Case ID: wash_125/html/0565-01.html
Source: Caselaw Access Project
Author: {"author": "Main, C. J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

[No. 17653.
    Department Two.
    July 17, 1923.]
    Sunset Copper Company et al., Appellants, v. J. E. Zickrick, Respondent, F. H. Dean et al., Interveners. 
      
    
    Release (6)—Obebation and Effect—Joint Wbongdoebs. The acceptance of money in satisfaction of a claim against one joint tort feasor, with a reservation that.it shall not be considered to release another joint tort feasor, operates as a release of the latter.
    Bbokebs (5)—Duties—Fbaud—Misbephesenting Pbice. An agent employed to purchase property who. misrepresented the price paid and made a secret profit at the expense of his principal is guilty of fraud and liable to the principal.
    Release (6)—Opebatton and Effect—Joint Wbongdoebs. Where an agent, employed to purchase property, made a secret agreement with the seller to represent the price to the principal as $100,000 when it was but $90,000, the excess of $10,000 to be paid to the agent, they were joint tort feasors in the wrong committed upon the principal, so that the release of the agent operated to release the seller.
    Appeal from a judgment of the superior court for King county, Frater, J., entered April 29, 1922, upon findings in favor of the defendant, in an action for damages from fraud and concealment, tried on the merits to the court.
    Affirmed.
    
      Kerr, McCord & Ivey and Wm. Z. Kerr, for appellants.
    
      George A. Custer, for respondent.
    
      
      Reported in 217 Pac. 5.
    
   Main, C. J.

The plaintiff brought this action to recover from J. E. Zickrick and W. W. Black the sum of $10,000, which it is alleged that the Sunset Copper Company was entitled to because of claimed concealment and misrepresentation of the purchase price of certain mining property. The fund in dispute, or a part of it, was also claimed by certain interveners. After tbe action was instituted, a settlement was made between Black, tbe interveners, and tbe plaintiffs, wbeieby Black paid the sum of $3,500 to tbe Copper Company and $1,500 to tbe interveners. Thereafter, in accordance witb a stipulation, tbe action against Black was dismissed witb prejudice. It came on for trial witb Zickrick being tbe only defendant. At tbe close' of tbe plaintiff’s case, tbe court dismissed tbe action witb prejudice, and tbe plaintiffs have appealed.

Tbe facts are somewhat involved, but may be summarized as follows: On March 9, 1916, and for some time prior thereto, W. W. Black and Frank L. Bell were tbe owners of certain mining property, situated near Index, in Snohomish county. Bell was a non-resident of tbe state and Black acted for him in dealing witb tbe property by virtue of a power of attorney. W. R. Scott, George H. Stevenson and tbe respondent, J. E. Zickrick, desired to purchase this property, or an option upon it. Scott advanced $1,000, and Zickrick, witb this money in bis possession, went to Black for tbe purpose of making a contract witb reference to tbe, purchase of tbe property. On this occasion, Zickrick, for tbe $1,000, purchased an option upon tbe property and received a receipt therefor which specified tbat tbe purchase price was $100,000. At tbe same time, there was delivered to him this writing: .

“Whereas, tbe undersigned, W. W. Black, gave a receipt to J. E. Zickrick for One Thousand Dollars ($1,003) for an option on tbe Sunset property for tbe price of One Hundred Thousand Dollars ($100,000),
“Now, therefore, it is agreed that tbe real price is Ninety Thousand Dollars ($90,000) to Zickrick, tbat anything in excess of Ninety Thousand Dollars ($90,-000) is to be paid to J. E. Zickrick.
“Dg.ted this 9th day of March, 1916.
“W. W. Black.”

When Zickrick reported to Stevenson and Scott that the purchase price was $100,000 instead of $90,000, they expressed some surprise, as it had been their understanding that the purchase could be made for $90,000. Zickrick assured them that the “bed rock” price for which the property could be purchased was $100,000. He did not disclose to them the memorandum above set out whereby he was to receive all of the purchase price in excess of $90,000. On the 17th of April, 1916, Stevenson and Zickrick went to see Black for the purpose of taking up the option and entering into a formal contract of purchase. Stevenson testified that, on this occasion, Black assured him that the purchase price of the property was $100,000, and a contract was taken in Stevenson’s name by which the purchase price was fixed at that sum. On the same day, Stevenson, Zickrick and Scott entered into a contract between themselves defining their respective interests in the property.

