Schroeder v. Hotel Commercial Co., 84 Wash. 685,


147 Pac. 417 (1915).

           SCHROEDER v. HOTEL COMMERCIAL CO.           685
 Apr. 1915               Syllabus.

      [No. 12198. Department Two. April 6, 1915.]
H. B. SCHROEDER et al., Appellants, v. HOTEL COMMERCIAL
                     COMPANY, Respondent. 1

EVIDENCE - DEMONSTRATIVE EVIDENCE - ADMISSIBILITY - DISCRETION

OF COURT. In an action for installments due on the price of an
electric piano, in which there was a counterclaim seeking
rescission of the contract on the ground of false and fraudulent
representations in its procurement, it was not error to permit
the presence of the piano, nor of a new piano action, in the
court room for the purpose of illustrating expert evidence as
to its condition, showing wear to pedals, keys, hammers, and
internal mechanism, where there was testimony showing the
character and extent of the use of the instrument between the
date of purchase and time of trial.

EVIDENCE - PAROL EVIDENCE - FRAUD. In an action to recover the
price of an instrument sold under a written contract, to which a
counterclaim setting up fraud in the procurement of the contract
had been interposed, parol evidence is admissible for the purpose
of showing the fraudulent inducement, and it is not open to the
objection that it is evidence of verbal representations tending
to vary the terms of a written instrument.

APPEAL AND ERROR - QUESTIONS REVIEWABLE - INSTRUCTIONS. Error
cannot be assigned upon instructions to a jury, where the action
was of equitable cognizance and the court took the verdict as
merely advisory and made complete findings on which it based its
decree.

APPEAL AND ERROR - FINDINGS - CONCLUSIVENESS. The findings of
the trial court will not be set aside on trial de novo in the
supreme court, when they are sustained by a decided preponderance
of the evidence.

SALES - CONTRACTS - RESCISSION BY BUYER - ACTS CONSTITUTING.
A finding that defendant rescinded a contract for the purchase
of an electric piano is sustained by the evidence, although
there was no formal rescission by a return of the instrument,
when it appears that this was due to promises of plaintiffs
to put the instrument in good condition, and also to subsequent
negotiations looking to an exchange for another instrument;
that, from the time of its first delivery, defendant insisted
that the instrument did not comply with the representations
which induced the contract, and refused to make additional
payments on that ground, which in itself was sufficient
to constitute notice of rescission.


1 Reported in 147 Pac. 417.

 686    SCHROEDER v. HOTEL COMMERCIAL CO.
                Opinion Per ELLIS, J.           84 Wash.

SALES - RESCISSION - WAIVER. Delay in formal rescission, induced
by promises of the vendor of an instrument to make it work
properly, is not a waiver of the right to rescind.

JUDGMENT - PARTIES - ASSIGNEE FOR COLLECTION - PERSONAL JUDGMENT.
The entering of judgment, on rescission of a contract, against
an assignee for collection is not error, where the only personal
judgment entered against him was for the costs of the action.

JUDGMENT - PERSONS NOT PARTIES - REAL PARTY IN INTEREST. A
judgment against one not named as a party to the action is not
erroneous, where the court finds that the plaintiff was an
assignee merely for collection; that the party against whom
judgment was rendered was the real party in interest; that it
was represented in the action by its agents who were paid by it;
and that it actually participated in the trial, though not a
nominal party; since one not a technical party is bound by the
decree if he be interested in the subject-matter of litigation
and has exercised the right to participate.

Appeal from a judgment of the superior court for Yakima
county, Grady, J., entered November 29, 1913, after a trial
before the court and a jury, in an action on contract.
Affirmed.

Marx & Conger, for appellants.

Wende & Taylor, for respondent.

