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

• Decision Date: 28 January 1970
• Docket Number: No. 9830--PR,9830--PR
• Citation: 464 P.2d 612,105 Ariz. 329
• Parties: SAM LEVITZ FURNITURE COMPANY, Inc., an Arizona corporation, Appellant, v. SAFEWAY STORES, INC., a Maryland corporation, and Arizona Land Title & Trust Company, as Escrow, Appellees.
• Court: Arizona Supreme Court

Page 612

464 P.2d 612

105 Ariz. 329

SAM LEVITZ FURNITURE COMPANY, Inc., an Arizona corporation, Appellant, v. SAFEWAY STORES, INC., a Maryland corporation, and Arizona Land Title & Trust Company, as Escrow, Appellees.

No. 9830--PR.

Supreme Court of Arizona, In Banc.

Jan. 28, 1970.

Rehearing Denied Feb. 10, 1970.

S. Leonard Scheff, Tucson, for appellant.

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

LOCKWOOD, Chief Justice:

This case is before us on a petition to review a decision of the Court of Appeals reversing a judgment of the Superior Court. The decision of the Court of Appeals, reported at 10 Ariz.App. 225, 457 P.2d 938, is vacated.

After nearly two years of negotiations plaintiff-appellant-seller, hereinafter referred to as Levitz, entered into a written agreement to sell, for $205,000, a four-acre tract in Tucson, to defendant-appellee-buyer, hereinafter referred to as Safeway. The contract contained the following provision:

'Seller has been informed that Buyer's agreement to purchase the property * * * is conditional upon Buyer's purchase, upon terms satisfactory to Buyer, of adjacent property described as follows * * *.'

The description which followed, included a parcel of adjacent land which we will refer to as the St. Pierre property. Earnest money and documents were placed in escrow for both properties. Shortly before closing, Safeway's agent looked over the St. Pierre property and found Lucy Teach living on it. After some conversation with her, he discovered that she claimed a life estate in the property in accordance with what she described as a 'recorded' will, and had two tenants renting part of the property from her.

The title company pronounced the title unmerchantable and refused to insure it unless Lucy Teach either joined in the contract to sell, or executed a quitclaim deed to the property. The trial court found that she was a necessary signatory seller and that it would have required a lawsuit to eject her. This impasse resulted from two things: (1) The rule of law that a buyer of real property takes with notice of rights claimed by any one in possession, and (2) the widespread practice, by title companies, of excepting from their insurance coverage 'rights of parties in possession.'

Safeway showed its good faith by trying to get an 'extended' title policy--i.e. one which would insure them against rights claimed by parties in possession--but the title company refused to issue one. After several attempts to compromise, rather than buy a lawsuit Safeway repudiated both sales.

Levitz brought the present action against Safeway for specific performance, alleging that Safeway had entered into a binding contract to buy the St. Pierre property, thereby fulfilling the condition precedent to the Levitz contract. Safeway defended on the ground that 'purchase', as used in the Levitz contract meant to 'acquire title' not merely to 'enter into a contract to acquire title.'

The trial court entered summary judgment for Safeway, and Levitz appealed. The Court of Appeals (Judge Hathaway dissenting) on September 8, 1967, reversed, in Arizona Land Title and Trust Company v. Safeway Stores, Inc., 6 Ariz.App. 52, 429 P.2d 686. The case at that time came before us on a petition for review, which we denied because the result was clearly correct. There were disputed facts. The Court of Appeals ordered a trial to be had on the merits, at which the surrounding circumstances could be shown, and at which the existence of any customs or usages pertaining to the word 'purchase' could be introduced together with evidence, other than hearsay, showing the nature and validity of Lucy Teach's claim.

On remand, trial was had to the court sitting without a jury. It found for Safeway (this time, on the merits) and Levitz again appealed.

At the trial there was considerable testimony from various persons construing the word 'purchase', but none of it reached the dignity of proving either a custom or a usage with reference to the word. A number of real estate men testified that, to them, 'purchase' meant 'actually to acquire the title.' The witness, Winter, with twenty-two years experience in the real estate business, admitted that some people use the word 'purchase' to mean the signing of a contract to acquire title, but stated that 'they are lay people that I don't consider to be knowledgeable.'

The net result of all of the testimony about the word 'purchase' was to demonstrate that its meaning depends upon who is using it, and the context in which it is used. Obviously it means different things to different people at different times.

In the absence of any defense, an unambiguous contract will be given effect as written, and the intent of the parties will be ascertained from the words used. Goodman v. Newzona Investment Co., 101 Ariz. 470, 421 P.2d 318. The problem in the instant case arises from the fact that the parties to the contract disagree on the meaning of the word 'purchase.'

There are a number of rules of construction, but the purpose of all of them is to ascertain the intention of the parties at the time the agreement was made. In Rental Development Corporation of America v. Rubenstein Construction Company, 96 Ariz. 133,...