Case Name: Alexander Haagen et al., Appellants, v. Jake Landeis et al., Respondents; Alexander Haagen et al., Appellants, v. Dale Wright et al., Respondents
Court: Washington Supreme Court
Jurisdiction: Washington
Decision Date: 1960-06-02
Citations: 56 Wash. 2d 289
Docket Number: Nos. 34730, 34731
Parties: Alexander Haagen et al., Appellants, v. Jake Landeis et al., Respondents. Alexander Haagen et al., Appellants, v. Dale Wright et al., Respondents.
Judges: Weaver, C. J., Hill, and Donworth, JJ., concur.
Reporter: Washington Reports
Volume: 56
Pages: 289–297

Head Matter:
[Nos. 34730, 34731.
En Banc.
June 2, 1960.]
Alexander Haagen et al., Appellants, v. Jake Landeis et al., Respondents. Alexander Haagen et al., Appellants, v. Dale Wright et al., Respondents.
Nashem & Dobbs, for appellants.
Velikanje & Moore and Paul M. Goode, for respondents.
Reported in 352 P. (2d) 636.

Opinion:
Ott, J.
— The defendants signed contracts for advertising space with National Business & Property Exchange, Inc. (hereinafter referred to as the corporation), and, after the advertisements had been published, refused to pay for them. These actions to recover the contract price were brought by the successors of the corporation. The trial court found that the contracts had been procured by fraud and entered judgments for the defendants. The plaintiffs appeal.
The cases were consolidated on appeal. The Landeis case only will be discussed herein and, because the questions presented are identical, the Wright case will be governed by the result.
The contract for the advertising space provided:
"Display Service Agreement
"National Business & Property Exchange, Inc.
"5410 Wilshire Boulevard
"Los Angeles 36, California
"Gentlemen:
"I hereby reserve one-eighth (%) page of display advertising space in National Buyers' Guide, commencing with your next issue subject to your publication schedule on the reverse side of this Agreement. You will publish in this space an advertisement prepared from the copy which I have approved on the accompanying survey form.
"For such reservation of space, I will pay you the sum of $275.00 at Los Angeles, California, forty-five (45) days from the date of your acceptance of this Agreement. However, if I do enter into an agreement to sell, lease, or exchange this business or property before the expiration of said forty-five (45) day period, I will pay the above mentioned sum immediately. If you commence legal action hereon, I agree to pay, in addition, a reasonable attorney's fee. I understand that you make no guarantee that I shall sell, lease or exchange this business or property.
"This Agreement shall become effective only when accepted at your office in Los Angeles, California. You shall notify me of such acceptance by letter.
"This Agreement contains the entire understanding between us and no representation or inducement has been made that is not set forth herein."
The execution of the "display service agreement" by the respondents was induced by Paul Kirker, the regional representative of the corporation. In order to persuade the respondents to sign the writing, he represented to them that the forty-five day payment provision, to which they objected, was only a formality; that the company would not insist on it, and that the respondents would not have to pay for the advertising space until their property was sold. Respondents would not have signed the writing except for these representations. It was on the basis of the representations as to when payment would be required that the trial court found fraud in the procurement of the contract.
Appellants' principal assignment of error relates to the sufficiency of the evidence to sustain a finding of fraud, and the court's failure to grant appellants' motion for judgment notwithstanding the decision of the court.
The nine essential elements of fraud, all of which must be established by clear, cogent, and convincing evidence, are: (1) A representation of an existing fact, (2) its materiality, (3) its falsity, (4) the speaker's knowledge of its falsity, (5) his intent that it shall be acted upon by the person to whom it is made, (6) ignorance of its falsity on the part of the person to whom the representation is addressed, (7) the latter's reliance on the truth of the representation, (8) his right to rely upon it, and (9) his consequent damage. Graff v. Geisel, 39 Wn. (2d) 131, 234 P. (2d) 884 (1951); Gray v. Wikstrom Motors, 14 Wn. (2d) 448, 128 P. (2d) 490 (1942).
The respondents failed to establish the element designated as (8), namely, their right to rely upon the representations. The "display service agreement" provided, inter alia: "This Agreement contains the entire understanding between us and no representation or inducement has been made that is not set forth herein." The quoted provision made it clear that all representations or inducements must be contained in the writing itself, and that respondents had no right to rely upon any representation or inducement not included therein. The oral representations upon which respondents relied were not contained in the agreement and, in fact, contradicted the plain and unambiguous provisions thereof. Therefore, the respondents had no right to rely upon the oral representations. See Kelley v. von Herberg, 184 Wash. 165, 50 P. (2d) 23 (1935).
The trial court erred in finding fraud.
Respondents contend that Kirker had apparent authority to modify the contract with regard to payments.
In Codd v. New York Underwriters Ins. Co., 19 Wn. (2d) 671, 680, 144 P. (2d) 234 (1943), we stated the rule relative to apparent authority as follows:
"The rule that, in the determination of the question whether an agent acts within the apparent scope of his authority, the acts of the principal alone and not the acts of the agent are to be considered, needs no citation of sustaining authority.
" 'The principal is responsible only for that appearance of authority which is caused by himself, and not for that appearance of conformity to the authority which is caused by the agent.' Bowles Co. v. Clark, 59 Wash. 336, 340, 109 Pac. 812, 31 L. R. A. (N. S.) 613."
Applying the rule to the instant case, the "appearance of authority" caused by the principal was clearly lim ited by the writing which the principal had prepared for the use of prospective purchasers. The limit of the agent's authority, as shown by the writing, was to obtain a written offer. When the respondents signed the writing upon the terms indicated, it was nothing more than their offer to purchase the advertising. The acceptance by the corporation of the respondents' written offer created a binding contract upon the terms stated therein. The writing specifically stated that "This Agreement contains the entire understanding between us." The principal thereby effectively gave notice to prospective purchasers of the advertising service regarding the limitation upon its agent's authority to make contracts in its behalf. This written limitation conclusively negatives the alleged apparent authority of the agent to modify the agreement orally.
Finally, respondents contend that the corporation ratified the agent's oral modification of the agreement inasmuch as it had been notified of the agent's representations before the service was furnished. We find no merit in this contention. There was no notice before acceptance. Two or three days after the corporation received respondents' notice of the agent's alleged representations, it received the following letter from them: "This note is [to] cancel expressed misunderstanding recently sent you. Please continue service on regular schedule." The letter withdrew respondents' previous objections to the contract as written and requested performance as provided therein.
The judgments are reversed, and the causes remanded with instructions to enter judgments for the appellants.
Weaver, C. J., Hill, and Donworth, JJ., concur.
Mallery, J., concurs in the result.