Peterson v. Neal

• Decision Date: 12 January 1956
• Docket Number: No. 33442,33442
• Citation: 292 P.2d 358,48 Wn.2d 192
• Court: Washington Supreme Court
• Parties: Frank A. PETERSON and Dorothy A. Peterson, husband and wife, Respondents, v. William E. NEAL and Mable L. Neal, husband and wife, Appellants.

Page 192

48 Wn.2d 192

292 P.2d 358

Frank A. PETERSON and Dorothy A. Peterson, husband and wife, Respondents, v. William E. NEAL and Mable L. Neal, husband and wife, Appellants.

No. 33442.

Supreme Court of Washington, Department 1.

Jan. 12, 1956.

Tonkoff, Holst & Hopp, Yakima, for appellants.

Walter V. Swanson, Douglas A. Wilson, Yakima, for respondents.

HILL, Justice.

This is an action by the purchasers for the rescission of the sale of a motel, on the ground of fraud, i. e., misrepresentation as to what the motel had earned while operated by the defendants, upon which the plaintiffs were entitled to and did rely.

The trial court found that the defendants had represented to the plaintiffs that the motel had realized as gross revenue for the year prior to November 12, 1953, the amount of six thousand dollars, and that that amount included fifty-four hundred dollars realized during the ten months from January 1, 1953, to November 1, 1953; and further found that those representations were substantially and materially false and that the plaintiffs had a right of rescission based thereon when they discovered them to be false. The trial court concluded that all the elements of actionable fraud had been established and decreed a rescission. The defendants appeal. We shall refer to the parties as purchasers and sellers.

No assignment of error is directed against any of the findings of the trial court. It is the position of the sellers in this court that, conceding arguendo that they had made the representations found by the trial court, still the evidence establishes as a matter of law that the purchasers waived their right to rescind by ratifying or affirming the transaction after they had acquired knowledge of the fraud.

While conceding that ratification and waiver are affirmative defenses and should be pleaded, and that they were not specifically pleaded in this case, the sellers urge that we have held that even when they are not pleaded the trial court can consider evidence relative to acts which it finds constitute a waiver, if that evidence is received without objection. In such cases, the pleadings are to be deemed amended to conform to the evidence and the court will consider the issue of waiver. Beaulaurier v. Washington State Hops Producers, 1941, 8 Wash.2d 79, 85, 111 P.2d 559.

We have found cases, like the Beaulaurier case, in which a finding of a waiver has been upheld although waiver had not been pleaded; but we have failed to find any case in which an appellate court has even considered the issue of waiver where it had not been pleaded and the trial court had made no finding on it.

The sellers' defense during the trial of this case was that they had not made the representations claimed. The trial court, however, decided that issue adversely to them. They also pleaded and made much of the shortcomings and failures of the purchasers as motel operators, which was immaterial if the sellers had made the representations as found by the trial court. See Frahm v. Moore, 1932, 168 Wash. 212, 11 P.2d 593. And they made much of the amount and value of the labor and materials that had gone into the construction and equipping of the motel, which also was immaterial if they had made those representations. See Bliss v. Clebanck, 1925, 136 Wash. 32, 238 P. 979. But if they had ratification and waiver in mind as defenses during the trial of the case, they approached those issues very casually. Had we read the pleadings and the statement of facts before we read the sellers' briefs on this appeal, we would not have known that ratification and waiver were being relied upon. The purchasers assert that they went through the entire trial and the post-trial motions without knowing it. The trial court made no mention of them in its memorandum opinion or in the findings of fact.

The sellers concede in their reply brief that the terms 'ratification' and 'waiver' were not used in the trial court, but urge that those words are merely conclusions and that the evidence, supplemented by two comments of counsel as to the purpose for which certain evidence was offered, was sufficient to put the purchasers and the trial court on notice that those defenses were being raised. We cannot agree.

We hold that the record before us does not disclose that either the trial court or the purchasers were ever properly or adequately advised that the sellers were relying upon the defenses of ratification and waiver, and that the sellers are not entitled to urge them on this appeal.

If, however, those issues were properly before the trial court, they were issues of fact for determination by that court. Bowman v. Webster, 1953, 42 Wash.2d 129, 134-135, 253 P.2d 934.

Counsel for the sellers urged in oral argument in this court that they could not compel the trial court to make a finding on those issues. They were not, however, without a remedy had the issues been properly before the trial court. We have consistently held that trial courts must make findings on all material issues, and have many times directed them to make findings on issues which we deemed to be material. See Bowman v. Webster, supra, and the many cases there cited; see, also, Garratt v. Dailey, 1955, Wash., 279 P.2d 1091.

The sellers, however, do not ask that the trial court be required to make findings on ratification and waiver, but urge that the evidence is so conclusive that we should hold that ratification and waiver were established as a matter of law. We shall consider that contention on the merits, although our holding that the issues of ratification and waiver were not properly or adequately...