Rains v. Lewis, 2474-II

• Decision Date: 16 May 1978
• Docket Number: No. 2474-II,2474-II
• Citation: 579 P.2d 980,20 Wn.App. 117
• Court: Washington Court of Appeals
• Parties: George C. RAINS, Jr. and Sandra Rains, his wife, Respondents, v. William B. LEWIS and Jane Doe Lewis, his wife, Curtis H. Coons and Rosemary Coons, his wife, and assignee Transamerica Land Banque Corporation, Appellants, George C. Rains and Fern D. Rains, and R. Bruce Harrod, Respondents.

Page 117

20 Wn.App. 117

579 P.2d 980

George C. RAINS, Jr. and Sandra Rains, his wife, Respondents, v. William B. LEWIS and Jane Doe Lewis, his wife, Curtis H Coons and Rosemary Coons, his wife, and assignee Transamerica Land Banque Corporation, Appellants George C. Rains and Fern D. Rains, and R. Bruce Harrod, Respondents.

No. 2474-II.

Court of Appeals of Washington,Division 2.

May 16, 1978.

Eugene A. Stock, Marysville, Curtis H. Coons, R. Bruce Harrod, Bremerton, for appellants.

Richard Headrick, Port Angeles, for respondents.

SOULE, Judge.

Transamerica Land Banque Corporation, also known as Transway Corporation, is the assignee of the defendants, William B. and Charlotte Lewis, and the only party pursuing this appeal.

The appeal is from a judgment entered on June 18, 1976 denying a number of defendants and Transamerica the right to reinstate a real estate contract which previously had been ordered forfeited by a judgment dated December 5, 1975. That forfeiture was subject to a right to reinstate the underlying contract by making payment in full within 120 days of December 5, 1975. We affirm the judgment.

The operative facts are relatively simple although the history of the underlying contract and ensuing litigation is not.

On January 22, 1974 an action was started by plaintiffs to forfeit the contract which originally had been formed in 1967. A lis pendens was duly filed on the same day. On December 5, 1975 a judgment of forfeiture was entered. Transamerica was not a party of record at that time. However, it had taken a quit claim deed from defendants Lewis on December 3, 1974 which it recorded on January 2, 1975 and was therefore subject to the constructive notice provided by the lis pendens. As assignee and successor to Lewis, Transamerica desired to exercise its right to reinstate the contract within the grace period. To that end, it attempted to arrange financing.

The 120th day fell on Saturday, April 3, 1976. By its judgment of June 18, 1976, the trial court held that April 3, 1976 was the last day on which to exercise the right. However, on Monday, April 5, 1976, Transamerica tendered a check in full payment to plaintiffs' attorney in Port Angeles. The plaintiff, George C. Rains, Jr., obtained the check from his attorney on the morning of April 6. He did not expressly refuse the tender on the ground that the time to reinstate had expired. Rather, he immediately telephoned the Seattle bank upon which it was drawn and was informed that there were not sufficient funds in the account to cover it. Upon receiving this information, he drove to Seattle and about 2 p. m. displayed the unendorsed check to an appropriate bank employee who checked with the operations officer. The employee reported to Rains, that there were no funds to cover it, and if presented, the bank would not honor it. Thereupon, Rains requested that the check be stamped "N.S.F." and returned to him, which was done.

Meantime, about noon on April 6, a representative of Transamerica had called C. Harry Norstrom, executive vice-president of the bank, advised Norstrom that the subject check had been issued and that a cashier's check to cover it was available in Marysville, Washington, at the office of the attorney for Transamerica. Mr. Norstrom left the bank for the purpose of obtaining the cashier's check. After receiving it, he returned to the bank shortly after 2 p. m. and, for the first time, told the operations officer about the certified check. The operations officer then told Norstrom that the Transamerica check had already been presented for payment and that it had not been honored. It is not suggested that Norstrom had ever agreed with Transamerica to cover its check in the event that it was presented before funds were on deposit to cover it.