ELLIS

ELLIS, J. - The plaintiff, Schroeder, as assignee for
collection, brought this action to recover from the defendant
unpaid installments .on the purchase price of an electric
piano, known as a "Welte Mignon," sold on conditional sale
by Eilers Music House to the defendant. The facts are
these:

In August, 1911, Schroeder was the manager of the North
Yakima branch of the Eilers Music House, a corporation.
About that time, Hitchings and Harrah, officers and chief
owners of the defendant company, desiring to purchase some
kind of automatic music instrument for use in their hotel,
opened negotiations therefor with Schroeder. He had
nothing in stock meeting their desire, and it was agreed that
the three would look through the stock of Eilers Music House
in Seattle, which they accordingly did on August 28, 1911.

           SCHROEDER v. HOTEL COMMERCIAL CO.           687
 Apr. 1915          Opinion Per ELLIS, J.

One Hopper, manager of the Seattle house, showed them,
among other automatic instruments, the one here in question.
He represented that the Welte Mignon was an automatic
piano the mechanism of which was made in Freiburg,
Germany; that it differed from others in that it reproduced not
only the notes, but the expression, style and mannerism of
the artist who played the selection to produce the record;
that it reproduced the playing of a given selection on the same
principle that a phonograph reproduces the singer's voice.
Neither Hitchings nor Harrah had any knowledge of musical
instruments and, as the evidence shows, both were
especially ignorant of instruments of this character. The
operation of the instrument was demonstrated to them for
something over an hour, during which time two or three selections
were played. The mechanism was exposed and to some extent
explained, but it is clear that none of the defects from
wear, which afterwards developed, were pointed out to
Hitchings or Harrah. Hitchings remarked that the case looked
cloudy as if it had been used. Harrah remarked that the
silk lining in the front of the case had rotted away. Hopper
then informed them that the piano had been used for
demonstration purposes at the Alaska-Yukon-Pacific Exposition,
and since in the storeroom of the music house, but that it
would be cleaned and polished and put in perfect order
before being shipped. Hopper himself further testified:

"And I also assured them that the condition of the
instrument was absolutely first class so far as the interior
mechanism was concerned. It was not worn, it was not in
bad condition, the keyboard was not yellow and the
instrument itself was in good condition and for all intents and
purposes to the purchaser should play just as well as new."

Hitchings and Harrah remarked that the instrument
played too loudly and irregularly, but were informed that
this was caused by an improper adjustment of the electric
current by which the piano was operated. Finally, it was
agreed that the defendant hotel company would purchase

 688    SCHROEDER v. HOTEL COMMERCIAL CO.
                Opinion Per ELLIS, J.           84 Wash.

the piano, receiving a small reduction on the regular price.
Four hundred dollars was paid down upon the purchase
price and it was agreed that the balance, amounting to
$1,450, should be paid in installments. A conditional sale
contract was drawn up and signed by the defendant company
by Hitchings, its manager. This contract described
the instrument as a "Welte Mignon," made no reference to
it as an old, used or second-hand instrument, and provided
that "any agreement other than expressed on the face of
this note will not be recognized." It was admitted, however,
that it was agreed at the time and as a part of the same
transaction, that the instrument would be put in first class
condition and all of the apparent defects remedied.

Early in September, 1911, the instrument was installed in
the dining room of defendant's hotel at North Yakima, but
the evidence shows that it failed to operate satisfactorily,
that it produced loud and discordant notes, that it was used
less than three months, being operated almost wholly by
electrical current and seldom by hand; that the Eilers Music
House sent an expert to remedy the defects, who remained
in North Yakima for several days, but failed to materially
or permanently remedy the defects; that the defendant
company finally abandoned its use altogether. It also appears
that the defendant's officers entered into negotiations with
Schroeder for an exchange of the instrument for another,
and that Schroeder, claiming that the matter would have to
be referred to the head officers of the company, told them to
pay no attention to the requests for payment of the
installments falling due on the purchase price pending such
negotiations. Finally, about the first of March, 1913, the
defendant absolutely refused to make further payments, and the
plaintiff brought this action to recover the balance of the
purchase price. The defendant filed a cross-complaint
seeking rescission of the contract on the ground that it was
procured through false and fraudulent representations.

           SCHROEDER v. HOTEL COMMERCIAL CO.           689
 Apr. 1915          Opinion Per ELLIS, J.

