Hubbell v. Ward

Decision Date17 July 1952
Docket NumberNo. 31911,31911
Citation246 P.2d 468,40 Wn.2d 779
PartiesHUBBELL et ux. v. WARD.
CourtWashington Supreme Court

J. Lael Simmons and Leslie M. Yates, Seattle, for appellant.

Ralph Purvis, James B. Sanchez, Bremerton, for respondents.

DONWORTH, Justice.

Plaintiffs instituted this action asking that defendant be compelled to perform specifically the terms of a certain earnest money receipt and agreement for purchase and sale of an apartment house in Bremerton and personal property situated therein. Plaintiffs are the purchasers named in the agreement and defendant, who owns the premises as his separate property, is the seller. At the time plaintiffs signed the agreement they delivered to the relator with whom the property had been listed for sale their check for $500 earnest money. Defendant later refused to carry out the terms of this agreement, giving as his reason that to do so would result in breaking up his home.

The earnest money receipt and agreement (designated in the record as Exhibit A and hereinafter referred to as the agreement) contains the following provision:

'Total purchase price is Twenty-Nine Thousand and No/100 Dollars ($29.000.00), payable as follows: On evidence of merchantable title purchaser agrees to pay Nine Thousand ($9,000.00) Dollars down and sign a contract for the balance, payable at $200.00 or more per month, including interest at the rate of 5% on deferred balances.

'Purchase price is to include all furniture in rentals, excluding owner's apartment, also to include necessary tools and equipment, furnace parts and insulation to maintain premises. Owner shall furnish complete inventory of furnishings for buyer's inspection and approval before closing of sale.' (Italics ours.)

A trial was had before the court sitting without a jury, the principal issue of fact being whether defendant had signed the agreement in the form in which it was offered in evidence by plaintiffs. The trial court found in favor of plaintiffs on this issue and entered a decree of specific performance directing defendant 'to enter into a real estate contract according to the terms of said earnest money receipt and agreement.' Defendant has appealed from this decree.

Appellants makes three assignments of error as follows:

'1. The trial court erred in finding that appellant ever agreed to the terms of Exhibit 'A'.

'2. The trial court erred in concluding that there was sufficient evidence in law to support a judgment of specific performance.

3. The trial court erred in rendering judgment against appellant.'

In support of his first assignment, appellant makes the statement that this being a case of equitable cognizance it will be tried de novo on appeal. This is no longer the rule. Since the adoption of Rule 43 of Rules on Appeal, 34A Wash.2d 47, effective January 2, 1951, there has been no distinction between our method of reviewing the record in equity cases and in law cases. To emphasize this change, Rule 43 has recently been amended.

Since appellant's first assignment does not refer by number and description to any particular finding which he is attacking, as required by Rule 43, supra, we shall accept the trial court's findings as the established facts in the case. Lopeman v. Gee, Wash., 245 P.2d 183, and cases cited therein. We must, therefore, accept the finding that appellant agreed to the terms of the agreement (Exhibit A).

The second and third assignments, which can be considered together, raise the question (which was inherent in the case) whether the agreement is a contract which a court of equity will specifically enforce.

Appellant, in answering this question in the negative, makes two principal contentions:

First, that the agreement is too indefinite in its terms to permit of being specifically enforced;

Second, that, being an agreement to enter into a future contract, it is nugatory because all of the terms of the future contract are not set forth.

On the other hand, respondents argue that the agreement is sufficiently definite in its terms and that the parties agreed therein to sign a contract for the balance due ($20,000 payable at $200 or more per month including five percent interest) in 'the standard and usual real estate purchase contract' form.

We are unable to determine that there is any standard form of such a contract or, if there be such, what its provisions are. Real estate purchase contracts differ in their provisions depending upon the nature of the property involved and the individual requirements of the parties thereto. They are not standardized as to their provisions any more than leases are. This court has held that an agreement to execute a lease cannot be specifically enforced unless the agreement definitely states the terms of the lease. Keys v. Klitten, 21 Wash.2d 504, 151 P.2d 989, 996, and cases cited therein.

