Court Opinion

ID: 9577258
Source: CourtListenerOpinion
Date Created: 2023-08-21 21:33:28.135819+00
Date Added: 2024-06-11T13:20:14.038815
License: Public Domain

Grady, C. J.
(dissenting) — The majority opinion does not reverse that part of the decree adjudging that appellants were guilty of fraudulent conduct in the procurement of the lease. The decision is based upon the theory that Clothier submitted no evidence from which it could be concluded that she sustained any damage by reason of any fraud by which she was induced to make the lease. I am not in accord with such decision.
I think the statement of the case in the majority opinion supports the findings of fact made by the trial court, and makes necessary the conclusion that Clothier was entitled to recover upon her counterclaim. The fraud practiced *677was by a nondisclosure of the fact that the building leased had a restricted use unknown to Clothier and which it was the duty of respondents or their agents to disclose to her.
Nondisclosure of material facts which a party is bound in good faith to disclose is a deceitful practice and equivalent to a false representation. Perkins v. Marsh, 179 Wash. 362, 37 P. (2d) 689; Oates v. Taylor, 31 Wn. (2d) 898, 199 P. (2d) 924, and Vol. III, Restatement of the Law of Torts, 117, § 551.
A defrauded lessee may perform the contract and maintain an action for the damages sustained by reason of a deception, or if sued for unpaid rent may claim damages by way of recoupment. Salter v. Heiser, 39 Wn. (2d) 826, 239 P. (2d) 327, and cases and texts cited; Nelson Co. v. Goodrich, 159 Wash. 189, 292 Pac. 406; 32 Am. Jur. 444, Landlord and Tenant, § 536. The general damages are measured by the “benefit of bargain” rule, which as expressed in the case of vendor and purchaser is the difference between the value of the property at the time of the sale and what its value would have been if as represented, and in the case of landlord and tenant, the difference between its rental value at the time of leasing and the rent reserved. Edwards v. Powell, 121 Wash. 598, 210 Pac. 7, 212 Pac. 163; Grosgebauer v. Schneider, 177 Wash. 43, 31 P. (2d) 90; Sherrin v. Gevurtz, 142 Wash. 128, 252 Pac. 683; Salter v. Heiser, 39 Wn. (2d) 826, 239 P. (2d) 327; 24 Am. Jur. 55, Fraud and Deceit, § 227.
The evidence submitted in support of Clothier’s claim for general damages consisted of the lease, which provided for a rental of five hundred dollars per month for a period of five years. An expert witness testified that the reasonable rental value of the building by reason of ordinance restrictions was two hundred fifty dollars per month. Considering that testimony with other evidence and permissible inferences to be drawn, the court found such rental to be three hundred dollars, or a differential of two hundred dollars per month. The amount of the judgment then became a matter of mathematical computation. The evidence submitted was *678the usual and proper kind by which to prove general damages in a case of fraudulent inducement to enter into a contract.
I gather from the majority opinion that the court has determined Clothier not only failed to prove she had sustained any damage, but affirmativ.ely established that she had not been damaged, because (1) the city did not threaten any abatement and took no legal action to evict Clothier from the premises or restrict her use of them; (2) the subtenants were not disturbed in their use of the premises; (3) Clothier conducted a dairy supply business on the first floor of the building, secured additional tenants who conducted various kinds of business activities and occupied space above the second floor that was not confined to office use; (4) no substantial alterations of the building were made by Clothier at any time; (5) she collected full rentals from all of her tenants during the entire three-and-one-half-year period preceding the trial of the action brought against her; and (6) she stated in her testimony that due to the posting of notice on the building by the city she had not been able to offer .space to anyone to rent, and, therefore, the property had at least the rental value fixed by the lease during the time Clothier occupied it.
The foregoing facts and events all relate to a time after the lease.had been made, but that can have no bearing upon the question of damages for the reason that the damages accrued when the deception was practiced and the lease was executed. In Nelson Co. v. Goodrich, 159 Wash. 189, 292 Pac. 406, reference was made to the time when a cause of action for deceit arises and we said:
“If appellant was induced by false and fraudulent representations to enter into the contract, then his cause of action immediately arose, and was in existence when the contract was afterwards assigned to the respondent.”
Even though Clothier may have suffered no loss of rentals, such fact did not defeat her right to recover the difference between the rental value of restricted property and the contract rental under the “benefit of bargain” rule. The rule is stated in 24 Am. Jur. 57, § 227, as follows:
*679“Under the benefit-of-the-bargain rule, the fact that the property received by the plaintiff in the transaction in which fraudulent misrepresentations are made is worth as much as or more than he paid therefor does not defeat his right to recover the difference between the actual value of the property and the amount that it would have been worth if it had been as represented. According to this view, the value or amount of the consideration paid or given by the plaintiff is immaterial and cannot affect the amount of his recovery. Whether or not the plaintiff makes a subsequent advantageous disposition of the misrepresented property likewise does not affect the application of the rule that he is entitled to the difference between the value of the property represented or warranted and the value of the property received.”
It would seem to follow from the foregoing that Clothier did prove she had been the victim of fraud and also established by evidence that she sustained a damage and the amount thereof.