Perkins v. Brown

• Decision Date: 07 December 1934
• Docket Number: 25118.
• Citation: Perkins v. Brown, 179 Wash. 597, 38 P.2d 253 (Wash. 1934)
• Parties: PERKINS v. BROWN et al.
• Court: Washington Supreme Court

38 P.2d 253

179 Wash. 597

PERKINS v. BROWN et al.

No. 25118.

Supreme Court of Washington

December 7, 1934

Department 2.

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

Action by William D. Perkins against Edwin J. Brown and others. From an adverse judgment, defendant Netherlands American Mortgage Bank appeals.

Reversed.

Allen Froude & Hilen, of Seattle, for appellant.

Edward H. Chavelle, of Seattle, for respondent.

STEINERT Justice.

This is an action to recover upon a promissory note and to foreclose a real estate mortgage given as security therefor. Plaintiff obtained a decree of foreclosure and also a money judgment against the makers of the note and the grantee of the mortgaged property for the full amount thereof, with interest and costs, plus the amount of taxes paid by the mortgagee. The grantee has appealed from the money judgment.

The facts are these: Appellant herein owned a seven-acre tract of land known as the 'Monitor Orchard,' together with a warehouse thereon, in Chelan county. Western Cold Storage Company, a corporation having its principal office in Wenatchee, was engaged in the business of packing fruit. William C. Brown was the president of the corporation, and his father, Edwin J. Brown, Sr., and his brother, Edwin J Brown, Jr., were stockholders therein. The corporation appears to have been under the control of the Browns.

Edwin J. Brown, Jr., and wife were the owners of lots 2 and 3 block 95, Terry's Second addition to the city of Seattle, hereinafter referred to as the 'Seattle property.' On July 26, 1928, Edwin J. Brown, Jr., and wife and Edwin J. Brown, Sr., and wife, executed and delivered to respondent their promissory note for $8,000, due in three years from date thereof, and secured by a mortgage on the Seattle property. It was upon this note and mortgage that this action was brought in November, 1932. We will hereinafter refer to these instruments as the 'Brown note' and the 'Brown mortgage,' respectively.

In the meantime, that is, on March 7, 1929, appellant and Western Cold Storage Company, hereinafter referred to as the 'storage company,' entered into a written agreement wherein appellant agreed to sell, and the storage company agreed to purchase, the Monitor Orchard and warehouse, upon terms set out in the contract, the material portions of which read as follows:

'1. The purchase price for said property is and shall be the sum of One Hundred Fifty Thousand Dollars ($150,000.00), which shall be payable in the following manner:

'(a) Second party [the storage company] shall cause to be conveyed to first party [appellant] the following described real property situate in Seattle, King County, Washington, to-wit: [the Seattle property] which is accepted by the first party at the agreed value of Sixteen Thousand Dollars ($16,000.00), subject to an Eight Thousand Dollar ($8000.00) mortgage thereon, which bears interest at 7% per annum, for which mortgage the Purchaser herein agrees to reimburse the Vendor herein in the following manner: First, by giving to the Vendor herein its Eight Thousand Dollar ($8000.00) promissory note with interest at 7% per annum payable on or Before January 1, 1930 and endorsed by Dr. Edwin J. Brown and Wm. C. Brown. * * *

'(b) The Purchaser herein shall cause to be delivered to the Vendor forthwith, an Assignment of a Sixty-seven Hundred and Fifty Dollar ($6750.00) purchase money note and mortgage wherein Dr. Edwin J. Brown is the Mortgagee and R. H. Maus is the Mortgagor, of certain equipment described in said mortgage, which Assignment shall be accepted by the Vendor herein, as of this date, at an agreed value of Five Thousand Dollars ($5,000.00). * * *

