Court Opinion

ID: 9601044
Source: CourtListenerOpinion
Date Created: 2023-08-22 01:35:46.318934+00
Date Added: 2024-06-11T09:48:46.664593
License: Public Domain

Weaver, J.
Defendants appeal from a money judgment against them. The judgment is based on an alleged breach of a written contract dated October 27, 1959.
Plaintiff sells building materials. October 27, 1959, three of plaintiff’s agents negotiated with defendants to sell them materials and labor to install ceramic siding and to reroof their residence. The agents used an ancient sales canard: *385when completed, defendants’ residence would be a bellwether for additional sales.1
Upon conflicting evidence, the trial court’ found (and we cannot disturb the findings): (a) defendants stated to plaintiff’s agents “ . . . that $3,500.00 was all that' they could afford and would agree to pay”; (b) plaintiff’s agents told defendants that plaintiff company would furnish the labor and materials and perform according to the contract for a total price of $3,500.00; and “. . . that the plaintiff would absorb the sales tax and other charges so that the total the defendants would be required to pay would be $3,500.00.” (Italics ours.)
In the presence of defendants, “$3500.00 inc. tax” was inserted in the appropriate blank of the printed contract. At the same time, the figures “60” and “$71.88” were inserted so that the contract provided for 60 monthly installments of $71.88. Both entries were made in ink. Defendants were led to believe that the monthly installments totaled $3,500.00; in fact, they total $4,312.80. The space for “Finance Charge” was left blank.
In the absence of defendants, plaintiff caused to be entered on the contract (in pencil) a finance charge of $812.80, thus making the total $4,312.80.
The same evening the contract was signed, defendants computed the total of monthly payments ($4,312.80) and later refused to allow plaintiff to perform the work.
The contract contains the following clause:
*386“. . . this [agreement] shall constitute the entire contract and be binding upon the parties hereto, as there are no covenants, promises or agreements, written or oral, except as herein set forth. . . . ”
The trial judge was well aware of this court’s decision in Haagen v. Landeis, 56 Wn. (2d) 289, 352 P. (2d) 636 (1960). He had tried that case also; our decision had been filed for publication 11 days prior to the trial of the instant case.
After trial, the judge announced his oral ruling. He analyzed the facts and concluded:
“ . . . the court is finding that fraud is here and vitiated the contract. The judgment will be for the defendants.”
In reaching this conclusion, the judge observed:
“. . . the court is still adhering to the rule, unless and until the recent case of Haagen v. Landeis, 156 W.D. 301 [the remittitur had not yet been sent down by this court and the possibility of a petition for rehearing had not been determined], becomes definitely the law, that fraud vitiates the entire contract, and notwithstanding the provision in the contract that there are no understandings or agreements that are not contained in writing in the contract, that nevertheless fraud can be shown and if shown vitiates the contract. Now, if our Supreme Court does in fact abandon that rule, of course the court will have to change its ruling here because that is the basis of the court’s ruling.” (Italics ours.)
Petition for rehearing in Haagen was denied November 10, 1960. Subsequently (the date does not appear in the record before us), the trial judge filed a written memorandum opinion in which he again recognized that plaintiff’s agents were guilty of fraud when they stated to defendants that $3,500.00 was all they would be required to pay. The trial judge said:
“ . . . It was the defendants’ testimony that it was agreed that they would not be required to pay finance charges. The contract contained a clause providing in part:
“ ‘ ****this shall constitute the entire contract and be binding upon the parties hereto, as there are no covenants, promises, or agreements, written or oral, except as herein set forth.’
*387“The court held that despite this clause, fraud vitiated the contract. The court further stated however, that the case of Haagen v. Landeis, 56 Wn. (2d) 289, which was then pending in the Supreme Court (petition for a rehearing having been filed) would control when finally determined. The petition for a rehearing in that case has been denied. Our court in the Haagen case, supra held:
“ ‘The oral representations upon which the respondents relied were not contained in the agreement and, in fact, contradicted the plain and unambiguous provision thereof. Therefore, the respondents had no right to rely upon the oral representations. See Kelly v. Von Herberg, 184 Wash. 165; 50 Pac. (2d) 23, (1935). The trial court erred in finding fraud.’
“Under the rule of the Haagen case, supra, the defendants may not rely upon the oral representation which they claim constituted fraud.
“Plaintiff will, therefore, be awarded judgment.”
In view of our holding in Haagen the trial judge had no choice. He entered a conclusion of law upon which judgment is based:
“That the defendants were not entitled to rely upon the representation of the plaintiff’s agents that the total amount called for by the contract was $3,500.00.”
In Webster v. L. Romano Engineering Corp., 178 Wash. 118, 34 P. (2d) 428 (1934) and in a plethora of decisions citing it, the court set forth the nine essential elements of fraud, all of which must be established by clear, cogent, and convincing evidence. In the instant case, we are concerned only with the eighth element — the right of defendants to rely upon the false and fraudulent representation.
Haagen v. Landeis, supra (four judges signed the majority opinion; four dissented; one concurred in the result), is authority for the trial court’s conclusion that, in the face of a merger clause in the contract, as a matter of law, defendants were not entitled to rely upon the fraudulent representations of plaintiff’s agents.
Recently, this court had occasion to notice that there has been a
“ . . . marked change in judicial attitude during the last half century toward the question of justifiable reli-*388anee. ...” Johnson v. Olsen, 62 Wn. (2d) 133, 135, 381 P. (2d) 623 (1963).
We believe that Haagen sub silentio overruled at least seven prior decisions of this court.2 To the extent that it is inconsistent with the general rule that a merger clause in a written contract does not foreclose the right to prove fraud, it is overruled.
Restatement, Contracts § 573, uses the following example:
“2. A and B enter into a written bargain that contains a clause stating that no representations not therein contained have been made. Fraudulent misrepresentations not contained in the writing in fact induced its formation. The bargain is voidable and an action can be maintained for deceit, the clause intended to exclude the assertion of fraud being illegal.”
The policy reasons behind the majority rule are discussed in the classic case of Angerosa v. White Co., 248 App. Div. 425, 290 N. Y. S. 204 (1936):
“. . . To deny relief to the victim of a deliberate fraud because of his own negligence would encourage falsehood and dishonesty . . . (t
“. . . In this jurisdiction protection is given to one who' is injured by falsehood or deception; fraud vitiates everything which it touches, and destroys the very thing which it was devised to support; the law does not temporize with trickery or duplicity. A contract, the making of which was induced by deceitful methods or crafty device, is nothing more than a scrap of paper, and it makes no difference whether the fraud goes to the factum, or whether it is preliminary to the execution of the agreement itself.
Plaintiff argues that the contract shows on its face that defendants were to pay $71.88 per month for a period *389of 60 months. The product of these figures ($4,312.80) would have been apparent to defendants had they been facile with mental arithmetic. This, of course, is in direct conflict with the written price of $3,500.00, defendants’ insistence that they would pay no more, and the agents’ representations that $3,500.00 would include all charges. Misrepresentations frequently have the effect of causing the other party to fail to use the means of knowledge within his power.
One authority said:
“. . . The modern tendency is certainly toward the doctrine that failure to use available means of knowledge because of reliance on misrepresentation, even negligent failure to use them, because of trusting to a misrepresentation, will not excuse positive wilful fraud or deprive the defrauded person of his remedy. . . . ” 3 Williston on Sales (rev. ed.) § 634.
We conclude, as did the trial court in the first instance, that fraud vitiates the contract, and that defendants are not foreclosed by the merger clause of the contract from placing reliance upon the fraudulent representations.
The judgment is reversed.
Donworth, Rosellini, Hunter, Hamilton, and Hale, JJ., concur.

