Ross v. Harding

• Decision Date: 16 April 1964
• Docket Number: No. 36704,36704
• Citation: 64 Wn.2d 231,391 P.2d 526
• Court: Washington Supreme Court
• Parties: Thomas B. ROSS and Mildred H. Ross, husband and wife, Plaintiffs, v. Charlotte M. HARDING, a widow, Appellant, Max E. LIEB and Sophie P. Lieb, husband and wife, Respondents.

Page 231

64 Wn.2d 231

391 P.2d 526

Thomas B. ROSS and Mildred H. Ross, husband and wife, Plaintiffs, v. Charlotte M. HARDING, a widow, Appellant Max E. LIEB and Sophie P. Lieb, husband and wife, Respondents.

No. 36704.

Supreme Court of Washington, Department 1.

April 16, 1964.

Willis C. Oldfield, Tacoma, for appellant.

Binns & Petrich, Tacoma, for respondents.

JAMES, Judge. ^*

The appellant and the respondents undertook the accomplishment of what must have seemed to them an uncomplicated business transaction. Involved was the sale of an almost extinct species of American free enterprise--a Mom and Pop grocery store. Unhappily, they now find that their efforts have brought them into court in a difficult and complex field of law. Their 'legal rights' must be determined by a consideration of the law of Contracts and specifically by the application of 'interpretive rules which are extremely subtle and artificial.' 12 Am.Jur. § 295, p. 848. ¹

On October 21, 1958, appellant, Charlotte M. Harding, and her then living husband, entered into a conditional sale contract for the purchase of the grocery store from plaintiffs, Thomas B. Ross and Mildred H. Ross, his wife. Appellant and her husband gave plaintiffs a real estate mortgage to secure performance of the conditional sale contract. On the same day, appellant and her husband signed, as lessees, an instrument signed, as lessor, by one Henry A. Keil, as administrator of the estate of Anna E. Pentland, deceased, covering 'That certain store building and living quarters situate at No. 4221 East 11th Street, Tacoma, Washington.' These were the premises in which the grocery store was established. The term provided in the instrument was 5 years with an option to lessees for an additional 5-year period. These premises, which were more fully described in the 'lease' by metes and bounds, were also identified by the same street address in the conditional sale contract and were referred to therein as 'Toddhaven Grocery.'

Appellant's husband died in August of 1959.

The transaction between appellant (individually and as administratrix of her deceased husband's estate) and respondents is encompassed in three instruments:

(1) Earnest Money Agreement and Sale of Personal Property, dated October 6, 1959. This document contains the following language of significance here:

'It is specifically understood and agreed that this offer is made subject to the written consent of the lessor of the said building to the assignment and/or renewal of the existing lease.'

(2) Assignment of Conditional Sales Contract, dated October 9, 1959. This document contains the following language of significance here:

'Also all interest in a certain lease dated October 21, 1958 made by Henry A. Keil as Administrator.'

(3) A paper which, in its entirety, is as follows:

'Tacoma, Washington

October 10, 1959

'I, Henry A. Keil, executor for the business known as Toddhaven Grocery, located at 4221 East 11th Street, Tacoma, Washington, give consent to Mrs. Mercedes Harding to underlet these premises to Mr. and Mrs. Max Lieb under the same conditions as in her present lease.

'Henry A. Keil

4114 Marine View Dr.' Pursuant to instrument No. 1, the respendents paid appellant $1,500 in cash. By the terms of the agreement, respondents assumed an unpaid balance on the conditional sale contract of $7,044.37 payable in monthly installments of $100, which included interest on deferred balances at 6 per cent per annum.

Respondents went into possession as directed by appellant's attorney, made monthly payments on the conditional sale contract to a bank for plaintiffs' account and monthly rental payments of $100 to Henry A. Keil. After April of 1960, respondents ceased making payments on either the contract or for rent, and, in May, abandoned the premises. The fixtures were left on the premises and the stock, which had been inventoried at less than $40 at the time of the sale to respondents, was entirely depleted.

Plaintiffs commenced this action for specific performance and joined both appellant and respondents as defendants. Plaintiffs sought judgment against both for the unpaid balance on the conditional sale contract and a decree of foreclosure of the real-estate mortgage executed by appellant and her husband. In appellant's answer and cross-complaint her alternative prayer was for dismissal of the action against her or for judgment over against respondents in the event of judgment against her.

The trial court entered judgment for the plaintiffs against the appellant for the balance due on the conditional sale contract and decreed a foreclosure of the real-estate mortgage. Both the plaintiffs' complaint and appellant's cross-complaint against respondents were dismissed.

