Syrovy v. Alpine Resources, Inc.

• Court: Washington Court of Appeals
• Writing for the Court: SWEENEY; THOMPSON, Acting C.J., and MUNSON
• Citation: Syrovy v. Alpine Resources, Inc., 841 P.2d 1279, 68 Wn.App. 35 (Wash. App. 1992)
• Decision Date: 17 December 1992
• Docket Number: No. 12105-4-III
• Parties: , 19 UCC Rep.Serv.2d 995 George SYROVY and George Syrovy Trust, Respondents, v. ALPINE RESOURCES, INC., and Ken Reoh and Jane Doe Reoh, husband and wife, Appellants.

Page 35

68 Wn.App. 35

841 P.2d 1279, 19 UCC Rep.Serv.2d 995

George SYROVY and George Syrovy Trust, Respondents, v. ALPINE RESOURCES, INC., and Ken Reoh and Jane Doe Reoh husband and wife, Appellants.

No. 12105-4-III.

Court of Appeals of Washington Division 3, Panel Two.

Dec. 17, 1992.

Review Granted March 31, 1993.

Albert J. Golden, Golden & Knowlton, P.S., Walla Walla, for appellants.

Michael V. Hubbard, Hubbard Law Firm, Waitsburgh, for respondents.

SWEENEY, Judge.

The George Syrovy Trust ¹ agreed to sell Alpine Resources, Inc., all timber from Mr. Syrovy's property produced by Alpine over a 2-year period for $140,000. Alpine produced some timber during the 2-year period and paid $50,000. Mr. Syrovy brought suit for the contract balance of $90,000. The trial court granted Mr. Syrovy's motion for summary judgment. Alpine appeals. We affirm.

FACTS AND PROCEDURAL BACKGROUND

On March 19, 1988, Mr. Syrovy and Alpine Resources, Inc., entered into a "Timber Purchase Agreement" (TPA) drafted by Ken Reoh of Alpine. The term of the agreement was for 2 years, beginning April 15, 1988 and ending April 15, 1990. Mr. Syrovy agreed to sell and Alpine agreed to buy "all the merchantable timber (12"' DBH and larger) produced during the term ...". The timber to be "sold, purchased, and delivered ... [was to] be produced by Buyer [Alpine] from timber on Seller's land ...".

"The total purchase price for all the commercial timber ... [was to] be ... $140,000.00". One thousand dollars, in earnest money, was escrowed. The earnest money was to be released to Mr. Syrovy on April 15, 1988, after Alpine completed the forest applications, verified access routes and determined that it could proceed with the harvest. The agreement then set out three different areas to be harvested and required that specified payments be made by Alpine before it commenced harvesting in the described areas. The agreement further provided:

Time is of the essence of this agreement. The Buyer will commence with active harvesting on said land as soon as possible after the execution of this contract and will carry on a continuous operation to this end so that the road system and harvesting will be completed and delivered within the term of this contract.

On June 1, 1988, the parties entered into a "Supplement to Timber Purchase Agreement and Receipt of Payment". Again the document was drafted by Mr. Reoh. The supplement changed the harvesting and payment schedule. Alpine verified the access and haul routes and Mr. Syrovy received the earnest money. Alpine then paid the initial $50,000 and began harvesting the first area. Alpine continued harvesting until October 1989. It stopped prior to completing the first area because of weather and the arrival of hunting season, which precluded access to the area.

After the 2-year contract with Alpine expired, Mr. Syrovy sold timber harvested from the same areas covered by the Alpine contract for $45,475.

On July 18, 1990, Mr. Syrovy filed suit against Alpine for the balance of the contract payment ($90,000) plus interest, attorney fees, and costs. Alpine answered denying the obligation and asserting impossibility of performance because of problems with access to the timber and bad weather. Alpine also claimed a right to credit for any monies, received by Mr. Syrovy, for sales of timber from property covered by the contract.

The trial court granted Mr. Syrovy's motion for summary judgment. Thereafter, the trial court granted Alpine's motion for reconsideration and vacated the order granting summary judgment, finding a question of fact as to damages.

Mr. Syrovy again moved for summary judgment and the trial court granted the motion. Alpine appeals contending issues of fact exist as to: (1) the meaning of the terms commencing, merchantable and commercial and the quantity term in the agreement; (2) whether the agreement called for a series of options to be exercised at Alpine's discretion; (3) Alpine's defense of impossibility of performance; and (4) the measure of damages.

STANDARD OF REVIEW

This court reviews de novo a trial court's order on summary judgment and engages in the same inquiry as the trial court. Safeco Ins. of Am. v. Butler, 118 Wash.2d 383 394, 823 P.2d 499 (1992); Marincovich v. Tarabochia, 114 Wash.2d 271, 274, 787 P.2d 562 (1990). Whether a contract isambiguous and the legal effect of a contract are, in general, questions of law. Clevco, Inc. v. Municipality of Metro. Seattle, 59 Wash.App. 536, 539, 799 [841 P.2d 1282] P.2d 1183 (1990), review denied, 117 Wash.2d 1006, 815 P.2d 265 (1991).

