'error.' Miscellaneous memoranda pertaining to this ledger account, which was opened in the name of J. D. McIntyre, shows clearly a knowledge on appellant's part, during the years 1914, 1915, and 1916, of the possession of these premises by respondents under the McIntyre agreement. Among them are:

'McIntyre trans to Morris (recorded). Lives on the place with his wife.'

'1/12/15 Mrs. Wade Morris writes will payment this month J. W. F.'

'1/10/14 will pay soon.'

Appellant's printed notice, signed in its behalf by Mr. Bateman, its manager, which is also before us as an exhibit in the case, bears date August 18, 1914, and is styled: 'Notice of Forfeiture, if Payment is Not Made.' The notice is addressed to 'J. D. McIntyre or Morris and Jane Doe McIntyre, Jane Doe Morris.' During the examination of Mr. Bateman the record shows the following:

'The Court: When Mrs. Morris came to you early in 1916 and asked you for an extension of the time you did not at that time refuse to recognize her rights, but you did agree to grant an extension of time, and still, after consenting, I understand they didn't pay anything, is

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