Peters v. McPhadden

• Decision Date: 26 September 1913
• Citation: 135 P. 26,75 Wash. 525
• Parties: PETERS et al. v. McPHADDEN et al.
• Court: Washington Supreme Court

135 P. 26

75 Wash. 525

PETERS et al. v. McPHADDEN et al.

Supreme Court of Washington

September 26, 1913

Department 2. Appeal from Superior Court, Spokane County; J. D. Hinkle Judge.

Action by J. J. Peters and others against A. McPhadden and others. Judgment for plaintiffs, and defendants appeal. Reversed and remanded.

O. C. Moore, of Spokane, for appellants.

John T Mulligan, Neil C. Bardsley, and H. N. Martin, all of Spokane for respondents.

MORRIS J.

This is an action to rescind a contract on the ground of fraud and deceit. The contract in issue was one whereby respondents exchanged a $10,000 mortgage upon lands in Grant county for 50,000 shares of the capital stock of the Washington Steel &amp Bolt Company of the par value of $1 each. The fraud complained of consisted of alleged false representations as to the condition of the corporation, property owned by it, the character of the business that was transacted, and the value of the stock. It was also sought, in case it should appear that the mortgage had passed beyond the control of the appellants, that judgment be entered for its value. Issue being joined, a jury was demanded by respondents, and upon the trial, a verdict was returned in their favor for $10,000, plus two years' interest at 8 per cent., upon which judgment was entered, and defendants have appealed.

Many errors are assigned, some of which we find well taken, and to those we will confine our attention.

The Washington Trust Company of Spokane was acting as trustee for a bond issue of the Washington Steel & Bolt Company and for this purpose held a trust deed or mortgage upon the property of the company. R. J. Danson, attorney for the trust company, was permitted to testify that about two weeks prior to April 20, 1912, a resolution had been adopted by the officials of the trust company directing his firm to institute proceedings to foreclose this mortgage. This was error. The transaction complained of took place in August, 1909. Many intervening causes might have affected the value of the bonds and the property of the bolt company between August, 1909, and April, 1912, which might have induced the trust company to take the action it did, and if its action could be proved in the manner it was attempted, which we seriously doubt, it was inadmissible and improper upon the issue to be submitted to the jury--the value of the stock in 1909. McNicol v. Collins, 30 Wash. 318, 70 P. 753.

Respondents were permitted to offer in evidence a notice to creditors signed by John P. Hoyt, referee in bankruptcy, reciting that on September 16, 1911,...