(18 Wash. 277) THORP v. SMITH et al. (Supreme Court of Washington. Dec. 13, 1897.) DECEIT INTENT. A seller who puts false recitals in the contract of sale as to the amount of the purchase price, whereby the purchaser's agent is enabled to defraud the purchaser, is not liable to the latter, in the absence of a showing that his purpose in inserting such recitals was to bring about such result. Appeal from superior court, King county; O. Jacobs, Judge. Action by Willis Thorp against B. M. Smith and others. Judgment for plaintiff. Defendants other than Smith appeal. Reversed. Harrison J. T. Ronald, for appellants. Bostwick (W. T. Scott, of counsel), for respondent. them. The respondent contends that by reciting a false consideration of $3,000 in the agreement the appellants put it in the power of Smith to deceive Thorp to his injury, and that they are liable for the consequences. The respondent has cited many authorities on the proposition, substantially, that where a third party conspires with an agent to defraud a principal, such third party is liable to the principal for the damages resulting; and this must be conceded, but we think that the general rule is well settled that a party complaining of deception must show that such third party made such false representations with the intention that he should act upon them, and that it is not enough to show that false representations were made with a knowledge of their falsity. City of Tacoma v. Tacoma Light & Water Co., 16 Wash. 288, 47 Pac. 738; 5 Am. & Eng. Enc. Law, p. 330; Mechem, Ag. § 796; Wells v. SCOTT, C. J. The plaintiff, who resided Cook, 16 Ohio St. 67; Marshall v. Hubbard, at Juneau, Alaska, intending to start an elec- 117 U. S. 415, 6 Sup. Ct. 806. There is nothtric light plant in that city, appointed the ing in this case to bring it within the holding defendant Smith his agent to proceed to in Oudin v. Crossman, 15 Wash. 519, 46 Pac. Seattle to purchase the necessary machinery 1047. Smith represented to Hawley and the therefor, and intrusted him with a check for company that he was personally interested $3,000, drawn by Thorp on the Merchants' with Thorp in the electric light plant, and National Bank of Seattle, to enable him to that they intended to turn it over to a stock make a purchase, and such arrangements company, and he requested that the contract were made with the bank by Smith thereby should recite a consideration of $3,000, for that a credit of $3,000 was obtained at the the purpose of enabling them to get a better bank, subject to Smith's check. A contract price for it. Hawley testified to this, and was entered into between the plaintiff, rep- also that it was only a fair price for the resented by Smith, and the defendant Union machinery; that Smith had purchased the Electric Company, whereby said company same for much less than its actual value; sold to Thorp certain electric machinery for and, furthermore, that it was not unusual the sum of $625 in money and $1,000 in notes. to recite an increased price in such instances; The defendant Hawley, an officer of the com- that the same was done often to cover other pany, was the one who made the sale of the contingent expenses connected with the unmachinery for the company, and drew a writ- dertaking, not itemized. But, however this ten contract, which was executed by Thorp may be, and conceding it was morally wrong on one side, by Smith, as his agent, and upon to recite a greater consideration in the inthe other side by the company, which con- strument than the one actually paid, that of tract stated that the purchase price of the itself constitutes no ground for a recovery, machinery was $3,000, and recited that $2,- nor do we regard it as at all material wheth 000 was paid in cash. This contract, with er Smith had an interest in the plant, or the notes in blank, was sent to Thorp, and whether the appellants understood he had he executed the notes, and delivered them any. There is absolutely no proof going to to the defendant company. Thorp after- show that either Hawley or the company rewards settled with Smith on the basis of his ceived any part of the difference between having paid $3,000 for the property. Smith the actual purchase price and the price stathad previously drawn $2,000 from the bank, ed, and it is not claimed by the respondent out of which he paid the defendant company that there is any such evidence; nor is there $625, and presumably retained the balance; any proof going to show that the increased at least there is no evidence tracing the price was stated for the purpose of enabling money any further. Upon Thorp's learning Smith to deceive Thorp. Hawley's testithe facts, he brought this action to recover mony above mentioned was uncontradicted. the difference between the recited price of Smith had power to draw the money from $3,000 and the actual price paid, viz. $1,625, the bank, irrespective of any purchase, aland the Union Electric Company and Hawley though it might have been a violation of have appealed from a judgment in his favor. his duty as against his principal. He was The appellants contend that there was no Thorp's agent, selected by Thorp, and the evidence tending to show that the price was appellants had a right to believe that it recited as $3,000 in the bill of sale with any was Thorp's desire that the contract should intention on their part to enable