Huberdeau v. Desmarais

• Decision Date: 01 July 1971
• Docket Number: No. 41588,41588
• Citation: 486 P.2d 1074,79 Wn.2d 432
• Parties: Wilfred HUBERDEAU, Petitioner, v. Andrew DESMARAIS and Jeanne Desmarais, Respondent.
• Court: Washington Supreme Court

Page 432

79 Wn.2d 432

486 P.2d 1074

Wilfred HUBERDEAU, Petitioner, v. Andrew DESMARAIS and Jeanne Desmarais, Respondent.

No. 41588.

Supreme Court of Washington, En Banc.

July 1, 1971.

Rehearing Denied Aug. 31, 1971.

Hovis, Cockrill & Roy, Ted Roy, Yakima, for petitioner.

Halverson, Applegate & McDonald, Alan A. McDonald, Yakima, for respondent.

HALE, Associate Justice.

Defendants, husband and wife, bought a hop farm on an executory contract of conditional sale. Several years later, the husband signed an agreement that, in event of a forfeiture, the buyers would transfer to the seller their United States Department of Agriculture hop allotment base. When the seller declared a forfeiture, however, defendants refused to transfer the allotment base, claiming that the husband's agreement to do so was unenforceable for want of consideration. From a decree ordering the transfer of the hop allotment base to the vendor, defendants appealed, and the Court of Appeals, concluding that the undertaking was without consideration, reversed. 2 Wash.App. 265, 467 P.2d 624 (1970). This court granted review (78 Wash.Dec.2d 228 (1970)), and affirms the Court of Appeals.

Andrew Desmarais and his wife Jeanne had a 40-acre hop farm near Moxee, Washington, where they had lived and farmed for 12 or 13 years; Andrew had been a farmer and associated with hop growing most of his life. In February, 1962, the couple sold their farm and, paying $40,000 down, bought an 80-acre hop farm from Wilfred and Nadine Huberdeau, husband and wife, on a conditional sale contract at a total price of $160,000. The conditional sale contract, signed on February 6, 1962, required the Desmarais to pay $5,000 principal and interest at 6 per cent beginning January 5, 1963, and annually thereafter. All payments were to be applied first to interest and next to principal. The Desmarais were to keep the taxes currently paid; time was declared of the essence with the right in the seller for breach of conditions to declare a forfeiture by registered mail. Buyers had the right to reinstate their contract by complying with its terms within 30 days of receiving such notice. ¹

After making the $40,000 down payment on February 15, 1962, defendants paid principal and interest in compliance with the contract for the first 2 years: January 2, 1963, they paid $5,000 on the principal and the current interest of $6,300; the next year, on January 3, 1964, they paid the $5,000 on the principal and $6,900 interest. Then they fell largely in arrears, paying only the accrued interest and taxes and nothing thereafter on the principal. January 5, 1965, the Desmarais paid Huberdeau $6,600 in interest; $6,600 in interest on January 4, 1966, and the same again on January 5, 1967. Until the time of forfeiture, total payments on principal, including the $40,000 down payment came to $50,000; interest payments totaled $33,000 and additionally, between 1962 and the first half of 1967, the Desmarais paid over $5,000 in real-estate taxes on the property.

In 1965, while the Desmarais were in their fourth year of occupancy as hop growers, the hop-growing industry was brought under crop control regulation of the United States Department of Agriculture. 31 Fed.Rog. 9713, 10072 (1966); 7 U.S.C. §§ 601--674 (1966). Under these regulations, the Hop Administrative Committee, with regional offices in Portland, awarded the Desmarais what is described as a hop allotment base or marketing quota, which authorized them to grow and sell 102,238 pounds of hops from their 1966 crop. This hop allotment base, or quota, was presented to them personally as hop growers and was not an allocation to them as owners of farm land. The record does not indicate that their hop allotment base was tied or attached to any particular land, farm or acreage, but instead that it was and is issued by the Hop Administrative Committee to the individual hop farmers as a kind of personal license or permit.

The Desmarais, as earlier noted, failed to make payments on the principal for the year 1965--they received the hop allotment base in 1965--and for the years 1966 and 1967, but each time paid the current interest in full. When, on January 5, 1965, Mr. Desmarais paid Mr. Huberdeau $6,600 interest, he explained that he would be unable to pay the $5,000 on the principal. Mr. Huberdeau indicated at that time that he would be satisfied with the interest only and gave no warning, direct or indirect, that he intended to declare a forfeiture. This event was repeated a year later when, on January 4, 1966, the day before it fell due, Desmarais paid to Huberdeau the accrued interest of $6,600 with nothing on the principal. Again Mr. Huberdeau stated that he was satisfied with receiving the interest only. And, on January 5, 1967, Mr. Desmarais for the third time paid the accrued interest of $6,600 with nothing to principal and as Desmarais described it, Mr. Huberdeau 'said as long as he got the interest, he was satisfied.'

