Hopkins v. Barlin

• Decision Date: 29 July 1948
• Docket Number: 30458.
• Citation: 196 P.2d 347,31 Wn.2d 260
• Parties: HOPKINS v. BARLIN.
• Court: Washington Supreme Court

196 P.2d 347

31 Wn.2d 260

HOPKINS v. BARLIN.

No. 30458.

Supreme Court of Washington

July 29, 1948

Department 2

purchase and acquire the property on the terms and conditions of the option, had he so elected, prospective purchaser could not, in action to recover amount paid under the option introduce proof of an alleged subsequent oral agreement that if prospective purchaser was unable to consummate purchase of business, money would be repaid to prospective purchaser since there was no independent consideration for alleged subsequent oral agreement.

Appeal from Superior Court, King County; James B. Kinne, Judge.

Solie M. Ringold, of Seattle, for appellant.

Eggerman, Rosling & Williams, of Seattle, for respondent.

STEINERT Justice.

Plaintiff brought suit for the return of a sum of money which he had previously paid to defendant for the execution and delivery by defendant to plaintiff of a written instrument wherein defendant had granted to plaintiff the right, during a specified period, to purchase certain business property belonging to defendant. A demurrer to the complaint was sustained and, upon plaintiff's refusal to plead further, the trial court entered judgment dismissing the action. Plaintiff appealed.

Our statement of the facts is necessarily based upon the allegations of the complaint. Respondent, Benjamin Barlin, was engaged in business in the city of Seattle under the trade name of Commercial Linen Company. On August 26, 1946, he executed and delivered to appellant, Stephen D. Hopkins, a written instrument denominated 'Option To Purchase,' in return for which appellant paid respondent the sum of $5,000. A copy of the instrument is attached to, and by reference made a part of, the complaint. We quote the material portions and provisions thereof:

'Option to Purchase

'The undersigned BENJAMIN BARLIN [respondent herein] of Seattle, Washington, hereinafter referred to as 'Barlin', who is doing business as 'Commercial Linen Company' with offices in the City of Seattle, does for a consideration of Five Thousand Dollars ($5,000.00) to be paid to him upon the execution by him of this agreement hereby give and grant to STEPHEN D. HOPKINS [appellant herein] of Olympia, Washington, the right to purchase the accounts receivable, inventory of merchandise, machinery, equipment, furniture and fixtures of said business which are located in the building on the real estate hereinafter described on the date of the exercise of this option, and the trade-mark and trade names of and belonging to the said Commercial Linen Company, under the following terms and conditions:

'1. The purchase price shall be the sum of $32,500.00 plus an amount equal on the date of the exercise of the option to the following: [the value, as determined, of the accounts receivable, inventory, furniture, fixtures, machinery and equipment].

'2. Said $32,500.00 shall be paid immediately upon the exercise of this option, credit being first given for amount paid for this option or to extend the option as hereinafter provided. Payment for the other items above referred to shall be made as soon as the value thereof as hereinBefore provided is ascertained.

'3. In the event said option is exercised and payment is made as aforesaid, then Barlin agrees that for a period of ten years from the date of the exercise of said option, he will not engage directly or indirectly in the business in the states of Washington, Oregon, Idaho, Montana and the Territory of Alaska of selling or dealing in the following items: [items of merchandise specified.]

'In consideration of said agreement by Barlin, Hopkins by the exercise of said option will thereby be deemed to have agreed to pay to Barlin, his heirs, executors or administrators, the sum of $17,500.00 payable as follows: [installments of $2,500.00 each, payable on January 2d and July 2d of each year, beginning January 2, 1947, until the full sum of $17,500.00 shall have been paid.] * * *

'4. In the event this option is exercised by Hopkins, he shall have the right for a period of ten days after this option is exercised to lease all the real property now occupied by Commercial Linen Company for a period of ten years at a rental of $750.00 per month, said lease to be upon a form agreed upon by counsel for the parties hereto. Said real property is described as follows: [description given.]

'In the event Hopkins as lessee is not in default under said lease during the first five years thereof, he shall have the right during said five years at any time to buy said real property free and clear of all encumbrances for the sum of $100,000.00, said amount to be reduced, however, by the amount of rental and rent deposit theretofore paid under said lease after deducting from said rental the following items: [taxes, insurance, repairs, etc.]

'In the event Hopkins desires to exercise the aforesaid right to purchase said real property, notice of the exercise of said right must be delivered to Barlin at least 90 days prior to the proposed date of purchase. Payment for said real property shall be made within ten days after Barlin has furnished Hopkins with title insurance and computation of the amount of the net purchase price.

'5. In the event this option is exercised, Barlin agreed for a period of six months from the date of said exercise to advise with Hopkins with respect to the business conducted with the assets purchased under this agreement and to serve during such period as one of the directors of such corporation as Hopkins may cause to be formed to conduct said business. The time devoted to such advice shall be in the discretion of Barlin. * * *

'7. In the event this option is not exercised within 60 days from the date of payment of said $5,000.00, then by the payment of another $5,000.00 delivered to Barlin Before the expiration of said initial 60 days, the period of the option will be extended for an additional 30 days.

'8. Signed notice of the exercise of this option must be delivered in writing to the undersigned within 60 days from the date said payment of $5,000.00 is received by the undersigned or within 30 days after payment of the $5,000.00 to extend the option for an additional 30 days as aforesaid. * * *

'10. In the event said option is exercised, Barlin will convey the items to be transferred and conveyed by him hereunder free and clear of all encumbrances and the closing of such transaction shall be accomplished in accordance with the Bulk Sales Law of the State of Washington.

'This option agreement made and executed this 26th day of August, 1946.

'/s/ B. Barlin

'Doing Business as Commercial Linen Co.' (Italics ours.)

After setting forth, by reference, the provisions of the option to purchase, the complaint alleged that both prior and subsequent to August 26, 1946, the day on which that instrument was executed and delivered and the $5,000 paid, the parties thereto agreed that in the event appellant should be unable to consummate the purchase of the business from the respondent, the sum of $5,000 would be refunded and repaid to appellant; that appellant was unable to interest capital in the purchase of the business and was unable to consummate the purchase thereof within sixty days from August 26, 1946; and that, despite oral and written demands therefor, respondent had failed and refused to return the $5,000.

Upon this state of facts as alleged in the complaint, appellant sought, but was denied, recovery of the amount paid by him for the option to purchase respondent's property.

Appellant's contentions are: (1) That the instrument involved in this case is not a true and valid option, because it contains no definite and specific undertaking on the part of respondent, the offeror, not to revoke the offer during the specified time; (2) that respondent gave no consideration for the $5,000 paid by appellant; (3) that the instrument was simply a receipt for money paid by appellant or, in any event, was ambiguous as to the disposition to be made of the money, and hence parol evidence was admissible to show the true agreement of the parties; and (4) that parol evidence was admissible to prove a subsequent agreement by the parties that the money would be refunded to the appellant in the event he should be unable to consummate the purchase of the property.

Appellant's first contention necessitates that we set forth, in part, the nature and characteristics of an option, in order that we may properly determine whether the written instrument between the parties was in law an option agreement.

An option to purchase real property may be defined as a contract by which one party, owner of the property and termed the optionor, for valuable consideration, sells to another party, called the optionee, the right to buy, or agrees with that other party that the latter shall have the privilege of buying, the property within the time, for the price, and upon the terms and conditions specified in the option agreement, but which of itself imposes no obligation on the optionee to purchase the property. James, Option Contracts, 2-7, § 101, 102; 55...