Emrich v. Connell
| Decision Date | 27 March 1986 |
| Docket Number | No. 52070-4,52070-4 |
| Citation | 105 Wn.2d 551,716 P.2d 863 |
| Parties | Linn EMRICH and Marian M. Emrich, his wife, and the marital community composed thereof, Respondents, v. C. Richard CONNELL and M. Agnes Connell, his wife, and the marital community composed thereof; George E. Toles and Jane Doe Toles, his wife, and the marital community composed thereof; Richard Boettner and Cloe Jean Boettner, his wife, and the marital community composed thereof; J. Peter Darling and Ann L. Darling, his wife, and the marital community composed thereof; Richard G. Farman and Harriet J. Farman, his wife, and the marital community composed thereof; Keith Swaggerty and Janet M. Swaggerty, his wife, and the marital community composed thereof; Roger Girard and Jane Doe Girard, his wife, and the marital community composed thereof; James Richardson and Jane Doe Richardson, his wife, and the marital community composed thereof; Richard A. Grund and Jane Doe Grund, his wife, and the marital community composed thereof; Alexander H. Hargis and Patricia C. Hargis, his wife, and the marital community composed thereof; William Marshall and Judith C. Marshall, his wife, and the marital community composed thereof; Arthur A. Moore and Florence S. Moore, his wife, and the marital community composed thereof; Norm E. Evans and Jane Doe Evans, his wife, and the marital community composed thereof; Dean Smith and Rita Smith, his wife, and the marital community composed thereof; James W. Holland and Jane Doe Holland, his wife, and the marital community composed thereof; Lew J. Lathrop and Jane Doe Lathrop, his wife, and the marital community composed thereof; Edward Bierney and Jane Doe Bierney, his wife, and the marital community composed thereof; S. Charles Snyder and Barbara J. Snyder, his wife, and the marital community composed thereof; A. Dean Stageberg and Edith M. Stageberg, his wife, and the marital community composed thereof; L. Ralph Fry, Jr. and LeAnn M. Fry, his wife, and the marital community composed thereof; Steven Larsen and Jane Doe Larsen, his wife, and t |
| Court | Washington Supreme Court |
Hillis, Cairncross, Clark & Martin, P.S., George Kresovich, Gary Fallon, Seattle, for petitioners.
Smith, Brucker, Winn & Ehlert, Thomas H.S. Brucker, Seattle, for respondents.
Petitioners--the general partners, C. Richard Connell and George E. Toles, and various limited partners of Issaquah Farms Unlimited--are owners and lessors of real property situated in Issaquah, Washington. The lessees, respondents Linn and Marian Emrich, operate a recreational airport on this property. They brought an action seeking to prevent petitioners from exercising a right of termination expressly provided for in the written lease, claiming that petitioners had orally agreed not to terminate the lease until the property was "ready to be developed." The trial court admitted evidence of the oral agreement and entered a decree entitling respondents to specific performance of this agreement. The Court of Appeals, Division I, affirmed. Emrich v. Connell, 41 Wash.App. 612, 705 P.2d 288 (1985). We reverse.
Respondents have operated a recreational airport on the Issaquah property since 1962 under a series of written lease agreements with the former owners. The respondents, whom the record reveals to have been experienced to some extent in real estate matters, personally negotiated these leases which contained cancellation clauses with various renewal options and first right of refusal provisions. The last of these leases was due to expire in March 1978.
In June 1975, petitioners purchased the Issaquah property subject to respondents' pre-existing lease. The Myers Company, a real estate brokerage firm which negotiated the sale and retained an exclusive right to resell the property, apparently remained involved with the property to some extent.
In late 1977, a few months before respondents' lease was due to expire, Cary Garman, an accountant with the Myers Company, was directed to negotiate a new lease with respondents. Negotiations between respondents and Garman resulted in a written lease for a 5-year term (with 1-year options) commencing on March 15, 1978, for a minimum annual rent of $6,000 and a maximum rent of 15 percent of respondent's gross revenues from operation of the airport. The lease contained other typical lease provisions. Of particular importance in this controversy is the cancellation clause in paragraph 19 of the lease, which provides:
Any time after the 15th day of March, 1978, Lessee agrees to vacate and surrender the demised premises within one hundred twenty (120) days following written notice from Lessor that this Lease Agreement is cancelled. Lessor agrees not to cancel this Lease for the purpose of leasing the premises to another party for a use similar to or the same as the use described in Paragraph 7, "Use of Premises".