The cause was tried to the court and jury. A verdict was
returned in favor of the defendant, but the court, after some
days' consideration, concluded to treat the verdict of the jury
as merely advisory, made complete findings of fact and
conclusions of law, and entered a decree in favor of the
defendant. Upon its own motion, the Eilers Music House was made
a party plaintiff for the purpose of participating in this
appeal.

I. The appellants claim that the court erred in
permitting the presence of the piano in the courtroom during the
trial and its use in illustrating the testimony of witnesses,
on the ground that there was no evidence that its condition
was at the time of the trial, November, 1913, the same as at
the time of purchase. There was, however, evidence of the
character and extent of the use of the instrument in the
meantime. Hitchings testified that it was used for an hour
each day at lunch and dinner for two or three weeks, that it
was used very little after that, and within a month or two
its use was discontinued altogether. That this was its only
use, except a few times it was played by hand as an
accompaniment to a violin. Expert evidence as to its condition,
showing wear to pedals, keys, hammers and internal
mechanism, which could not have resulted from such limited
intermediate use, was also introduced. We are satisfied that
both the court and the jury were better able to understand
this testimony and to determine the probable condition of the
instrument at the time of the sale with the machine itself
before them than they would have been by the unillustrated
testimony. Courts are permitted a wide discretion in the use
of illustrative aids such as pictures, models and machines.
Harris v. Seattle, Renton & S. R. Co.,
65 Wash. 27, 117
Pac. 601. This is a common practice, especially where
questions of mechanism are involved. We find no error in the use
of this machine, or in permitting its presence in the
courtroom.

 690    SCHROEDER v. HOTEL COMMERCIAL CO.
                Opinion Per ELLIS, J.           84 Wash.

A kindred objection is advanced touching the use of a new
piano action as illustrative of the testimony of an expert
witness as to the difference between an old and a new action.
What we have said of the use of the piano in issue sufficiently
disposes of this objection.

II. It is contended that the court erred in admitting
evidence of representations in the nature of warranties not
contained in the written contract and in instructing the jury
thereon, though it is asserted that the case was tried
throughout upon the theory of fraud. We pass the manifest paradox
in the claim that evidence and instructions were admitted and
given on the theory of warranty while the case was tried
throughout on the theory of fraud. Both claims, of course,
could not be true. The ground of appellants' contention
seems to bc that the evidence of verbal representations in the
nature of warranties made prior to the execution of the
contract was inadmissible as tending to vary the terms of the
writing itself. The case of Eilers Music House v. Oriental
Co.,
69 Wash. 618, 125 Pac. 1023, is cited as a parallel case
sustaining this contention. That case, however, presented
wholly different issues from those presented here. In that
case, the action was in the nature of replevin to recover an
instrument sold on conditional sale contract similar to that
here involved. The defendant admitted the making of the
contract, but set up a counterclaim for damages on the
ground that the instrument failed to meet certain alleged
verbal warranties. No rescission of the contract on the ground
of fraud was sought. No purely equitable defense was
interposed. We held that verbal representations amounting to
specific warranties were not admissible in evidence because
not in the written contract. The trial court, however, did
admit evidence of certain defects, on the ground that there
was an implied warranty that the instrument was adapted
to the purposes for which it was sold. We held, however,
that the counterclaim was properly dismissed, not because
this evidence was improperly admitted, but because there was

           SCHROEDER v. HOTEL COMMERCIAL CO.           691
 Apr. 1915          Opinion Per ELLIS, J.

no evidence that the defects complained of had resulted in
monetary loss or measurable damage.

The case of Smith v. Bolster, 70 Wash. 1, 125 Pac. 1022,
was likewise defended on the ground of specific warranties,
and a counterclaim for damages was interposed. No misrepresentation
as to the amount of use to which the car there
in question had been subjected was claimed. No rescission
for fraud was sought.