Smith to recite the purchase price as $3,000. Thorp deceive Thorp, and that, in the absence trusted Smith, and was defrauded by him. thereof, there could be no recovery against | But by an exercise of reasonable prudence he might have ascertained the true state of facts by an inquiry of the company as well before his settlement with Smith as he did afterwards. There was no attempt upon the part of the company to conceal anything, and there is nothing to show that the company had any knowledge of Smith's limited instructions from Thorp with reference to drawing the money from the bank, or that he drew any more from the bank than he paid the company in making the cash payment for the machinery, if that were material. There was nothing in the transaction to put the appellants on their guard in any way that Smith intended using the contract for the purpose of deceiving Thorp, and there was no basis for a recovery by Thorp against the appellants in this action. The question was raised in a number of ways by objections to proof and requests to charge, and the action of the court in ruling upon them was erroneous. The court proceeded upon the theory that it was immaterial whether the appellants intended that Thorp should be deceived as to the actual price paid, but were liable in consequence of having made a false recital in the contract, whereby Smith was enabled to deceive his principal. Reversed and remanded, with instructions to render judgment in favor of the appellants. DUNBAR, ANDERS, and REAVIS, JJ., con cur. GORDON, J., did not sit. court for Whatcom county to recover of the defendant, the Bellingham Bay Baseball Association, a corporation, a balance upon an open account, amounting to $525. In its complaint appellant alleged that the defendant corporation was insolvent, and asked for the appointment of a receiver, who qualified, collected about $170, and was discharged before the distribution of the money so collected by him was made. Thereafter the respondents, who were judgment creditors of the defendant, petitioned the court for the appointment of another receiver, and the appointment was made. On January 9, 1897, an order was made which adjudged the claim of the plaintiff barred by the statute of limitations, and directed the receiver to distribute among the other creditors (respondents herein) the fund then on hand. The appeal is from that order and judgment. It does not appear from the record that the defendant, the Bellingham Bay Baseball Association, was ever served with summons, or that it ever appeared in the action. The respondents have moved to dismiss the appeal, for the reason that no notice thereof was served upon the receiver. We think the motion must be granted. The receiver was a proper party, and entitled to be served with notice. It follows that the motion must be granted, and the appeal dismissed. DUNBAR and REAVIS, JJ., concur. (18 Wash. 245) PACIFIC COAST TRADING CO. v. BEL- The receiver of an insolvent corporation, appointed on petition of certain judgment creditors of such corporation, was a proper party to plaintiff's appeal from a judgment finding that plaintiff's claim against the common debtor was barred by limitations, and ordering the ceiver to distribute the fund among such judgment creditors, and was entitled to notice of such appeal. re Appeal from superior court, Whatcom county; John R. Winn, Judge. Action by the Pacific Coast Trading Company, a corporation, against the Bellingham Bay Baseball Association. From an order adjudging the claim of plaintiff barred by the statute of limitations, and directing the distribution of a certain fund in the hands of a receiver among Frank E. Biles, E. C. Ward, and George Duffy, judgment creditors of defendant, plaintiff appeals. Appeal dismissed. Kerr & McCord, for appellant. E. M. Day and G. V. Alexander, for respondents. GORDON, J. In October, 1891, the appellant commenced an action in the superior (17 Wash. 88) STATE v. McCAULEY. (Supreme Court of Washington. Dec. 13, 1897.) BANK BOOKS-EVIDENCE-ADMISSIONS. 1. On a prosecution for making profits out of public funds, books of the bank, made up in part from defendant's checks, containing credits for interest on city funds deposited in the bank, are admissible in evidence as admissions of defendant's knowledge of such credits, without producing the checks, or a showing of any demand to produce them. 2. A depositor, who, with a cashier, examines his pass book, as made up from debit and credit slips, showing deposits and checks against the same, and a balance found thereon, will be presumed, in the absence of a contrary showing, to admit that the bank's books, which are made up from the same source, and show the same balance, are correct. On rehearing. For former decision, see 49 Pac. 221. Approved. REAVIS, J. The single question which was argued before us at this time was the admission of the bank books introduced in evidence by the state, which were made in part from the checks of appellant, and without production of the checks, and a showing of any demand upon appellant to produce the same. We shall not now review any other feature of the case, which was fully discussed in the opinion upon the original hearing. 