Case Title: Pearson v. Vandermay

Citation: 407 P.2d 143, 67 Wash. 2d 222

Docket Number: 37696

State: washington

Court: Washington Supreme Court

Date: 1965-10-28T00:00:00Z

Document:
67 Wn.2d 222 (1965) 407 P.2d 143 PHYLLIS PEARSON, Respondent, v. JOHN VANDERMAY et al., Appellants.[*] No. 37696. The Supreme Court of Washington, Department Two. October 28, 1965. Frederick W. Post, for appellants. Howard T. Manion (of Whitmore, Vinton, Powers & Manion), for respondent. DONWORTH, J. This is an appeal from a judgment on the pleadings favorable to plaintiff, who is now respondent. A major issue in this case is the legal meaning of a written stipulation for judgment signed by counsel for each of the parties hereto, which was filed in a prior suit instituted to obtain a foreclosure of a second mortgage in which appellants Vandermay, as holders thereof, were plaintiffs, and respondent Pearson was a party defendant because of her ownership of a third mortgage on the premises. The stipulation for judgment was made between the Vandermays and Phyllis Pearson because the immediate foreclosure of the Vandermays' mortgage and sale of property seemed to be the best way to protect the interests of both the Vandermays, who held the prior lien on the real property involved, and Phyllis Pearson, who did not want to be foreclosed out of her subordinate interest therein, but who apparently was unable or unwilling to satisfy the Vandermays' second mortgage. The Vandermays' attorney drafted the stipulation. It reads: The complaint of plaintiff-respondent Pearson alleges: The Vandermays alleged in their answer: The Vandermays submitted findings of fact and conclusions of law which were rejected by the trial court. The trial court accepted the findings of fact and conclusions of law submitted by Phyllis Pearson, except that it wrote into them the interlineation which reads: The findings of fact and conclusions of law which the trial court accepted read as follows: Appellants' counsel made a "Motion for Judgment Notwithstanding Oral Decision of the Court or in the Alternative for a New Trial," in which he stated: Appellants' assignments of error numbers one and five charge, in substance, that, in granting a judgment on the pleadings, the trial court erred because it ignored a portion of facts pleaded in appellants' answer and counterclaim and certain questions of law raised thereby. Specifically, in those assignments of error, appellants emphasize that the trial court accepted appellants' pleading that "defendants kept plaintiff informed of the progress of the sale." It is argued that if this fact be accepted as true, then a judgment on the pleadings in favor of the plaintiff-respondent is not possible under the law. We agree with appellants' contention for the following reasons: [1] In Hodgson v. Bicknell, 49 Wn.2d 130, 136, 298 P.2d 844 (1956), we stated: The trial court recognized that it must accept the factual allegation in the answer that "defendants kept plaintiff informed of the progress of the sale." However, the trial court also apparently believed that it could and should render judgment for respondent-plaintiff for one of three reasons: (1) That this allegation meant only that plaintiff had been so informed with regard to the making of the contract, but that proof of plaintiff's being informed by defendant of the alleged threatened rescission because of the collapsed sewer could not be introduced under this pleading, or *231 (2) That plaintiff's knowledge of the need for the repair of the sewer in order to save the sale was irrelevant in view of the stipulation, or (3) That plaintiff had not been informed of the need for the repair of the sewer in order to save the sale because of the oral statement of plaintiff's counsel to the contrary during the hearing on the motion for judgment on the pleadings. [2] None of these reasons will support the judgment on the pleadings. With regard to the first reason, the pleading is indefinite, it is true. However, the pleading should be construed as required by Rule of Pleading, Practice and Procedure 8(f), which reads: Under that rule, this pleading would permit appellants to show that Phyllis Pearson, through her attorney, was informed of the threatened rescission by the purchaser, caused by the collapse of the sewer and the need for repairs. The sale was still "in progress" because it was executory due to the fact that it could not be consummated until the 1-year redemption rights had expired. Acquiescence of respondent at this point would be sufficient to warrant the Vandermays in believing that they had the authority to make the repairs, and be reimbursed for these as an expense of the sale. (We shall explain the basis for such belief in connection with our discussion of the second and third possible grounds for the trial court's