I shall refer to Allarbe as though he were the sole appellant.
In approaching a consideration of this case, I will admit,arguendo, that Allarbe was unjustly deprived of his money by the acts of Ragan and Dunnett, and that a trust relationship existed. I do contend, however, that Allarbe, with full knowledge of his alleged wrongs, made a complete settlement with Ragan and Dunnett, and afterwards confirmed that settlement by taking over and conducting the sheep business of the corporation.
"The basic element of a compromise is a disputed claim."Cannavina v. Poston, 13 Wn.2d 182, 124 P.2d 787.
A settlement is as conclusive as a final judgment. State exrel. Great Northern R. Co. v. Superior Court, 60 Wn. 187,110 P. 808. Accord: Snohomish River Boom Co. v. Great Northern R.Co., 57 Wn. 693, 107 P. 848; Crocker v. Boyd, 88 Wn. 685,153 P. 1076.
The majority mention that Allarbe was an ignorant Spaniard; but let us see what kind of man the record discloses him to be. He came to this country from *Page 701 Spain in 1906 and to Yakima county in 1907, and at the age of fifteen started in the sheep business which he has since continued. At the beginning of the depression he had accumulated a fortune of $50,000 from his operations. Any man who can amass $50,000 is, to use an old expression, "nobody's fool." Through the years he was compelled to engage in many business transactions, in handling, buying, and selling sheep and wool, in leasing ranges, in hiring men, and in buying supplies for his operations. He did some banking business also. He was able to and did keep account of the gas and groceries used. True, he could neither read nor write, but did speak and understand English. In passing upon this question and the credibility of this man, the trial court stated:
"Allarbe is a Spaniard, with a limited knowledge of the American language. He is not educated nor of more than normal mentality. He has been in contact with sheep and especially as to handling sheep, he is well advised by experience. He is more or less ignorant of business transactions, but to what extent it is difficult to determine. He responded readily to questions of his own attorney, but cross-examination by other counsel could elicit but little information. I assured myself that he understood the questions but for the greater part, his answers were `I don't know.' His testimony was far from being fair and candid.
"Ragan was not candid and plainly was attempting to testify not necessarily untruthfully but in the manner best to serve his case. His initial step in using the money of Allarbe for his own purpose and his very apparent disregard to Allarbe's participation in the business, is the glass through which we must view all of his actions and his testimony in this case.
"I cannot give great credibility to either Allarbe or Ragan for those reasons. I think Allarbe understood what he was doing when they incorporated and also understood the recitals as to the amount contributed by him. He possibly did not appreciate that he was bearing the burden of the venture for five years, at the end of which if unsuccessful, he would recover his stock and no more under the pooling agreement. . . . *Page 702
"I think Allarbe understood the entire set up; the fact of incorporation in order to borrow money; the contemplated loan by Plaintiff; the purchase of the Olney and Kays sheep, and the proposed management of the Simcoe Sheep Company by Ragan. In none of these things can I find any actionable wrong on the part of Plaintiff, nor reason for believing that it was thus creating a basis for subsequent fraud to be perpetrated on the Simcoe Sheep Company. . . .
"I made one hundred forty-four pages of single spaced notes during the eight weeks of trial and sought to keep understanding analysis of each of the very numerous episodes or items testified to. . . ."
In this connection, the majority adopts a rule taken from a decision of a court commissioner of Nebraska, Faulkner v.Simms, 68 Neb. 295, 89 N.W. 171, 94 N.W. 113. I cannot see the application of the rule to this case. A reading of that case demonstrates that the evidence taken in the trial court was written and much of it was in the form of stipulations as to what certain witnesses would testify to if present. In the instant case, many witnesses were present and testified during the course of the trial, and their credibility and the weight to be given to their evidence was fully tested by the trial court. True, in this state, cases in equity and those law cases tried to the court must be tried de novo. Rem. Rev. Stat., § 1736 [P.C. § 7321]. In many cases, we have made statements relative to the consideration to be given the judge who saw the witnesses and heard them testify. Typical of these holdings are the following:
"The sole question raised by the appeal is whether or not the findings are supported by the evidence.
"A case of this character, where witnesses for the respective parties tell stories which are diametrically opposed, always presents a difficult problem to a trial court, and a more difficult problem for an appellate court. Recognizing such difficulty, this court has long adhered to the rule that it will not disturb the judgment unless the evidence clearly preponderates against the findings of the trial court. This, because the trial *Page 703 court has a distinct advantage in ascertaining the truth, by reason of the fact that he has the opportunity of observing the witnesses while they are testifying." King v. Brehme, 174 Wn. 61,24 P.2d 453.
"There was a conflict in the evidence, and the court resolved that conflict in favor of the bank. Findings of the court are to be considered as verities in support of the judgment unless they appear by the record to be contrary to the clear preponderance of the evidence. Herz v. Ransom, 168 Wn. 512, 12 P.2d 750;Rockwell v. Peyran, 172 Wn. 434, 20 P.2d 841. In this case, the evidence does not preponderate against the findings made by the court." Puget Sound Nat. Bank v. Olsen, 174 Wn. 200,24 P.2d 613.
"It is the well settled rule that the findings of the trial court on conflicting evidence will not be disturbed unless the evidence clearly preponderates against them. King v. Brehme,174 Wn. 61, 24 P.2d 453; Puget Sound National Bank v.Olsen, 174 Wn. 200, 24 P.2d 613; Grimes v. Fraser,178 Wn. 511, 35 P.2d 88; Collins v. Larson, 180 Wn. 171,38 P.2d 1057. The evidence in this case is in utter conflict. There was substantial evidence in support of the findings made by the court, and a careful scrutiny of the entire record fails to convince us that the preponderance of the evidence is against the findings. We must, therefore, accept the findings of the court as verities. This disposes of the questions of fact." Kelly v.Bank, 188 Wn. 614, 62 P.2d 1359.
