Moss v. Vadman

• Decision Date: 18 December 1969
• Docket Number: No. 41083,41083
• Citation: 463 P.2d 159,77 Wn.2d 396
• Parties: Darrell MOSS and Robert Robbins, Appellants, v. Warren E. VADMAN and Jane Doe Vadman, his wife, Richard Swanson and Jane Doe Swanson, his wife, James Whisler and Jane Doe Whisler, his wife, James Swanson and Jane Doe Swanson, his wife, and Evergreen Park, Inc., a Washington Corporation, Respondents, Sharon L. Moss and Isabel Faye Robbins, Appellants.
• Court: Washington Supreme Court

Page 396

77 Wn.2d 396

463 P.2d 159

Darrell MOSS and Robert Robbins, Appellants, v. Warren E. VADMAN and Jane Doe Vadman, his wife, Richard

Swanson and Jane Doe Swanson, his wife, James Whisler and

Jane Doe Whisler, his wife, James Swanson and Jane Doe

Swanson, his wife, and Evergreen Park, Inc., a Washington

Corporation, Respondents,

Sharon L. Moss and Isabel Faye Robbins, Appellants.

No. 41083.

Supreme Court of Washington, En Banc.

Dec. 18, 1969.

Rehearing Denied March 5, 1970.

Perkins, Coie, Stone, Olsen & Williams, Theodore J. Collins, Seattle, for appellant.

Brodie, Fristoe & Taylor, E. Robert Fristoe, O'Leary, Meyer & O'Leary, Ernest L. Meyer, Olympia, for respondent.

FINLEY, Judge.

This action was brought by the plaintiff, Darrell Moss and Robert Robbins ¹ (partners who bought and sold real estate) against Warren Vadman, ¹ (their accountant who also advised them from time to time on their real estate transactions). Their complaint was that he had failed to assign to them an option to purchase 1,163.30 acres of land referred to herein as the Mottman tract. The option was obtained by Vadman under circumstances and conditions hereinafter described.

This particular property had a special value in 1966, it being large enough to be an acceptable site for the campus of a new 4-year college which it was believed the 1967 legislature would establish in Thurston County. ² Title to the property was in Mottman Mercantile Company, a corporation owned by the members of the Mottman family.

Vadman assigned the option to Richard Swanson, James Swanson and James Whisler, ¹ who were also made parties defendant in this action. They in turn assigned the option to a corporation owned by them, and that corporation subsequently exercised the option, bought the property, and expended substantial amounts in its development. That corporation (Evergreen Park, Inc.) was also made a party defendant.

The plaintiffs, alleging violation of Vadman's duties to them as their agent, sought a judgment against him for an amount somewhat less than the amount of the finder's fee he received from the Swansons and Whisler (hereinafter called the Swanson-Whisler group). The plaintiffs also sought to establish an interest in the Mottman tract on the theory of a constructive trust, and filed a lis pendens based on that claim. In the alternative they sought to recover the profit which they would have obtained had the option been assigned to them.

The trial court dismissed the action on the basis of its conclusions that Vadman was not the agent of the plaintiffs in procuring the option; that he breached no fiduciary relationship in assigning the option to the Swanson-Whisler group; and that consequently no constructive trust was established. From that dismissal, the plaintiffs have appealed.

We feel that the case turns on the issue of whether there was a breach of a fiduciary relationship between the plaintiffs and the defendant Vadman.

A detailed presentation of the facts is necessary for an adequate understanding of that issue. Many of the facts are stipulated as part of a pretrial order, others are hotly contested, as are some of the inferences drawn by the trial court from the facts.

Vadman was also the accountant for the Mottman Mercantile Company, as well as for some individual members of the Mottman family. We will refer to the corporation and the members of the family collectively as the Mottmans, except where differentiation may be important. Based upon the knowledge Vadman had acquired of the Mottmans, he suggested to the plaintiffs in November or December 1965, that the Mottmans might be willing to accept $1,000,000 dollars for the tract of land here in question. The plaintiffs in March 1966, authorized Vadman to offer $5,000 for a 1-year option to purchase the tract for $1,000,000. ³ It was agreed that Vadman was to receive a 2 per cent finder's fee if he was successful in acquiring the option and if the option was sold or exercised by them within the year. It was understood that the option would be taken in Vadman's name, and that the identity of Moss and Robbins was not to be disclosed to the Mottmans. ⁴

This offer was not acceptable to the Mottmans, either as to purchase price or as to the amount to be paid for the option, but because of the interest shown they commissioned Mr. Hubert Hoffman to make a study of the property to determine its value.

