Downs v. Smith

Tolman, C. J. This is an action to rescind a contract for the purchase of certain real property, including the personalty used in connection therewith, on the ground of false representations and fraud. The action was tried to the court, resulting in a decree rescinding and canceling the contract and awarding a judgment in favor of the plaintiffs for the amount *204 paid by them on tbe purchase price, with legal interest. From that judgment tbe defendants appeal. Tbe real estate in question was improved and equipped as a natatorium and dance ball, and bad been operated by tbe seller as a public place of amusement. Tbe sale included tbe fixtures and equipment as well as water rights, etc., appurtenant to tbe land. Tbe contract was dated April 28,1931. Tbe purchase price was $35,500, of which $5,000 was paid in cash, tbe balance being payable at tbe rate of $400 per month, beginning June 1, 1931. Eespondents took possession of tbe property probably early in May. They did not make either tbe monthly payment due June 1 or tbe one due July 1, and on July 6 they were given a notice to pay tbe defaulted installments within ten days under pain of forfeiture. Tbe payments were not made, but within tbe ten-day period this action was instituted. Tbe allegations as to false representations and fraud are numerous, and tbe evidence given in support of them is voluminous and amply sufficient, if believed, to warrant tbe judgment which was rendered. We have read tbe record with care, and while we agree with tbe. trial court that some of tbe allegations are not supported by evidence sufficiently clear and convincing, others are so supported and those which are proven call for tbe relief granted. No good purpose would be served by setting out in detail tbe mass of testimony pro and con. It is perhaps sufficient to say that tbe evidence convinces us that tbe appellants represented that they bad a good and sufficient water right appurtenant to tbe land which would supply ample water at all times for tbe filling of tbe natatorium pool as often as needed; that in addition and for emergencies there was a well on tbe premises equipped with a pump and an electric motor, which bad a capacity of delivering three hundred gallons of water per *205 minute to the pool; and that as’ often as it was necessary to change the water, the pool could he drained, cleaned and refilled from a storage pond supplied by the irrigation ditches under the water right, all after the close of business on any evening and be fit and ready for use the next morning, usually with but little artificial heat, because the water drawn from the storage pool would be naturally warmed by exposure to the sun. These representations were, to all practical intents and purposes, false and misleading. While it is true that appellants had an adjudicated water right, it was of such a class, with so many other rights prior to it, as to furnish no water after about the middle of June. The well, as equipped, could not be made to refill the pool in less than twenty-five days of operation, which of course rendered the pool useless as a commercial proposition. The only way to fill the pool after the water from the irrigation ditches failed was to buy water from the adjacent city of Walla Walla at a money cost of over forty dollars for each filling of the pool and a time cost of sixty hours consumed in the filling, thus putting the pool out of commission for fully half the time. Moreover city water required far more heating than water delivered through the irrigation ditches to the storage pond, and there was a further loss of time and an added expense at each refilling of the pool of perhaps twenty to twenty-five dollars on that account. These actual conditions rendered the plant wholly unprofitable as a natatorium. It was equally unprofitable as a dance hall, but we see no need to discuss the evidence upon that feature. The facts, as we find them to be, amply support the judgment for the respondents for the purchase money paid. It is urged, however, that respondents, having *206 been in default in their payments, were as a matter of law not entitled to maintain this action. It is true that one who seeks to enforce the terms of a contract •against another or to recover damages for the breach of a contract by another must show that there has been no breach on his own part. This is on the theory that one who has himself breached a contract can not thereafter enforce the contract against the other party. Reddish v. Smith, 10 Wash. 178, 38 Pac. 1003, 45 Am. St. 781, and many cases following. So far as we are aware, that rule has never been applied to an action to rescind a contract on the ground of fraud. Fraud vitiates everything, and a contract obtained by fraud is, the fraud being established, a nullity. Producers’ Grocery Co. v. Blackwell Motor Co., 123 Wash. 144, 212 Pac. 154. This action having been commenced before the expiration of the time given by the notice within which to perform, respondents were not technically in default, and the rule invoked by appellants would not therefore apply in any event. Kuehl v. Scott, 66 Wash. 318, 119 Pac. 742. But the sounder reason is that respondents were not seeking to enforce rights under the contract. They sought its entire abrogation and rescission because of fraud, and having established the fraud, the contract became as though it never had existed, and appellants having in their hands money rightfully belonging to respondents, equity requires its repayment. “Neither did plaintiff’s default preclude him from rescinding on the ground of the alleged misrepresentations of Sinanides. In the denial of a hearing by the Supreme Court in de Bairos v. Barlin, 46 Cal. App. 665, 674, [190 P. 188, 192], where the facts were similar to those of the instant case, it is said that the rule invoked ‘applies only to cases where a rescission is sought or claimed by one party to an executory con *207 tract on the ground of a breach of the contract by the other party. ... We know of no case which holds that such rule applies to a case where the vendee in default on payments due on the contract seeks to avoid and rescind it for fraud of the vendor in procuring its execution, or for mistake inducing its execution.’ ” Lombardi v. Sinanides, 71 Cal. App. 272, 235 Pac. 455. Something is said upon the subject of the recovery being too large because no allowance was made for the value of the use and occupation during the time respondents were in possession. The answer seems to be that there was no proof of any such value. Indeed, taking the evidence as a whole, it appears rather overwhelmingly that one attempting to operate this property would lose money daily, and of course there can be no value to use and occupation under such conditions. The judgment is affirmed. Holcomb, Main, Beals, and Millabd, JJ., concur.