It is my contention that the court had a much better opportunity in this case to measure the credibility of appellant and the weight to be given to his testimony than in an ordinary case which lasted but a few hours or days. The court saw and heard the appellant testify, and, at different times during the eight weeks of trial, he had the opportunity of measuring him while in the court room. Henriod v. Henriod, 198 Wn. 519,89 P.2d 222. The court observed appellant's conduct and demeanor when he testified, and noted his countenance and demeanor while he was seated in the court room. From all these facts, the court was able to and did measure the appellant's value as a witness, and was able *Page 704 to ascertain with certainty his ability to understand English and to know what was being said by the various witnesses, the court, and the attorneys. It seems to me that this is a typical case for applying the rule that trial judges are better qualified to determine the credibility of witnesses and the weight to be given to their testimony.
I propose to show from the record that Allarbe and his attorneys were fully acquainted with the situation; that Allarbe, with full knowledge of the wrongs perpetrated upon him, made full and complete settlement, and that the attorneys representing respondents in this case not only gave appellant's attorney full opportunity to examine all the records of the company, but aided and assisted appellant's attorneys in every possible way. Further, that Allarbe, after the settlement, took possession of all of the property of the Simcoe Sheep Company which had been turned over to him at the time the settlement was made, and that he conducted the sheep business for a considerable length of time and only brought this action when he had lost money in the venture, which loss was occasioned by the depression as much as anything else.
Sometime during October, 1932, Allarbe came to the conclusion that Ragan and Dunnett had misapplied some of the moneys he had invested and had otherwise converted much of the property to their own uses. He then sought the aid of Mr. Seijas, a member of the Seattle bar, who spoke Spanish. Seijas, with the aid of Jack O'Conner, who had been discharged by Ragan, commenced an investigation concerning the sheep business conducted by Ragan. O'Conner continued to advise Allarbe until the settlement in May, 1934. O'Conner, testifying for appellant, stated that Allarbe, in April, 1934, was charging "just everything that had been mentioned here in court."
Seijas and Allarbe attended the stockholders' and trustees' meeting in December, 1932. *Page 705
After considerable investigation, Seijas drew a complaint for Allarbe against Ragan and Dunnett and the Wool Growers, but never filed it. Then Allarbe and O'Conner discharged Seijas and employed Charles Bolin, a Yakima county lawyer. Bolin continued the investigation for Allarbe. Allarbe complained to Bolin that Ragan Dunnett and the Wool Growers had appropriated from thirty to forty thousand dollars of his money, and had turned the Simcoe sheep into the bands operated by Ragan Dunnett. These charges were communicated by Bolin to Dunnett and the Wool Growers.
Mr. Bolin then drew a complaint which was never filed.
In November, 1933, Frank J. Allen of the Yakima bar became associated with Bolin. During the next six months, Allen and Bolin made a complete, thorough, and exhaustive examination of the affairs and the operations conducted by Ragan Dunnett and the Wool Growers. The extent of the investigation is best told in the words of Mr. Allen while on the stand:
"I first went down to Mr. Richards and Mr. Delle's office and asked to see the minute book. Someone went across the hall to the Wool Growers and got the minute book and I there in that office made notes of what I found. After having digested that and made notes of what had taken place I had numerous conferences with Polonio Allarbe, Mr. Jack O'Conner and Mr. Stephen Rodrick. These occurred at different times and on different occasions, sometimes one was present, sometimes two were present, sometimes three were present. I talked with Mr. Hubbert. I also received some communication from Mr. Seijas and after numerous conferences with Mr. Polonio — I think that covered about all that I spent in examining the original incorporation. That occurred sometime in October or November, 1933, and occupied a period of two or three weeks.
"Then we had an investigation of the loss of paraphernalia such as horses, machinery, and rifles, and the purchase of merchandise by Ragan Dunnett and charged to Simcoe Sheep Company. We then investigated *Page 706 hay, barley and potatoes at the Foster place and the claims of the Yakima Hardware and the Yakima Tent Awning Company.
"I went to the Wool Growers office and got out all of the statements for the wool from the first time that they started and checked over the production and what they got for it and the value of the wool and what was done with it. Then I also went over the sheep that were shipped from the time they started until the time I was investigating to see that the number that were shipped was sold and the prices received and the credits to the Simcoe Sheep Company. I also went over the Wool Growers books as to the purchase of the Kays sheep and the Olney sheep.
"I examined the minute book, by-laws, articles of incorporation of the Simcoe Sheep Company, particularly the minutes of the first meeting and everything they had in there up to November, 1933. I went over the books of the Wool Growers regarding all loans made to the Simcoe Sheep Company. I investigated the first loan made and the amount taken out for payment of the Kays sheep. I learned they took out of the $30,000.00 loan money to be paid for the Kays sheep that were already supposed to be paid for. The amount was $8,000.00 or $9,000.00. I found they also took out between $4,000.00 and $5,000.00 interest of Ragan Dunnett. I worked at this investigation since the middle of October or November, 1933."
Mr. Allen had a meeting with Ragan and Dunnett when Mr. Conklin and Mr. Richards were present. Testifying relative to this meeting, Mr. Allen stated:
"Mr. Richards said to me at that meeting, he was the first to speak, `What is all the fuss about, what does Polonio Allarbe want?'