The trial court's findings of fact cover quite concisely what followed thereafter. On July 16, 1966, Mr. George Mottman, Mr. Hoffman and the defendant Vadman met at the store operated by Mottman Mercantile Company and tentatively agreed upon a price of $1,160,000.00 ⁵ for the tract and $60,000.00 for a one year option, and planned for a stockholders meeting later to obtain stockholder approval thereto.

(Finding of fact 12.)

On July 18, 1966, the defendant Vadman reported to Plaintiffs the price and that Mottman would probably give an option for a year for $60,000.00.

(Finding of fact 13.)

The defendant Vadman was sick from July 21 to August 7, 1966, and the Mottmans delayed the stockholders' meeting until August 8th so that he could be present. At the meeting on August 8, 1966, the Mottman's orally agreed to give the defendant Vadman an 'Option' to the end of August. The defendant Vadman informed Mottmans that he was dealing with some undisclosed interested parties (plaintiffs) and that they were to have until the end of August to raise the $60,000.00. The defendant Vadman told Mottmans that he was also interested, and if the undisclosed parties then interested did not raise the money, he would find others, and it was agreed that he, Vadman, would have an additional day for himself or until September 1, 1966, at 5:00 P.M.

(Finding of fact 14.)

That on or about August 8, 1966, plaintiffs were informed that they would have to the end of the month (August 31, 1966) to obtain from Vadman an assignment of his option right upon the payment of $60,000.00 for the option and a Finder's Fee of 2%. Later, on the evening of August 31, 1966, on a phone call from the plaintiffs, the defendant Vadman extended the time to 10:00 A.M., September 1, 1966.

(Finding of fact 15.)

At this point, we interrupt our quotation of the trial court's findings to point out that the finding (No. 14) that Vadman had the day of September 1 for himself is a crucial finding in the case. The plaintiffs at all times have contended that their understanding was that they had until 5 p.m. on September 1, 1966 to raise the $60,000. We, therefore, amplify finding No. 14 by the testimony of the defendant Vadman as to what transpired at the August 8, meeting.

Vadman testified that the Mottmans were pushing for immediate payment of the $60,000 and suggested first 2 days and then 10 days for payment; that he, endeavoring to get more time for the plaintiffs, suggested a month, but that the Mottmans would not agree to an extension beyond the end of the month (August). Vadman then phoned Moss to ask if he and Robbins were interested in those terms, I.e., $60,000 by the end of August. Advised that they were, Vadman went back to the meeting and said, 'I will take the option until the end of the month.' It was shortly thereafter that he interjected the idea of an extra day for himself into the discussion, saying that if his parties could not raise the $60,000 by the end of August, he would raise it himself.

We accept the trial court's finding based on the substantial though uncorroborated ⁶ testimony that the plaintiffs were advised they had until the end of August (1966) to raise the $60,000, and that Vadman had an extra day (I.e., until 5 p.m. on September 1, 1966) to raise that amount if the plaintiffs failed.

In their quest for the $60,000, the plaintiffs contacted the Swanson-Whisler group in the latter part of August.

We turn again to the findings as made by the trial court.

On August 24, 1966, the defendant Richard Swanson began dealing with the plaintiffs regarding the option and in what proportions they would contribute and who would have control. After several meetings they failed to agree. On August 29, 1966, the defendant Richard Swanson contacted the defendant Vadman and learned that plaintiffs had until the end of August to perform. On August 30, 1966, Richard Swanson informed the defendant Vadman that his group would put up option money and pay a finders' fee if plaintiffs did not. On the evening of August 31, 1966, the defendant Vadman told the defendant Richard Swanson that he had given plaintiffs until 9:00 or 10:00 A.M. on September 1, 1966 within which to produce the $60,000.00. On the morning of September 1, 1966, at 10:00 o'clock A.M., plaintiffs had not complied and the defendant Vadman accepted the Swanson-Whisler offer.

(Finding of fact 17.)

Richard Yeager, of Shelton, Washington, was on the local four-year college committee and was interested in recommending a location for the new college. On August 30, 1966, he talked with plaintiffs about their option and found that it was oral, and concluded the 'price' on the property was right, but the terms were poor. Later on August 31, 1966, he called defendant Vadman to verify what he had heard from the plaintiffs, and on the evening of August 31, without further contacting plaintiffs, he decided to put up the money. He talked with some of his acquaintances and on the morning of September 1, 1966, obtained funds from different ones and at about 11:30 A.M. obtained from the Bank a Manager's Check for $60,000.00 and left it with Vadman's secretary to take up the option, although plaintiffs did not know until about noon that day that Yeager had actually concluded to raise the $60,000.00 or that he had attempted to actually put up the money for the option. Further, Yeager made no agreement with Vadman regarding the finder's fee.

(Finding of fact 18.)

That at a meeting which started at 2:00 P.M. on September 1, 1966, the option was signed by the...