The agreement here involved, as interpreted by the parties themselves, contemplated that a real estate purchase contract which would contain new and additional terms might be executed in the future. It appears that there had been no understanding between the parties as to what these additional terms should be. The trial court directed appellant 'to enter into a real estate contract according to the terms of said earnest money receipt and agreement.' Neither the agreement nor the court's decree of specific performance affords appellant any information as to what provisions the proposed real estate contract shall contain relative to these important matters:

1. No provision is made as to the time for the transfer of title to the personal property or as to the manner of passing title thereto.

2. After the purchaser is given possession of the premises (which is to be within thirty days after closing the transaction), in what manner, if any, may the seller declare a forfeiture of the proposed real estate contract in the event of default by the purchaser in his performance thereof? In such event may the seller retain all payments theretofore received as liquidated damages for the breach?

3. Which party bears the loss if the building, or the contents, is damaged or destroyed by fire or other casualty?

4. What kinds of risks are to be insured against while the contract is in effect? What are the limits of the policies? Who pays the premiums? Who is to be designated as the insured therein and who holds the policies?

5. Who pays the taxes and assessments levied on the property?

6. Who is responsible for keeping the building in repair?

7. Who pays the water or other utility charges?

8. May the purchaser make capital improvements without the consent of the seller?

9. What protection, if any, is the seller to have against mechanic and materialmen's liens created by the purchaser?

10. Is the purchaser permitted to remove any furniture or other personal property from the apartment house or replace worn out pieces without the seller's permission?

11. May the purchaser use the premises for any other purpose than operating an apartment house? 12. When and where are the monthly payments to be made by the purchaser?

13. Is the purchaser to indemnify the seller against claims of third persons for personal injuries and property damage arising because of accidents occurring on the premises?

The foregoing are matter material to the rights and obligations of both parties. The seller is giving up possession and control of the premises and furniture for possibly eleven years, during which time it is important to him that his property be protected by having the obligations and duties of the purchaser with respect to it definitely defined. It is equally important to the purchaser that his property rights be protected and his duties clearly defined.

Respondents have not indicated in their brief whether the 'usual and standard' real estate purchase contract includes any provisions relative to the matters mentioned above. They argue that it is not necessary for the earnest money agreement to contain a forfeiture clause, a designation of the place of payment, any provision as to who shall bear the risk of loss during the life of the contract, or any provision relative to fire insurance. It may be true that such matters are not ordinarily provided for in an earnest money agreement, but respondents recognize that the contemplated real estate contract is to contain some new and additional provisions not mentioned in the agreement.

In Keys v. Klitten, supra, the parties agreed in an earnest money receipt to enter into a 'proper lease' of certain hotel property. In holding that specific performance of the agreement should be denied, because the terms of the lease contemplated by the earnest money receipt were too indefinite, we said:

'What would be a proper lease? It must, we think, be admitted that an answer to the question might depend upon many circumstances and conditions; in other words, proper is not a word which does or could indicate the particular terms and conditions which were to be incorporated into the lease to be prepared; at least in the absence of testimony as to the meaning of the term proper lease. Neither would it seem that the term proper lease meant a lease in accordance with the terms and conditions of the receipt, for the that been the intent of the parties, it would have been easy to say that a lease should be prepared which would embody the terms of the the earnest money receipt, as was done in the case of Omak Realty Inv. Co. v. Dewey, 129 Wash. 385, 225 P. 236.

* * *

* * *

'It is apparent to us from the testimony that it was not intended by the earnest money receipt to fix the terms and conditions of the lease, and it is just as apparent that the parties are unable to agree on the terms and conditions of such lease. In order, then, to specifically enforce this earnest money receipt, it would first be necessary for us to determine what terms and conditions should be included in a proper lease. To do this would, in our...

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