"I said that he [Polonio Allarbe] had found out that a lot of money and a lot of sheep, these people had defrauded him of, and wants his money back. Ragan took his money and bought sheep at excessive prices, bought some in his own name that were never given to Polonio, out of Polonio's money. I mean the Simcoe Sheep Company money when I put Paul [Polonio]. He used money for ranges and bought hay and grain with it, and used it for his own sheep, stole range off Paul and put it in his own name, took the Simcoe *Page 707 Sheep Company's money and paid it on a contract to purchase land from the railroad company. Ragan said that it wasn't so, he didn't steal any range. I said to Mr. Ragan at that meeting that he owed the Simcoe Sheep Company $14,000.00 and he never paid that; and that he paid on his own note moneys that belonged to the Simcoe Sheep Company. I said to him that he borrowed money from the bank and paid it on his own note and bought decrepit, toothless old sheep from Olney and paid a big price for them. I also told him that he did it for the use and benefit of the Wool Growers. I tried to cover every complaint that we had.
"I told him that they had used the sheep company's money to pay on the Olney range and had no business to do it. That is what he did. They paid back range fees on the Olney range with Polonio's money, with the sheep company's money, and used Simcoe Sheep Company money to pay back range on the Kays sheep too. I claimed that he paid too much for them in order to pay out the mortgage to the Wool Growers. I told him he purchased sheep with the Simcoe Sheep Company money and had taken them themselves and never accounted for it. I told Mr. Ragan that he had stole two car loads of lambs going to Chicago, and he said that I was a liar. He tried to cover everything possible, because he thought we were going to get some money. I told them they had cheated us out of about thirty-five thousand dollars, and I thought we could recover fifty thousand dollars and we were going to bring suit for it.
"I accused Mr. Ragan for being responsible for the switch to Archie Prior of the Crawford Creek range belonging to the Kays to the McCready Creek range belonging to Prior [Crawford Creek carried two bands of sheep and McCready Creek range one band].
"I accused Mr. Ragan of keeping the money in his own pocket for two years and not accounting to the Simcoe Sheep Company for it.
"I accused the Wool Growers of unloading the Kays and the Olney sheep upon the Simcoe Sheep Company and getting Ragan to use Simcoe Sheep Company money for that purpose.
"I don't remember saying anything at that time about the pooling agreement, although I knew about it. I claimed that they were liable, because they were acting in cahoots with Ragan Dunnett in unloading these *Page 708 sheep to the Simcoe Sheep Company and getting an excessive price.
"After that I repeatedly told Mr. Conklin when I found out anything, what I found out, and particularly of this money that they had taken out of the first mortgage, the $4,137.00, and credited on Ragan Dunnett's interest due the Wool Growers. Mr. Conklin asked me if I supposed Polonio would be willing to take back the sheep and dissolve the pooling agreement, if Ragan Dunnett would give up their stock, if he would sign releases for everybody and call every thing off. I said that I didn't know, I would take it up with him.
"I told Allarbe every day what occurred. . . .
"I told Mr. Conklin that we would make the settlement after the meeting at which Ragan refused to give up the Olney range. Mr. Allarbe authorized me to make a settlement. The meeting on May 28, 1934, was held in the Wool Growers' office. There was Charlie Bolin, and myself, and Polonio, and Stephen Rodrick, and Masters, and Dale Simmons, and that other young man in the office, Mr. Lawson, and Mr. Dunnett, Mr. Ragan, and Elery Van Diest was in a part of the time, and Mr. Conklin.
"We had previously gone over what the fellows called the creditors' agreement. At that time, he handed me two other papers, called releases, but I don't remember what the other one was. Charlie and I stepped out in the hall and looked these papers over together, and then we came back into the room. . . .
"At a certain point in the meeting, I explained to him, Polonio, that now this — I did, yes. After Mr. Conklin had read the new papers releasing the other, I said, `Now, Polonio, understand that if this goes through, if you agree to this, then you have waived any right you may have to any claims at all through or for the benefit of the Simcoe Sheep Company, and there would be no more lawsuits. It is all settled. You won't have any — you will get back your sheep, but you won't have any claim against them.'"
The statement just referred to was made to Allarbe prior to the time the release was signed.
The trial court listened to the testimony of Mr. G.A. Conklin of the law firm of Richards, Conklin Delle, *Page 709 attorneys for the Wool Growers Service Corporation. Mr. Conklin testified as follows:
"The Wool Growers Service Corporation and Ellis Ragan consulted me about certain charges made against them in regard to the Simcoe Sheep Company. I myself, personally, took care of the complaints made against the Wool Growers Service Corporation and Ragan Dunnett by Polonio Allarbe. Mr. Allen, claiming to represent the Simcoe Sheep Company and Polonio Allarbe, made the charges to me against the Wool Growers Service Corporation and Ragan Dunnett. . . .
"I had eight or ten conferences with Mr. Allen and at one of those he said that he had discovered enough that, if he could obtain an accounting, it would recover a judgment of about $50,000. Mr. Allen, on a couple of occasions, was in the Wool Growers Service Corporation and wanted to get the books so that he could determine questions as to sales and loans. Mr. Simmons was there on those occasions. The information he desired was given to him.
"We had a meeting in Mr. Richards' office about the middle of April, 1934. Mr. Richards, Mr. Allen, Mr. Ragan and I were there. Mr. Allen, in reply to Mr. Richards at this meeting, stated that he had spent quite a considerable lot of time in going over the Simcoe Sheep Company and the Wool Growers Service Corporation books. They were satisfied that this $45,900, contributed by Polonio Allarbe and Severiano Galanena, had been taken and used by Ragan for his own benefit; that he had bought sheep with part of that money. Mr. Allen said that he was satisfied that he could prove that the Wool Growers Service Corporation and Ragan Dunnett had conspired together to sell the Kays sheep to Allarbe and Galanena at an exorbitant price; and satisfied that the Olney sheep had been sold at more than their value and that Ragan had used range of the Simcoe Sheep company for his own benefit without any payment to the Simcoe Sheep Company; and that Simcoe money had been used to pay for range of Ragan Dunnett. . . .
