Court Opinion

ID: 8193398
Source: CourtListenerOpinion
Date Created: 2022-09-09 23:16:32.483617+00
Date Added: 2024-06-11T16:40:40.874985
License: Public Domain

Siebecker, J.
(dissenting). I cannot concur in the decision of the court. The record, in my opinion, sustains the trial- court in its finding to the effect that the appellants, *252after having knowledge of the payment by the plaintiff of a commission to the defendants Harvey and McClure and of their paying a part thereof to Clark C. Hyatt, continued to exercise acts of ownership of the property under the lease and elected to build and assert the interest of the lessee and retain the benefit thereof, and thereby waived their rights, if they had any, to have the lease or bond canceled.
I am authorized to say that Mr.. Justice Vinje concurs in this dissent.
On November 16, 1920, a motion by the respondent for a rehearing was granted, and the cause was reargued on January 15, 1921.
The following opinion was filed May 31, 1921:
Rosenberry, J.
Mr. Chief Justice Winslow and Mr. Justice Kerwin took no part in the consideration of this case at the time it was submitted. The opinion of the court was filed July 3, 1920, three of the Justices concurring in the decision and two dissenting. A motion for a rehearing was made.' The motion was considered and a rehearing granted and the cause was again fully argued before the court, all Justices sitting. Before the matter was considered in conference Mr. Justice Kerwin died. When the case was taken up the court was equally divided upon the questions involved. The case being an important one by reason of the amount and legal principles involved, further consideration was postponed until such time as the vacancy created by the death of Mr. Justice Kerwin should be filled! Upon the appointment of Mr. Justice Doerfler the entire matter was again reconsidered by the whole court. Upon such reconsideration the court is of the opinion that the conclusion reached and announced in the opinion filed should not lie disturbed, largely for the reasons therein stated. The situ*253ation is such, however, that we deem it advisable to state briefly the grounds upon which our final conclusion rests.
Upon the rehearing two principal questions were considered. First, whether the plaintiff was chargeable with the knowledge which his agent, Schenck, had as to the material facts in relation to the negotiations and the parties thereto; and second, whether, the twelfth finding made by the trial court was sustained by the evidence, and, if so, whether or not. the subsequent conduct of the lessees amounted to a waiver of their right of rescission.
In connection with the first proposition some criticism is made of a statement contained in the opinion that “It taxes human credulity to believe that under such circumstances Schenck [the agent] did not know that McClure and Harvey represented the proposed lessee.” We have again examined the testimony of Mr. Schenck upon this point, and while it does not appear that he knew the names of those who subsequently became the lessees, he must have known, or at least is chargeable as a matter of law with knowledge of the fact, that they represented an undisclosed principal, for at no time did they pretend that they were negotiating in their own behalf. ‘ They must have been negotiating in behalf of some principal, and it may be, as contended, that Mr. Schenck did not have knowledge of the fact that the present lessees were the principals; but he is chargeable, as a matter of law, with knowledge of the fact that they were representing a third party. It is further contended that Schenck’s agency was of a very limited scope. In his reply to the cross-complaint the plaintiff alleged:
“That there was in the employ of this plaintiff a real-estate agent by the name of Otto J. Schenck, to generally look after said real estate, collect the rents therefrom, taking care of the same for this plaintiff, and that this plaintiff let it be known to the said Otto J. Schenck that he would entertain a proposition to lease said real estate upon long-term *254lease, provided suitable and responsible parties could be found who would be willing to lease the same, and at such rental as this plaintiff would be willing to accept as a condition of entering into said lease.”
Plaintiff further alleged that:
“Accordingly, during the summer of 1911, certain persons, who were unknown to this plaintiff, approached the said Otto J. Schenck, who was at that time acting as the agent for this plaintiff, and informed the said Otto J. Schenck, as this plaintiff is informed and believes, that they, the said persons at that time unknown to this plaintiff, had a person who was ready and willing to lease said real estate so owned by the said plaintiff. . . . That this plaintiff did not personally conduct any of the negotiations with either of said persons, but that said negotiations were carried on by the said Otto J. Schenck as his agent, and that neither this plaintiff nor the said Otto J. Schenck had any knowledge or infonnation until shortly prior to the execution of said' lease that the said defendant H. J. Hayes was the person who was to become the lessee.”
