Nailor v. Western Mortg. Co., 34158

• Decision Date: 30 April 1959
• Docket Number: No. 34158,34158
• Citation: 54 Wn.2d 151,72 A.L.R.2d 938,338 P.2d 737
• Court: Washington Supreme Court
• Parties: , 72 A.L.R.2d 938 E. R. NAILOR, doing business as Nailor Lumber Company, Respondent, v. WESTERN MORTGAGE COMPANY, a corporation, and Gifford P. Owen, Appellants. Ralph E. SCHMITT, doing business as Schmitt's Sheet Metal Company, Respondents. v. WESTERN MORTGAGE COMPANY, a corporation, and Gifford P. Owen, Appellants. Thomas P. WINDOW, doing business as Olympic Electric Company, Respondent, v. WESTERN MORTGAGE COMPANY, a corporation, and Gifford P. Owen, Appellants. J. W. CAVEN and Orville Perry, a co-partnership doing business as J. W. Caven Plumbing & Heating Company, Respondents, v. WESTERN MORTGAGE COMPANY, a corporation and Gifford P. Owen, Appellants. A. E. NAILOR and E. R. Nailor, a co-partnership doing business as Angeles Gravel & Supply Company, Respondents, v. WESTERN MORTGAGE COMPANY, a corporation, and Gifford P. Owen, Appellants.

Page 151

54 Wn.2d 151

338 P.2d 737, 72 A.L.R.2d 938

E. R. NAILOR, doing business as Nailor Lumber Company, Respondent, v. WESTERN MORTGAGE COMPANY, a corporation, and Gifford P.

Owen, Appellants.

Ralph E. SCHMITT, doing business as Schmitt's Sheet Metal

Company, Respondents. v. WESTERN MORTGAGE COMPANY, a corporation, and Gifford P.

Owen, Appellants.

Thomas P. WINDOW, doing business as Olympic Electric

Company, Respondent, v. WESTERN MORTGAGE COMPANY, a corporation, and Gifford P.

Owen, Appellants.

J. W. CAVEN and Orville Perry, a co-partnership doing

business as J. W. Caven Plumbing & Heating

Company, Respondents, v. WESTERN MORTGAGE COMPANY, a corporation and Gifford P. Owen,

Appellants.

A. E. NAILOR and E. R. Nailor, a co-partnership doing

business as Angeles Gravel & Supply Company, Respondents, v. WESTERN MORTGAGE COMPANY, a corporation, and Gifford P.

Owen, Appellants.

No. 34158.

Supreme Court of Washington, En Banc.

April 30, 1959.

Lundin, Barto & Goucher, Seattle, for appellants.

Joseph H. Johnston, W. A. Raley, Nathan G. Richardson, Port Angeles, for respondents.

WEAVER, Chief Justice.

Separate actions brought by plaintiffs were consolidated for jury trial and upon appeal. Defendants appeal from money judgments entered after verdicts of the jury against them.

The court instructed that

'The gist of the various Plaintiffs' actions against the Defendants is an alleged conspiracy between the Defendants and one Wayne Williams to defraud and to cheat the Plaintiffs.'

Wayne Williams, a contractor and builder, became indebted to plaintiffs for materials. Williams is not a party to these actions, which sound in tort for damages arising out of false representations made by defendants and by Williams concerning his financial status. The defendants authorized Williams to make the misrepresentations to the plaintiffs; hence, their liability for the damages suffered by reason of the reliance placed upon them.

The defendants are the Western Mortgage Company, a corporation, and its president, Gifford P. Owen, who wrote the following letter to a plaintiff that caused him to believe Williams' false representations:

'Western Mortgage Company

Dexter Horton Building

Seattle 4, Washington

October 27, 1953

'E. R. Nailor Lumber Company

'Port Angeles

'Washington

'Gentlemen:

'This is to notify you that Mr. Wayne Williams has permanently associated himself with the Western Mortgage Company of Seattle, Washington.

'Mr. Williams and the Western Mortgage Company will derive numerous benefits from this association. The Western Mortgage Company gains contact with an experienced builder and subsequent close contact with the mortgage lending field in the Olympic Peninsula area. Furthermore, Mr. Williams will receive first priority on all mortgage lending requirements. This will also permit Mr. Williams to resume his building program in the very near future.

'It is suggested that any questions regarding the aforementioned association be directed to Mr. Williams, personally.

'Yours truly,

'/s/ Gifford P. Owen

'Gifford P. Owen, President

'Western Mortgage Company.'

(Italics ours.)

Each of the other plaintiffs received a similar letter or was shown, by Williams, one of identical import addressed 'To whom it may concern.'

Pursuant to the authorization in the letters regarding his 'association' with the defendants, Williams made the following statements to plaintiffs about his financial status: That he owned stock in the Western Mortgage Company in an amount over sixty-seven thousand dollars and exhibited the stock to a plaintiff; that he owned the controlling interest in the company; that he was a permanent member of the board of directors; that he had forty thousand dollars immediately available for payment of past debts; and that he had several hundred thousand dollars available for future building by virtue of his interest in the Western Mortgage Company. These representations were false.

All of the plaintiffs testified that, prior to receiving the letters, they had stopped all credit to Williams because of his indebtedness to them and his inability to meet his obligations. Having received the letters from defendants and having relied upon Mr. Williams' misrepresentations, as we have outlined them, plaintiffs re-established Mr. Williams' credit and sold him materials until the fall of 1954.

'Representations of fact as to the credit or financial condition of a third person may, where the essential elements of fraud are present, constitute remediable fraud.' 37 C.J.S. Fraud § 48, p. 300.

'The rule that recovery may be had for misrepresentations as to a third person's financial condition is most frequently applied where one person, for the purpose of inducing another to lend money or sell goods or other chattels on credit to a third, misrepresents the financial standing of the latter; * * *' 37 C.J.S. Fraud § 48, p. 303.

There is substantial evidence in the record, which the jury was entitled to believe, that defendants intentionally participated in the transactions with Mr. Williams to further their common purpose, and that plaintiffs were entitled to rely upon defendants' false representations and did so to their damage. That Mr. Williams is not a party to these actions is immaterial, for, in State ex rel. Woodworth and Cornell v. Superior Court, 1941, 9...