'4. It is particularly provided, however, that if the payments made to the Vendor herein, exclusive of the initial sums mentioned in subdivisions (a), (b) of paragraph 1, at the end of the three years, do not equal the interest on the balance of the purchase price, and the Purchaser herein does not make up such deficit on or Before March 1, 1932, the Vendor may cancel this contract, retain all payments theretofore made. * * * '7. The Vendor herein shall pay Before delinquency, all real estate taxes that may have been levied for the year 1928 but payable in 1929, and that may be levied subsequent to this date, upon the property in King County, Washington, which it is accepting as a part of the purchase price herein as mentioned in subsection (a) of paragraph 1. * * *

'19. The Purchaser herein shall forthwith furnish to the Vendor an abstract of title or title insurance at its option, showing merchantable title in Edwin J. Brown and wife, covering the property in King County, Washington mentioned in subdivision (a) of paragraph 1, which title shall be free and clear of encumbrances save and except 1928 taxes. * * *

'22. Time is of the essence of this contract and in the event the Purchaser shall fail to properly and timely care for said premises as mentioned in paragraph 8, or to make the payments as hereinBefore provided * * * then the Vendor may at its option declare this contract forfeited and determined, * * * and in the event of such forfeiture, all payments theretofore made by the Purchaser herein shall be retained by the Vendor. * * *'

Pursuant to this contract, the storage company, on March 7, 1929, executed and delivered to appellant its note for $8,000, payable January 1, 1930, and indorsed by Edwin J. Brown, Sr., and William C. Brown. This note will hereinafter be referred to as the 'storage company note.' At about the same time, Edwin J. Brown, Jr., and wife delivered to appellant a statutory warranty deed covering the Seattle property. This deed was dated January 2, 1929, and acknowledged March 6, 1929. Shortly thereafter, appellant conveyed and assigned all its interest in the Monitor ranch and the above contract to defendant Continental Land Company, a corporation, subject to the cold storage company's contractual rights. Some time prior to April 25, 1930, Continental Land Company, in an action against the storage company, sought to forfeit the contract. On the date last mentioned, however, a stipulation was entered into between the parties to that action, whereby certain moneys owing to the storage company from a garnishee in the action were to be applied on the $8,000 storage company note which Edwin J. Brown, Sr., and William C. Brown had indorsed. Under the arrangement then perfected, that note was canceled, and in its place the storage company gave its new note in the sum of $5,610.80, payable on or Before July 1, 1932.

When the present action was instituted, appellant here was made a party, on the theory that by the contract above referred to it had assumed to pay the Brown mortgage. The defendants Edwin J. Brown, Sr., and wife and Edwin J. Brown, Jr., and wife defaulted in the action, and upon the trial the court rendered judgment against the two Browns and their wives and also against appellant for the full amount of the Brown note, with interest and costs, including also certain taxes paid; the whole amount aggregating $12,940.54. As appears by the memorandum decision in the case, the trial court held that, as a matter of law, the Brown note, herein sued on, had been assumed by appellant, by virtue of the terms of its contract with the storage company, and that therefore appellant was liable for the deficiency remaining after the sale of the mortgaged property. The one question presented by this appeal relates to the liability of appellant for any deficiency so remaining.

The principal dispute between the parties is with reference to the construction to be given to the word 'reimburse' used in paragraph 1(a) of the contract.

We preface our discussion of the question by calling attention to several details already disclosed by our statement of the case. In the first place, this is not a suit between the Browns and appellant. It is a suit brought by respondent against the Browns and appellant. The rights, if any, of the Browns against appellant are therefore, not involved here. In the next place, it will be observed that, according to the terms of the deed from Edwin J. Brown, Jr., and wife to appellant, the latter did not assume or agree to pay anything, but merely took the Seattle property subject to the 'existing mortgage for $8,000.00.' In the third place, the contract, on the terms of which respondent relies, did not provide that the purchaser was to 'reimburse' the vendor for the payment of the mortgage, but only to reimburse it for the mortgage. It will also be observed that the initial sums referred to in paragraph 4 of the contract are made up of two items: (1) $16,000 representing the agreed value of the Seattle property, to maintain which amount the note of $8,000 of the storage company was executed and delivered on account of the outstanding Brown mortgage, and (2) $5,000...