Mr. Desmarais testified that on each of these three occasions Huberdeau had made no demands, promises, or threats of forfeiture or repossession, nor had he insisted upon any pledge or assignment of the hop allotment base, but each time indicated that he was satisfied with the interest alone. Mr. Desmarais' testimony was undisputed, too, that when accepting each payment, Mr. Huberdeau was aware of the depressed economic conditions of the hop industry and market. Mr. Huberdeau, he said, had visited him during the growing season and each fall after the hop-picking season. In making each of the three interest payments and on other occasions, Mr. Desmarais testified that he told Mr.Huberdeau that he would be unable to make the $5,000 payments due on the principal:

A. Yes, in the fall after hop-picking we would know where we stand by our crop and by our expenses we had during the year. Q. And this would be a matter of discussion between yourself, your husband and Mr. Huberdeau. A. Yes. Q. In other words, would you be telling him, 'We are just going to be able to make the interest payment,'? A. Yes, I would tell him we weren't able to make the payment. Q. And what would he say? A. He said it was all right as long as we could pay the interest.

This was the situation when Desmarais made the interest payment to Huberdeau on January 5, 1967. According to Mr. Desmarais' uncontradicted testimony, when the $6,600 check was paid, Mr. Huberdeau affirmatively indicated that he wanted the Desmarais to keep the farm; that he wanted them 'to make a go of it.' It was obvious that the hop farm, even in experienced hands, had not been making money. The seller, having already received a $40,000 down payment, plus two annual payments of $5,000 on principal, and assurance of further payment of interest at 6 per cent on an undiminishing principal, in all probability felt it to his financial advantage to keep the buyers in possession and operating the ranch until the conomic auguries of hop farming took a turn for the better.

Accordingly, the vendor's acceptance of the interest in January, 1967, with his indication that he was satisfied with it and hoped the Desmarais would stay on in possession and continue their hop growing, amounted to more than a simple waiver of or forbearance of the $5,000 principal payment. It constituted an affirmative undertaking by the vendor that he would not declare a forfeiture effective within the next crop year. In accepting the $6,600 interest for the third successive year under these circumstances, and in partial inducement to keep the buyers from surrendering the property, the sellers made an implied agreement not to forfeit the buyers' rights under the contract until the hops for the next ensuing growing season had been harvested and with reasonable dispatch marketed. The Desmarais, in buying the farm, had promised to pay principal and interest, but they did not contractually undertake to work it as a hop farm. The contract for purchase of the farm placed the buyer under no affirmative duty to raise hops or any other crop, or do anything other than pay the principal, interest and taxes, and preserve the vendor's security in the real estate and personalty. The circumstances of their paying and the vendors' accepting the $6,600 interest thus created an implied agreement that, if plaintiff accepted the interest, the defendants would continue to farm for another crop season. This produced more than a simple waiver or forbearance, and bound the sellers to leave the purchasers in possession for at least one more year.

The agreement to transfer the hop allotment base was signed by Desmarais after he had made the interest payment to Huberdeau on January 5, 1967. Mr. Huberdeau, around January 10, brought to the Desmarais the proposed draft agreement in controversy here, which, among other things, provided:

1. Seller agrees to waive the timely payment of the 1967 installment under the terms of that certain real estate contract referred to above, provided however, that Purchaser shall not get credit therefor against the balance due thereunder, and none of the other terms and conditions of said contract shall be affected in any way, but shall remain in full force and effect, including but not limited to, Purchaser's obligation to make timely installment payments hereafter.

2. Purchaser agrees that the allotment base granted to him pursuant to the Hop Marketing Order of 1965 shall be a part of the land included in said contract, and that in the event Seller elects to declare a forfeiture of Purchaser's rights under said contract because of a breach thereof by Purchaser, Purchaser agrees to take all steps and to perform all acts necessary to effect a transfer of said allotment base to Seller.

He asked the Desmarais to sign the agreement, but they told him they wished to consult with their attorney. They discussed the proposed agreement with their attorney a day or so later, and thereafter, on January 14,...