Holdridge v. Garretson

• Decision Date: 22 May 1929
• Docket Number: 21491.
• Citation: 277 P. 982,152 Wash. 226
• Parties: HOLDRIDGE v. GARRETSON et ux.
• Court: Washington Supreme Court

277 P. 982

152 Wash. 226

HOLDRIDGE v. GARRETSON et ux.

No. 21491.

Supreme Court of Washington

May 22, 1929

Department 2.

Appeal from Superior Court, Yakima County; A. W. Hawkins, Judge.

Action by P. B. Holdridge against Lloyd Garretson and wife. Judgment of dismissal, and plaintiff appeals. Affirmed.

Grady & Velikanje, of Yakima, and Henderson Carnahan & Thompson, of Tacoma, for appellant.

Rigg &amp Brown, of Yakima, and S. F. McAnally, of Tacoma, for respondents.

MAIN J.

This action was brought to enforce the terms of a written contract for the sale of 15,000 shares of the capital stock of a corporation. To the second amended complaint, which will be referred to as the complaint, a demurrer was interposed and sustained. The plaintiff refused to plead further, and elected to stand upon his complaint. A judgment was entered dismissing the action, from which he appeals.

The Lloyd Garretson Company, a corporation, was engaged in business in the city of Yakima. The appellant owned 15,000 shares of its capital stock of the par value of $1 per share and the respondent 45,000 shares. The respondent was the managing director, and the appellant was employed by the corporation, and devoted his time to its affairs. Differences arose between these two stockholders, and November 18, 1925 they entered into an agreement by which the appellant agreed to sell, and the respondent agreed to purchase, the former's stock. This agreement, after making certain recitals, provides:

'Now, therefore, for the purpose of arriving at the value of said stock and the price which shall be paid by the first party to the second party for his stock in said corporation, it is mutually agreed between the parties hereto as follows:

'That first party will purchase of the second party and the second party will sell to the first party all of the shares of stock in said corporation which are now owned by the second party at a price to be fixed as herein provided. * * *

'In order to arrive at the present fair market value of said stock, it is mutually agreed that the assets of said Company shall be appraised by three appraisers, one of whom shall be appointed by each of the parties hereto, and the two so appointed shall select a third who shall constitute a board of appraisers for the purposes aforesaid. * * *

'Each of the parties hereto shall select the persons to act as his appraisers within ten days from the signing of these presents and such appraisers so selected shall immediately thereafter meet and select the person who shall act as the third members of said board of appraisers, and as soon as the inventory shall have been furnished the said appraisers shall meet at the place of business of the Company and proceed to appraise the property and assets of the Company and place thereon a fair market value as of the date of said appraisement, taking into consideration not only the physical assets of the said Company, but also the good-will of said business, accounts, railroad claims, and all other property of said Company of every kind and character.

'Said appraisers shall make their report in writing and a copy of the same shall be furnished to each of the parties hereto.

'It is further agreed that for the purposes of this agreement the said appraisers shall act as a board of arbitration but that neither party shall introduce any evidence before said board other than the examination to be made by said board of the assets of the Company and that the findings and report of said board shall be final andconclusive between the parties hereto and binding upon them and that either of the parties hereto may give the same the force and effect of a judgment, as provided by Section _____ of Remington's Compiled Statutes of Washington, 1922, it being the intention of the parties hereto that this agreement shall be construed as a Statutory Arbitration Agreement, as provided by the Statutes of the State of Washington.

'It is further agreed between the parties hereto that if for any reason the said board of three appraisers shall not be able to agree upon the market value of said stock, that the third member of said board who has been selected by the two first appointed by the parties hereto, shall be released and discharged and the two appointed by the parties shall proceed to select a new third member of said board, who shall act with the other two, and such method shall be continued until three appraisers have been selected and who shall be able to agree upon the valuation of said stock. * * *

'It is further agreed that whenever the second party shall have been paid in full for his said stock, that each party hereto will execute and deliver to the other a full receipt and release of all claims and demands held by each against the other.'

It will be observed that the contract provides that the price of the stock shall be fixed by a board of appraisers who shall act as a board of arbitration. The complaint alleges that the respondent was the managing director of the corporation, and that appellant held a position therewith, and devoted his time and energy to its affairs. It is further alleged that certain differences had arisen between the parties relative to claims and accusations made by the appellant against the respondent, and that such claims and accusations were of such a nature as to involve the parties in litigation and had engendered personal animosities, making it impossible for them to longer work together. It is further alleged that the appellant refrained from prosecuting his claim against the respondent and severed his connection with the management of the affairs of the corporation. No mention is made in the contract of either of these matters as constituting a part of the consideration therefor.

Whether the complaint stated a cause of action depends, first, upon whether the contract had in part been executed by the appellant severing his connection with the corporation and abandoning his claim against the respondent on account of the other matter which had arisen between the parties, the precise nature of which is not set out. If upon the trial the respondent would be permitted to prove the considerations not mentioned in the contract, it may be said that the complaint states a cause of action. Inquiry must here be directed as to what is the rule by which the courts will be guided in determining whether a contract will be enforced which provides that the price of a thing sold shall be fixed by appraisers or arbitrators, and there has been an abortive attempt to so fix the price. It is well settled that, where a contract has been partly performed and is no longer wholly executory, or where the provision for arbitration or appraisement relates merely to an incident such as arriving at the purchase price of the property, or the parties cannot be placed in statu quo, the failure of the appraisement or of the arbitration will not absolve the parties from the...