"We made him an offer to permit him to go through our books with his own accountant, and sit down with him and determine if any misappropriations of money *Page 710 were made, from the time of the formation of the Simcoe Sheep Company, by Ragan Dunnett or the Wool Growers Service Corporation, and if it was shown to us that such a misappropriation had occurred, either Ragan or the Wool Growers Service Corporation would pay it. Mr. Allen did not avail himself of this offer, saying that he would make his own investigations in his own way. Mr. Allen said he did have the books of the Simcoe Sheep Company. . . ."
Speaking of the meeting of May 28, 1934, and the agreement settling the controversy, Mr. Conklin said:
"It was determined to hold the stockholders' and trustees' meeting to have this agreement formally put up to them. Mr. Allerbe, Mr. Ragan, and Mr. Dunnett were the trustees of the Simcoe Sheep Company at that time. Ragan Dunnett, Allarbe, Bolin, Allen, myself, Mr. Simmons, Rodrick, Masters, and Elery Van Diest were present at this meeting. I think Mr. Lawson was present. I prepared the creditors' agreement and the minutes for the meeting and, I think, the resignations of Ragan and Dunnett and forms of releases.
"It was explained to me that Rodrick and Masters were there as friends and advisers of Allarbe. . . . So I said that these negotiations had run over a long period of time and they had been pieced together from various conferences and various meetings at various times, and I thought, to round this thing up, a general statement of the purpose and intents to be accomplished should be made. So I stated to those present that I wanted every one there to clearly understand what the meeting was for and what should be accomplished at the meeting. And I said that, heretofore, Mr. Allen, representing Mr. Allarbe and the Simcoe Sheep Company, had charged that the Wool Growers Service Corporation and Ragan Dunnett and Joe Sears had conspired together to beat Polonio out of his money, and they had used some of his funds for their own behalf. And I enumerated the various things that Allen had charged us with.
"I will explain what I said then. I explained that I wanted every one there to clearly understand and comprehend what this matter was all about and what we were there for. And I said that, heretofore, Mr. Allen, representing the Simcoe Sheep Company and *Page 711 Allarbe, had charged that the Wool Growers and Sears and Ragan Dunnett had conspired together to defraud Allarbe and the Simcoe Sheep Company out of their money and their property.
"That Allarbe and Fat had turned over to Ragan $45,900 in the beginning to be invested in sheep, and they claimed that Ragan had misappropriated some of those funds for his own benefit and had used some of that money to buy sheep. And that Ragan and the Wool Growers had sold off these Kays sheep at a price in excess of their real value and had sold the Olney sheep to the Simcoe Company for more than they were worth; and that out of the first $30,000 loan the Wool Growers had taken $8,760 and used it to pay the balance which they claimed to be due on the sale of the Kays sheep, or on their mortgage on the Kays sheep. They claimed that the Wool Growers had unlawfully taken $4,100 of the Simcoe money out of that first loan and arbitrarily applied it on indebtedness owing by Ragan and Dunnett to the company.
"I explained that Allen had charged that Ragan, as manager of the Simcoe Sheep Company, had purchased range for himself and paid for it with Simcoe funds, and that he had trespassed his sheep upon ranges belonging to Simcoe Sheep Company and hadn't paid them for the use of the ranges. And I said that generally they charged that Ragan had fed up hay and grain and pasture, bought and paid for with Simcoe funds, to his own sheep. That is, he had allowed his own sheep to eat up hay, grain, and pasture belonging to the Simcoe Sheep Company and hadn't paid for it.
"They charged that Ragan had commingled his sheep with those of the Simcoe Sheep Company so that, in the replacement, he got better lambs than he put into the Simcoe flocks. I enumerated each and every of the charges that had been made insofar as I could remember them, and I think I was careful to relate each and every charge that had been made because I was very careful and cautious that everybody understood exactly what was going to be done.
"I went on after I had enumerated these various items and stated that, now, as I understand — and I explained here that these negotiations had been carried on to the point where Allen, as representative of Allarbe and Simcoe Sheep Company, had reached an *Page 712 agreement with Ragan Dunnett and the Wool Growers to settle this matter.
"`Now,' I said, `the proposed settlement is this — that Ragan and Dunnett are to resign as officers and trustees of the Simcoe Sheep Company. They are to assign and transfer all of their stock in the Simcoe Company to Allarbe, and the Pooling Agreement is to be dissolved. The accounts of these creditors, who have signed this agreement, are to be secured by a second mortgage running to the Guaranty Trust Company as their trustee. Ragan and Dunnett are to get out of the company and Allarbe is to become the sole and only stock holder, that is, insofar as Ragan and Dunnett are concerned.' . . .
"Polonio Allarbe signed that agreement for himself and Severiano Galanena as attorney in fact. The records did not show that Severiano Galanena's interest had been transferred and, as this was a stockholders' and trustees' meeting, we had Polonio Allarbe sign as attorney in fact for Severiano Galanena. Ragan and Dunnett signed it individually and as co-partners. Masters and Rodrick signed as witnesses to Allarbe's signature. The creditors had previously signed it. The minutes of the special meeting of the stockholders and trustees were marked Exhibit 16. These minutes were signed at that meeting."