On the 3rd day of May, 1916, the contract of purchase between Black and Scott was superseded by a separate contract between Stevenson and Bell for the latter’s interest in the property, and another contract between Stevenson and Black for his interest in the property. On the 5th day of October, 1916, another contract was 'entered into covering the matter of the subsequent payments. On the 2nd day of May, 1917, Zickrick sold and transferred his entire interest in the contract and property to Stevenson for the sum of $10,000. It should be noticed here that this $10,000 is not the subject-matter of this action. Some time subsequently Stevenson and Scott assigned and transferred all of their interest to the Sunset Copper Company, a corporation, one of the appellants.

Tliis company prosecuted certain development work upor. the property, added machinery and expended a large sum of money. It made the payments on the contract of purchase from time to time as they became due. It was not until the fall of 1917, or sometime during the early spring of 1918, that the appellants learned of the secret agreement between Black and Zickrick which provided that the real purchase price was $90,000 instead of $100,000 and that the $10,000 excess should be paid to Zickrick. Notwithstanding this fact, the appellants continued to malee the payments upon the purchase price, but protested against paying the last $10,000. This was paid, however, because the contract contained a provision making time the essence thereof. The appellants took the position that, since the real purchase price of the property was $90,000 instead of $100,000, they should not be required to pay more than the $90,000. As already stated, they paid the last $10,000, making the full $100,000, to avoid the possible forfeiture of their contract, which they claim was threatened if they did not make the payment. After this action was begun, a stipulation was entered into, as above indicated, which provided that, if Black should pay the sum of $5,000, the action should be dismissed as to him, with prejudice.

There are a number of questions discussed in the. briefs, but the law of the case appears to us to be not very difficult, even though it is not easy to state the facts ■‘vith clearness.

The controlling question is whether the release of Black was a release of the action against Zickrick, a joint ';ort feasor. The rule is that the acceptance of money in satisfaction of a claim against one joint tort feasor, with a reservation that it shall not be considered as a release of another joint tort feasor, operates as a release of the latter. Randall v. Gerrick, 93 Wash. 522, 161 Pac. 357, L. R. A. 1918D 179; Larson v. Anderson, 108 Wash. 157, 182 Pac. 957, 6 A. L. R. 621; Betcher v. Kunz, 112 Wash. 563, 192 Pac. 955.

It cannot be doubted that, when Zickrick represented to Stevenson and Scott that the “bed rock” purchase price of the property was $100,000, instead of $90,000, and did not disclose to them the secret agreement by which he was to receive the difference between the $90,000 and the $100,000, he was committing a fraud upon them. Where an agent is employed to purchase property at a certain price, or the best price possible, and he enters into a contract for its purchase at a greater price whereby he is to be benefited at the expense of his principal, he is guilty of fraud in the misrepresentation of the purchase price. Hindle v. Holcomb, 34 Wash. 336, 75 Pac. 873; Packard v. Booth, 62 Wash. 333, 113 Pac. 774; Stewart v. Preston, 77 Wash. 559, 137 Pac. 993.

Zickrick, in taking the secret agreement by which he was to be benefited to the extent of $10,000, was committing a fraud upon Stevenson and Scott. As already pointed out, Black, when the contract of-purchase was made between him and Stevenson, assured the latter that the purchase price was $100,000. The arrangement between Black and Zickrick was such that we think the release of one operated as a release of the other, under the rule above stated with reference to the effect of the release of one of two joint tort feasors.

This disposes of the case except as to the $1,500 which was paid the interveners. As indicated, Zickrick, prior to the time when he sold and transferred his interest to Stevenson, had made some kind of an assignment to those who intervened in the action. The assignment from Zickrick to Stevenson, it appears to be conceded, was broad enough to include the $10,000 for which this action was brought. Whether the Sunset Copper Company has a right to offset the $1,500 paid the interveners against the balance of the purchase price for his interest in the property which he sold to Stevenson, will not be here determined, as this question more properly will arise if the $1,500 is pleaded as an offset in an action brought by Zickrick for the balance due him upon his contract of assignment.

The judgment will be affirmed.

Fullerton, Parker, and Tolman, JJ., concur.