AMBIGUITY--CONTRACT TERMS

The rights and obligations of the parties to this contract are controlled by article 2 of the Uniform Commercial Code (RCW 62A.2).

A contract for the sale apart from the land ... of timber to be cut is a contract for the sale of goods within this Article whether the subject matter is to be severed by the buyer or by the seller even though it forms part of the realty at the time of contracting, and the parties can by identification effect a present sale before severance.

RCW 62A.2-107(2). ²

Alpine contends the absence of a quantity term precludes summary judgment. RCW 62A.2-201(1). ³ A sales contract is not enforceable beyond the quantity term stated in the agreement. RCW 62A.2-201(1); Hankins v. American Pac. Sales Corp., 7 Wash.App. 316, 319, 499 P.2d 214 (1972). Here, both the trees to be cut and the quantity of timber (goods) were easily ascertainable in the TPA. Mr. Syrovy was required to sell and Alpine was required to buy all timber (12"' DBH and larger) growing on the described land which Alpine could harvest within 2 years.

Alpine also contends interpretation of the contract terms commencing, merchantable and commercial were ambiguous and, therefore, raise issues of fact. An ambiguity in a contract is present if a term is reasonably capable of being understood in either of two or more senses. Ladum v. Utility Cartage, Inc., 68 Wash.2d 109, 116, 411 P.2d 868 (1966).

The TPA required that Alpine was to make specified payments "[p]rior to commencing with harvesting" certain areas of Mr. Syrovy's land. We disagree with Alpine's assertion that the payment terms in the TPA are ambiguous. "Words should be given their ordinary meaning...." Corbray v. Stevenson, 98 Wash.2d 410, 415, 656 P.2d 473 (1982). The ordinary meaning of commencing is "to begin; start". Random House Dictionary of the English Language 411 (2d ed. 1987). Payments were to be made before Alpine began its harvest of timber in each of three areas. The term "commencing" is not ambiguous.

Alpine further agreed "to purchase all the merchantable timber (12"' DBH and larger) produced during the term ...". The "total purchase price for all the commercial timber ... [was to] be ... $140,000.00." In ordinary usage, commercial means "prepared, done, or acting with sole or chief emphasis on salability, profit, or success ...". Random House Dictionary of the English Language 411. Merchantable in the timber industry means suitable for lumber or having commercial value. 52 Am.Jur.2d, Logs and Timber § 2 (1970). Thus, both terms define goods capable of being sold. Alpine offers no alternative definitions and, more significantly, offers no explanation regarding what effect the claimed ambiguities might have on the obligations of the parties.

This contract dealt with timber that could be sold. In fact, Alpine accepted the timber harvested without objecting to its merchantability or commercial value.

The contract terms were not ambiguous and, therefore, do not present issues of fact precluding summary judgment.

OPTIONAL NATURE OF CONTRACT

Alpine contends the TPA is a series of options for Alpine to cut (and pay for) timber, from specifically described land, rather than a single sale calling for installment payments, as Mr. Syrovy maintains. Alpine, therefore, concludes that it was neither obligated to harvest nor pay for options which it did not exercise. Fisher v. Elmore, 610 F.Supp. 123 (E.D.N.C.1985), aff'd, 802 F.2d 771 (4th Cir.1986) (logger under no obligation to cut timber identified to contract when cut).

RCW 62A.2 does not address the issue raised and, therefore, principles of contract law apply. RCW 62A.1-103. An option is the "[r]ight of election to exercise a privilege", while installments are "[d]ifferent portions of the same debt payable at different successive periods ...". Black's Law Dictionary 1094, 798 (6th ed. 1990). A party with an option has a choice. 1A A. Corbin, Contracts § 259 (1963).

Alpine agreed to pay $140,000 for all the timber (12"' DBH or larger) it could produce from the described property during a 2-year period. The TPA does not mention the word "option" in its title or its terms nor does it describe a "choice" regarding Alpine's performance. It specifies that time is of the essence and that the work should be continuous so that the "harvesting will be completed and delivered " within the 2-year term. (Italics ours.) The TPA called for one sale with periodic partial payments on the $140,000 sales price, rather than a series of options.

Alpine's reliance on Fisher is misplaced. In Fisher, the agreement called for payment to occur after the logs were harvested and payment was dependent upon the quantity of timber harvested. The buyer was under no obligation to harvest any timber. Fisher, at 124-25. Here, payment was not dependent on the quantity of timber harvested; Alpine was obligated to pay regardless of whether the timber was harvested. The TPA was not a series of options.

IMPOSSIBILITY OF PERFORMANCE

Alpine next contends its defense of impossibility of performance precludes summary judgment. The commercial transaction before us does not readily fit those anticipated by RCW 62A.2. Usually, the seller of goods is responsible for production. RCW 62A.2-615 affords a defense to the seller's performance based on impracticability. Here, the contract relegated control over...