Passing upon the testimony which I have just set out and other evidence in the case, the trial court stated in his able and comprehensive memorandum opinion as follows:
"Coming now to the releases claimed to have been given. There is ample evidence to indicate that Ragan had been guilty of some of the acts charged against him in the management of Simcoe Sheep Company. But it is not necessary that Ragan or Plaintiff be guilty of any act to the detriment of Simcoe Sheep Company to justify releases. It is sufficient that they were charged with faults and that suit was threatened against them.
"We find Allarbe suspicious of Ragan and retaining Seijas to investigate, and becoming suspicious of Seijas retaining Bolin and Allen for the same purposes. He believed that Ragan was appropriating money and *Page 713 property of Simcoe Sheep Company to his own use or that of Ragan and Dunnett.
"Bolin and Allen found these wrongful acts to have been committed in their opinion. They believed these wrongs had been committed and for that matter, still believe it. They say they learned that between Eight Thousand Dollars and Nine Thousand Dollars was taken from Allarbe and Simcoe Sheep Company in connection with Kays sheep. That between Four Thousand Dollars and Five Thousand Dollars belonging to Simcoe Sheep Company was applied on debts of Ragan and Dunnett. That Ragan had taken feed and ranges of Simcoe Sheep Company for use of Ragan and Dunnett. That he had taken Simcoe Sheep Company money and paid for his own ranges and to buy railroad range land. That he borrowed Fourteen Thousand Dollars and never paid it back. That he had borrowed money for Simcoe Sheep Company and used it for his own purposes. That Plaintiff and Ragan had caused the purchase of the Kays and Olney sheep at a very high price for Plaintiff's benefit. That they used Simcoe Sheep Company money to pay back range fees on Olney range and Kays ranges. That Ragan and Dunnett had purchased sheep with Simcoe Sheep Company money and not accounted for them. That they had stolen two carloads of sheep when going to Chicago. That they had cheated Allarbe and Simcoe Sheep Company out of Thirty-five Thousand Dollars, possibly Fifty Thousand Dollars. That Ragan had kept Simcoe Sheep Company money in his own account without accounting for it. That Ragan purchased supplies for himself with Simcoe Sheep Company money and took personal property from that Company. That he took the top sheep and other sheep from Simcoe Sheep Company for himself. That Ragan used the greater part of the money turned over by Allarbe to him for his own uses. These things and possibly others I have overlooked were ascertained and were told to Allarbe by Allen. At this time they contemplated suit against Plaintiff and Ragan and Dunnett to recover for these acts and misappropriations and had informed Plaintiff of their intentions. Then it was that Conklin suggested the settlement by which Allarbe would own the Simcoe Sheep Company with its attendant stipulations. The evidence shows that Allarbe was kept advised of the *Page 714 various negotiations which consummated in the meeting of May 28.
"It seems to me that upon all the evidence there can be noquestion but what Allarbe understood there was a settlement to bemade by which he was to get the Simcoe Sheep Company to himself,and that he went up to the meeting knowing that there was to be aconsummation of that settlement. At that time he knew of the longlist of wrongs he was informed had been perpetrated against him,and I cannot believe he did not know that he was settling all hiswrongs in getting his sheep back. What was done at that meeting is a matter of conflict in the evidence. I have followed Mr. Conklin's recital through carefully and I find him doing about what I would have done, had I been an attorney in his place. Prior to that time, Allen had procured a statement showing number of sheep and quantity of property with indebtedness of Simcoe Sheep Company and its value had been canvassed with Allarbe and his friends. It seems to me that what Conklin and Allen testified to as to what happened at that meeting is what would naturally happen. An attorney preparing for such a meeting in advance of it, would canvass the things to be done, and attend the meeting, prepared to do them in a certain way, armed with the previously prepared papers. So it seems to me that logically, they would canvass the charges made against Plaintiff and Ragan and the settlement of those charges at this meeting. I think that was done. Whether Allarbe understood fully what was going on is another question. I think he understood that he was giving up his claims for damages and was getting his sheep back; that Ragan and Galanena were getting their notes back, which meant although he may not have appreciated the result, that the pooling agreement was terminated. He understood that he was not to get the Olney range, and that Plaintiff would finance the Company if McGuffie was manager. He may not have understood the machinery by which that result was accomplished; the reorganization of the Company after Ragan and Galanena were out for the purpose of executing the releases; although he understood the necessity for signing papers and the purpose of the papers signed to accomplish the settlement. This includes his own release as well as that given by the Sheep Company. I put myself *Page 715 in the position of an attorney handling the re-organization of the Company by picking friends of Allarbe as figure heads to fill the necessary positions to transact the business for Allarbe's benefit. The entire matter became more a matter of form than substance, so long as Allarbe was given what he had bargained for.
"There is much for Allarbe to complain of since the beginning of his relations with Ragan, but if we analyze the situation I think we find our sympathy for his wrongs tending to warp our judgment on the question of existing fraud in the settlement. I cannot help but feel that he knew enough of the proposed settlement to know that he was electing between an action to recover for his losses and the turning over of the entire Company to him. That it left him loser on his original investment was true, but I think he knew that. He might well have understood the difficulty of proving many of the items of loss against Ragan, as the evidence in this case has demonstrated.
