Hudson v. Beers

Mount, J. This action was brought by the plaintiffs to rescind a sale of certain lots in the city of Spokane upon the ground of fraudulent representations made by the defendant Beers to the plaintiffs, and that, relying upon these fraudulent representations, they transferred their property to the defendant Beers. The defendant Bagley was made a party because he purchased the property from Beers after the transfer by the plaintiffs to Beers. It is alleged that Bagley was not an innocent purchaser for value in good faith. On a trial of the case, the court concluded [226] that the sale was fraudulent as to the plaintiffs; that Bagley was not an innocent purchaser from Beers and wife, but that he had paid $500 on the purchase price and paid some taxes, and was therefore given a lien for the purchase price and faxes after deducting certain rent. The defendant Beers and wife have appealed from the judgment finding fraud. Bagley has .appealed from that part of the decree finding that he was not an innocent purchaser; and the plaintiffs Hudson have appealed from that part of the judgment giving Bagley a lien upon the property for the purchase money paid by him. In view of the conclusion which we have reached upon the appeal of Beers and wife, it will not be necessary to consider the other two. appeals. The facts as shown by the record are, in substance, as follows: Beers and wife were the owners of letters patent for a device known as “The Simplex Water Gas Burner.’'’ Mr. Beers, in the early part of the year 1917, was demonstrating this burner in the city of Spokane for the purpose of selling territorial rights. Mr. Hudson became interested in this burner. He watched and assisted in its demonstration for two or three weeks, and finally concluded to purchase certain territorial rights by trading to Mr. Beers therefor the two lots in question, upon which there was a dwelling house, including, also, with the lots and dwelling house certain household goods. This sale was consummated on February 14, 1917. After the sale was completed, and Mr. Hudson and his wife had executed a deed for their lots and dwelling house and a bill of sale of the household goods, and after Mr. Beers had assigned the territorial rights .for certain states to Mr. Hudson, Mr. Hudson then, upon ;his own account, proceeded to demonstrate the burner and to offer for sale on his own account certain territorial rights. He sold the rights of Spokane county; he [227] then went to Seattle and demonstrated his burner there for a short time; then he went to Taeoma and demonstrated the burner in Taeoma and sold the county of Pierce; he then went to Butte, Montana, and demonstrated the burner there; and then he went to Watonga, in Oklahoma. During the time he was exhibiting this burner and demonstrating it to prospective customers in these different places, the burner would frequently not operate properly. The result was that he returned to Spokane, and in February of 1918, brought this action to rescind the sale upon the ground of fraudulent representations made by Beers and relied upon by him. On the trial of the case, he offered in evidence some printed circulars and blueprints which he testified were used by Mr. Beers in making the sale to him. One of these circulars stated that: “The Simplex Water-Gas Burner is a scientifically and specially constructed burner, made purposely for burning ordinary WATER, and cheapest grade of KEROSENE (or coal oil) as a fftel—by combining the gasses generated from the two liquids to produce an ideal fire for heating and cooking. ‘ ‘ The flame is one of the hottest known outside of the oxyacetylene flame, and is absolutely free from soot or smoke. Can be lighted in one minute, and extinguish instantly. It is perfectly safe (we offer $100 to anyone who can explode it without using powder or dynamite). Fits any stove without any alterations whatever. Can be installed in five minutes or taken out in one minute. “The fuel container can be placed any distance away, or high or low, without making any difference in its operation. “It generates its own oxygen from the water, and therefore requires no draft or outside air; it therefore burns steadily and the combustion is perfect. Draft burners must fluctuate because drafts are bound to fluctuate, and the Simplex succeeds where draft burners have failed. We get as much oxygen from one gal228 Ion of water as a draft burner or ordinary coal or wood fire can get from 3300 gallons of air, and besides, we get the benefit of the hydrogen to add fuel to and intensify the heat of our flame.” Mr. Hudson, in his testimony, did not show that there were any other representations than those contained in the circulars and blueprints which were about the place during the demonstration before the time of his purchase of the territorial rights. He testified that the burner was not practical; but we are convinced from the record before us that whatever of failure there was of the