Stusser v. Gottstein, 25062.

• Decision Date: 25 July 1934
• Docket Number: 25062.
• Citation: 178 Wash. 360,35 P.2d 5
• Parties: STUSSER v. GOTTSTEIN.
• Court: Washington Supreme Court

35 P.2d 5

178 Wash. 360

STUSSER v. GOTTSTEIN.

No. 25062.

Supreme Court of Washington

July 25, 1934

Department 1.

Appeal from Superior Court, King County; Clay Allen, Judge.

Action by A. S. Stusser against Joseph Gottstein. Judgment for defendant, and plaintiff appeals.

Reversed and remanded.

Eimon L. Wienir, of Seattle, for appellant.

J. A Coleman, of Everett, and Davis, Groff & Moran, of Seattle for respondent.

STEINERT, Justice.

This is an action to recover moneys paid under a written agreement by the terms of which refund was to be made by the payee to the payor upon the giving of a specified notice by the latter. Trial by jury resulted in a verdict for the payee. Motion for new trial having been denied, judgment was entered on the verdict, from which the payor has appealed.

The parties to this litigation had for a long time prior to the action been intimate friends and had sustained frequent business relations with each other. In 1926 they became associated together in the operation and management of North Pacific Finance Corporation, which conducted an investment business. While so associated and engaged, the parties entered into a written agreement with each other. That agreement forms the basis of this action. It reads as follows:

'September 6, 1928.

'In consideration of A. S. Stusser purchasing jointly with myself a certain assignment of lease dated August 20 1928, from the Arjo Investment Company, which is recorded on February 19, 1925, Volume 48 Book of Leases, page 472, I agree to refund A. S. Stusser any amounts paid by him on said lease on or Before June 30th upon five days notice.

'Joseph Gottstein.'

The Arjo Investment Company mentioned in the agreement was a corporation previously organized by respondent and his brother-in-law. Each held a one-half interest therein. In October, 1925, that corporation acquired, for a consideration of $5,000, a ninety-nine year lease on certain unimproved real estate in Seattle. The lease called for the payment, by the lessee, of a graduated annual rental and also taxes, assessments, and certain other charges.

In August, 1928, just shortly Before the above agreement was entered into, respondent had offered to sell to the appellant a one-half interest in the lease for $3,500. Respondent apparently believed at that time that the lease could be readily resold at an early date and at a handsome profit; at any rate, he so expressed himself to appellant. There is a serious dispute as to some of the event that led up to the making of the agreement and also as to certain occurrences that followed it. According to appellant's version, he took respondent's proposition under consideration and made an investigation of the property covered by the lease, but, after such investigation, concluded that he would not enter into the proposed deal. He therefore declined to accept respondent's offer. Thereupon respondent made the proposal that, if appellant would buy a one-half interest in the lease, respondent would guarantee to protect him against any loss that he might sustain. Appellant agreed to accept the offer, provided that the transaction was to be considered as a loan to respondent. Upon this basis the agreement was thereupon executed. An assignment transferring the lease from Arjo Investment Company to appellant and respondent jointly had already been executed and delivered to appellant at the time that the negotiations first began. After their culmination in the written agreement, appellant filed the assignment for record on September 7, 1928. About the same time appellant paid to Arjo Investment Company the sum of $3,500. Thereafter appellant paid the company other sums, the same being one-half of the annual rental, taxes, and assessments. The total amount thus paid by appellant, and for which this action was brought, was $4,824.14. On May 31, 1929, which was the date of his last payment, appellant orally notified respondent that he elected to demand a refund of all the moneys paid by him, and at the same time advised respondent that he was prepared to execute an assignment, release, deed, or whatever might be necessary to transfer his interest in the lease to respondent or to whomsoever respondent might designate. Respondent was unable to make refund at the time that the notice was given to him, but told appellant that he would do so just as soon as he had closed a contemplated deal. Similar promises were reiterated by respondent on frequent occasions thereafter, but none were ever fulfilled.