"There is no question concerning the fact that Plaintiff and Ragan were seeking to have themselves freed from all claims whatever, and that Bolin and Allen fully understood that. They represented Allarbe in their negotiations and agreements with Plaintiff and Ragan, and understood that all claims of every kind were to be released by Allarbe and Simcoe Sheep Company. If Bolin and Allen practiced fraud upon Allarbe, there is no connection of Plaintiff or Ragan shown therein, outside of the fact that the settlement was advantageous to them assuming the guilt of either one. There is no connection of Plaintiff and Ragan with Bolin and Allen other than as adversary parties and no inference that I can see that they influenced Bolin and Allen by any unfair method to agree to the settlement. The language of either an oral or written agreement is construed in the light of attendant circumstances and they leave no doubt in my mind, that the language here used was meant to cover every possible right of recovery which Allarbe or Simcoe Sheep Company might have against Plaintiff or Ragan and Dunnett save alone in relation to the current unpaid mortgage. I think Allarbe understood it in that way and that he agreed to it upon advice of his counsel, who beyond question so understood it. . . .
"There is no question but that the financial condition *Page 716 and the immediate stress under which the Company was laboring was given consideration in his determination. But it also appears that the assets of the Company; the probable income from wool and sheep and in fact all the chances of successful operation of the Company, were investigated by Allarbe and his attorneys, showing a decision after study and deliberation rather than a coerced acquiescence in a plan laid down by Plaintiff." (Italics mine.)
I acknowledge the rule that a release of this nature will be scrutinized closely by the court to determine if it was fairly obtained. In this regard, the burden lies upon the fiduciary to prove such to be the case. Appeal of Cunningham, 122 Pa. St. 464, 9 Am. St. 121. However, this qualification does not abrogate the general rule that a beneficiary may release his fiduciary. Restatement of the Law of Trusts, § 217; Ingram v.Lewis, 37 F.2d 259.
If the release is properly obtained, it is binding upon the fiduciary, and he cannot complain merely because he made a bad bargain. Ballard v. Cox, 193 Wn. 299, 75 P.2d 126.
Just prior to and at the time the settlement agreement was entered into, appellant made every accusation which he now makes against the respondents. His attorneys made as complete an investigation as they desired, and it impresses me, as it did the trial court, that the investigation was quite thorough. True, one of the witnesses, a bookkeeper familiar with the books of Ragan Dunnett, testified that it would be necessary to secure an audit in order to have an absolutely accurate report of the finances of the ventures involved. This might well be said to be true of any transaction involving the operation of an extensive business venture. However, the investigation made was complete enough to lead to general conclusions as to appellant's rights and remedies. Furthermore, it does not appear that appellant ever desired an audit or that one was not available to him. Allarbe was told and he understood *Page 717 what he was giving up and what he was receiving. He understood that he faced two difficulties in the future — refinancing and securing a range. The fact that he placed more confidence in the ability of the Bolins as to what they could or would do in this regard than was justified will not invalidate the contract. There is no evidence that any of the respondents misled Allarbe in this regard. The Wool Growers carried out their part of the agreement to finance the Simcoe Company for the balance of the season. Far from being over-reached by any conduct or acts of the respondents in effecting the settlement, appellant can blame his own judgment in this matter.
Touching the settlement, there was no misrepresentation, concealment, or fraud that led to the execution of the release. Appellant sought and obtained outside assistance, and it was the consequence of the advice and counsel of this assistance that the settlement was obtained. Obviously, appellant distrusted respondents and did not rely on them or their advice at that time. When a beneficiary secures the advice of friends or attorneys of his own choosing and relies on their advice and there is no evidence that fraud was practiced on such counsel or friends by the trustee, then the trustee is relieved of the charge of fraud. I am impressed with the California case ofColton v. Stanford, 82 Cal. 351, 23 P. 16, 16 Am. St. 137, in which the court said:
"Of course, in all trust relations the existence of confidence will be presumed, and if it appear that any advantage has come to the trustee in dealing with his cestui que trust, the burden will be thrown upon him to show that confidence was not in fact abused. But it has always been held, as we understand it, that this presumption might be overcome by proof of the fact that confidence had not been abused, and that the beneficiary acted, not upon any reliance or confidence placed in the trustee, but upon the advice of an independent, professional, disinterested, and competent adviser.
"Here, therefore, we have a case in which — assuming the existence of a fiduciary relation, and that the presumptions *Page 718 as to confidence and the burden as to proof are as claimed by appellant — the undisputed facts show that there was absolutely no confidence reposed by the beneficiary, but that she acted exclusively upon the advice of several disinterested experts and professional friends, specially selected to investigate and counsel her, because of their ability and familiarity with the affairs of the trustees with whom she was dealing, and who acted toward her in the highest good faith."
This case has been cited as authority with others inBettendorf v. Bettendorf, 190 Iowa 83, 179 N.W. 444, 945. I quote:
"The appellant contends, however, that the widow acted on the advice of C.N. Voss, and entirely disconnected herself from any reliance on the defendant. The fact of having obtained the independent advice of a third party does not alone obviate the presumption of the exercise of undue influence. It is merely a circumstance tending to show the `uberrima fides' of a transaction between the fiduciary and the beneficiary. The purpose of such proof is to establish the freedom of the cestuique trust from any influence or control of the trustee. This may be done by proof that the beneficiary acted on his own judgment, or solely on the advice of another. Manifestly, if either of these situations is established, the dominant party could not have exercised control in bringing about the deal between himself and the cestui que trust. The effect of this would be to obviate the presumption of unfair dealing quite as completely as proof that the cestui que trust was fully advised of all the facts, and, being sui juris, acted freely in dealing with the trustee. The force to be given proof of independent advice necessarily depends on whether the adviser has been put in possession of all the facts and circumstances, and, if not, whether the means of inquiry to ascertain these were at hand: in short, whether the adviser was so informed of the facts as that he might intelligently guide the cestui que trust in reaching a determination, and whether the cestui que trust relied entirely upon the advice given, in connection with what he may have known himself, and without placing confidence in the trustee. [Citing cases.]" *Page 719
Accord: Wertz v. Clay, 157 Va. 263, 160 S.E. 27; Forbes v.Forbes, 5 Gill (Md.) 20.