burner was caused by reparable defects in the burner which Mr. Hudson was using in his demonstrations. ' He admitted that upon the witness stand. It is plain from all the evidence that, with a burner in repair, it would do the things claimed for it by Mr. Beers. In fact, the evidence shows without dispute that there were other burners of this same kind in Spokane that had been used a year or more at the time of the trial, and that these burners were perfectly satisfactory and did the work claimed for them. So we are satisfied from the evidence in the case that there was no showing that these burners were not practical when in proper repair, and that there were no fraudulent representations relied upon by Mr. Hudson. Furthermore, according to his own evidence he watched, for a period of two or three weeks, the operation of the burner which was being used by Mr. Beers for demonstrating purposes in Spokane. He assisted in the demonstrations. After he purchased the territorial rights, he demonstrated the burner himself in different places in this state and in Montana and Oklahoma. While he at different times made some complaint of the fact that the burner did not operate.properly, he attributed it to the fact that some parts of the burner were not properly adjusted or were out of re [229] pair. He did not then offer to trade back or to rescind his sale until nearly a year after it was made; and if we may concede, for the purposes of this case, that he was not able to make sales as fast as he had anticipated, and for that reason paid more for his territorial rights than they were really worth, that was a chance which he himself took when he purchased the territorial rights from Mr. Beers. Ve think it is plain from all the facts in the case that, at the time of the purchase, he was cognizant of the construction of the burner and the method of operation, and knew as much about the details of it as Mr. Beers. In fact, there is evidence in the record that he himself had attempted to perfect a burner of some character and that, when he saw this burner, he concluded that this was the burner he wanted. It follows, we think, from his own evidence, that he did not rely upon the representations made by Mr. Beers before the sale, but that he investigated the machine thoroughly before the sale, was satisfied therewith, and cannot now be heard to say that he relied upon the representations of Mr. Beers. In the case of Meyer v. Maxey, 92 Wash. 73, 158 Pac. 995, in discussing this point we said: “Even assuming that every representation charged by respondents had been made by appellant, it is manifest that the case falls within the rule announced by Pomeroy and reiterated'in many of our decisions to the effect that, where the party charging misrepresentation institutes inquiry for himself, has recourse to the proper means of obtaining information and actually learns the real facts, or could have done so by availing himself of the means of information at hand, he cannot claim that he did not learn the truth and was misled by the representations. . . . While we have gone as far as any court in relieving against inducing fraud and artifice,-we have never gone so far as to relieve a purchaser of all responsibility for a failure to observe facts and conditions as much within [230] his reach as that of the seller, especially where he has professedly undertaken an examination for himself with every opportunity to make it as complete as he pleased.” Mr. Hudson under the facts in the case, falls squarely within that rule. He not only was in a position to know all the facts before he made the purchase, but, after he made the purchase, for nearly a year he demonstrated the machine in other parts of the country, and sold territory. He cannot now be heard to say that he relied upon the representations made by Mr. Beers to him. It is true that, two or three months prior to the time the action was brought, Mr. Hudson became sick while he was in Oklahoma, and for that period of time was probably unable to demand a rescission; but he had ample opportunity prior to the time he became sick to learn all about the machine which he had purchased and the territorial rights under the patents; and it was Ms duty, upon discovering fraud, if there was any, to immediately rescind his contract. This he did not do, concededlv, for a period of nearly one year. We are of the opinion that there were no fraudulent representations made by Mr. Beers; but, if we may concede that there were fraudulent representations, they were discovered by Mr. Hudson long prior to the time when he brought tMs action and were waived because he made no demand for rescission on that account. We are of the opinion, therefore, that the trial court erred in finding that the sale was induced by fraud and in entering a decree setting aside the sale. The judgment is reversed and the cause remanded with instructions to dismiss the action. Holcomb,'C.J., Bridges, and Parker, JJ., concur.