National Bank of Commerce of Seattle v. Dunn

• Decision Date: 22 April 1938
• Docket Number: 26781.
• Citation: 78 P.2d 535,194 Wash. 472
• Parties: NATIONAL BANK OF COMMERCE OF SEATTLE et al. v. DUNN.
• Court: Washington Supreme Court

78 P.2d 535

194 Wash. 472

NATIONAL BANK OF COMMERCE OF SEATTLE et al. v. DUNN.

No. 26781.

Supreme Court of Washington, En Banc.

April 22, 1938

Appeal from Superior Court, King County; Howard M. Findley, Judge.

Action for rent due under a lease of business property by the National Bank of Commerce of Seattle and another, as trustees of the trust created by the will of Mattie A. Thomas deceased, against Arthur G. Dunn, individually, and as executor of the estate of Jeanette W. Dunn, deceased. From an adverse judgment, the plaintiffs appeal.

Reversed and remanded with instructions.

Kerr McCord & Carey and Anthony Kane, all of Seattle, for appellants.

Donworth Paul & Donworth, Roberts & Skeel, and W. E. Evenson, Jr., all of Seattle, for respondent.

BEALS Justice.

The National Bank of Commerce of Seattle and George C. Wheeler, as trustees of a trust established by the will of Mattie A. Thomas, deceased, instituted this action against Arthur G. Dunn, individually, and as executor of the will of his late wife, Jeanette W. Dunn, for the purpose of recovering judgment for rent, which the plaintiffs claimed to be due under a lease of business property in the city of Seattle. The trust in question was the subject of the action of Thomas v. National Bank of Commerce, 187 Wash. 521, 60 P.2d 264, but no question presented in this action was considered in the former suit.

Defendant having answered, an amended reply was filed, and additional relief was requested in a supplemental complaint, to which defendant answered. The defendant admitted liability in the sum of $3,916.24, together with $19 accrued costs, paying the aggregate amount into court for the benefit of plaintiffs, and the action was tried to the court sitting without a jury. Findings of fact and conclusions of law in defendant's favor were entered, followed by a judgment awarding plaintiffs the amount which defendant admitted owing, and denying plaintiffs any further relief. From this judgment, plaintiffs have appealed.

Error is assigned upon the refusal of the trial court to make findings of fact and conclusions of law requested by appellants; upon the making of the findings and conclusions signed by the court; upon the refusal of the court to award appellants judgment for any amount in excess of that which respondent admitted owing; and upon the entry of judgment for that sum only.

It appears that Mattie A. Thomas (then Mattie A. Phillips), during the month of August, 1909, was the owner of a tract of real estate located at the southwesterly corner of Third avenue and Stewart street, in the city of Seattle. August 10, 1909, Mattie A. Thomas, by an instrument in writing, leased the land to Cline Piano Company, a corporation, for the term of fifty-one years, from August 1, 1909, at an annual rental of $12,600, payable $1,050 on the first day of each calendar month, beginning January 1, 1911. The lessee took possession of the property, improved the same by erecting thereon a building, as it had agreed to do, and June 24, 1912, assigned its interest in the lease to Virginia Investment Company, a corporation; the lessee's interest finally becoming vested in Arthur G. and Jeanette W. Dunn, by assignment dated May 25, 1928. This assignment was accepted by Mr. and Mrs. Dunn on the day following its date, the trustees under the Thomas will giving their consent thereto. It is admitted that Mr. and Mrs. Dunn took possession of the premises as owners of the lessee's interest in the lease, and that this interest was their community property.

Over two years prior to the assignment to the Dunns, Mattie A. Thomas died, leaving a will, which was thereafter probated Before the superior court for King county, and December 31, 1926, the lease in question, with other property of her estate, was distributed, to be held in trust according to the terms of her will. At the time of the commencement of this action, the appellants herein, the National Bank of Commerce of Seattle and George C. Wheeler, were acting trustees under the Mattie A. Thomas will, and were entitled as such to institute and maintain this action.

September 7, 1929, Jeanette W. Dunn died, her will was probated, and the appointment of respondent, Arthur G. Dunn, as executor thereof was confirmed by the court. In this opinion, by respondent we mean Mr. Dunn, personally and as executor. The respondent admitted that he held possession of the demised premises under the lease from the death of his wife until March 24, 1933, but denied that he had been in possession of the premises thereafter.