The facts surrounding the negotiation of this clause are sharply disputed by the parties. In particular, the parties disagree as to the effect of Garman's assurances to respondents during the negotiations that they would not be signing a 4-month lease, that the petitioners intended to hold the property for development or sale, that governmental processes incident to any planned development of the property would take at least a year or more, and that respondents could remain on the property until it was ready to be developed. Respondents claim, and the trial court agreed, that the negotiations established an oral agreement that the lease cancellation clause would not be invoked until the property was ready to be developed. Petitioners deny that they orally agreed to anything not contained in the written lease.
In any event, the cancellation clause, as set forth above, became paragraph 19 of the written lease, which was signed by respondents on December 29, 1977 and by the general partners of Issaquah Farms, Connell and Toles, on January 3, 1978.
Approximately 13 months after the signing of the lease, petitioners began investigating other potential uses for the property, which was zoned residential. (The airport operation was allowed to remain as a pre-existing use). In the spring of 1979, petitioners applied for a rezone to permit an industrial park development on the property. On December 3, 1979, the Issaquah City Council imposed a temporary building moratorium on land in Issaquah, including the airport property. On December 11, 1979, petitioners sent a 4-month notice of cancellation to respondents pursuant to the lease cancellation clause in paragraph 19.
Respondents commenced this action in superior court on February 25, 1980, seeking a preliminary and permanent injunction against cancellation of the lease and specific performance of an alleged oral agreement between the parties that the lease would not be cancelled until the property was ready to be developed. Following a nonjury trial, the trial court entered extensive findings of fact, including the following:
12. The Lease is not a totally integrated document reflecting the total intentions of the parties. No party intended that paragraph 19 of the Lease would represent the total agreement between the parties regarding cancellation.
13. An addendum was orally and contemporaneously added to the written provisions of the Lease ("the oral addendum"), providing that the lessor would not terminate the Lease until the Property was ready to be developed, thus creating a condition precedent to the lessor's exercise of the right of cancellation under paragraph 19 of the Lease.
* * *
28. The Property is not ready to be developed.
Based on these findings, the trial court held that: (1) parol evidence is admissible to prove the oral agreement that the lease will not be cancelled until the property is ready to be developed; (2) respondents are entitled to a decree of specific performance of that agreement; and (3) petitioners are equitably estopped from exercising their right of cancellation under the written lease until the property is ready to be developed. Petitioners seek review of the Court of Appeals decision affirming the trial court. We reverse.
The initial issue raised by petitioners is whether parol evidence is admissible to prove an oral agreement which is inconsistent with the terms of a written lease. The Court of Appeals upheld the trial court's admission of extrinsic evidence of the oral agreement even though it concluded that the oral agreement is inconsistent with the cancellation clause in the written lease. Petitioners contend that the Court of Appeals misapplied the parol evidence rule. We agree.
The parol evidence rule, as traditionally stated in Washington, provides:
[P]arol or extrinsic evidence is not admissible to add to, subtract from, vary, or contradict written instruments which are contractual in nature and which are valid, complete, unambiguous, and not affected by accident, fraud, or mistake.
Buyken v. Ertner, 33 Wash.2d 334, 341, 205 P.2d 628 (1949). It is not a rule of evidence but one of substantive law. Barber v. Rochester, 52 Wash.2d 691, 696, 328 P.2d 711 (1958). Thus, prior or contemporaneous negotiations and agreements are said to merge into the final, written contract, and any evidence of these, even if admitted without objection, is rendered incompetent and immaterial by operation of the rule. Fleetham v. Schneekloth, 52 Wash.2d 176, 179, 324 P.2d 429 (1958).
However, the parol evidence rule only applies to a writing intended by the parties as an "integration" of their agreement; i.e., a writing intended as a final expression of the terms of the agreement. See Heath Northwest, Inc. v. Peterson, 67 Wash.2d 582, 584, 408 P.2d 896 (1965); University Properties, Inc. v. Moss, 63 Wash.2d 619, 621, 388...
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