Kahin v. Lewis
| Decision Date | 17 July 1953 |
| Docket Number | No. 32352,32352 |
| Citation | 259 P.2d 420,42 Wn.2d 897 |
| Court | Washington Supreme Court |
| Parties | KAHIN et al. v. LEWIS et al. |
Fred T. Smart, Seattle, Kelley, O'Sullivan & Myers, Seattle, for appellant.
Robbins & Robbins, Ralph E. Franklin, Seattle, for respondents.
This action was instituted by plaintiffs pursuant to the uniform declaratory judgment act, RCW 7.24.010 to 7.24.140 ], inclusive, seeking adjudication as to their rights and status arising out of a certain ninety-nine year lease. Defendants were the lessees and their assignee.
The lessees entered a general denial. The assignee admitted nearly all the allegations of plaintiffs' complaint and cross-complained against the lessees for an adjudication of its rights and status under an agreement for assignment of the lease. The lessees answered the cross-complaint denying certain allegations and asserting two affirmative defenses to which the assignee replied. The lessees by trial amendment added a third affirmative defense to their answer asking that the cross-complaint be dismissed because no justiciable controversy existed.
The trial court heard evidence on the issues tendered by the original complaint and entered findings of fact, conclusions of law and a judgment declaring the rights of plaintiffs and both defendants under the lease with respect to the option price hereinafter mentioned. In the same judgment the court dismissed the assignee's cross-complaint against the lessees without prejudice. From the portion of this judgment dismissing the cross-complaint this appeal was taken by the assignee.
The facts alleged in the cross-complaint may be summarized as follows: Plaintiffs George Kahin and Orlo Kellogg leased certain premises to Harry Lewis and his wife (respondents) for a ninety-nine year term commencing August 30, 1947. Under the terms of the lease respondents were required to complete the construction of a building on the property within thirty months at a cost of at least forty thousand dollars. The construction cost was to be computed under a formula contained in paragraph 4(b) of the lease which read:
'* * * such cost to be the building contractor's cost of labor and materials plus ten percent, together with architect's fees of not over six percent.'
The lease further provided that within three months after the substantial completion of the building respondents were to notify plaintiffs of the actual cost of construction thereof and, in the absence of such notification, it was to be assumed for the purpose of fixing the option price hereinafter mentioned that the construction cost was not more than forty thousand dollars.
By the terms of the lease plaintiffs retained an option to terminate the lease and retake the premises and improvements at the end of the tenth year of the term and for one year thereafter (i. e., at any time between August 30, 1957 and August 30, 1958). In the event that plaintiffs should elect to exercise this option during the specified period, the option price was to be ascertained by multiplying by two the actual cost of the building computed in accordance with paragraph 4(b) of the lease less depreciation thereon from date of substantial completion at the rate of three percent per annum. The building was erected and substantially completed on April 3, 1950.
Respondents on June 29, 1950, caused a written statement to be delivered to plaintiffs purporting to show that the total cost of constructing the building was $66,795.98. Plaintiffs promptly objected to several items in the statement on the ground that they were not properly includable in computing the option price. Plaintiffs contended that respondents had not shown the actual construction costs (computed according to the lease) to be more than $43,708.55.
On July 3, 1950, respondents agreed in writing to assign to appellant their leasehold interest and rights as lessee under the lease. This instrument contained the following provision:
Pursuant to this agreement and relying on the quoted statement appellant accepted the assignment of the lease on July 7, 1950.
Paragraph VI of appellant's cross-complaint alleged:
'This defendant contends:
'(a) That said warranty relates to the costs of construction computed in accordance with paragraph 4(b) of said lease;
'(b) That it warrants to this defendant a basis of '$60,000.00 more or less', or more specifically the amount of $66,795.98, the amount of said costs as actually submitted by defendant, Harry Lewis, from which could be computed the price payable to it under the option of termination contained in paragraph 16 of the lease; and
'(c) That consequently if said price be declared to be any less than twice the difference between $66,795.98 and a sum equal to 3% thereof per annum from April 3, 1950, until the exercise of said option, the warranty would make the defendants, Harry Lewis and wife, liable to this defendant's for the amount of its damage by reason thereof.
'On the contrary, the defendants Harry Lewis and wife, categorically dispute and oppose these contentions, by reason of which an actual controversy affecting the substantial rights of the parties exists between them.'
The relief prayed for as to respondents was:
'2. In the event the court finds the construction cost of said improvement, computed in accordance with Paragraph 4(b) of the lease, to have been less than the $66,795.98 claimed by defendants Harry Lewis and Wife, that the court further finds the warranty contained in paragraph 4 of the Agreement For Assignment Of Lease to be related to Paragraphs 4(b) and 16 of the lease, and that the court declare the defendants, Harry Lewis and wife, to be liable to this defendant in such amount as it may be damaged by exercise of plaintiff's option at the lesser price.'
The trial court in its conclusion of law No. 3 stated its ground for entering judgment dismissing appellant's cross-complaint against respondents as follows:
'(3) That the Cross-Complaint of the defendant, Lake City Catering Co., Inc., does not state facts showing a controversy properly...
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