In their complaint, appellants allege that Mr. Dunn had paid the rent up to and including November, 1932, but had made no payments thereafter, save the sum of $1,000, paid February 21, 1933. Appellants prayed for judgment for rentals aggregating $41,000, together with interest. By his answer, respondent admitted an indebtedness to appellants on account of rent in the sum of $3,916.24, but denied any further indebtedness. By their supplemental complaint, appellants prayed for judgment for rent which had accrued after the institution of the action. Respondent alleged, by way of an affirmative defense, that March 24, 1933, he, individually and as executor of the will of his deceased wife, assigned his interest in the leasehold to Ansonia Improvement Company, a corporation, and that this corporation accepted the assignment and took possession of the property, thereby terminating all liability on the part of respondent for the further payment of rent. It appears without dispute that respondent Arthur G. Dunn, together with his sons, Edward B. and Arthur G. Dunn, Jr., during the month of March, 1933, organized, under the laws of the state of Washington, a corporation called Ansonia Improvement Company, having a capital stock of 500 shares of no par value, to which corporation the lease was later formally assigned. Appellants, in their amended reply, alleged that they had never consented to the assignment of the lease to the corporation (which will hereinafter be referred to as Ansonia), and that, in so far as appellant's claim for rent is concerned, the assignment to Ansonia nowise released respondent from an obligation under the lease to pay rent. At the time of the trial, appellants claimed rent in the aggregate sum of $48,300, with accumulated interest. Respondent admitted liability as above stated.

The trial court was of the opinion, as expressed in the judgment, that respondent's liability to appellants for rent under the lease referred to in the complaint herein was based solely upon privity of estate, and that the making of the assignment of the lease to Ansonia terminated all liability on the part of respondent for the payment of the rent called for by the lease. The first question, then, which may properly be determined is whether or not the lease contains a covenant to pay rent, upon which respondent, as successor in interest of the original lessee, is still liable, by way of privity of contract, notwithstanding the assignment of the lease to Ansonia. Appellants contend that they never consented to or recognized that assignment, and that for other reasons the relationship between appellants and respondent was nowise changed thereby; that the original lease contains a covenant to pay rent; and that respondent, holding under the lease as successor in interest of the original lessee, is by privity of contract obligated to pay the rent which the lease calls for.

The original lease, after an opening paragraph containing the date and the names of the parties, continues:

'Witnesseth: That the said lessor, upon the terms, conditions and considerations hereinafter set forth, does hereby lease and demise unto the said lessee, their executors, administrators and assigns, those certain premises * * *

'For the term of fity-one years from the 1st day of August, 1909, to and including the 31st day of July, 1960, at an annual rent of twelve thousand six hundred ($12,600) dollars per year, paid in the following manner:

'Five thousand two hundred and fifty ($5,250) dollars paid this day to the lessor, as five months advance rent up to the 1st of January, 1910 (receipt of which is hereby acknowledged). The rent for January, 1910, to be paid in advance.

'The lessor further agrees to grant lessee eleven months free rent beginning the first day of February, 1910, and ending December 31st, 1910, and thereafter the said annual rent is to be paid in monthly installments of one thousand and fifty ($1,050) dollars each, payable in advance on the first day of each calendar month beginning with January 1st, 1911, in gold coin of the United States of the present standard of weight and fineness, at such place in the city of Seattle as the lessor may from time to time previously designate in writing, and in default of such designation, then on the leased premises.

'It is further expressly covenanted, understood and agreed between the parties hereto as follows:'

Here follow nineteen numbered paragraphs, the first providing for the deposit by lessee of $5,000, to be returned when lessee should complete and pay for a building, costing not less than $50,000, to be constructed on the land covered by the lease the second providing that in case of forfeiture of the lease, 'the damages, in so far as rents are concerned,' should be in a stated amount. The third paragraph provides for the construction of the building referred to in the first paragraph; the fourth stating that the lessee should, at his own expense, maintain the improvements on the property in good repair, and that the lessee might, under certain circumstances, construct another building, if desired. By the fifth paragraph, the lessee covenanted, promised, and agreed...