Sam Levitz Furniture Co. v. Safeway Stores, Inc.

Decision Date22 August 1969
Docket NumberCA-CIV,No. 2,2
Citation457 P.2d 938,10 Ariz.App. 225
PartiesSAM LEVITZ FURNITURE COMPANY, Inc., an Arizona Corporation, Appellant, v. SAFEWAY STORES, INC., a Maryland Corporation, and Arizona Land Title & Trust Company, as Escrow, Appellees. 681.
CourtArizona Court of Appeals

S. Leonard Scheff, Tucson, for appellant.

Snell & Wilmer, by Maynard P. Goudy and Arthur P. Greenfield, Phoenix, for appellees.

MOLLOY, Chief Judge.

This is a sequel to a reversal rendered by this court in Arizona Land Title & Trust Co. v. Safeway Stores, Inc., 6 Ariz.App. 52, 429 P.2d 686 (1967). 1 In this previous opinion, we decided that it was not clear whether the word 'purchase' as used in this contract for the sale of real estate meant the consummation of a binding contract of purchase with the owners of three other pieces of property, or the actual acquisition of titles to these other properties.

The lines of battle are about the same on re-appeal. The seller (Levitz), under this contract, contends that a firm contract of sale came into existence when the buyer (Safeway) exercised its option to purchase the adjoining properties and Safeway contends that its purchase from Levitz was subject to a condition precedent which never occurred in that it (Safeway) never actually acquired title to the adjoining land.

In our previous opinion, we said:

'If we have nothing more than the four corners of this document to guide us, we would be constrained to accept the seller's interpretation. This is so because this is a contract in which the verbiage was selected by the buyer. 261 P.2d 1003 (1953); Restatement, Contracts 261 P.2d 1003 (1953); Restatement, Contracts § 236(d), p. 328.' 6 Ariz.App. at 56, 429 P.2d at 690.

In that opinion, we quoted with approval from the Restatement of Contracts as to the Primary standard of interpretation of an integrated contract:

'The standard of interpretation of an integration, except where it produces an ambiguous result, or is excluded by a rule of law establishing a definite meaning, is the meaning that would be attached to the integration by a reasonably intelligent person Acquainted with all operative usages and knowing all the circumstances prior to and contemporaneous with the making of the integration, other than oral statements by the parties of what they intended it to mean.' (Emphasis added) Restatement, Contracts § 230, p. 310.' 6 Ariz.App. at 57, 429 P.2d at 691.

We further said:

'Were we to assume that there are no surrounding circumstances to assist in the interpretation of this contract, we have already indicated that we would accept the interpretation of the seller as to the key phrase selected for litigation here. But, even if this assumption be made, this would not mandate judgment for the seller as there exists a factual issue which would have bearing upon the outcome even under this theory.

'The parties have argued at great length as to the rights of Aunt Lucy Teach in the St. Pierre property. The seller's characterize (Sic) her claim as a 'spurious oral claim of a life estate.' The buyer, on the other hand, argues that the claim of ownership by a possessor of real estate is good grounds for refusing to accept title to the property.

* * * * * *

'Implied terms of a contract are just as much a part thereof as express ones. Zancanaro v. Cross, 85 Ariz. 394, 339 P.2d 746 (1959); 4 Williston on Contracts § 610(B), pp. 532--53 (3d ed.). It seems to this court to be crystal-clear that, if the word 'purchase' referred to a Contract of purchase as to the adjacent property, it was intended to mean a contract with the owners of the fee interest in the property. Certainly no fair interpretation would conclude that the execution of a contract of purchase with strangers to the title would satisfy this condition. And if this is so, it seems equally clear that if Mrs. Teach had a life tenancy in the St. Pierre property by reason of adverse possession, or otherwise, and if she was not one of the signatory sellers under the buyer's contract in regard to the property, the buyer would not have Purchased the St. Pierre property under any interpretation of that word.

'As to whether Mrs. Teach's interest in the St. Pierre property is 'spurious' as contended by the seller, or has validity, as impliedly contended by the buyer, the record is not conclusive. All of the evidence now before the court is of a hearsay variety, which would not control on a motion for summary judgment.' 6 Ariz.App. at 58--59, 429 P.2d at 692--693.