judgment.) In regard to the second possible reason for the trial court's judgment, the court may have believed that, since the stipulation did not expressly spell out that this expense was to have priority over Phyllis Pearson's claim, it cannot have priority, even if it were considered as an expense of sale which the Vandermays had been led to believe was to be charged against the selling price before either party received any portion of his claim. The stipulation was made with the expectation that Mr. Vandermay would be a limited agent of respondent Pearson *232 for the purpose of reselling property in order to realize sufficient proceeds from the sale to pay her the amount of her claim against the Stickneys, plus 6 per cent interest. Mr. Vandermay was to exercise his reasonable business judgment in the incurring of the ordinary expenses of sale and in the acceptance of offers. Respondent Pearson has argued that the stipulation did not create an agency relationship. However, she has acquiesced in the sale made by Mr. Vandermay and has conceded the appropriateness of the ordinary expenses of the sale incurred by Mr. Vandermay, such as the commissions to the real-estate broker, the real-estate sales tax, and the escrow fees, as shown by the accounting according to appellants' brief, page 9. Those ordinary sales expenses were not given priority over the Pearson claim by the stipulation, hence we come to the conclusion that these were allowed as proper expenses of sale because of Mr. Vandermay's agency position. The question raised by the pleadings is whether this sewer repair was within Mr. Vandermay's authority to make, and pay for, as an appropriate sales expense under the circumstances which were pleaded. The stipulation does not determine this issue directly. Its express provisions do not imply the exclusion of the expenses of sale which were within the authority of Mr. Vandermay to incur. The issue is one of Mr. Vandermay's authority to make this expenditure as a part of his authority as agent to sell the property. It is within the area of the third possible reason for the trial court's judgment that the determination of the issue of Mr. Vandermay's authority appears likely to be found. Counsel for appellants Vandermay stated at the trial court hearing, in his written motion for a new trial, and in his brief and his oral argument on appeal, that, under his pleadings, he intended to show that respondent's counsel was informed of the impending rescission as a part of the "progress of sale." We gather, from what counsel for appellants stated, that he claims to have informed respondent, through her attorney, of the need for the sewer repairs in order to save the sale. If this is true, and if, in that context, *233 the respondent did not object to the expenditure or inquire as to the amount of the charges, or give some other indication that Mr. Vandermay's authority was being questioned, it may be that her conduct might have reasonably led Mr. Vandermay to believe that he had the authority to make the expenditure as an expense of the sale. Neither the trial court nor this court should speculate about this issue, and there is no evidence or admission in the record regarding what was said as to the existence of such facts, to whom it was said, when, and under what surrounding circumstances. [3] Respondent's counsel has denied any knowledge of impending repairs, or the need for them, until after the repairs were made, and has contended that they were made without any authority. We believe that the conflict between the parties on this point raises a question of fact which could not be resolved by the trial court on a motion for judgment on the pleadings, after the significance of the pleadings became apparent in the light of the conflicting statements of counsel. See Mayflower Air-Conditioners, Inc., v. West Coast Heating Supply, 54 Wn.2d 211, 339 P.2d 89 (1959). Under the circumstances in which this case has come to this court, the judgment on the pleadings must be reversed and the cause remanded for a new trial. The new trial shall be conducted in a manner consistent with this opinion. The other assignments of error raised by appellants need not be discussed at this time and no opinion as to their merit is expressed or implied from this opinion. Nothing in this opinion is intended to foreclose the plaintiff from challenging the defendants' defenses and counterclaims in any regard at trial, except that as the record now stands, a judgment on the pleadings is not possible in favor of plaintiff or defendant because of the issue discussed above. The costs on this appeal shall abide the final determination of the cause as provided in Rule on Appeal 55(b) (1), RCW vol. 0. ROSELLINI, C.J., WEAVER and HAMILTON, JJ., and STAFFORD, J. Pro Tem., concur. [*] Reported in 407 P.2d 143.