49 Pac. 221. There was competent testimony, sufficient to justify the verdict of the jury, without the introduction of the bank books, now the subject of discussion. But the question occurred, on appellant's petition for a rehearing, whether, considering that the evidence fully justified the verdict, without the books referred to, the introduction of the books, if incompetent, might have injured appellant; and the court deemed further argument advisable. Perhaps the rule with reference to the notice to defendant to produce original papers upon a criminal trial, on the ground that he has been sufficiently advised in the indictment and course of the trial, was too broadly stated in the opinion of the court upon the original hearing; but we now think the books in question were properly admitted by the superior court, in the nature of admissions of the defendant that he had knowledge of the credits for interest entered on the bank books in his favor on his personal account for city funds deposited in the bank; and, further, defendant having, with the cashier of the bank, examined his pass book, as made up from the debit and credit slips, showing deposits and checks against the same, and the balance of account being shown thereon, and the bank books in question having been made up from the same source, and showing the same balance, he, without a contrary showing on his part, which was not made, admitted the correctness of these books. Such admissions were entitled to go before the jury, and their weight would be a matter for the consideration of the jury. Debit and credit slips used by the bank may, by the admission of the defendant, become primary evidence of the items shown upon them. Defendant had the right to contradict anything in the nature of an admission made upon the books, but did not do so. We are unable, from the rehearing, to arrive at any other conclusion than upon the original hearing, and the judgment of the superior court is affirmed. SCOTT, C. J., and DUNBAR, ANDERS, and GORDON, JJ., concur. (18 Wash. 281) BOYD v. COCHRANE et al. (Supreme Court of Washington. Dec. 13, 1897.) NEGOTIABLE INSTRUMENT-EXTENSION-VOID CON SIDERATION. An agreement by a bank to extend the time of a note owing to it, in consideration of the maker's securing the county treasurer to deposit a portion of the county funds with said bank for a certain period, is founded on an invalid consideration, and will not release a surety thereon. Appeal from superior court, King county; E. D. Benson, Judge. Action by A. H. Boyd, receiver of the Bank of Auburn, against William Cochrane and P. C. Hayes, on a promissory note. Judgment for plaintiff, and defendants appeal. Affirmed. Preston, Carr & Gilman, for appellants. H. G. Rowland, for respondent. DUNBAR, J. The appellants made and executed to the respondent bank the following note: "Auburn, Washington, Sept. 17, 1895. Two months after date, without grace, for value received, I promise to pay to the order of the Bank of Auburn, $1,000.00 (one thousand dollars), payable at the Bank of Auburn, Washington, with interest from date at the rate of 10 per cent. per annum until paid. In case this note shall be placed in the hands of an attorney for collection, I agree to pay five per cent. upon the amount then due as attorney's fees. If not paid until after suit has been commenced, I agree to pay 50 dollars as attorney's fees. No. 2,082. Due Nov. 17. William Cochrane. P. C. Hayes." In course of time, the ordinary suit was brought upon the note by the receiver of the bank. The affirmative defense pleaded in the answer sets up that one John W. Maple was the duly elected and qualified treasurer of King county; that the Bank of Auburn was a corporation duly organized, etc., was engaged in the banking business, and had the right, power, and authority to so engage and receive deposits of money subject to check, draft, and otherwise; and that the bank had on deposit, under a bond duly given under the law for the safe-keeping and return of the money deposited, certain moneys of the county of King. The fourth and material allegation of the answer is as follows: "That prior to the 15th day of July, 1896, and on said date, and for a long time subsequent thereto, the said Bank of Auburn was generally reputed to be a solvent bank, and fully able to meet all its obligations, and to pay all demands for sums that had been deposited therein; and these defendants, and each of them, believed at said times said bank to be entirely solvent. That on the 15th day of July, 1836, the said Bank of Auburn represented to the defendant William Cochrane that they were desirous of retaining the deposit that the said John W. Maple, as county treasurer, had placed in said bank, and that said deposit [was] of advantage to said bank and for its interest, and requested the defendant William Cochrane to secure from said John W. Maple, as county treasurer, such deposit, and then contracted and agreed with the said Cochrane that if he (the said Cochrane) would procure the said John W. Maple to leave the moneys at that time deposited with said bank on deposit therewith for a period of two months from said date, that the said Bank of Auburn would, in consideration thereof, give to said defendant an extension of time of six months upon the note sued on in this action. That, pursuant to said agreement and arrangement, the said Cochrane did procure said Maple to so leave said money on deposit with said bank for said period of two months, and in consid eration thereof, and of the action of the said