Kelly v. Merritt

191 P. 404, 111 Wash. 426, 1920 Wash. LEXIS 649
CourtWashington Supreme Court
DecidedJuly 8, 1920
DocketNo. 15654
StatusPublished
Cited by1 cases

This text of 191 P. 404 (Kelly v. Merritt) is published on Counsel Stack Legal Research, covering Washington Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Kelly v. Merritt, 191 P. 404, 111 Wash. 426, 1920 Wash. LEXIS 649 (Wash. 1920).

Opinion

Mount, J.

This action was brought to recover damages against the defendants on account of alleged false and fraudulent representations in the sale of an apartment house. Upon issues joined, the case was tried to the court and a jury, and resulted in a verdict and judgment in favor of the plaintiffs for $1,500. The defendants have appealed.

[427]*427A large number of errors are assigned, but the principal points argued by the appellants are that the court erred in refusing to grant a nonsuit at the close of the plaintiffs’ evidence, and in refusing to grant a judgment notwithstanding the verdict at the close' of all the evidence. The appellants vigorously contend in this court that the rule of caveat emptor should apply, and because it was within the power of the plaintiffs to learn all of the facts, and because they did not do so, they cannot now recover for false representations, even if made.

Since the case was tried to a jury and a verdict returned in favor of- the plaintiffs, we must assume, for the purpose of this appeal, that the facts as stated by the appellants are true. These facts are in substance as follows: In March, 1918, the respondents were desirous of purchasing a lease running from three to five years on an apartment house. They applied to the appellants, who were acting as real estate brokers in the city of Seattle, and were introduced to a Mr.' Arnold, who was then -in the employ of the appellants. Mr. Arnold showed the respondents several apartment houses which were not suitable. He also showed to the respondents an apartment house known as- the “Oleta.” He stated to the respondents .that this .apartment house had a short time lease, but that the' owner' of the house would make a new lease of from' three 'to five years at an advanced rental. The lease' in effect at that time expired in September, 1918, and-carried a- monthly rental of $350. Mr. Arnold stated that the owner had been seen and that -a three to five, year lease could be procured upon, this apartment ■ at about $500 per month after the expiration of the-short term lease. He advised respondents to take' ah assign-1 ment of the short term lease and in that way-sávé $150-[428]*428per month for the time of the short term lease, and thus saving about $900. This was satisfactory, and the respondents thereupon agreed' to pay $5,500 for the furniture and the lease upon this apartment house, which was to be extended for a period of from three to five years after the expiration of the lease then in effect. The lease then upon this apartment house was owned by one Bellingham, who had possession of the house. He had listed this lease and furniture for sale at $5,500. There was a mortgage upon the furniture for $2,500. It was agreed that the respondents should assume that mortgage and pay the balance, $3,000, in money and notes. A mortgage upon the apartment house which had been given by the owner of the fee had been foreclosed and the apartment house had been purchased by Ivan L. Hyland. The time for redemption had not yet expired. Bespondents did not know these facts and were not informed thereof.

At the time the respondents agreed to purchase the lease, Mr. Arnold, who represented the appellants, stated to them that he had seen the owner of the property and the owner had agreed to extend the lease from three to five years at an additional rental after the expiration of the lease then in force. “When requested by the respondents to see the owner and interview him, Mr. Arnold stated that they could see the . owner when the final papers were prepared. Thereafter Mr.. Merritt, one of the appellants, stated to the respondents, in substance, that he was an attorney at law and that he would see that their interests were protected if they desired him to do so. On March 20, respondents were told that Mr. Hyland was the owner of the premises and that he had consented to a renewal of the original lease from three to five years and that they would go to his office and the papers [429]*429would there he made out. Thereupon Mr. Bellingham, who held the short term lease, and the respondents, with an attorney selected by appellants, and Mr. Arnold went to the office of Mr. Hyland. Mr. Belling-ham, Mr. Arnold and the attorney who represented the respondents, went into Mr. Hyland’s private office. The respondents waited in the outer office. After a conference of a few minutes, Mr. Arnold returned to the outer office and informed the respondents that the owner had agreed to extend the lease for a period of three to five years at a little less than $500 per month. Thereupon Mr. Hyland dictated an assignment of the short time lease from Bellingham to the respondents. Mr. Hyland consented to the assignment in writing and the respondents agreed to accept the assignment of the lease. The consent by Mr. Hyland reads as follows:

“The undersigned, Ivan L. Hyland, purchaser at sheriff’s sale of the above described premises under mortgage foreclosure against Huldia E. Johnston, do hereby consent to the foregoing assignment.
“Dated this 23d day of March, 1918.
“Ivan L. Hyland.”

The respondents went into possession of the building, and at the expiration of the short term lease in October, 1918, were ousted by Mrs. Johnston, who had redeemed from the foreclosure and refused to extend the lease.

Under the facts testified- to by the respondents, as stated above, we are satisfied there was no duty on the part of the respondents to inquire further whether Mr. Hyland was actually owner of the property or whether he would consent to a renewal of the lease. According to the respondents’ testimony, the appellants had sent an attorney along with the respondents, and this attorney was supposed to look out for the [430]*430Interests of the respondents on the assignment of the short term lease. When Mr. Arnold had stated that Mr. Hyland was the owner of the property and that he consented to an assignment of the short term lease and to an extension thereafter of three to five years at less than $500 per month, it stands to reason, we think, that they had a right to rely upon that representation. It is argued here that the consent to the assignment signed by Mr. Hyland was itself notice of the fact, that he was not the owner of the premises. It may be that, one versed in the law might conclude that a purchaser at.sheriff’s, sale was not the absolute owner of property so purchased, but it is plain, we think, that an ordinary person, not knowing perhaps of the right of redemption in another person, would conclude that Mr. Hyland, the .purchaser, was the actual owner. The attorney selected by the appellants to represent respondents upon that occasion did not advise respondents that.Hyland was not the lawful owner of the premises at that time. In any event, we are satisfied that the respondents were entitled to rely upon the statements' made by Mr. Arnold to them upon that occasion, and that the rule of caveat emptor should not apply under those facts. ' Whén the appellants, through their employee, Mr. Arnold, represented to the 'respondents that Mr. Hyland was the owner of the premises ahd that he would consént to a renewal of the short term lease from three to five years, we think the respondents were under no obligation to make further inquiry. Blum v. Smith, 66 Wash. 192, 119 Pac. 183. In Christensen v. Koch, 85 Wash. 472, 148 Pac. 585, in discussing the question of whether -the vendee may rely upon the representations of his vendor, it is said:

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Bluebook (online)
191 P. 404, 111 Wash. 426, 1920 Wash. LEXIS 649, Counsel Stack Legal Research, https://law.counselstack.com/opinion/kelly-v-merritt-wash-1920.