Karr v. Mahaffay , 140 Wash. 236 ( 1926 )

The plaintiff, after rescinding on the ground of fraud, a contract to purchase land, brought this action to recover the consideration paid. The cause was tried to the court and a jury, and resulted in a verdict in favor of the plaintiff in the sum of $23,538.87. The defendants made a motion for judgment notwithstanding the verdict and, in the alternative, for a new trial. The court sustained the former motion and entered a judgment dismissing the action, from which the plaintiff appeals.

The facts which the jury had a right to find from the evidence introduced in the appellant's behalf are these: The appellant, in November, 1922, became acquainted with one Jay DuMas and this acquaintance ripened into an engagement of marriage in May, 1923. About the first of August, 1923, DuMas, having learned that the appellant had several thousand dollars in money and a contract upon land which she had sold in Yakima county with a balance due upon it of $20,000, began to advise that the appellant exchange her contract for a large tract of land three or four miles from Puyallup, which, he stated, could be purchased for fifty dollars an acre, and that he would plat and sell it for one hundred dollars. He stated that the land was owned by a wealthy, elderly gentleman who was contemplating an early trip to Europe. The appellant finally yielded to the persuasion of DuMas and consented to dispose of her contract and acquire the Puyallup land.

Dumas then went to R.E. Mahaffay Company, of which the respondent R.E. Mahaffay was president (who will be referred to hereinafter as though he was the only party to the action), and met one Harry C. Johns who had charge of the real estate business of the company. DuMas was looking for a large tract of cheap land. Johns did not have such land listed, and interviewed one A.H. Barnhisel who was also engaged in the real estate business. Barnhisel had a tract of land consisting of approximately seven hundred acres which he finally agreed to sell for nineteen dollars an acre, with a cash payment of $500. The respondent, Barnhisel, Johns and DuMas met one evening in the office of R.E. Mahaffay Company. At this time, the terms of the contract were talked over in the respondent's presence. After the details were agreed upon, Barnhisel drew the contract. This contract was dated August 31, 1923, and was between Barnhisel and wife and R.E. Mahaffay, the respondent. It was acknowledged on the day it bore date, to wit, August 31, 1923. The contract provides for the sale of the land at nineteen dollars per acre with a cash payment of $500. It also provides that the purchaser shall take care of a $7,700 mortgage then upon the land.

On August 30, the day before this contract was signed, appellant had signed a contract for the purchase of the land which was presented to her in Seattle by DuMas. After signing the contract at the instance of DuMas, she came to Tacoma for the purpose, as she thought, of closing the transaction. The contract which she signed was blank as to the seller, and was not signed by any other person at the time she signed it. When she got to Tacoma, Dumas had her go to a hotel to wait, while he went out to finish up the transaction. In about an hour he returned and stated that the contract would not be ready for three or four days. In a few days the appellant received the contract, and, at that time, R.E. Mahaffay's name was written in as the party selling and he had signed and acknowledged the same on the 31st day of August, 1923.

By this contract the appellant was purchasing the same land which was covered by the other contract for the sum of $38,500, approximately fifty dollars per acre. The appellant assumed the $7,000 mortgage as a part of the purchase price. Barnhisel testified that R.E. Mahaffay Company were to receive a commission of five per cent on the sale of the land by him. DuMas, prior to the execution of the contracts, had taken the appellant to show her the land which she was to purchase, but he did not show her the land covered by the contracts. In September following, the engagement of marriage between DuMas and the appellant was terminated.

About October 1, the appellant, being somewhat uneasy about the transaction, went to Tacoma, visited the office of R.E. Mahaffay Company and had a talk with respondent. Up to this time, these parties had not met. At this interview, the respondent told the appellant that he owned the land which she had purchased and that he was buying it on contract. He showed her a deed which he had in his possession, which was made out to Barnhisel from West and Wheeler. He did not show her the contract by which he was purchasing the land from Barnhisel at nineteen dollars per acre. The reason for this is obvious.

About November 1, 1923, the appellant, having been notified by DuMas that twenty acres of the land had been sold, went to the office of R.E. Mahaffay Company and there again met the respondent who told her that twenty acres of the land had been sold and one thousand dollars received. He gave appellant a statement signed by himself, in which he listed the twenty acres sold and the price, accounted for the payment of five hundred dollars on the contract, interest of $58.87 and payment on the mortgage of $240, leaving a balance due the respondent of $201.13. For this he gave her a check and took her receipt in words and figures as follows:

"10/30 1923.

