Dunseath v. Hallauer

• Decision Date: 29 January 1953
• Docket Number: No. 31979
• Citation: Dunseath v. Hallauer, 253 P.2d 408, 41 Wn.2d 895 (Wash. 1953)
• Parties: DUNSEATH, v. HALLAUER et ux.
• Court: Washington Supreme Court

Page 895

41 Wn.2d 895

253 P.2d 408

DUNSEATH, v.HALLAUER et ux.

No. 31979.

Supreme Court of Washington, Department 2.

Jan. 29, 1953.

Max R. Nicolai, Seattle, for appellant.

Edwards E. Merges and Howard P. Pruzan, Seattle, for respondent.

HILL, Justice.

Wilbur G. Hallauer and his wife agreed with John D. Dunseath and his wife to exchange properties, the exchange agreement being dated January 15, 1949.

The Hallauer property was a ranch of approximately one hundred fifty acres in Okanogan county about twelve miles from Omak.It included a fully equipped apple orchard (eighty acres of producing trees and eight acres of young trees, not yet producing), together with a cold storage warehouse on the railroad two miles from the ranch.This property was valued, for the purpose of the exchange, at $40,000, and was referred to throughout the trial and the findings as the 'Malott Orchard.'

The Dunseath property was a Seattle apartment house valued, for the purpose of the exchange, at $210,000.The Dunseaths were purchasing the apartment house on a contract on which there was $116,000 still due.

The difference between the value of the Dunseath's equity in the apartment house and the value of the Hallauer's orchard was agreed to be $54,000, which was paid in cash by the Hallauers to the Dunseaths at the time of the closing of the transaction, March 1, 1949.On that date, also, the parties exchanged deeds and other documents of conveyance, the Hallauers took possession of the apartment house, and the Dunseaths took possession of the orchard property.

The winter of 1948-1949 was extremely cold in Okanogan county and throughout much of eastern Washington, and the prolonged low temperatures caused severe damage to fruit trees.Both parties were ignorant, on the date of the actual exchange, March 1, 1949, of the damage done to the Malott orchard, but during the spring and summer it developed that so many trees had been killed and severely damaged that it was impossible to continue the operation of the orchard as a commercially feasible venture.

Dunseath brought this action to recover damages, basing his claim upon a provision in the exchange agreement reading:

'Risk of damage to the respective properties prior to the closing of the deal is assumed by the seller of each of the properties, respectively.'

Most suits involving liability for loss or damage occurring between the date of execution of a contract to convey real estate and the date of its performance involve injury or destruction of buildings by fire.However, illustrative of other types of damage which are sometimes involved, we find: dam carried away by freshet, Green v. Kelly, 1845, 20 N.J.L. 544; land washed away, Neponsit Realty Co. v. Judge, 1919, 106 Misc. 445, 176 N.Y.S. 133, andAmundson v. Severson, 1919, 41 S.D. 377, 170 N.W. 633; land destroyed by crevasses or inundation, Ford v. Russell, 1930, 13 La.App. 390, 128 So. 310; property ruined by vandals, Coolidge & Sickler, Inc., v. Regn, 1951, 7 N.J. 93, 80 A.2d 554; and hurricane damaged buildings and fences, Gallicchio v. Jarzla, 1952, 18 N.J.Super. 206, 86 A.2d 820.

The trial judge took the position that there had been no depreciation in any of the non-orchard acreage, the buildings on the property, or the cold storage warehouse, as a result of the cold weather.He valued the producing orchard at $500 an acre and the young orchard at $250 an acre, or a total of $42,000, but found that the land containing only dead and commercially useless trees, which would have to be removed, had a value of only $150 an acre, making the value of the eighty-eight acres as of March 1, 1949, only $13,200.The difference, or total damage, was $28,800, of which he estimated that ten per cent had been done by January 15, 1949.Deducting that ten per cent as being apart from the damage the Hallauers assumed, he found the damage subsequent to January 15th and prior to March 1, 1949, to be $25,920, and gave Dunseath judgment in that amount.

The Hallauers appeal, making twenty assignments of error.These assignments are so grouped for argument that they actually urge three reasons why the respondent's cause of action should be dismissed and four reasons why the appellants are, in the event dismissal of the action is not ordered, entitled to a new trial.