In the case before us, the action was not to recover the
possession of the instrument, but to recover the balance of
the purchase price, the appellant thus waiving the right of
possession for breach of the contract. The answer did not
set up a counterclaim for damages for breach of warranties
either express or implied, but sought by cross-complaint a
rescission for failure of the instrument to comply with the
conditions of the sale, namely, that the contract itself
prescribed the instrument as a Welte Mignon when it was not in
fact, though so represented, and on the further ground of
fraudulent misrepresentations inducing the sale, to the effect
that the instrument, though not flew, had only been used for
demonstration, and that certain loud and discordant notes
were not due to wear but to the use of an alternating electric
current and would disappear when a direct current was
applied.

When the court overruled the appellants' objection to the
introduction of oral evidence in support of the cross-complaint
he clearly noted the true distinction. He said, "The
court construes the cross-complaint to be based upon
rescission upon the ground of false representations of material
facts inducing the making of the contract." This
construction of the cross-complaint was clearly correct. The issue
of inducing fraud, thus presented, opened the door to parol
testimony as to the whole transaction, regardless of the fact
that the resulting contract was in writing. This is
elementary.

 692    SCHROEDER v. HOTEL COMMERCIAL CO.
                Opinion Per ELLIS, J.           84 Wash.

We shall not review the instructions further than to say
that they contain no material error. In any event they are
of no controlling importance here. The trial court took the
verdict as merely advisory, treating the case as one in equity,
made complete findings and based its decree thereon. No
error is assigned upon this treatment of the case. It is here
for trial de novo as other actions tried to the court. The
instructions, whether right or wrong, cannot have any
material bearing upon the result.

III. It is next contended that the court's findings
generally were not sustained by the evidence. The court found,
in substance, that the officers of the cross-complainant were
wholly ignorant of the construction and operation of electric
pianos; that during the negotiations looking to the sale, they
noticed from the case and the lining of the face that it did
not appear to be a new piano, and noticed that it did not
play properly; that upon these things being indicated, the
agent of Eilers Music House in Seattle, in the presence of
Schroeder, represented that while not a new piano, it had
only been used for the purpose of demonstration to
prospective purchasers and to the public in the salesroom of the
music house and at the Alaska-Yukon-Pacific Exposition,
and that "the piano was practically to all intents and
purposes a new piano;" that these representations were made for
the purpose of inducing the purchase, were relied upon by
the cross-complainant as being true, and induced the making
of the written contract of purchase; that when delivered the
instrument failed to play properly and an expert, sent by the
Eilers Music House to adjust it, failed to make it play
properly, but on the contrary it continued to play so loudly
and discordantly that it was useless for operation in the
dining room; that it was used for about three months during
the noon and evening meals and occasionally at night, almost
entirely by mechanical operation; that its usage by the
cross-complainant was not such as to cause any of the defects
found by the court to exist; that the pedals were worn, showing

           SCHROEDER v. HOTEL COMMERCIAL CO.           693
 Apr. 1915          Opinion Per ELLIS, J.

that the instrument had been much operated by hand;
that the keyboard was out of alignment and the keys
somewhat discolored; that the original name on the fall board
had been almost completely obliterated by scratching the
finish at that point, and the original name covered by a plate
upon which appeared the name "Welte & Sons ;" that the
bellows contained holes and was worn in the creases; that one
of the two air tubes had been removed and replaced by a tube
of different material and design from the original; that at the
time of the purchase, none of these defects were observed by
the officers of the cross-complainant, because of their lack of
experience touching such instruments; that the instrument
had received, prior to the sale, much harder usage and was in
a much more worn condition than it would have been had it
only been used for the purpose and to the extent represented,
and that it was, at the time of the trial, in practically the
same condition as when it was first delivered to the
cross-complainant.

We have read the abstract and supplemental abstract of
record with frequent recourse to the statement of facts. Any
detailed discussion of the evidence would extend this opinion
to prohibited length. It must suffice to say that we are
convinced that the court's findings are sustained by the decided
preponderance of evidence.

