Pacific Warehouse Co. v. McKenzie-Hunt Paper Co.

• Decision Date: 22 July 1914
• Docket Number: 11095.
• Citation: 80 Wash. 489,141 P. 1147
• Court: Washington Supreme Court
• Parties: PACIFIC WAREHOUSE CO. v. McKENZIE-HUNT PAPER CO.

141 P. 1147

80 Wash. 489

PACIFIC WAREHOUSE CO. v. McKENZIE-HUNT PAPER CO.

No. 11095.

Supreme Court of Washington

July 22, 1914

Department 1. Appeal from Superior Court, King County; W. B. Stratton Judge.

Action by the Pacific Warehouse Company against the McKenzie-Hunt Paper Company. Judgment for plaintiff, and defendant appeals. Affirmed.

Trefethen & Grinstead, of Seattle, for appellant.

Preston & Thorgrimson, of Seattle, for respondent.

CROW C.J.

Action by Pacific Warehouse Company, a corporation, against McKenzie-Hunt Paper Company, a corporation, to recover rent alleged to be due upon a written lease. From a judgment in plaintiff's favor, the defendant has appealed.

On April 25, 1910, respondent, in writing, leased to appellant, then known as McKenzie-White Paper Company, a portion of the Maritime building in the city of Seattle, for the term of five years, at the monthly rental of $340. On the same date, and as a part of the same transaction, respondent also executed and delivered to appellant the following written agreement:

'In consideration of one dollar to us in hand paid, we hereby agree to make application to the city council for a permit for an overhead walk connecting the present overhead walk on the south side of Marion street, and extending across said Marion street, to connect with the doorway on the second floor at the south side of the building, known as the Maritime building. We further agree to use all honorable means of securing said permit, and as soon as same is granted, we agree to construct said overhead walk as aforesaid. If said permit should not be granted, or said walk constructed within a period of twelve months from date hereof, permission is given McKenzie-White Paper Company, at their option, to cancel the lease for part of the second floor and basement of said Maritime building made with them of even date herewith, or to amend same in such manner as shall be mutually agreeable to us, and to said McKenzie-White Paper Company.

'Dated this 25th day of April, 1910.

'Pacific Warehouse Co.'

'By E. Cardin, President.'

It is conceded that respondent made every reasonable effort to obtain the necessary permit from the city, but failed to do so. There is evidence that by mutual consent the time for obtaining the permit was extended until about July 1, 1911 as it then seemed probable that the permit could be obtained. The permit was finally refused by the city authorities, with the result that the overhead walk could not be constructed. Thereafter, and on July 5, 1911, respondent orally notified appellant that the permit could not be obtained, and requested appellant to exercise its option. On July 27, 1911, respondent served upon the appellant the following written notice:

'Seattle, Wash., July 27, 1911.

'McKenzie-Hunt Paper Co. Seattle, Washington--Gentlemen: Referring to the lease between ourselves and you, executed April 25, 1910, and our communication to you upon the same date in regard to overhead walk:

'We hereby notify you that the city authorities have refused us the permit in said communication referred to.

'We hereby require you to exercise the option granted to you in said communication of terminating said lease, and to exercise said option forthwith. It is not, and never has been, our intention that the option therein referred to could be exercised by you at any time during the term of the lease, but that you were to exercise the option forthwith upon the happening of the contingency. We have no idea of being bound by a lease to you and you not being bound on the lease to us.

'Unless we receive a written communication from you within forty-eight hours from this date, saying definitely that you choose to terminate the lease or choose to continue the lease, we shall assume that your choice is to continue the lease.

'Yours respectfully,

'Pacific Warehouse Co.,

'Per E. Cardin, Pres.'

There is some evidence to the effect that about the same date--July 27, 1911--respondent leased to appellant, at the rental of $40 per month, additional floor space, which was then reasonably worth $100 per month. Respondent claims that this was done in consideration of appellant's oral agreement to waive its option to terminate the principal lease. Appellant denies this alleged oral agreement, claiming the lease of the additional floor space was an independent transaction having no relation whatever to appellant's option. In any event, appellant failed to notify respondent of its exercise of the option at any time prior to January 16, 1912, but continued in possession, paying rent according to the terms of the principal lease. On January 16, 1912, appellant, in writing, notified respondent that it then elected to cancel the lease, and that it would vacate the premises on February 29, 1912. On January 19, 1912, respondent, in writing, notified appellant that respondent denied appellant's right to then exercise the option, and that respondent would hold appellant for the rent during the remainder of the five-year term. On February 29, 1912, appellant vacated the premises, and surrendered the keys to respondent's manager. There was evidence introduced by appellant tending to show that at all times from July 17, 1911, until January 16, 1912, it was making an effort to consolidate with some other firm, or to close its business and sell its stock; that it succeeded in making a sale about January 16, 1912; and that it then had no further use for the premises after February 29, 1912. There was no evidence showing the extent of appellant's business or the value of its stock.

Several contentions are made by the respective parties, but the controlling question before us is whether appellant exercised its option to terminate the lease, and gave respondent...