It seems reasonably clear from this prior opinion that, if, on remand, there were no circumstances shown effective to change the four-corners meaning of this contract and if the signatory seller on the St. Pierre contract was, in fact, the fee simple owner of the property sold, then there was an unjustified refusal on the part of Safeway to perform its contractual obligations with Levitz. Right or wrong, this decision controls this subsequent appeal. Tucson Gas & Electric Co. v. Superior Court In and For Pima County, 9 Ariz.App. 210, 450 P.2d 722 (1969).

We find nothing in the evidence developed on trial which changes the meaning of this contract. The previous opinion points out that the cross motions for summary judgment, which were the procedural vehicles by which the problem was then brought before the court, left open a number of possibilities as to circumstances giving rise to the contract:

'Affidavits and depositions do not touch upon anything said or done prior to or at the time of the making of this contract. Nor do we even have the physical layout of the various properties concerned before us, which we conceive might shed some light on whether the parties may have contemplated a sale of the subject property separate from the adjacent property under certain limited circumstances. Nor do we know whether there are any local usages of terminology that might cast light upon the meaning of this contract.' 6 Ariz.App. at 57, 429 P.2d at 691.

In the trial record, we do not find evidence of any significant communications between the parties which bear upon whether Safeway was to be obligated to buy the subject property after it had secured a satisfactory contract of purchase as to the other properties. The evidence does indicate, and the trial court found, that the seller knew that the purpose for which the Levitz property was being purchased required the purchase of some other land in the vicinity. But there is no evidence of any communication to the seller that Safeway would not, under any circumstances, proceed with the purchase of this property unless it simultaneously purchased the St. Pierre property, or any other particular piece of property in the vicinity.

That Safeway's own undisclosed intentions in this regard were flexible is indicated by the fact that one of its contracts as to the adjoining property contained alternative options as to whether Safeway would take the whole or only part of the property. 2

The fact that the purchase of other pieces of property was contemplated by Safeway was brought home to the seller by this contract itself. But pre-contract negotiations between the parties shed no light as to what the rights of the parties would be under the particular post-contract circumstances that developed. That Safeway may have been obligated to purchase the subject property, even though the completion of a contract of purchase of one or more of the other parcels of property should fail because of a default on the part of a seller, is left open by anything said or done prior to the execution of this contract.

As for the physical layout of these properties, there is nothing to indicate that a reasonable buyer would not obligate itself to purchase this property without the St. Pierre property. The Levitz land is by far the largest of the four parcels involved. The St. Pierre property is one fourth its size and has no frontage on Speedway. The Levitz property is approximately four full acres in size and has a frontage of 360 feet on Speedway, one of the most important thoroughfares in the City of Tucson for the establishment of retail businesses. The Levitz land is obviously commercially usable without being combined with any adjoining land.

There is no evidence that Levitz was given plans of what Safeway proposed to do with these properties when purchased. There is evidence showing that the undisclosed intent of Safeway was to use both the St. Pierre property and the Levitz property, but we do not consider such evidence to be pertinent to an interpretation of this bilateral, integrated contract. It is not the undisclosed intent of the parties with which we are concerned, but the outward manifestations of assent. This principle of law is expressed well by Justice Holmes:

' * * * the making of a contract depends not on the agreement of two minds in one intention, but on the agreement of two sets of external signs * * *.' 3 Holmes, The Path of the Law.

That courts should not be concerned with the undisclosed intent of the parties is made crystal-clear by a long line of decisions of our Supreme Court, including: Goodman v. Newzona Investment Co., 101 Ariz. 470, 421 P.2d 318 (1966); Brand v. Elledge, 101 Ariz. 352, 419 P.2d 531 (1966); LeBaron v. Crismon, 100 Ariz. 206, 412 P.2d 705 (1966); Galbraith v. Johnston, 92 Ariz. 77, 373 P.2d 587 (1962).

Nor is there any evidence in this record of any operative usages which would assist in the construction of this contract. 4 A usage is a habitual or customary practice, more or less widespread, which prevails within a geographical or sociological area. Restatement of Contracts § 245. A usage is a course of conduct and is based upon a series of actual occurrences. Coyner Crop Dusters v. Marsh, 90 Ariz. 157, 175, 367 P.2d 208, 220 (1961), Rehearing granted on other grounds, 91 Ariz. 371, 372 P.2d 708 (1962); and See 2 Wigmore, Evidence § 379 (3d ed. 1940). In order to be...

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