Court Opinion

ID: 9530446
Source: CourtListenerOpinion
Date Created: 2023-08-07 03:59:53.130154+00
Date Added: 2024-06-11T13:28:07.080319
License: Public Domain

Finley, J.
(dissenting) — Following the lead of the majority, I, too, shall limit my discussion to the Landeis case, and hereinafter shall refer to Mr. and Mrs. Landeis as the respondents. It is undisputed that, on February 29, 1956, respondents signed the written document set forth verbatim in the majority opinion and denominated “Display Advertising Agreement.” On its face, this writing appears to be an offer to purchase advertising space in The National *294Buyers’ Guide, published by the appellants’ predecessors. The writing further contains a recital that the offerer promises to pay the sum of $275.00 to the offeree forty-five days from the date of acceptance of the offer. The promise contained in the written offer is in no manner conditioned upon the success or failure of the advertisement purchased in securing a buyer for the property of the respondents to be advertised.
However, it is also undisputed that the publisher’s agent, Paul Kirker, told the respondents, at the time of execution of the writing, that they would not have to pay for the advertisement until and unless the property advertised was sold. But for this representation, the respondents would not have signed the writing. Neither the materiality nor the falsity of the representation is in dispute. Thus, in legal contemplation, the respondents entered into a contractual relationship (the offer being accepted by appellants’ predecessor on March 5, 1956) in reliance upon a false representation of a material fact.
Thereafter, the advertisement was published in accordance with the agreement, but the respondents did not succeed in selling their property. Relying on Kirker’s representation, the respondents, therefore, refused to pay; whereupon, the appellants commenced the instant action. The respondents pleaded fraud as an affirmative defense, thereby placing themselves in the position of having to prove by clear, cogent and convincing evidence each of the nine elements of fraud set forth in the majority opinion. Further, the pleading raised the question of whether, as a matter of law, fraud perpetrated by the agent, Paul Kirker, would constitute a bar to enforcement of the contract by the appellants, standing in the shoes of Kirker’s principal.
Boiled down to their essentials, and in the face of the undisputed facts above summarized, the problems presented by this case turn wholly upon the legal significance to be attached to the fact that the written document, executed by the respondents in reliance upon Kirker’s false representation, contained a so-called “merger clause,” reading as follows:
*295“This Agreement contains the entire understanding between us and no representation or inducement has been made that is not set forth herein.”
The majority take the position that this clause imparted notice of the actual limits of Kirker’s authority and rendered the respondents’ reliance upon his representations unreasonable. Therefore, they conclude, the trial court erred in holding that the respondents were not bound by the agreement. I do not agree.
In the first place, insofar as appellants’ right to enforce the agreement is concerned, it is completely immaterial whether Kirker, at the time he made the misrepresentation in question, had the authority — actual or apparent — to make such a statement. This is not a case wherein the party claiming to have been defrauded by the acts of an agent is seeking to recover compensatory damages against a principal who is himself innocent of any wrongdoing. In such a case the principal may well be protected by the rule that a principal is liable only for such wrongful acts of his agent as are committed within the scope of the agent’s authority. See Dickson v. Phillips (1924), 131 Wash. 633, 230 Pac. 630. However, in the instant case it is the principal who is the plaintiff — a principal who is seeking to reap the benefits of his agent’s allegedly fraudulent representation.
Not only may a principal not enforce a contract which was induced by his agent’s fraud; but further, such a contract is unenforcible, even though the written instrument upon which the principal relies contains a merger clause repudiating any representations made by the agent which are not contained in the writing. Holcomb & Hoke Mfg. Co. v. Auto Interurban Co. (1923), 140 Wash. 581, 250 Pac. 34, 51 A. L. R. 39; Producers Grocery Co. v. Blackwell Motor Co. (1923), 123 Wash. 144, 212 Pac. 154. These two cases appear to negate the notion, set forth by the majority, that reliance on the representations of an agent, in the face of a merger clause, is unreasonable. The reason for this was rather cryptically stated by the court in the Producers Grocery case, supra, wherein we said:
*296“ . . . Fraud vitiates everything it touches and is not merged in the written contract.”
A somewhat more elaborate explanation appears in an opinion of the Texas court (Dallas Farm Machinery Co. v. Reaves (1957), Texas Civil Appeals, 307 S. W. (2d) 233), quoting from Bates v. Southgate (1941), 308 Mass. 170, 31 N. E. (2d) 551, 133 A. L. R. 1349, as follows:
“ ‘As a matter of principal it is necessary to weigh the advantages of certainty in contractual relations against the harm and injustice that result from fraud. In obedience to the demands of a larger public policy the law long ago abandoned the position that a contract must be held sacred regardless of the fraud of one of the parties in procuring it. No one advocates a return to outworn conceptions. The same public policy that in general sanctions the avoidance of a promise obtained by deceit strikes down all attempts to circumvent that policy by means of contractual devices. In the realm of fact it is entirely possible for a party knowingly to agree that no representations have been made to him, while at the same time believing and relying upon representations which in fact have been made and in fact are false but for which he would not have made the agreement. To deny this possibility is to ignore the frequent instances in everyday experience where parties accept, often without critical examination, and act upon agreements containing somewhere within their four corners exculpatory clauses in one form or another, but where they do so, nevertheless, in reliance upon the honesty of supposed friends, the plausible and disarming statements of salesmen, or the customary course of business. To refuse relief would result in opening the door to a multitude of frauds and in thwarting the general policy of the law.’ ”
See, also, Land Finance Corp. v. Sherwin Electric Co. (1929), 102 Vt. 73, 146 Atl. 72, 75 A. L. R. 1025, and the annotation based thereon in 75 A. L. R., commencing at page 1032.
It is my best judgment that the public policy thus expressed, and which appears to be implicit in our own decisions, supra, should be adhered to in the state of Washington. This, I believe, represents the most persuasive, desirable and proper judicial solution of the problem of human, business, and legal relations involved in the instant case. *297I, therefore, would affirm the judgment of the trial court; consequently, I dissent.
Rosellini, Foster, and Hunter, JJ., concur with Finley, J.
November 10, 1960. Petition for rehearing denied.