In the last cited case, the court said:
"Every facility was furnished by the defendant for the examination of the accounts, and we have no evidence of any books or accounts being kept back. They were examined by the parties or some of them, and by the solicitors of the parties fully able and competent to determine what was due from the trustees to thecestuis que trust. This examination gave rise to the compromise, and release made on the 30th of April, 1830, and forms the basis of the release executed on the 8th of June, 1831, after the complainant arrived at age. It is immaterial whether the complainant examined the books and accounts of the trust, or not. It is sufficient that they were examined by persons competent to make the examination for him."
It may be admitted that silence where there is a duty to speak can, on occasion, result in a finding of fraud on the part of the trustee. 53 C.J. p. 1223, § 38; Oliver v. Oliver, 118 Ga. 362,45 S.E. 232. This does not mean, however, that it is the trustee's duty to outline every detail in effecting a settlement of a disputed claim.
In the case of Bakamus v. Albert, 1 Wn.2d 241,95 P.2d 767, this court upheld a release which it was alleged was obtained by fraud. It appears that, when the release was signed, certain information was withheld from the releasee. In passing upon that question, we said:
"The mere fact that respondent Albert refused to answer questions propounded to him by appellant's counsel, did not constitute fraud; it would seem that his conduct on that occasion would have rather tended to suggest that further investigation was advisable; but in any event, it cannot be held that his conduct at that time constituted fraud on appellant. . . .
"In the case at bar, appellant was in full possession of her faculties and had the benefit of the advice of counsel."
In the case of In re Schoenewerg's Estate, 277 N.Y. 424,14 N.E.2d 777, the remainderman, who at termination *Page 720 of a trust signed a release upon having received a report of the trustee in form as presented to the court, was held precluded from raising objection of an illegal mortgage transaction. The court said:
"We think this ruling was right. No claim was made by the petitioner of actual imposition practiced upon him. His testimony was that he had understood the objective nature of the instrument of release. In the account accepted and retained by him was a schedule which showed that the mortgage investment in question had been defaulted and was in process of reorganization. No proof of any misrepresentation or of refusal to disclose any fact was offered.
"This being his case, the petitioner may not be heard to say that the accounting trustee owed to him as remainderman an affirmative duty to detail an open state of facts as to which he was content to waive inquiry."
There is some language in the case that would indicate that the court may not have considered the parties involved to be in a fiduciary relationship. However, in almost exactly the same situation, the accounting of a trustee to a remainderman, the court applied the rule of this case and designated the parties a trust relationship of which in my mind there can be no doubt. The court said:
"The law encourages the making of agreements for the release of fiduciaries and for the approval of their informal accounts principally because they avoid expense and delay. Except where fraud or imposition is shown, such agreements and releases are approved. [Citing cases.] The position of the objectant here is exactly the same as the petitioner in Matter of Schoenewerg(supra), wherein it was stated that he `may not be heard to say that the accounting trustee owed to him as remainderman an affirmative duty to detail an open state of facts as to which he was content to waive inquiry. There can be no legal implication of impropriety in such a business transaction.'" In re James'Estate, 19 N.Y.S. 2d 532.
In the case under consideration, the claimed inexperience and ignorance of the appellant was overcome *Page 721 by the assistance and advice obtained from his counsel. The parties to the settlement were all satisfied from their investigations that the compromise settlement was the best bargain they could obtain, and, having made it, they cannot be heard to complain. To hold otherwise would go beyond the rule of honest disclosure between a fiduciary and a beneficiary, and make it impossible to deal with those other than educated business men. Anyway, the duty owing to appellant was quite obviously not existent at the time the settlement was made. At that time, the parties were all dealing at arm's length. If there had been a breach of trust relationship, it had already occurred, and it was due to that fact that the appellant was willing to negotiate and execute a settlement and release. For this reason, if for no other, I conclude that the parties were bound by their agreement.
As I view this case, in order to find for appellant, it would be necessary to find that Seijas, Bolin, Allen, and Conklin were guilty of fraud in securing the signature of Allarbe to the agreement of settlement.
I have read the testimony of Bolin, Allen, and Conklin with care, but cannot find even a suspicion of wrongdoing on their part. On the other hand, they were honest and sincere and made every effort to advise Allarbe and his friends concerning every detail of the Ragan Dunnett transactions and just what he was to receive in the settlement.
The majority mention the fact that Seijas was paid $400 from Simcoe funds. That amount was earned by Mr. Seijas and the payments were made at the instance of Allarbe.
Allen and Bolin received a note from Simcoe for $7,500 in payment of their services. This note was made in compliance with a contract for legal services entered into by Allen and Bolin and Allarbe at the time they started their investigations. They earned their fee. *Page 722
The majority, without pointing out any factual basis for its holding and without discussing the legal questions involved, holds that Allarbe did not receive any consideration for his agreement of settlement. The trial court held:
"There were considerations passing from both Plaintiff and Ragan and Dunnett for the settlement and execution of the releases. . . . The consideration passing to Allarbe (in effect the Sheep Company upon settlement) was the surrender of the stock of Ragan-Dunnett and Galanena to him, withholding foreclosure by the Plaintiff and the financing of the Simcoe Sheep Company by the Plaintiff during the current year of actual operations. There is no suggestion in the evidence that the pressure of threatened suit by Plaintiff compelled Allarbe against his wish to enter into the agreement resulting in giving the releases. His position is that he did not execute them; that they were made under circumstances violative of fiduciary relations existing, hence void. That they were not properly executed. But what is more to the point, he has contended consistently that the releases were meant to refer to matters of contract only and not to items of tort. He has sought to show that in the final settlement the long list of his claims were not discussed and were not considered as a basis of settlement. This is inconsistent with the theory thathe released his claims for damages because of threat offoreclosure." (Italics mine.)
