Esmieu v. Hsieh

• Decision Date: 23 August 1979
• Docket Number: No. 45753
• Citation: Esmieu v. Hsieh, 598 P.2d 1369, 92 Wn.2d 530 (Wash. 1979)
• Parties: Louis P. ESMIEU and Stephen A. Esmieu, Individually and as Trustees of the Henry Esmieu, Sr., Trusts, and as agents and attorneys in fact for Elissa Esmieu Schrag, Henry Esmieu, Jr., Richard Esmieu, James Esmieu, Dianna Esmieu, Dunnell and Rita Esmieu Melior, Petitioners, v. Jack HSIEH and Dorothy Hsieh, Pacific Rim International Inc., Donald Worley and Byrdeen Worley, Cameron Sherwood, William Tugman, Phelps Gose and Yancy Reser, Respondents.
• Court: Washington Supreme Court

Page 530

92 Wn.2d 530

598 P.2d 1369

Louis P. ESMIEU and Stephen A. Esmieu, Individually and as Trustees of the Henry Esmieu, Sr., Trusts, and as agents and attorneys in fact for Elissa Esmieu Schrag, Henry Esmieu Jr., Richard Esmieu, James Esmieu, Dianna Esmieu, Dunnell and Rita Esmieu Melior, Petitioners, v. Jack HSIEH and Dorothy Hsieh, Pacific Rim International Inc., Donald Worley and Byrdeen Worley, Cameron Sherwood, William Tugman, Phelps Gose and Yancy Reser, Respondents.

No. 45753.

Supreme Court of Washington, En Banc.

Aug. 23, 1979.

LeSourd, Patten, Fleming & Hartung, Leon Misterek, Robert Austin, Edwards & Barbieri, Malcolm Edwards, Seattle, for petitioners.

Leavy, Taber, Schultz, Bergdahl & Sweeney, John G. Schultz, Andrew C. Bohrsen, Pasco, for respondents.

DOLLIVER, Justice.

This is the second of three cases involving the same parties and the same property. This case, Esmieu II, comes to us on a petition to review a decision of the Court of Appeals. Esmieu v. Hsieh, 20 Wash.App. 455, 580 P.2d 1105 (1978). See, also Esmieu v. Schrag (Esmieu I), 88 Wash.2d 490, 563 P.2d 203 (1977).

Esmieus, both as individuals and through a family trust, own over 15,700 acres of agricultural land. They desired to generate more family income by diversifying their holdings and executed two agreements with Jack Hsieh. The first, executed in December 1973, was to exchange about 9,000 acres (Tract A) for other real estate which Hsieh would provide. The second agreement (Agreement), at issue in this case, executed in March 1974, consisted of a lease and option to exchange. It provided for plaintiffs to lease another 6,700 acres (Tracts B and C) to Hsieh for about 20 years, with rent increases upon specific occurrences, and further provided Hsieh with an option to purchase these tracts by exchanging other real estate with specified values. Hsieh, by securing water permits and performing other necessary tasks, was to provide irrigation for the leased land. Esmieus were required to cooperate fully in this endeavor. Provision was also made for a 60-day notice of claimed default, and for termination of the lease if default should remain uncured.

Tracts A, B and C were already subject to leases to Charles Maiden. The Agreement required Esmieus to negotiate promptly for termination of the leases and to bear all expenses in order that Hsieh could take possession of the land as soon as possible. Hsieh negotiated directly with Maiden for a partial termination of the Maiden leases and agreed to bear some of the costs himself in order to facilitate termination. He delivered the termination agreement to the Esmieus' attorney for their signatures. The signed termination agreement was never returned to him; in fact, Hsieh did not even know it had been signed until just before trial. The trial court found that the failure of the Esmieus to deliver the signed Maiden lease termination to Hsieh constituted a breach of the Agreement; the Court of Appeals found that Hsieh could not enter the property to fulfill the requirements for obtaining water permits because of the Esmieus' failure to complete the termination of Maiden's lease. The Esmieus claim that the signed release was placed in escrow and that Hsieh voluntarily and independently abandoned his efforts to obtain water permits. The permit applications were eventually canceled in April 1975.

Hsieh paid the rent installment of October 1, 1974. Due to uneasiness arising from Esmieus' procrastination, the January 1, 1975, rent payment was made to Esmieus' attorney, conditioned upon their faithful performance of their Agreement obligations. Esmieus gave notice of default for nonpayment of rent and failure to provide irrigation to the property. After 60 days, they took the position that the Agreement was terminated because the alleged defaults remained uncured. In June 1975, they leased Tract A to International Pelleting Company (IPC) for 40 years, despite a provision in the Agreement which prohibited an assignment of any interest in Tracts A, B and C without Hsieh's consent.

Thereafter, the Esmieus brought this action to quiet title; Hsieh counterclaimed for specific performance of the Agreement and damages. The trial court denied Esmieus' claims and ordered specific performance. The trial court found that Hsieh's obligation to pay rent after January 1, 1975, had been suspended because of the Esmieus' lack of cooperation as required by the Agreement and by "their inter-family agreement to actively block or thwart Dr. Hsieh's performance". The court ordered the return to Hsieh of $22,500 which had been paid into the court registry as rental payments during the litigation period.

Two major issues are before us. The first pertains to the Esmieus' claim that their covenant to cooperate in obtaining water permits is independent of Hsieh's covenant to pay rent and secure the permits. They assert that, even if their failure to terminate the Maiden lease is found to be a breach of the Agreement, they were still entitled to cancel the...