Appellant's assignments of error all relate to the trial court's conclusion that the respondents never became legally bound to perform because of the failure of appellant to fulfill a 'condition precedent' which was a material part of the contract of sale.

The trial court's finding of fact No. 5 is as follows:

'Said 'Earnest Money Agreement and Sale of Personal Property' provides as follows:

"It is specifically understood and agreed that this offer is made subject to the written consent of the lessor of the said building to the assignment and/or renewal of the existing lease.'

'The building referred to was the building in which the business of the Todd Haven Store was conducted. The 'existing lease' referred to is in evidence herein. It was executed by Henry A. Keil 'as Administrator of the Estate of Anna E. Pentland, Deceased,' on October 21st, 1958. Said Henry A. Keil was discharged as Administrator of said Estate on July 29, 1957. Title to said building was at all times pertinent to this action vested in Esther A Marbut, Myrtle A. Keil and Evelyn E. Stein, as their separate property in equal undivided shares. Said purported lease was for a term of five years from November 1, 1958, renewable at Lessees' option for an additional term of five years, and was not assignable, nor was underletting or occupancy by any person permitted, without the written consent of lessor. No consent of any person was ever obtained to the assignment and/or renewal of said lease or any lease of said property to Defendants Lieb or either of them. That Henry A. Keil did execute a written consent to subletting by Mercedes Harding to Mr. and Mrs. Max Lieb. That except as to the above lease there was no evidence of fraud or misrepresentation by anyone. HBS.'

The trial court entered the following conclusions of law:

No. 7:

'The purported lease of the Todd Haven Store premises was made without authority, and was null and void from its inception. Defendant Harding by implication represented to Defendant Max E. Lieb that it was a valid lease and expressly represented that it was an 'existing lease'. Said representation was a material, substantive term and condition of the 'Earnest Money Agreement and Sale of Personal Property.' The leasehold, if valid, would have constituted a valuable estate.'

No. 8:

'The language concerning the lease which is quoted in Finding of Fact V embodies a material condition precedent which had not been complied with.'

There is no evidence to controvert the trial court's finding of fact No. 5. Neither is there any explanation whatever for the puzzling performance of Mr. Keil. Neither he nor any one of the owners of the real property which he purported to lease was called as a witness. Nor was any explanation tendered concerning their nonappearance.

Appellant's argument, when considered in its entirety, poses three questions, all referable to the provision in the sale agreement calling for a written consent to assignment or renewal of the 'existing lease.'

The first question to be determined is whether or not the provision in question constitutes a 'promise' or a 'condition precedent.' ²

A 'condition' whether it be 'precedent' or 'subsequent' may be either express, implied in fact, or constructive. 5 Williston, Contracts (3d ed.) § 668, p. 152; 3A Corbin, Contracts, §§ 631, 632, pp. 21, 22.

'Conditions precedent' are those facts and events, occurring subsequently to the making of a valid contract, that must exist or occur before there is a right to immediate performance, before there is a breach of contract duty, before the usual judicial remedies are available. 3A Corbin, Contracts § 628, p. 16; Partlow v. Mathews, 43 Wash.2d 398, 261 P.2d 394. A breach of a 'promise' subjects the promissor to liability in damages, but does not necessarily excuse performance on the other side. Nonperformance or nonoccurrence of a 'condition' prevents the promissee from acquiring a right, or deprives him of one, but subjects him to no liability. 5 Williston, Contracts (3d ed.) § 665, p. 132. Where it is doubtful whether words create a 'promise' or an 'express condition,' they are interpreted as creating a 'promise.' Restatement, Contracts § 261, p. 375; 5 Williston, Contracts (3d ed.) § 665, p. 133.

Whether a provision in a contract is a condition, the nonfulfillment of which excuses performance, depends upon the intent of the parties, to be ascertained from a fair and reasonable construction of the language used in the light of all the surrounding circumstances. 5 Williston, Contracts (3d ed.) § 663, p. 127.

Any words which express, when properly interpreted, the idea that the performance of a promise is dependent on some other event will create a condition. Phrases and words such as 'on condition,' 'provided that,' 'so that,' 'when,' 'while,' 'after,' or 'as soon as' are often used. 12 Am.Jur. § 295, p. 849; 5 Williston, Contracts (3d ed.) § 671, p. 161.

It would be difficult to choose words to more precisely express an intention to create a condition precedent than those used in the contract here to be construed.

'It is specifically understood and agreed that this offer is made subject to the written consent * * *' (Italics...