William Cochrane in procuring said deposit to be so left with said bank, and in consideration of the action of the said Maple [in] so leaving said money for said period, the said Bank of Auburn did extend the time of payment of the said note for six months from the 15th day of July, 1896, to wit, to the 15th day of January, 1897." And the next allegation is "that said contract and agreement for extension of time was made without the knowledge or consent of the defendant P. C. Hayes." The plaintiff interposed a demurrer to this affirmative defense, for the reason that it did not constitute a defense or counterclaim to plaintiff's complaint, and also moved the court to strike the denials of the amended. answer of the defendants, for the reason that they were sham, frivolous, and irrelevant. The demurrer and motion to strike were supported by the court, and, the defendants electing to stand on their answer, judgment was given against Cochrane as principal and Hayes as surety. There are some questions of law raised by the appellants in this case that are not disputed by the counsel for the respondent; and, as we view the case, there is only one real question to be decided, and that is whether the consideration pleaded in the answer was a sufficient consideration to support the contract for an extension of the time of payment so as to discharge the surety from liability upon the note. It will be conceded, we think, without the citation of authorities, that the contract upon which the surety claims his discharge must be founded upon a valid agreement, based on a valid consideration. Does the contract set up in the affirmative defense fall within these requirements? We think that it plainly does not. The statute especially prohibits county officers from using any portion of the money intrusted to their care for safekeeping in order to make a profit out of the same, and prohibits them from using the same for any purpose not authorized by law. Such acts the statute constitutes a felony. And this court, in several cases which have been before it, has decided that the salary, and the salary only, was intended to be the recompense of the treasurer; and any agreement which the treasurer of King county made in reference to the public funds, whereby they were to be deposited or used in any manner whatsoever for the benefit of himself or of any other person, was a violation of this statute. It is true that the law provides that the treasurer may deposit in his name, as county treasurer, any moneys of the county in any national, state, or private bank doing a general banking business in his county; but the evident intention of the law is that the treasurer shall be left untrammeled in the exercise of his choice of banks where such deposit is made, and that, in the exercise of that choice, he must look, and look only, to the interests of the public; and in no event is he authorized (as it is alleged that he did do by this affirmative answer) to deposit money in banks for any particular time. The losses which so frequently occur to counties and other municipalities in this state are nearly always attributable to the action of the custodian of the funds in keeping them on hand after they should have been paid out on warrants and demands which were due. The treasurer has no way of knowing when legal demands will be made upon the funds within his keeping, and it is his duty to keep them available at all times. Rule 279 in Greenhood on Public Policy is as follows: "Any contract by which public office is to be used for private gain is void." And this rule is well sustained by the authorities. The question, of course, is whether this case falls within the rule. Under this rule, Baldwin v. Coburn, 39 Vt. 441, is cited. In that case A. was appointed commissioner of liquors for a county, and had the power to appoint 10 agents. He appointed B. agent for the town of F., and B. agreed to buy of A. all the liquors needed to supply said town, and C. and D., by bond, agreed that he would do so. The court held that the law contemplated that the agent should buy without trammels with reference to the public interest only, and held the bond void. It cannot be said under the allegations in this answer that the treasurer here selected a bank which was to be the depository of the public funds untrammeled, and without a personal interest; for the very object of the contract which the answer alleges was entered into was to influence the action of the county treasurer in his selection of banks. And such influence is pleaded as forming the consideration upon which the contract should be sustained. Mr. Pomeroy, in his work on Equity Jurisprudence, in discussing this question, places first, under the ban of the law, contracts made for the purpose of unduly controlling or affecting official conduct, and says (section 935): "All agreements directly or indirectly preventing or controlling the due administration of justice are opposed to the universal and most elementary principles of public policy. Whatever be their form and immediate purpose, and however innocent may be the motives of the parties, they are plainly invalid." The authorities are grouped in the notes and the text, and this case falls squarely within the rule announced by many of them, which includes contracts for third persons, stipulating for their influence in procuring official administrative acts to be done. The rule is thus announced by Bish. Cont. § 500: "Any contract between an officer and a private person by which the former undertakes to do anything of official duty, right or wrong, in accord with such duty or contrary to it, is in a greater or less degree an obstruction to the unbiased exercise of his office, even where it does not influence him corruptly. SHEAFE v. CITY OF SEATTLE. (Supreme Court of Washington. Dec. 13, 1897.) MUNICIPAL CORPORATIONS-IMPROVEMENTS-COMPROMISE WITH ABUTTING OWNERS-VALIDITY CLAIMS-LIMITATIONS. 