Wickre v. Allen

• Court: Washington Supreme Court
• Writing for the Court: WEAVER; FINLEY
• Citation: Wickre v. Allen, 364 P.2d 911, 58 Wn.2d 770 (Wash. 1961)
• Decision Date: 14 September 1961
• Docket Number: No. 35695
• Parties: Paul D. WICKRE, Respondent, v. W. Gorden ALLEN and Madeline Allen, husband and wife, and John Truhan and Alice O. Truhan, husband and wife, Appellants, and Carrie H. Wickre, Respondent.

Page 770

58 Wn.2d 770

364 P.2d 911

Paul D. WICKRE, Respondent, v. W. Gorden ALLEN and Madeline Allen, husband and wife, and John Truhan and Alice O. Truhan, husband and wife Appellants and Carrie H. Wickre, Respondent.

No. 35695.

Supreme Court of Washington, Department 1.

Sept. 14, 1961.

Rehearing Denied Nov. 28, 1961.

Imus, Marsh & Johnson, Longview, Morley, Thomas & Orona, Lebanon, Or., for appellants.

Studley & Purcell, Longview, for respondent.

WEAVER, Judge.

This is an action for the rescission of a contract by which plaintiff purchased radio station KBAM in Longview, Washington. The trial court rescinded the contract of purchase because of defendants' fraud, granted plaintiff judgment for $25,000 (plaintiff's down payment) and canceled plaintiff's promissory notes for $59,718.82 (the balance of the purchase price) and the mortgages securing them.

Defendants make twenty-three assignments of error: seven to the findings of fact supporting plaintiff's theory of the case; thirteen to the refusal to enter defendants' proposed findings of fact--that fraud did not exist, that plaintiff was not entitled to rely on certain representations, that plaintiff waived his right to rescind, that defendants were entitled to judgment for the unpaid balance of the purchase price, that $800 per month was the reasonable rental value of the radio station during the time it was operated by plaintiff; and three assignments of error of a miscellaneous nature--the first to the admission of an exhibit in evidence, the other two formal and dependent upon our disposition of the first two categories.

The trial court found the following material representations, made by defendants and relied upon by plaintiff, to be false:

'(a) Said defendant represented as a fact that the net profit as shown by said Profit and Loss Statement in the sum of about $2,800.00 per month was a typical month's operation for said station and was the amount of net profit per month that the plaintiff and his wife could expect in the operation of said station. ¹

'(b) Said defendant represented as a fact that said station did not engage in trade-out ² advertising except with Newton's Record Shop for records.

'(c) Said defendant represented as a fact that said station did not engage in cut-rate ³ advertising.'

'The case depends upon the credibility of the parties. * * * the representation of net income, and denial of trade outs and cut rate prices represent clear, cogent, and convincing evidence of fraud. * * *'

There is substantial evidence in the record before us to support the finding of fraud and plaintiff's right to rely thereon. We cannot disturb it. Hallin v. Bode, Wash., 1961, 362 P.2d 242, and cases cited; Thorndike v. Hesperian Orchards, Inc., 1959, 54 Wash.2d 570, 575, 343 P.2d 183, and cases cited. The evidence of fraud meets the test set forth in Webster v. L. Romano Engineering Corp., 1934, 178 Wash. 118, 34 P.2d 428.

The following is the chronology of events we need consider:

September 25 and October 4, 1957, plaintiff and his wife discussed, at their home in Washington, D. C., the purchase of the radio station with one of the defendants.

October 14, 1957, plaintiff visited Longview, Washington, for approximately three days, to examine the station and the community.

December 24, 1957, plaintiff signed the purchase contract and made a $5,000 down payment.

February 28, 1958, plaintiff paid an additional $20,000 and executed sixteen promissory notes, secured by real and chattel mortgages, the first note falling due January 2, 1959.

March 1, 1958, plaintiff took possession of the radio station, the Federal Communication Commission having theretofore approved the transfer of the broadcasting license.

May 19, 1958--approximately two and one-half months after taking possession of the station, during which period the fraud was discovered, plaintiff elected to claim a rescission of the purchase contract by commencement of this action. In his complaint, he tendered to defendants a return of all assets described in the contract. The tender was sufficient. Bariel v. Tuinstra, 1954, 45 Wash.2d 513, 525, 276 P.2d 569.

Shortly thereafter, he suffered a nervous breakdown and returned to Washington, D. C., where he remained until the trial of this action on January 26, 1960. The station was operated by a manager until June 8, 1959, when the court, upon defendants' petition, appointed a receiver, who now has possession and control of the station.

