Salisbury v. Goddard

• Decision Date: 21 March 1916
• Citation: 156 P. 261,79 Or. 593
• Parties: SALISBURY ET AL. v. GODDARD ET AL.
• Court: Oregon Supreme Court

156 P. 261

79 Or. 593

SALISBURY ET AL. v. GODDARD ET AL.

Supreme Court of Oregon

March 21, 1916

Department 1.

Appeal from Circuit Court, Multnomah County; C. U. Gantenbein Judge.

Action by Sarah L. Salisbury and another against John Bruce Goddard and another. From a judgment for plaintiffs, defendants appeal. Reversed and remanded.

This is an appeal by the defendants John B. Goddard and A. W. Ehrlich from a judgment rendered against them for $2,650. The plaintiffs, Sarah L. Salisbury and E. P. Salisbury, her husband, in February, 1914, owned at Salem, Or., a city lot whereon was erected a dwelling, which real property was unincumbered. They had successfully operated at Olympia Wash., a rooming house, and, desiring to resume such business, Mrs. Salisbury called upon Goddard, a real estate broker at Portland, Or., and made inquiry for such a building in the latter city. He directed her to the "Hotel Bushmark," a lease of the two upper stories of which and the furniture, etc., in the rooms therein, had been listed with him by Ehrlich, the owner thereof, for sale or exchange. The landlord of such tenements was the Beaver Investment Company, a corporation, which had leased them for a term of five years from July 1, 1911, at $400 a month to Jacob Cassell, from whom Ehrlich, by mesne transfer and with the consent of the landlord, derived title. The furniture, etc was hypothecated to that corporation to guarantee the payment of the rent as it matured, and also mortgaged to W. W. Green to secure the payment of $1,500, on account of which the tenant was required monthly to pay the interest and $50 on the principal. Mrs. Salisbury visited the Hotel Bushmark, and was so pleased with the location and prospects of success that her husband, pursuant to invitation, also called upon the broker, and made further inquiry about the building. After several inspections of the furniture, furnishings etc., the plaintiffs, on February 11, 1914, subscribed their names to a writing, wherein they offered to execute to Ehrlich a warranty deed of their lot for an assignment of the lease and a transfer of the personal property. The value of the lot was estimated in the writing to be $3,000, while the worth of the tenancy and the property stipulated to be accepted was placed at $4,500, less, however, the mortgage of $1,500, thus making the several appraisements equal. Ehrlich accepted the plaintiffs' proposal by a writing wherein it was stated the exchange should be made within five days. The plaintiffs, having been notified of such acceptance, agreed with Goddard that an inventory of the furniture, etc., should be made on a stated day, but at the time so appointed they did not visit the Hotel Bushmark, having concluded the operation of the business would be too great an undertaking for their limited means. Goddard thereupon called upon them and after some conversation and further assurances on his part they concluded to execute the deed, and pursuant to such solicitation, an exchange of transfers was made February 18, 1914. At that time it was learned that Ehrlich had paid on the chattel mortgage $150, which sum was liquidated by the plaintiffs. They took immediate possession of the hotel and operated it two months. A few days after quitting that business, the plaintiffs, without tendering or offering to return any of the property which they had received, commenced this action.

It is alleged in the complaint that the lot in Salem at the time it was conveyed to Ehrlich was of the reasonable value of $2,500; that the defendants, conspiring to defraud the plaintiffs out of such real property, represented to them that for four months immediately prior to such conveyance Ehrlich, in operating the hotel, had made a monthly net profit of $150 to $200; that in order to effect a transfer of the possession of the hotel, the defendants represented to the plaintiffs that the rental thereof under the terms of the lease was $250 a month; that, relying upon such statements, an exchange of property was consummated; that by crafty devices the defendants prevented the plaintiffs from reading or seeing the lease, and in like manner did not allow them to examine the books of account, showing the extent and value of the business of the rooming house, until after they took possession thereof; that such representations were false, in that the money received by Ehrlich from the hotel during the time so stated had been insufficient to meet the expenses of its operation; that the monthly rent reserved in the lease was $400, but the landlord was accepting $250 a month, thereby waiving at sufferance the right to demand the sum stated in the writing; that the value of the rooming house and of the furniture, etc., therein was not equal to the mortgages thereon; and that by reason of such false representations the plaintiffs had been damaged by the loss of their lot $2,500 and $150 paid to Ehrlich, or in the sum of $2,650.

The separate answers of the defendants denied the material averments of the complaint, and for further defenses alleged, in substance, that prior to the assignment of the lease and the transfer of the furniture, etc., the plaintiffs carefully inspected such property; that they were also fully advised in respect to the lease, and knew that though it provided for the payment of a monthly rental of $400, the landlord was receiving, and willing to accept during the then financial stringency, $250 a month; and that the Salem real property was, at the time the title was conveyed to Ehrlich, worth not more than $1,800, while the value of the lease and of the furniture was then $3,500. The reply put in issue the allegations of new matter in the answer, and the cause, being tried, eventuated as hereinbefore stated.

J. N. Hart, of Portland, for appellants. W. H. Hallam, of Portland (Charles E. McCulloch, of Portland, on the brief), for respondents.

MOORE, C.J. (after stating the facts as above).

It is not alleged in the pleadings, nor does it appear from the testimony given at the trial, what disposition the plaintiffs made of the lease or of the furniture and furnishings of the hotel. As witnesses they severally testified in support of the averments of the complaint. On cross-examination Mr. Salisbury was asked if, prior to the commencement of the action he had ever made any complaint to either of the defendants, in regard to the lease and the property which he had received. He answered:

"Well, after the bargain was concluded I had occasion to go to the Mr. Goddard's office, * * * and when I went into the room Mr. Goddard says to me, 'What is the matter, Salisbury? What makes you look so disheartened? What is the trouble?' he says, 'you look worried.' 'Well,' I says, 'that proposition up there don't look good to me. I am afraid we are going to lose out. I am afraid the old lady and I are going to lose out on it. It don't look good.' That is the complaint I made. Q. How long had you had the place then? A. Probably a week or ten days, or something along there."

On redirect examination, this witness was asked by his counsel:

"In this conversation that you were talking about a few minutes ago, did Mr. Goddard tell you how you could make any money on the place?"

To this question the defendants' counsel objected on the ground that the advice sought to be attributed to Goddard was given after an exchange of the property was consummated, and, this being so, any remarks then made by him were incompetent, irrelevant, and immaterial. The objection was overruled and an exception allowed, whereupon the witness replied:

"When I started to go home Mr. Goddard took his overcoat and wanted to go along with me down the elevator, and he says, 'Mr. Salisbury,' he says, 'you want to get a lot of girls--some girls there. That is the way to make it pay.' I says, 'We don't do business that way.' I says, 'If we can't make an honest living without that kind of work, we don't want to run a rooming house.' "

The defendants' counsel thereupon moved to strike out such answer for the reasons stated in the objection interposed to the preceding inquiry, but the motion was denied and an exception allowed.

Mr. Goddard, as a witness in his own behalf, testified in support of the averments of the answers, contradicting many statements attributed to him by the plaintiffs. On direct examination he was asked:

"Mr. Salisbury testified that you advised him to get some girls up there in the house. Mr. Goddard, what is the fact about that?"

The witness replied:

"No; I never done that. I have never done that in any instance."

It is believed that in denying the motion of defendants' counsel to strike out Mr. Salisbury's answer respecting the advice asserted to have been given to him by Mr. Goddard as hereinbefore quoted, a very prejudicial error was...