1. A city having, at the expense of abutting owners, made an improvement which could have been made at the expense of the general fund, may accept less from the owners than the amount originally assessed, and, if the special fund created to pay the expense proves inadequate to fully meet warrants drawn upon it, the city is liable for the difference. 2. The provision of the Seattle charter which requires claims to be presented within six months applies only to damages arisi g in tort. Appeal from superior court, King county; E. D. Benson, Judge. Action by C. M. Sheafe against the city of Seattle. Plaintiff had judgment, and defendant appeals. Affirmed. John K. Brown and F. B. Tipton, for appellant. Clise & King, for respondent. GORDON, J. This was an action to recover upon a warrant issued upon a special fund created to pay the expense of grading a street. The complaint alleges that, after the completion of the improvement, the city compromised with the various owners of property abutting on said street, and accepted from them amounts less than the sums assessed against such property, in consequence whereof the special fund upon which plaintiff's warrant was drawn was insufficient to pay the same. A demurrer sus to the complaint was overruled, and as an affirmative defense the city set up that the claim upon which plaintiff sued was not presented to the city council, or filed with the clerk, within six months after the time when the claim for damages accrued. A demurrer to the affirmative defense was tained, and judgment entered for the plaintiff on the trial, and it is from that judgment that this appeal is taken. But two errors are assigned: First, the overruling of the demurrer to the complaint; second, the sustaining of the demurrer to the affirmative defense in the answer. In support of the first assignment it is urged that the city was without power to compromise with the property owners, or to accept less than the sums assessed against the property, that the attempted compromise was 51 P.-25 and is ultra vires, and that the balance can still be collected. We cannot agree with this position. The city council had authority, in the first instance, to make the improvement at the expense of the general fund of the city, or of the owners of the property abutting the improvement; and the whole question as to the method of paying the cost of the improvement or apportioning it was with the council. The case differs from that in which liability is sought to be established upon the ground of neglect and failure to act. Here the right to recover is based upon an affirmative act; and the council, having the power to determine what portion of the expense a particular piece of property should bear, might well compromise and accept from the owner a less sum than that originally assessed against his property. No prejudice to the warrant holder results therefrom. The effect of it is merely to make the city liable for the difference, and this is what the council might have done in the first instance. The demurrer to the complaint was properly overruled. Nor do we think that the plaintiff was required to file with the clerk of the city, or present to the council, a statement of his claim. The provision of the city charter which requires that course relates to claims for damages arising in tort. The judgment was right, and it is affirmed. 1. The obligation of the master to furnish to the servant reasonably safe machinery and appliances with which to work, and that of the servant to exercise care to avoid injury, are reciprocal, and the duty of each is measured by the standard of ordinary care. 2. An employer who uses machinery which is in common and ordinary use in his line of business cannot be held liable for an injury to his employé which might have been prevented by the use of different machinery. 3. Where there are two methods by which a service may be performed, one perilous and the other safe, an employé who voluntarily chooses the perilous rather than the safe one cannot recover for an injury thereby sustained. 4. In an action for personal injuries, an employé showed that a machine was provided with a shaft, supported by two brackets, and had upon either end, inside the brackets, a collar. Each collar was held in place by means of a set screw, the head of which projected five-eighths of an inch. Collars and set screws of similar pattern were in common use on such machines. The belt upon the pulley slipped off while the machinery was in motion, without defect of pulley or belt. Plaintiff attempted to replace the belt, but it caught on the screw, and he was injured. Held, that the machine owner was not negligent in not putting the collar outside the brackets, and in not countersinking the set screws, even though the shaft would have been safer if thus constructed. |