"Received of R.E. Mahaffay Two Hundred one 13/100 Dollars Proceeds of sale of 20 acres Puyallup contract $1,000 — Payt. on cont. 500 Int 58.87 — Payt. mtg $240.

$201.13 Blanche I. Karr."

In January, 1924, the appellant was again notified to go to the office of R.E. Mahaffay Company. On this occasion the respondent stated to her that ten acres of the land had been sold, for which seven hundred fifty dollars had been received. He took from the appellant a receipt for six hundred thirty dollars which he then paid to her. The balance, so the receipt recites, was paid on the contract mortgage. At the time the appellant signed the contract to purchase, she turned over to DuMas her contract for the Yakima land upon which there was a balance due of $20,000, and gave him $3,500 in cash. On January 31, 1924, the appellant learning that she had been defrauded, rescinded the contract by written notice, and subsequently brought the present action to which DuMas was made a party, but, at that time he having departed from the state and his whereabouts not being known, service of process could not be made upon him.

[1] That the appellant was grossly defrauded cannot be doubted. The only question in the case is whether the respondent was a party to that fraud or fraudulent conspiracy, whichever it may be termed. Whether there be fraud in a transaction is a question of fact, but this fact need not be established by direct and positive evidence. It may be proved, and generally is proved, by circumstantial evidence. It may be established by inference like any other disputed fact. In Porter v. O'Donovan,65 Ore. 1, 130 P. 393, it is said:

"Contention is made in the brief of defendant that there can be no presumption of fraud, but it is said in Williamson v.North Pac. Lum. Co., 42 Or. 160, 70 P. 390: ``Fraud is a question of fact, but need not be shown by positive evidence, as this can seldom be done. It is generally proved by circumstantial evidence, and may be established by inference like any other disputed fact.' In the case of Phippsv. Willis, 53 Or. 195, 96 P. 868 (18 Ann. Cas. 119), it is said: ``Nor is direct and positive proof essential to the establishment of fraud. It is always permissible to prove it by any circumstances from which it may follow as a legitimate inference; this class of evidence in many instances being the only proof available.' See, also, Kabat v. Moore, 48 Or. 198,85 P. 509."

That fraud may be established by inference from facts proven was recognized by this court in State Bank of Goldendale v.Beeks, 124 Wn. 467, 214 P. 817. In Wolfgram v. Dill,37 S.D. 282, 157 N.W. 1059, with reference to a fraudulent conspiracy, it was said:

"Whether a conspiracy existed or not was, of course, a question for the jury, and we believe there was sufficient evidence tending to show the existence of a conspiracy to have warranted the trial court in submitting the question to the jury. True, there was no direct evidence of a conspiracy, but that is not material. Circumstantial evidence is competent to prove a conspiracy, and, if sufficient to convince the jury, is sufficient in law. Where two or more persons are found to be working for the accomplishment of the same definite object, it may be inferred that they are pursuing a preconcerted plan or arrangement to accomplish that object. Nor is it necessary to show that any particular member of an alleged conspiracy was a party to the wrongful enterprise at its inception, for ``every person entering into a conspiracy or common design already formed is deemed in law a party to all acts done by any of the other parties, before or afterwards, in furtherance of the common design.'"

Whether the testimony of the respondent is to be believed, or the inference drawn that he was a party to the fraud, was so plainly a question for the jury that little argument is necessary. The respondent's defense was that he had no interest in the transaction and was signing the contracts merely as an accommodation to DuMas. To sustain a judgment notwithstanding the verdict in this case, it would be necessary not only to disregard the inference which the jury had a right to draw from the facts, but also disbelieve testimony of the appellant that the respondent stated he was the owner of the land and was purchasing it on contract.

[3] A motion for judgment notwithstanding the verdict involves no element of judicial discretion. It can only be granted when the court can say as a matter of law that there is neither evidence, nor reasonable inference from evidence, to sustain the verdict. Brown v. Walla Walla, 76 Wn. 670,136 P. 1166; Mattson v. Griffin Transfer Co., 90 Wn. 1,155 P. 392.

The judgment will be reversed, and the cause remanded with direction to the superior court to pass upon the motion for a new trial.

TOLMAN, C.J. MACKINTOSH, PARKER, and MITCHELL, JJ., concur.