Russell v. Stephens

• Decision Date: 27 August 1937
• Docket Number: 26360.
• Parties: RUSSELL v. STEPHENS et al.
• Court: Washington Supreme Court

71 P.2d 30

191 Wash. 314

RUSSELL v. STEPHENS et al.

No. 26360.

Supreme Court of Washington, En Banc.

August 27, 1937

Appeal from Superior Court, Spokane County; Charles H. Leary, Judge.

Action by R. W. Russell against Pasha C. Stephens and others wherein the named defendants filed a counterclaim. Judgment for plaintiff, and defendants appeal.

Reversed with directions that both action and cross-action be dismissed.

Superseding former opinion, 64 P.2d 787.

E. A Cornelius, of Spokane, for appellants.

A. O. Colburn, of Spokane, for respondent.

STEINERT Chief Justice.

An opinion in this case directing the affirmance of the judgment below was heretofore rendered and filed in this court on February 1, 1937. Russell v. Stephens (Wash.) 64 P.2d 787, 788. A petition for rehearing was subsequently granted, and, later, the cause was reargued en banc.

The sole question considered in the former opinion was whether the appellant Stephens, having counterclaimed for damages for breach of the contract set forth in the complaint, thereby acquiesced in the previous rescission of the same by the respondent, Russell. The substance of the former decision is contained in one sentence of the opinion, as follows: 'A plea for damages for breach of the contract operates as a rescission thereof and terminates it.'

That pronouncement was rested on the case of Stevens v. Irwin, 132 Wash. 289, 231 P. 783, and the cases therein cited.

Upon a further consideration of the matter, we are of the opinion that our former holding was erroneous and that the language on which it relied, and to which it referred, in the case of Stevens v. Irwin, supra, was inaccurate and inappropriate.

An action for breach of contract proceeds, not upon the theory that the contract has been rescinded, but, rather, upon the theory that the contract is in existence but has been violated. To rescind a contract is to declare it void in its inception and to put an end to it as though it never were; to breach a contract implies a violation of a valid and subsisting obligation. When a contract is legally rescinded, the parties are restored to their status quo generally; when a contract is broken, as that term is used in law, the party not in default has, among other remedies, that of an action for damages against the defaulting party. 5 Page on Contracts, §§ 2878, 3023, 3024, 3027; 3 Williston on Contracts, §§ 1301-1303, pp. 2351-2355.

The vendor in a contract of sale and purchase may, upon default in payment by the vendee, declare the contract forfeited and, if the contract so provides, retain all sums paid thereon, as liquidated damages, or he may elect to sue either for specific performance or for the damages actually suffered. Asia Investment Co. v. Levin, 118 Wash. 620, 204 P. 808, 32 A.L.R. 578; Reiter v. Bailey, 180 Wash. 230, 39 P.2d 370, 97 A.L.R. 1489.

Under the law as thus declared and established, we are compelled to hold that our former opinion must be withdrawn and that the opinion in the case of Stevens v. Irwin, supra, must be modified to the extent of deleting therefrom the words 'thus rescinding and terminating it,' following the words 'for the breach of the contract,' appearing in 132 Wash. 289, at page 292, line 3, 231 P. 783, at page 784.

This brings us to the merits of the pending case, as reflected in the issues tried by the court.

In order to have a clear understanding of the situation, it will be necessary to analyze the pleadings, findings, and judgment, and to review the evidence supplied by the record.

In his complaint the respondent, R. W. Russell, alleged that on February 20, 1935, he entered into a contract with appellant Pasha C. Stephens, a widow, by the terms of which respondent agreed to purchase, and appellant agreed to sell, 160 acres of land in Spokane county. The purchase price amounted to $2,500, payable $50 at the time of the execution of the contract, $500 on or Before October 1, 1935, and the balance in periodic installments of $100 and $200 respectively. The $500 payment was secured by an assignment pro tanto of a real estate contract covering a tract of land in Stevens county and naming respondent as vendor and Deer Park Lumber Company as vendee.

