Peninsular Sav. & Loan Ass'n v. C.J. Breier Co.

• Decision Date: 04 March 1926
• Docket Number: 19270.
• Court: Washington Supreme Court
• Parties: PENINSULAR SAVINGS & LOAN ASS'N v. C. J. BREIER CO.

243 P. 830

137 Wash. 641

PENINSULAR SAVINGS & LOAN ASS'N v. C. J. BREIER CO.

No. 19270.

Supreme Court of Washington

March 4, 1926

Department 1.

Appeal from Superior Court, Kitsap County; Fench, Judge.

Action by the Peninsular Savings & Loan Association against the C.J Breier Company. From a judgment for the plaintiff, defendant appeals. Reversed and remanded for further proceedings.

Rummens & Griffin, of Seattle, for appellant.

Marion Garland, of Bremerton, for respondent.

FULLERTON J.

This is an action by the Peninsular Savings & Loan Association against the C.J. Breier Company to recover in quantum meruit for the rental of certain premises situated in the city of Bremerton, in this state. The cause was tried to the court sitting without a jury, and resulted in a judgment in favor of the association for $548. The C.J. Breier Company appeals.

The principal facts of the case are not in serious dispute. The appellant is a corporation organized under the laws of the state of Idaho. It operates a system of stores for the sale of merchandise in the states of Idaho, Washington, and Oregon; one of such stores being located at Bremerton. The manner in which the appellant is organized and its method of doing business is stated only generally in the record, but we gather therefrom that it is incorporated for $1,000,000 divided into shares of stock known as common and preferred. When a new store is established, there is assigned to it a certain proportion of the stock, both common and preferred the preferred stock being held by the stockholders of the general company, and the common stock is divided between the general stockholders and the person who is put in charge of the particular store. In this instance there were assigned to the Bremerton store 12,600 shares, of which 8,400 were preferred and 4,200 were common. One C. R. Gates was made local manager of the store, and to him were assigned one-third of the shares of the common stock. His compensation was a fixed salary and such a share in the profits as the common stock would earn from the local business.

The powers of the local manager were restricted. He was given no authority to purchase merchandise or to pay for merchandise purchased. The buying was done by representatives of the general corporation employed for that purpose, and the bills incurred therefor were paid from the company's general office. Nor does it appear that the local manager had power as between himself and his principal, to enter into any form of obligation on behalf of the company, even for that department of which he was manager; his powers being confined solely to the sales of merchandise.

For some months prior to the beginning of the year 1924 the managers of the corporation were desirous of making a change in the location of the store at Bremerton. They were occupying a place on which they had a long-time lease, but it was thought another location would be more desirable. To that end Gates began negotiations with the respondent looking to the rental of a building in which the respondent had a leasehold interest. These negotiations finally terminated in an agreement by which Gates, on behalf of the appellant, agreed to sublease the premises for a three-year term, at a rental of $150 per month, payable monthly in advance. By the terms of the agreement certain improvements were to be made in the premises at the cost of the lessors, and a deposit was to be made by the lessees, to be credited as rental on the last months of the lease. These negotiations reached their termination on April 17, 1924, at which time the respondent delivered to Gates a key to the premises. Shortly thereafter a formal written lease was prepared by the respondent and forwarded to the head office of the appellant for execution. The appellant, however, did not execute the lease, and certain of its executive officers came to Bremerton in the latter part of April or the first of May to look over the situation. On looking it over, they declined to enter into the lease, and so notified Gates. It appears from their testimony, of which there is no direct contradiction, that they were not informed by Gates how far the negotiations had proceeded, and did not then know that Gates had accepted a key to the premises. In so far as the executive officers of the appellant knew, the transaction then ended. It appears, however, that Gates kept the key to the premises until the latter part of July or the 1st of August following before he returned it to the respondent. No actual possession of the premises was taken, no rental was paid in advance, nor was any deposit made. There is no direct evidence as to the time when Gates first informed the respondent that the agreement to lease would not be carried out by the appellant, but there is indirect evidence that it must have been so informed long prior to the time Gates finally surrendered the key. This we gather from the following circumstance. Immediately after Gates learned that the negotiated lease would not be entered into, he began negotiations looking to a severance of his relations with the appellant. These negotiations continued until the latter part of August, 1924, when a settlement was reached, and Gates parted with his interests. While the negotiations were pending, Gates requested the respondent not to sue the appellant for the rent until after his relations were so severed, and the respondent accommodated him. Not only did it not so sue, but it did not even notify the appellant until after the settlement had been concluded that it had a claim against it for rent.

The...