These allegations of the plaintiff’s reply have not been withdrawn or modified, and the court is unanimously of the opinion that these allegations, taken in connection with the facts and circumstances shown by the evidence, conclusively establish that Schenck was the agent of the plaintiff, empowered to negotiate in respect to the terms of the lease, and furthermore, that Schenck had knowledge of the fact that the persons (Harvey and McClure) who approached him were representing third parties, and that .the plaintiff is therefore chargeable with knowledge of the facts which came to the attention of his agent, Schenck, in the course of the negotiations.
By the finding of fact numbered 12 the trial court found:
“That after having knowledge (before the commencement of this action) of the payment by the plaintiff of the moneys aforesaid to the defendants Harvey and McClure, and of the payment by said Harvey and McClure of a part *255thereof to said Clark C. Hyatt, the defendants H. J. Hayes, H. P. Carrow, Guy H. McFall, and R. A. Bartholomew continued to exercise acts of ownership of said premises under and by virtue of the lease and elected to hold and assert the interest of the lessee therein, and have by their conduct since obtaining such knowledge waived their rights, if any they ever had, to have said lease or bond canceled, and have elected to retain said lease and the benefits thereof.”
In consideration of the question whether this finding is sustained by the evidence, the court, has given full effect to the established rule that a finding of the trial court upon questions of fact will not be reversed unless it is against the clear, preponderance or great weight of the evidence. It is conceded on both sides that on or about July 28, 1916, the lessees were fully informed in regard to the payment of a commission to their agents, Harvey, McClure, and Hyatt. The finding of the trial court to the effect that they had knowledge of such payment before the commencement of the action is therefore sustained. The question then arises whether or not they had knowledge of the payment of a commission to their agents prior to that time. It is claimed by the plaintiff that such knowledge was brought home to the lessees in October, 1911, and again late in 1913 or early in 1914. As pointed out in the original opinion, the finding of the court as to the time when knowledge was brought home to the plaintiff is a general finding, being to the effect that it was some time prior to the commencement of the suit. Such a finding may well rest wholly upon the undisputed fact that they had such knowledge in July, 1916. Whether or not they had such knowledge prior to that time, as now contended by the plaintiff, can only be ascertained by an examination of the evidence, unaided by any finding of the trial court in that respect. We have again carefully reviewed the evidence, and the court is of the opinion that it clearly preponderates against plaintiff’s contentions. If *256the testimony be given its full weight, the facts brought to the attention of the lessees were not sufficient to arouse a suspicion in the minds of the lessees, who had fully trusted Harvey, McClure, and Hyatt, who were not only their, agents but their personal friends, in the negotiations of an important business deal. Considered in connection with all the evidence, the testimony relied upon by plaintiff is highly improbable and not at all convincing. It was not sufficient to' put the lessees upon inquiry and was wholly lacking in that definiteness necessary to charge them with knowledge of the essential facts.
There remains then the question, Did the lessees by their conduct after July, 1916, elect to retain the lease and the benefits thereof? The facts being undisputed, the question of whether their conduct after that date amounted to an election is a question of law. The real question is whether or. not, under the established facts, in the exercise of a sound discretion, a court of equity should grant relief to the lessees who were admittedly the victims of an insidious fraud. For the reasons stated in the original opinion, the court considers that such relief shotild be granted. The original mandate is approved.
Siebecker, C. J., and Vxnje and Jones, JJ., dissent.
• On July 13, 1921, the following order was entered by the court:
The motion herein on behalf of the respondent, filed June 8, 1921, while in terms a motion to modify the mandate, is in fact and substance a motion for a rehearing of a decision made on rehearing and cannot therefore be entertained. The motion papers are stricken from the files and the clerk is directed to remit the record forthwith.