Sherman v. Lunsford

• Decision Date: 11 August 1986
• Docket Number: No. 12933-3-I,12933-3-I
• Parties: Steve SHERMAN, Respondent, v. Kirk LUNSFORD, Appellant.
• Court: Washington Court of Appeals

Page 858

44 Wn.App. 858

723 P.2d 1176

Steve SHERMAN, Respondent, v. Kirk LUNSFORD, Appellant.

No. 12933-3-I.

Court of Appeals of Washington,

Division 1.

Aug. 11, 1986.

William L. Hanson, Seattle, for appellant.

O.J. Hunphry, III, Lasher and Johnson, Seattle, for respondent.

GROSSE, Judge.

This is an appeal from an action for breach of contract and specific performance. The trial court found appellant Lunsford in breach and awarded damages and attorney's fees to respondent Sherman. Sherman cross-appeals the denial of specific performance and the calculation of the amount of damages.

In August of 1980, Lunsford was substantially in arrears in payments to the former holder of his State of Alaska "entry permit" for fishing in that state. He needed to make a good faith payment of at least $15,000 by October of 1980 and then to try to renegotiate the payment schedule. In late August or September of 1980, Lunsford approached Sherman to invest in the fishing permit. Sherman agreed and had a cashier's check for $5,000 made out to the previous holder which the two delivered together on September 16.

In October they went to Sherman's attorney to discuss the elements of a written agreement designed to protect Sherman's interest in the permit. The attorney testified at trial that the two came to him and presented the basic elements of the contract which he then drew up and sent to Sherman with a copy for Lunsford. Lunsford never showed the draft contract to his business advisor or attorney, even though Sherman's attorney recommended it be reviewed by Lunsford's counsel. Sherman's attorney testified that he added two provisions not discussed: standard boilerplate that the agreement could not be modified orally and that the written document represented the entire agreement, paragraphs 11 and 19 respectively.

The contract was signed at a second meeting on December 16, 1981. The contract called for a $15,000 payment by Sherman for which he would receive a 15 percent interest in the permit. The percentage interest in the permit was reached on the assumption that the permit was worth $100,000 and that Sherman's payment would give him a corresponding percentage ownership. The parties agreed orally, immediately prior to signing the contract, that Sherman need only make a payment of $13,000 at the signing, with the remaining $2,000 to be paid later. No deadline was stated or agreed to. Lunsford requested the $2,000 several times between January and the spring of 1981. Sherman tendered that amount during the summer fishing season by telling Lunsford to deduct that from his crews share.

Lunsford returned to Seattle after the 1981 fishing season ended and paid Sherman his full crews share without deducting the final payment for the interest in the permit. After consulting his attorney, Lunsford then sent Sherman $13,000 representing the total money paid by Sherman under the contract. He declared that the contract was terminated by Sherman's breach for failing to make the full $15,000 payment. Sherman refused to accept the money, instead suing for specific performance of the contract. After trial the court found Lunsford in breach and awarded damages of $26,064 flowing from the breach with attorney's fees of $14,250. The damage calculation was based on a 13 percent value of the permit and 13 percent of the value of 1 year's gross earnings by Lunsford for 1981 on the theory that the parties reformed the contract's terms by their conduct to require a $13,000 payment for a 13 percent interest in the permit, conclusion of law 3. The trial court refused to specifically enforce the contract finding it in the nature of a personal services contract and therefore limited the damages to those flowing immediately from the breach. Both parties appeal.

Lunsford first argues that there was no contract in fact because there was no agreement--no "meeting of the minds"--as to the essential elements of the contract. He argues that neither party accurately understood the written agreement they signed. Lunsford also focuses on testimony as to confusion up to the point of signing the contract of whether the price and correlative interest in the permit were $13,000/13 percent or $15,000/15 percent.

This "reigning confusion" raised by Lunsford's counsel is a good illustration of why Washington follows the objective theory of contracts, focusing on the objective manifestations of the agreement rather than the less precise subjective intent of the parties not otherwise manifested. Absent fraud, deceit or coercion, a voluntary signator is bound to a signed contract even if ignorant of its terms. See Lyall v. DeYoung, 42 Wash.App. 252, 256-57, 711 P.2d 356 (1985), and cases cited therein; Rainier Nat'l Bank v. Lewis, 30 Wash.App. 419, 423, 635 P.2d 153 (1981). Lunsford claims none of these exceptions to excuse his performance. Although the parties may not have fully understood the legal significance of each and every term, they knew they were signing a binding contract; nothing in the record indicates that either party was misled or coerced into signing by other than economic exigencies. Both parties are bound to the terms of the signed contract absent proper evidence of modification or waiver thereof.