Norstrom immediately informed plaintiffs' attorney of the fact that funds were not available to honor the check and apparently they have remained available ever since. However, plaintiffs have consistently held to the position that whatever rights Transamerica may have had to reinstate the contract were lost because Transamerica did not meet the time limit established by the court and tendered a check without sufficient funds with which to pay it. The evidence of that position is found in the affidavit of George C. Rains, Jr., dated April 24, 1976:

That they had substantial time to make arrangements for satisfaction of the Court order and failed to meet the statute of limitations established by the Court. Also, failing on April 5th and 6th to have funds on hand at the bank to cover said check, Transway Corporations knowingly tendered a check on April 5, 1976, being fully aware that at such time there were not sufficient funds on hand to cover said check.

Since the money was not paid as directed, I request that all interest of the defendants and anyone claiming by or through them be forfeited, cancelled and extinguished.

On April 22, 1976 Transamerica moved to intervene in the original action. Affidavits of Norstrom and Rains were filed in connection with the motion. The application was denied. From the record we gather that the hearing on the matter was on May 28, 1976 but the formal order denying leave to intervene was not signed until June 18, 1976, the date upon which the judgment confirming the previous forfeiture was also signed. That judgment recites that Transamerica appeared by its attorney in place of William B. Lewis.

The purpose of the attempted intervention was of course to enable Transamerica to become a party of record in an effort to protect whatever interest it had, including its right of appeal.

Three issues are presented by the appeal:

1. When the 120th day allowed for reinstatement falls on Saturday, does CR 6(a) operate to extend the time to the following business day?

2. (a) When a check for which there are not sufficient funds on deposit is tendered to reinstate a contract and, after the last day for reinstatement has expired, is personally taken by the payee to the bank on which it is drawn, there submitted for payment, marked "N.S.F." and returned to the payee after a search of the bank records reveals that insufficiency, is the court justified in confirming the previously entered judgment of forfeiture?

(b) Is the court so justified even though an officer of the bank acting at the behest of the maker of the check and while away from the bank had already received from the maker of the check sufficient funds to cover it but had not yet deposited it to the maker's account or in any way communicated with any personnel of the bank concerning the existence and his personal possession of the funds?

3. Was the trial court justified in refusing to permit Transamerica to intervene after the time for reinstatement had expired?

We do not reach the first issue relating to the effect of CR 6(a) upon the situation when the last day to reinstate falls on a Saturday. The plaintiff did not refuse initial tender of the check on this or any other ground. Because plaintiff unprotestingly accepted the check, an argument could be made that he waived his right to thereafter disclaim that tender. The record is confused as to his intent in this regard and we prefer to base our holding on other grounds.

Upon the second issue, it must be remembered that a judgment or forfeiture had already been entered. The "final judgment" in this case was entered December 5, 1975. Nestegard v. Investment Exchange Corp., 5 Wash.App. 618, 489 P.2d 1142 (1971). The order of June 18, 1976 confirming the forfeiture is a "final order after judgment." RAP 2.2(a)(13). Forfeitures are not favored in law and when such relief is sought, the court may exercise its discretion and grant a period of grace, setting terms whereby the contract can be reinstated. State ex rel. Foley v. Superior Court, 57 Wash.2d 571, 358 P.2d 550 (1961); Dill v. Zielke, 26 Wash.2d 246, 173 P.2d 977 (1946); Ryker v. Stidham, 17 Wash.App. 83, 561 P.2d 1103 (1977).

Such a period of grace was granted in this case and Transamerica, although not a formal party, was well aware of the terms and as successor to Lewis, could claim no greater rights than could Lewis. Now, because of the complications arising from the delicate state of its bank account, it is in effect asking for further equitable relief, which the trial judge in his discretion, denied. Based upon the record before us, including the lengthy history of the litigation, we are not prepared to find that the trial court abused its discretion. If Transamerica is to prevail, it must now be on the ground that its tender was legally adequate and that the dishonor of the check was improper.

We find that the dishonor of the check was proper and not the result of bank error, as urged by Transamerica.

It is undisputed that when the check was issued, the account was not sufficient to cover it. All agree...