Mr. Roehl (defendant) testified:
“. . . they made the stipulation that they would make us a good deal if we will let them take pictures of before and after on the house and later on show people the place.”
Mrs. Roehl (defendant) testified:
“ . . . they told us that they could give us a real good cheap job, they said a cheap job but a good job, if we would allow them to use our home as a before-and-after advertisement on TV. We had no objection to that and also I believe it was Mr. Brown who said that they would bring people past our house out on the street, they wouldn’t bother us, but they would bring them past to show our house which is in need of paint, they would see the difference in it and they expected Mr. Ayers to get quite a few sales in Sunnyside from it because they could see the improvement that the siding made on our house.”

Becker v. Lagerquist Bros., Inc., 55 Wn. (2d) 425, 348 P. (2d) 423 (1960); Nyquist v. Foster, 44 Wn. (2d) 465, 268 P. (2d) 442 (1954); Gronlund v. Andersson, 38 Wn. (2d) 60, 227 P. (2d) 741 (1951); Peoples Bank & Trust Co. v. L. Romano Engineering Corp., 188 Wash. 290, 62 P. (2d) 445 (1936); Producers’ Grocery Co. v. Blackwell Motor Co., 123 Wash. 144, 212 Pac. 154 (1923); Schroeder v. Hotel Commercial Co., 84 Wash. 685, 147 Pac. 417 (1915); Union Inv. Co. v. Rosenzweig, 79 Wash. 112, 139 Pac. 874 (1914).