We find no merit in defendants' assignments of error that present their 'Third Affirmative Defense'--'that plaintiff has been guilty of laches and unreasonable delay in bringing this action. * * *' The record supports the conclusion that the election to claim a rescission of the contract was timely made by the commencement of this action. See Lester v. Percy, Wash., 1961, 364 P.2d 423.

By appropriate assignments of error, however, defendants present their contention that plaintiff, by his conduct after the commencement of this action, waived his right to rescind the contract.

Plaintiff's actions that defendants claim constitute a waiver of his election to rescind the contract--which, of course, must be sufficient to constitute an abandonment of his right to maintain this action--are:

(a) Plaintiff listed the radio station for sale with two brokers in Washington, D. C.; plaintiff or the brokers advertised the station for sale in a trade publication of national circulation.

(b) Plaintiff, by letters dated December 29, 1958, and January 9, 1959, attempted to negotiate a sale of the station to Al Weeks, who was then managing the radio station.

(c) Plaintiff was identified as the owner of the station during the sign-off announcement.

(d) December 29, 1958, plaintiff's counsel tendered to defendants' counsel $3,906.30--the amount of the first installment note, plus interest--subject to certain conditions not germane to the issue of fraud. The conditions were not met and the payment was never made.

By way of explanation, plaintiff offered the following:

(a), (b) Less than a month after the commencement of this action and plaintiff's return to Washington, D. C., in poor health, plaintiff's wife received a letter from their counsel in Longview, Washington, written after a conference with defendants' counsel. The letter is subject to the interpretation that defendants would not be adverse to a resale of the station on some basis that would permit each party to recover his investment; hence, plaintiff's attempt to sell the station pending litigation.

(c) Regarding the use of his name as the owner of the station at the time of signing off the air, plaintiff testified: 'A. I was not the owner. I was the guardian. It was necessary for my name to remain associated with the license because of the FCC rules and regulations.

'Q. Is that why you had them make the sign off announcement in that manner? A. That is correct.'

(d) Concerning the alleged tender of payment of the first installment note, plaintiff testified:

'The sum of approximately four thousand dollars was forwarded to my attorney on the basis of a compromise of the lawsuit.'

Having considered these factors in relation to all the evidence, the trial court said, in his memorandum opinion:

'We have considered all of the actions of Wickre [plaintiff] together with the letter of his attorneys and do not believe a waiver of his right to a rescission has been established. There were no acts which unequivocally waive his right of rescission. All of the actions of Wickre were equivocal in our opinion.'

Consequently, the trial court entered finding of fact XXII, which, in part, states

'* * * that such acts were not an unequivocal election to retain the property under the contract and were not an unequivocal election by plaintiff to waive his right to recission; that the evidence fails to disclose that plaintiff herein has in any manner unequivocally waived his right to rescind said contract.'

We agree with the trial court.

The rule is well-stated in 24 Am.Jur. 37, Fraud and Deceit, § 210:

'Where subsequent acts are relied upon as a defense in a case where fraud is clearly established, it is said the acts must stand upon the clearest evidence, must evince a purpose to waive or forgive the fraud, and must amount to a clear election not to rescind. If what is done is merely for the purpose of saving the plaintiff from further loss, without any purpose to give up whatever right he may have either at law or in equity to rescind, the right of rescission will not be affected. Therefore, one who has perfected his right to rescind a fraudulent contract cannot lose it by merely taking care of the property received, or by preserving it in case it is of a perishable nature, unless what he does is done with the intent to confirm the contract.' (Italics ours.)

Whether it be claimed that plaintiff's actions constitute an affirmance or ratification of the contract, waiver of known fraud, or waiver of the right to rescind, it appears that the touchstone of the problem is the intent of the actor. ⁴ Algee v. Hillman Investment Co., 1942, 12 Wash.2d 672, 123 P.2d 332. As we said in Vinneau v. Goede, 1957, 50 Wash.2d 39, 41, 309 P.2d 376, 377:

'In any event waiver is a matter of intent, and the court found upon overwhelming evidence that there was no intent to waive.'

In determining intent, the nature of the subject matter of the contract should be considered. Bariel v. Tuinstra, 1954, 45 Wash.2d 513, 524, 276 P.2d 569, 575, involved rescission of a contract for the sale of a dairy herd. This court said:

'When respondent refused to take back the cows at the time that appellant sought to rescind the sale, appellant became an involuntary bailee of the milk cows and had no alternative but...