Lunsford next argues that Sherman breached the express terms of paragraph 2 ¹ since only $13,000 was paid at the signing and Sherman never formally tendered the $2,000. However, without objection, uncontradicted parol evidence was admitted to the effect that the parties agreed immediately prior to signing the contract that Sherman could pay $13,000 at that time and the remaining $2,000 at an unspecified time in the future. Both parties testified as to the fact and specifics of this oral agreement; both agreed that the contract was for 15 percent and that $15,000 was the total payment, consistent with the writing. ²

Extrinsic evidence of terms not contained in a partially integrated writing ³ is not normally admitted when such terms contradict or are inconsistent with terms in the writing. See Emrich v. Connell, 105 Wash.2d 551, 556, 716 P.2d 863 (1986); Black v. Evergreen Land Developers, Inc., 75 Wash.2d 241, 249, 450 P.2d 470 (1969). The admissibility of the parol evidence was never challenged here. We are therefore faced only with what legal effect it has, if any, on the contract at issue.

The oral agreement is properly characterized not as a "term" inconsistent with other terms in the writing, but as a waiver by Lunsford of the requirement that Sherman pay the full $15,000 at the signing: Lunsford agreed to relinquish his known right under the terms of the writing to insist on full payment of the $15,000 at the signing, excusing Sherman's delay of full performance at the signing, and thus waiving that requirement. Panorama Residential Protective Ass'n v. Panorama Corp., 97 Wash.2d 23, 28-29, 640 P.2d 1057 (1982) (acceptance of lesser sums waived contractual right to higher rents; waiver may be unilateral and without consideration so long as the right waived was known and existed at the time of the knowing waiver); Bowman v. Webster, 44 Wash.2d 667, 669-70, 269 P.2d 960 (1954). See also RCW 62.2-209(4) & Official Comment 4; Restatement (Second) of Contracts §§ 150, 84 (1981); E. Farnsworth, Contracts § 8.5, at 561 (1982) (waiver involves "the excuse of the nonoccurrence or of a delay in the occurrence of a condition of a duty"). ⁴

Sherman's oral tender of the $2,000 from his crews share is sufficient performance on his part under these circumstances to maintain the validity of the contract and his equitable position. See RCW 62A.2-511(2) & Official Comment 3 discussing tender of payment by the purchaser in a contract for sale of goods. Once Lunsford decided to abandon the contract and attempted to return the $13,000, Sherman was under no obligation to segregate or put aside the $2,000. Kreger v. Hall, 70 Wash.2d 1002, 1009, 425 P.2d 638 (1967) (one ready, willing, and able to tender performance is relieved of that duty when the other party by word or act indicates he will not perform). The contract was therefore as stated in the December 16 writing: $15,000 for 15 percent interest in the permit, with the final $2,000 payment waived by Lunsford for an indefinite period.

Lunsford next contends the contract is not legally enforceable, either because it is illegal under Alaska law, or unconscionable as a perpetual obligation. Neither claim is tenable.

Foreign law is a fact which may be proved in Washington courts in any manner acceptable to the trial court. RCW 5.24.020 and RCW 5.24.030; Untersteiner v. Untersteiner, 32 Wash.App. 859, 862-64, 650 P.2d 256 (1982) (enforcing contract for alimony found to be valid under Austrian law pleaded and proved at trial even though such obligation might not have been properly imposed by a Washington court); Byrne v. Cooper, 11 Wash.App. 549, 554-56, 523 P.2d 1216 (1974). The trial court held:

The contract ... was valid by both Washington and Alaska law to the extent only of rights as between the parties, but the plaintiff had no enforceable rights against or in the permit itself. ⁵

Conclusion of law 2. The evidence before the trial court, consisting of letters and affidavits from the chairman of the Alaska Commercial Fisheries Entry Commission and an Alaskan Assistant Attorney General assigned to the commission, supports the conclusion. Although the text of the governing statutes can be read to indicate otherwise, see Alaska Stat. §§ 16.10.333, 16.43.150(g), 16.43.170, cases interpreting the statutes do not prohibit such private arrangements although they may not be formally sanctioned or recognized. See State, Commercial Fisheries Entry Commission v. Templeton, 598 P.2d 77 (Alaska 1979), Chocknok v. State, Commercial Fisheries Entry Commission, 696 P.2d 669, 675-76 (Alaska 1985), and Commercial Fisheries Entry Commission v. Apokedak, 680 P.2d 486 (Alaska 1984). All recognized the existence of...