Appellants first advance the proposition that the provisions of the exchange agreement dated January 15, 1949, were merged in the deed obtained by the respondentMarch 1, 1949; and where, they ask, 'is there any provision in the deed between the parties in the instant case whereby respondent can hold appellants liable for the condition of the trees in March, 1949?'

One answer to this rhetorical question is that we cannot tell because the deed is not in evidence, this particular argument apparently being an afterthought on the part of the appellants.However, we answered a similar argument in Davis v. Lee, 1909, 52 Wash. 330, 100 P. 752, by recognizing the merger rule for which appellants contend and then pointing out that it has exceptions, one of which is that when there are stipulations in a contract for the sale of land of which the conveyance itself is not a performance, the question then becomes whether the parties intentionally surrendered those stipulations.We there quoted with approval from Morris v. Whitcher, 1859, 20 N.Y. 41, in part as follows:

"* * * in absence of all proof there is no presumption that either party, in giving or accepting a conveyance, intends to give up the benefit of covenants of which the conveyance is not a performance or satisfaction."[52 Wash. 330, 100 P. 755.]

We find this exception to the merger rule well stated in an annotation in 84 A.L.R. 1008, 1018:

'Where a contract for the sale of land embraces stipulations other than those relating to the conveyance of the subject-matter, and imposes upon the vendor the duty of performing acts other than those required to assure to the vendee the character of title stipulated for, the contract is something more than one for the mere conveyance of the subject-matter at a designated time, hence the execution and delivery of the deed of the land is merely the performance of the provisions relative to transfer of the title.It is one of several executory acts stipulated for, therefore, its performance does not affect the vitality of the original contract as to collateral matters which the vendor has obligated himself to perform.Accordingly, where there are collateral undertakings expressed in such a contract which are not satisfied by a subsequently executed deed of the subject-matter, these undertakings survive the acceptance of the deed, unless there are provisions in the deed inconsistent with the survival of such covenants or stipulations.'

See, alsoGreen v. Kelly, supra.

We therefore hold that the collateral undertaking whereby the owners agreed to assume risk of loss until the deal was closed was not satisfied by the subsequently executed deeds and was not merged in but survives the execution of the deeds.

Appellants next assert that, since the trees constituted a large part of the consideration which Dunseath was to receive, he could have rescinded the agreement immediately upon discovery of the damage but was not entitled to keep the property and maintain an action for damages.(Parenthetically, it may be said that this is a distinct departure from appellants' position at the trial, where their efforts were directed toward minimizing the value of the orchard because of its age, the unprofitable varieties, and its location in a 'cold pocket.'Hallauer himself testified on several occasions that the property was worth as much after the cold winter as it was before, and that its value was depreciated only to the cost of the removal of the trees.)

This argument by appellants' counsel, who did not represent them at the trial, is based in part on an assumption that we are not prepared to make as to the reason for the inclusion of the assumption-of-risk clause in the exchange agreement.We think that this is a particularly appropriate provision for an exchange agreement, and that it means exactly what it says.Abatement of a portion of the purchase price in the event of damage to one of the properties is not an available remedy on an exchange of property, as it might be in the usual contract for sale of real estate.The parties contracted to assume the risk of damage of their respective properties prior to the date of closing, which they had a right to do, and we do not see what clearer language they could have used to express their intention.

There are, in any event, factors here which distinguish the present case from those relied upon by the appellants: First, the contract had been executed and the deeds exchanged, and the parties had gone into possession of the properties conveyed to them and several months elapsed before the fact of damage and the extent of it could be established; second, while it is true that the parties did not anticipate that the winter damage would be as extensive as it proved to be, winter damage is one of the more common risks of the fruit grower and must be regarded as one of the risks of damage concerning which the parties were contracting, and it was so found by the trial court.

Green v. Kelly, supra, involved an agreement for the sale of a sawmill property containing a provision by which the owner agreed to deliver possession of the premises in as good repair as they then were, natural and reasonable wear and tear excepted.Between then and the date agreed upon for conveyance of the property, a freshet carried out sixty feet of the dam erected to supply the mill with water.On the day provided for in the agreement, the purchase price was paid and a deed and possession of the premises were delivered to the purchaser.The purchaser then brought an action for damages for breach of the agreement to deliver the premises in as good condition...