The rule relative to the sufficiency of consideration is:
"If a person at the instance of the promisor waive or release his personal right to do any lawful thing, the waiver or release constitutes a valuable consideration for the promise." 6 Am. Eng. Ency. of Law (2d ed.), p. 737.
"The rule is well settled that an agreement of compromise is supported by a sufficient consideration where it is in settlement of a claim which is unliquidated, where it is in settlement of a claim which is disputed, or where it is in settlement of a claim which is doubtful. There are cases to the effect that in order to support a compromise in avoidance of litigation the claim must be an actual one, founded upon a colorable right about which there is room for honest doubt and actual dispute, *Page 723 and with some legal or equitable foundation, and not one which is without foundation, and is known to be so, or is in its nature an illegal claim out of which no cause of action can arise in favor of the person asserting it. The usual test, however, as to whether a compromise and settlement is supported by a sufficient consideration is held to be not whether the matter in dispute was really doubtful, but whether or not the parties bona fide considered it so, and that the compromise of a disputed claim made bona fide is upon a sufficient consideration, without regard to whether the claim be in suit or not. The law favors the avoidance or settlement of litigation, and compromises in good faith for such purposes will be sustained as based upon a sufficient consideration, without regard to the merits of the controversy or the character or validity of the claims of the parties, and even though a subsequent judicial decision may show the rights of the parties to have been different from what they at the time supposed. The real consideration which each party receives under such a compromise is, according to some authorities, not the sacrifice of the right, but the settlement of the dispute." 8 Cyc. 505 et seq.
Cited with approval in Hutchinson v. Mt. Vernon Water PowerCo., 49 Wn. 469, 95 P. 1023. See, also, Snohomish RiverBoom Co. v. Great Northern R. Co., 57 Wn. 693, 107 P. 848.
"Anything of detriment on the one side, or of benefit on the other, may afford a consideration for a compromise. So, a compromise agreement may be supported by an agreement to perform some act which the promisor is not legally bound to perform, the mutual undertakings of the parties for the benefit of each other, the mutual promises of others similarly situated, the surrender of a lease, the payment of a note before due, or the forbearance of a legal right, such as the right to sue on a disputed or doubtful claim or an agreement not to appeal from a judgment, if the right of appeal exists or there are sufficient grounds for belief in its existence." 15 C.J.S. Compromise and Settlement, § 9, p. 725.
The trial court was entirely correct in holding that each party received a consideration for the settlement. *Page 724
Another reason for affirming the trial court was that Allarbe after the settlement took all of the sheep and equipment of the company and continued in control until the end of the 1934 season.
I call attention to a few of his actions during that period of time: He stated that the sheep were his; he was boss of the sheep and was glad to have them back and felt satisfied he would make some money on them and was going to get more sheep and have McGuffie operate them for him. He gave orders to herders. He conferred with McGuffie on money matters concerning the company's affairs, talked with Allen and McGuffie about getting more sheep, and visited the herds at least once every week. He never expressed dissatisfaction over the settlement. He replaced two herders with Spaniards from California. He instructed McGuffie to wire Bolin in Oregon about buying more sheep. He stated that he was going to take Allen and Bolin in business with him. He went to Chicago with one shipment of lambs. He laid plans to get new ranges for 1935 and appeared before the Indian council and made application for the Olney range for 1935. He borrowed money at two different times from the Wool Growers and signed a note thereof as president. In fact, he did everything that an owner or a manager would have done with his own sheep.
It is the law in this state that, if a person claiming fraud enters into new arrangements concerning a contract to which the fraud applies and retains the benefits thereof for a considerable length of time, he is deemed to have waived his claim for damages: Virtue v. Stanley, 87 Wn. 167, 151 P. 270; VictorProducts Corp. v. Edwards, 172 Wn. 1, 18 P.2d 1045; Keylonv. Inch, 178 Wn. 522, 35 P.2d 73; Bonded Adjustment Co. v.Anderson, 186 Wn. 226, 57 P.2d 1046, 106 A.L.R. 166.
Other states adhere to the same rule: Schmidt v. Mesmer,116 Cal. 267, 48 P. 54; Burne v. Lee, 156 Cal. 221, *Page 725 104 P. 438 (both quoted from in the Keylon case).
I have shown that Allarbe settled his differences with Ragan and Dunnett, took full ownership and possession of the sheep business, and conducted that business for many months. After so doing, he should be estopped from denying the agreement of settlement into which he freely entered.
The real reason Allarbe sought to recover in this case was that he lost money during the season following the settlement. The loss of money was occasioned, not by anything that any individual did in this case, but by the business depression. This is shown by the testimony of Archie Prior, who had been in the sheep business for thirty-eight years. He stated:
"Well, I would say the prices started down in '30. I didn't notice it so much, but did begin to notice it in '31, and kept on going down until '34, because '34 I think was the worst year, the poorest year I ever had . . ." and that in 1934, "I operated at a loss."
Even the business ability exhibited by Allarbe in building a fortune of $50,000 could not overcome the hard times of 1934. Finding that he had made a bad bargain, his native shrewdness and exceptional business judgment impelled him to rely upon his supposed ignorance to recoup his lost fortune from Ragan and Dunnett by charging fraud in the settlement of his controversy with them.
The judgment of the trial court was correct, and the judgment should be affirmed.