Esmieu v. Hsieh

• Court: Washington Court of Appeals
• Writing for the Court: FARIS; MUNSON, C. J., and ROE
• Citation: Esmieu v. Hsieh, 580 P.2d 1105, 20 Wn.App. 455 (Wash. App. 1978)
• Decision Date: 15 June 1978
• Docket Number: No. 2146-III
• 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, Appellants, v. Jack HSIEH and Dorothy Hsieh, his wife, Pacific Rim International Inc., a Washington Corporation, Donald Worley and Byrdeen Worley, his wife, and Cameron Sherwood, William M. Tugman, Phelps R. Gose and Yancy Reser, and the partnership consisting thereof, Respondents.

Page 455

20 Wn.App. 455

580 P.2d 1105

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, Appellants, v. Jack HSIEH and Dorothy Hsieh, his wife, Pacific Rim International Inc., a Washington Corporation, Donald Worley and Byrdeen Worley, his wife, and Cameron Sherwood, William M. Tugman, Phelps R. Gose and Yancy Reser, and the partnership consisting thereof, Respondents.

No. 2146-III.

Court of Appeals of Washington,Division 3.

June 15, 1978.

Leon C. Misterek, Malcolm L. Edwards, Robert G. Austin, Seattle, for appellants.

Andrew C. Bohrnsen, Pasco, Sherwood, Tugman, Gose & Reser, Walla Walla, for respondents.

FARIS, Judge Pro Tem. ^*

Plaintiffs Esmieus, both as individuals and through a family trust, own over 15,700 acres of agricultural land in Walla Walla County. Desiring to generate more family income by diversifying their holdings, they made two agreements with defendant Jack Hsieh. ¹ The first, of December 1973, was to exchange about 9,000 acres ("Tract A") for other real estate which Hsieh would provide. The second, of March 1974, a Lease and Option to Exchange Agreement (the "Agreement"), is at issue in this case. It provided for Esmieus to lease another 6,700 acres (Tracts "B" and "C") to Hsieh for approximately 20 years, with rent increases upon specified occurrences, and provided that Hsieh have an option to purchase Tracts B and C by exchanging other real estate with specified values. Hsieh was also, by securing water permits and performing other necessary tasks, to provide irrigation for the leased land. Esmieus were required to cooperate fully in this endeavor. Provision was also made for 60-day notice of claimed default, and for termination if default should remain uncured.

Because of certain terms of the family trust, all the exchange provisions were subject to court approval. This caused some prior litigation: the Superior Court, on June 27, 1974, approved the principle of an exchange but reserved for later approval the specific property to be exchanged for trust property. This court ordered that all the Superior Court's orders entered after November 18, 1974, be vacated on due process grounds. Esmieu v. Schrag, 15 Wash.App. 260, 548 P.2d 581 (1976), aff'd 88 Wash.2d 490, 563 P.2d 203 (1977). This did not affect the order of June 27, which still provides the basis for the Agreement involved in this case.

Tracts A, B, and C were subject to leases to Charles Maiden, expiring in 1978. The Agreement required Esmieus to negotiate promptly for termination of the leases and to bear all expenses so Hsieh could take possession of the land as soon as possible. Hsieh, pursuant to the Agreement, negotiated directly with Charles Maiden for a partial termination of the Maiden leases. He delivered it to Esmieus' then attorney, for their signature. Differences had arisen among the Esmieus, some of whom opposed the Hsieh agreement. By the time Hsieh provided the lease termination agreement to Esmieus' attorney, all were agreed in desiring not to comply with the Agreement. Although they had actually signed the lease termination which Hsieh had negotiated with Maiden, they left it with their attorney and told Hsieh, when he occasionally inquired, that it still was unsigned.

Esmieus' failure to complete the Maiden lease termination effectively blocked Hsieh's gaining possession of the land, so he could not fulfill the final requirement for the water permits, which was to provide a construction schedule. The Agreement, which Esmieus had prepared, specifically highlighted the importance of obtaining irrigation water; it is no exaggeration to say that it was the keystone of the entire transaction. The record fully supports the trial court's finding that Hsieh "conscientiously and vigorously attempted to comply . . . with regard to obtaining water permits." His efforts were obstructed and ultimately rendered futile by Esmieus' failure to place him in possession by refusing to cooperate in terminating the Maiden leases. Without possession he could not meet all the requirements for obtaining the water permits. He had negotiated an agreement to terminate the Maiden leases, and had even agreed to make a $25,000 cash payment himself. Esmieus signed the termination, but denied having done so and did not permit it to be delivered. ² Hsieh, frustrated in his considerable efforts to complete the irrigation plans, finally abandoned them. The permit applications eventually were 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, and was conditional. ³ Esmieus gave notice of default for nonpayment of rent and failure to obtain irrigation. After 60 days they took the position that the Agreement was terminated by the alleged defaults remaining uncured. In June 1975, they leased Tract A to International Pelleting Corp. ("IPC") for 40 years. Thereafter, Esmieus brought this action to quiet title; defendant Hsieh counterclaimed for specific performance of the Agreement and for damages. The trial court denied Esmieus' claim. It ordered specific performance, but denied damages as being speculative. This appeal followed.

Esmieus sought court assistance to enforce forfeiture of the Agreement. They urge that their covenant to cooperate in obtaining water permits is independent of Hsieh's covenants to pay rent and secure water permits; therefore, they argue, even if their alleged failure to terminate the Maiden lease constituted a breach of the agreement, they were still entitled to cancel the lease and receive a judgment quieting their title. Hsieh asserts that Esmieus' breach, which prevented him from getting the permits, amounted to breach of the implied covenant of quiet enjoyment. He argues that that implied covenant and his own covenants are dependent, so that his failure to pay rent is excused.

Esmieus first claim that since Hsieh's payment of the January rent was conditional, it did not constitute a valid tender such as to excuse his performance. ⁴ In light of our discussion below, we need not decide if the January payment constituted sufficient tender of performance since the trial court found, and we agree, that Hsieh's default, if any, on this one payment was insufficient to allow Esmieus to terminate the Agreement. Equity abhors a forfeiture, Port of Walla Walla v. Sun-Glo Producers, Inc., 8 Wash.App. 51, 504 P.2d 324 (1972); conditions of forfeiture must be substantial before they will be enforced in equity.

The main question is whether Hsieh's obligations to pay rent and secure water permits are independent of Esmieus' obligation to cooperate in obtaining water permits. It has long been the rule that, to determine whether covenants be dependent or independent, the court must look to the contract as a whole to discover the intent of the parties. Toellner v. McGinnis, 55 Wash. 430, 104 P. 641 (1909). The...