IV. It is also contended that the court's finding to the
effect that the respondent rescinded the contract is not
sustained by the evidence. While there was no formal rescission
by an actual return of the instrument prior to the commencement
of the action in March, 1913, the evidence makes it clear
that the promises of the appellants to put the instrument in
good condition and the subsequent negotiations looking to
an exchange for another instrument was the sole reason for
the respondent's retention of this piano. In fact the evidence
makes it clear that there was never more than a conditional
acceptance of this instrument. From the time of its first
delivery the respondent insisted that the instrument did not

 694    SCHROEDER v. HOTEL COMMERCIAL CO.
                Opinion Per ELLIS, J.           84 Wash.

comply with the representations which induced the contract,
and refused to make any additional payments on that ground.
This in itself was, under the circumstances, a sufficient notice
of a rescission. It is too clear for doubt that any offer to
return the piano would have been refused.

Diligence in rescission is always a relative question. What
is laches in a given case is always dependent upon the
particular circumstances. Thompson v. Rhodehamel,
71 Wash. 24, 127 Pac. 572; Freeman v. Gloyd, 43 Wash. 607, 86 Pac.
1051. Delay in formal rescission, induced by promises of the
vendor to make machinery work properly, is not a waiver of
the right to rescind. Crabtree v. Potts, 108 Ill. App. 627;
McCormick Harvesting Mach. Co. v. Dodkins, 24 Ky. Law
2306, 73 S. W. 1129; Laumeier v. Dolph, 145 Mo. App.
78, 130 S. W. 360; Wood Mowing & Reaping Mach. Co. v.
Calvert, 89 Wis. 640, 62 N. W. 532; Fuller v. Chenault, 157
Ala. 46, 47 South. 197.

V. It is next urged that the court erred in entering
judgment for the $400 paid upon the contract against the
plaintiff Schroeder who was only an assignee for collection. It is
asserted that the "plaintiff was not liable in any event for
more than the costs of the action." The answer to this
contention is that no personal judgment was entered against the
plaintiff except for costs.

VI. Finally it is contended that the court erred in
entering any judgment against the Eilers Music House because
that corporation was not a party to the action. The court
found that the plaintiff was an assignee merely for collection;
that the Eilers Music House was the real party in interest;
that it was represented in the action by its agents who were
paid by it; and that it actually participated in the trial
though not a nominal party to the action. This finding was
excepted to, but its correctness is not questioned in
appellants' brief or argument. It is amply supported by the
record. Upon its own motion the Eilers Music House was
made a party to this appeal. The trial here is de novo.

           SCHROEDER v. HOTEL COMMERCIAL CO.           695
 Apr. 1915          Opinion Per ELLIS, J.

Every party in interest is now before this court. There is
no pretense that the Eilers Music House, had it been a
nominal party throughout, could have advanced anything
further in its behalf than has been presented. To compel
the respondent to again litigate this transaction with that
company would be a manifest injustice. We have often held
that a person, though not a technical party to the action, is
bound by a decree if he be interested in the subject-matter
and has exercised the right to participate in the litigation.
Douthitt v. MacCulsky,
11 Wash. 601, 40 Pac. 186;
Shoemake v. Finlayson, 22 Wash. 12, 60 Pac. 50; American
Bonding Co. v. Loeb, 47 Wash. 447, 92 Pac. 282; Kibler v.
Maryland Casualty Co., 74 Wash. 159, 182 Pac. 878.

The court decreed that the contract be cancelled, that the
respondent have an equitable lien upon the piano for the $400
paid thereon, with interest from August 28, 1911, until the
same be paid by the plaintiff or Eilers Music House, that
upon such payment the piano be delivered to the plaintiff or
the Eilers Music House, and that upon failure of such payment
within thirty days from the date of judgment the
respondent might foreclose its lien upon the piano.

Upon a careful consideration of the whole record, we are
satisfied that the decree should be affirmed. It is so ordered.

FULLERTON, MOUNT, MAIN, and CROW, JJ., concur.


 696    KRUG v. KRUG.
                Opinion Per Curiam.                84 Wash.