Respondent's version of the transaction is quite different from that of the appellant. He denied that there was ever anything said about a loan between the parties and insisted that the agreement was nothing more than appears upon the face of the writing. According to his story the parties contemplated a joint venture with respect to the purchase of the lease from Arjo Investment Company, with the option to appellant of terminating it on June 30, 1929, by giving five days' notice, and having his advances refunded. His contention also was that not until October, 1929, when the general financial crash loomed, did appellant notify him that he wanted his money back. Although conceding that he had frequently promised appellant that he would see that appellant got his money, he was positive that he had told appellant that he was not recognizing any legal liability for reimbursement.

The ambiguities of the written agreement are apparent on its face. It may be read as an agreement to enter into a joint enterprise, or it may be construed to be simply a loan agreement. It is also equivocal in several respects in its provisions relative to the refund of payments. Court and counsel both recognized the imperfections of the agreement, and for that reason considerable parol evidence was offered and admitted touching the matters just referred to. Under the situation presented by the evidence, the court instructed the jury that it should determine the true meaning of the contract and the obligations of the parties thereunder; that the principal rule in the interpretation of contracts is to ascertain the true intention of the parties; and that where the written contract is vague and uncertain in its terms, parol evidence is to be allowed, not to vary, but to explain, the intent and purpose of the parties at the time of entering into the written agreement. The instructions so given were not excepted to by either party, and we conceive that they stated the law correctly. Carstens v. Earles, 26 Wash. 676, 67 P. 404; Durand v. Heney, 33 Wash. 38, 73 P. 775; Dioguardi v. Haddow, 167 Wash. 62, 8 P.2d 978.

But, in a subsequent instruction, the court told the jury that the arrangement entered into between appellant and respondent with regard to the joint purchase of the leasehold in question constituted, as a matter of law, a joint venture rather than a loan agreement. Appellant assigns error upon this instruction. In our opinion, the instruction removed the very issue that formed the crux of the case, and took from the jury the primary question that it was called upon to decide.

'It is conceded that the general rule is that the construction of written instruments is a question of law for the courts. We think it may also be conceded that there are certain well defined exceptions to this rule--as, where the identity of the subject-matter of a document, or its construction, depends upon collateral facts or extrinsic circumstances, the inferences from such facts, when they are proven, should be drawn by the jury. Where it is an enforcible contract, and the ambiguity arises as to the relative responsibilities and duties of the respective parties under the contract, which responsibilities and duties can be determined either by proof of the meaning of the terms used in the contract or by a showing of the circumstances surrounding the parties with reference to the subject-matter of the contract at the time it was entered into, and there is any controversy over such facts, undoubtedly such contract should be submitted to the jury, and its meaning determined by that tribunal by aid of such explanatory testimony.' Durand v. Heney, 33 Wash. 38, 73 P. 775.

In Hoge v. George, 27 Wyo. 423, 200 P. 96, 18 A. L. R. 469, involving a similar question, the court said: 'Where the existence of the relationship [joint venture] is in issue, and there is substantial evidence tending to prove that the parties intended to join their efforts in furtherance of the enterprise for their joint profit, the question is pre-eminently one for a jury.'

Here there was a sharp and divergent issue as to whether the agreement was one of joint venture or a mere loan. The determination of that issue had a very important bearing upon the consequent rights and obligations of the respective parties. It therefore was a question for the jury, and not for the court, to decide. The giving of the instruction was error.

The appellant next assigns error upon two instructions on the subject of tender. In the first of these instructions the court told the jury that 'under the agreement herein' appellant was bound to make a tender (actual production of an instrument constituting a conveyance of appellant's interest, and an offering thereof to the respondent) not later than June 30, 1929, unless it appeared from the evidence that the tender would not have been accepted. In the second of these instructions the court advised the jury that if the appellant made a tender, but conditioned it upon refund being first made by respondent, then the verdict should be for the respondent. In this second instruction the court also told the jury that a mere offer to tender was not equivalent to actual tender, and that if appellant did nothing more than to of...