The contract which is involved in the present action contained the usual provisions for forfeiture for failure to make any of the payments or to perform any of its covenants, and provided that the vendor, appellant, might, upon forfeiture, retain all sums theretofore paid, as liquidated damages.

As a part of the same transaction, appellant leased to respondent an adjoining tract of 320 acres, to be used for crop raising and pasturage.

The complaint then alleged that respondent was induced to enter into the contract by reason of the following false and fraudulent representations of appellant's agent, R. J. Hilton: (1) That the land to be purchased was located not more than 2 1/2 miles from a schoolhouse, when, as a matter of fact, it was 5 miles distant; (2) that the property was but 4 miles from Dishman, the nearest trading center, when, in fact, it was 7 miles distant; (3) that there was enough good pasture for 200 head of sheep, when, in truth, because of lack of moisture, the pasture was not sufficient for anywhere near that number; and (4) that there was enough water available on the place for ten to fifteen cows, when, actually, the place had never been able to water more than four cows.

According to the complaint, these misrepresentations were made at a time of the year when a reasonable inspection of the premises by respondent would not have revealed the true water situation, and for that reason respondent relied on Hilton's representations.

The complaint further alleged that, upon discovering that the representations were false, respondent immediately elected, by written notice, to disaffirm and rescind the contract and the accompanying assignment, upon the grounds of misrepresentation as to the amount of land capable of being cultivated, the amount of crops that could be grown on the land and the amount of water available.

The prayer of the complaint sought cancellation of the contract, lease, and assignment, the return of the initial payment, and a direction to Deer Park Lumber Company to pay the proceeds of its contract to respondent.

Appellant Stephens appeared separately and answered by way of a general denial and also by counterclaim in which she asked for damages for breach of contract. So far as the record Before us discloses, Hilton and Deer Park Lumber Company, who had been named as parties defendant in the complaint, did not answer. Hilton, however, testified as a witness for appellant. The reply denied the allegations of appellant's counterclaim.

The court made findings to the effect that respondent had been induced to enter into the contract by false and fraudulent representations of Hilton concerning the distance from the land to the schoolhouse, the distance from the land to Dishman, the nearest trading center, and the sufficiency of pasture to accommodate 200 head of sheep; that, due to the higher intelligence and greater experience of Hilton, who acted as the agent of appellant, and the inexperience and lack of education and training of respondent, the parties did not deal at arm's length; that respondent had been unable to ascertain from inspection whether the pasture was so circumstanced as to have good moisture during the summer; and that he, therefore, relied on Hilton's representations in that regard. However, the court did not find that there had been any misrepresentation as to the amount of water supply available for cattle; in its oral decision at the conclusion of the trial, the court specifically stated that respondent had not met the burden of proof in that respect.

From these findings the court concluded that respondent was entitled to have the instruments designated in the complaint canceled, to have an order entered requiring Deer Park Lumber Company to pay respondent the sum of $500, and to recover judgment against the appellant in the sum of $50.

The judgment followed the provisions of the conclusions of law, but ordered that respondent's action be dismissed, with costs, as to Hilton.

The assignments of error all relate to the findings made by the court, and it therefore becomes necessary to review the evidence. In doing so, we are mindful of the fact that the court had the benefit of seeing the witnesses, and we therefore proceed upon the established rule that the findings of the court are entitled to great weight and, when the evidence is conflicting, will be accepted as correct unless the evidence clearly preponderates against them. Kelly v. Bank, 188 Wash. 614, 62 P.2d 1359.

The undisputed facts are as follows: Respondent Russell is a widower 55 years of age. He has eleven children, four of whom are of school age ranging from 11 to 17 years; the rest of his children are grown. Prior to his coming to Washington, Russell had lived in South Dakota, where for 13 years he had engaged in farming and raising stock, including sheep, hogs, and cattle. At times, he had owned as many as 200 sheep and some dairy cattle besides. His entire farming experience covered a period of 37 years.

Russell moved to Washington in 1929 and took up a farm at Deer...