Simons v. Cissna

• Decision Date: 09 March 1909
• Citation: 52 Wash. 115,100 P. 200
• Parties: SIMONS v. CISSNA et al.
• Court: Washington Supreme Court

100 P. 200

52 Wash. 115

SIMONS v. CISSNA et al.

Supreme Court of Washington

March 9, 1909

Appeal from Superior Court, Whatcom County; Jeremiah Neterer, Judge.

Action by A. Simons against Charles Cissna and another. Judgment for plaintiff, and defendants appeal. Reversed, with direction to dismiss as to defendant Home Security Savings Bank, and to award a new trial as to defendant Cissna.

Dorr & Hadley and Hardin & Hurlbut, for appellants.

H. M White and Pemberton & Sather, for respondent.

RUDKIN C.J.

On the 15th day of May, 1905, the defendant the Home Security Savings Bank was the owner of certain mill property and timber lands in Watcom county. At or about that time a corporation known as the 'American Mill & Timber Company' was organized, with a capitalization of $20,000 for the purpose of taking over this property. Only $5,000 had then been paid in on the capital stock of the purchasing company, and no payments on account of stock subscriptions have since been made. On the above date the defendant bank entered into an agreement to sell the mill property and timber lands to the American Mill & Timber Company in consideration of the sum of $18,000, $5,000 of which was paid at the execution of the contract, the balance of $13,000 to be paid in monthly installments of $500 per month. The contract contained numerous stipulations and conditions including provisions that the contract was to be a mere option to purchase; that no right, title, or interest in the property should vest in the purchaser until the full payment of the purchase price; and that the contract should be forfeited, at the option of the vendor, for failure on the part of the purchaser to operate the mill for a period of 30 days, or to make payments when due, or to comply with other provisions of the contract. The $5,000 paid by the purchasing company was the $5,000 paid in on its capital stock. On the 30th day of June, 1905, the plaintiff contemplated entering into a logging contract with the American Mill & Timber Company to log off the lands described in its contract of purchase. The plaintiff was not acquainted with the officers of the company, and knew nothing of its financial affairs or standing. He therefore asked the president of the American Mill & Timber Company for a reference as to the company's standing and its ability to carry out its contract. The plaintiff was referred to the defendant Cissna, and informed him that he was about to enter into a logging contract with the American Mill & Timber Company and had been referred to him to ascertain how the company stood financially. Cissna informed the plaintiff that the company was good financially; that it was wholly solvent, and would pay 100 cents on the dollar; that it had the timber land and mill property, and $20,000 back of it. Relying on these representations, the plaintiff entered into a contract with the American Mill & Timber Company by which he agreed to haul and deliver fir logs at the rate of $4 per thousand and cedar logs at the rate of $4.50 per thousand. Under this agreement the plaintiff expended large sums of money in building and repairing skid roads, in moving donkey engines, and in hauling and delivering logs to the mill. On or about November 1, 1905, the American Mill & Timber Company discontinued business and became insolvent, and the plaintiff has been unable to collect for his services. This action was instituted against the defendants to recover damages for the false and fraudulent representations as to the solvency of the American Mill & Timber Company, and from a judgment in favor of the plaintiff and against both defendants this appeal is prosecuted.

A series of motions was interposed against the complaint, to strike certain portions, and to make other portions more definite and certain. These several motions were in a large part denied, and the rulings of the court are assigned as error. Motions of this kind are addressed to the sound discretion of the trial court, and we see nothing in the complaint or in the subsequent proceedings at the trial to indicate that this discretion was abused, or that the appellants were injured or prejudiced in the slightest degree by any of the rulings complained of.

Error is assigned in the overruling of a demurrer to the complaint, in the denial of a motion for nonsuit at the close of the respondent's case, and in the denial of a motion for a directed verdict or judgment at the close of all the testimony. These several rulings involve the same general questions, and may be considered together. It seems to us that the complaint contains all the essential elements of a cause of action. It sets forth the representations made; that they related to existing material facts; that they were false; that the appellants knew of their falsity, and intended thereby to deceive and defraud the respondent; that the respondent was ignorant of the falsity of the representations made, and believed them to be true, and that the respondent acted upon them to his damage. Tacoma v. Tacoma Light & Water Company, 17 Wash. 458, 50 P. 55; 20 Cyc. 90.

The contention that representations as to solvency relate to mere matters of opinion and are not actionable is untenable. 'A representation as to a third person's solvency and credit must be an assertion implying knowledge, not a mere expression of opinion, although an intentionally false opinion may be actionable. But the question whether a representation as to a third person's financial ability is a statement of fact or an expression of opinion is recognized as being one of peculiar difficulty, and as its solution depends upon the circumstances, as well as upon the nature of the statement and the meaning of the language used, it is in the first instance to be determined by the jury. In the earlier cases the courts construed as mere expressions of opinion statements which the court now would doubtless regard as representations of fact.' 20 Cyc. 75. This is especially true of this case, where the appellant Cissna was familiar with the affairs of the American Mill & Timber Company down to the smallest detail.

The further contention that the respondent was guilty of negligence in relying upon the representations made, and that he should have ascertained the financial condition of the American Mill & Timber Company from other sources or upon independent investigation, is equally unsound. 'The rule imposing upon a purchaser the duty to investigate as to the truth of his vendor's statements concerning the property to be sold has no application to representations made by a third person as to the credit, solvency, etc., of another. In cases of...