Syrovy v. Alpine Resources, Inc., 60109-7

• Decision Date: 07 October 1993
• Docket Number: No. 60109-7,60109-7
• Citation: 122 Wn.2d 544,859 P.2d 51
• Court: Washington Supreme Court
• Parties: , 21 UCC Rep.Serv.2d 917 George SYROVY and George Syrovy Trust, Respondents, v. ALPINE RESOURCES, INC., and Ken Reoh and Jane Doe Reoh, husband and wife, Petitioners. En Banc

Page 544

122 Wn.2d 544

859 P.2d 51, 21 UCC Rep.Serv.2d 917

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

No. 60109-7.

Supreme Court of Washington,

En Banc.

Oct. 7, 1993.

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

Hubbard Law Office, Michael V. Hubbard, Waitsburg, for respondents.

DURHAM, Justice.

George Syrovy and the George Syrovy Trust (Syrovy) contracted to sell timber to Alpine Resources, Inc. (Alpine). Syrovy claimed that Alpine breached its contractual obligations when it failed to pay the total contract price. The trial court granted Syrovy's request for summary judgment and the Court of Appeals affirmed. We affirm in all respects.

On March 19, 1988, Syrovy entered into a contract involving the sale of timber, known as a "Timber Purchase Agreement", with Alpine. The agreement was signed by George Syrovy (seller) and by Ken Reoh for Alpine (buyer). The contract provides that "[Syrovy] agrees to sell, and [Alpine] agrees to purchase all the merchantable timber (12"' DBH and larger) produced during the term hereof from the lands described below". Clerk's Papers (CP), at 3. The term of the agreement was for 2 years, from April 15, 1988, to April 15, 1990. The contract contains a clause stating that time is of the essence. Under this clause, "[t]he Buyer will commence withactive [sic ] 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." CP, at 4.

The timber sold under the contract was to be "produced by the buyer" from portions of sections 24, 26 and 35 of the seller's land. The contract states that "[t]he total purchase price for all the commercial timber on the above legally described property shall be ONE HUNDRED & FORTY THOUSAND DOLLARS ($140,000.00)." CP, at 3. The purchase price was to be paid as follows: (1) $1,000 earnest money upon signing a forest practice application and the contract itself; (2) $39,000 on May 31, 1988, "or sooner should Buyer elect to commence with harvesting" the south half of section 35; (3) $50,000 "[p]rior to commencing with harvesting" the north half of section 35, and section 26; and (4) $50,000 "[p]rior to commencing with harvesting Section 24." CP, at 3.

On June 1, 1988, the parties entered into a "Supplement to Timber Purchase Agreement and Receipt of Payment". CP, at 13. The supplement refers to the original agreement, characterizing it as "a Timber Purchase Agreement for all the commercial timber on the following legally described property [sections 24, 26, and 35]". CP, at 13. The document then changes the payment schedule so that the north half of section 35 and section 26 are to be logged first, with a commensurate payment of $50,000. ¹ In accord with the supplement, Alpine remitted $50,000 to Syrovy upon the signing of that agreement. According to the supplement, this payment granted Alpine "the right to enter onto and harvest all the commercial timber" in the north half of section 35 and section 26.

Following this supplemental agreement, Alpine began harvesting operations in sections 35 and 26. Alpine continued timber production until October 1989. It alleges that further access to the harvesting area was precluded by a combination of inclement weather and the start of hunting season. Alpine also faced other difficulties in harvesting the timber, including the death of one of its employees. Alpine received $331,517.35 for the timber it harvested from Syrovy's land, but there is no indication as to the costs Alpine incurred in harvesting this timber. Alpine made no further payments on the contract, nor did it log any other sections. After the contract period expired, Syrovy sold timber from the same areas covered by the Alpine contract for $45,475.

Syrovy filed suit against Alpine on July 18, 1990, alleging breach of contract and seeking to recover the balance of the contract price ($90,000). Alpine denied that it had a contractual obligation to pay these moneys, and it asserted impossibility of performance as an affirmative defense. Alpine also claimed that any damages should be offset by the amount Syrovy received for reselling the timber. On October 11, 1991, Syrovy moved for summary judgment. ² Finding that there were no material issues of fact, the trial court granted Syrovy's motion. It held that the two parties had "entered into a timber purchase agreement, which had been drafted by Ken Reoh, for all the merchantable timber (12"' DBH and larger) produced by the buyer from described parcels of seller's land during the agreement's two[-]year term". CP, at 187. The trial court further stated that "[t]he purchase price for the timber produced was $140,000.00 of which $50,000.00 was paid." CP, at 187. As such, the trial court awarded Syrovy $90,000, plus interest, fees and costs. In making this ruling, the judge relied exclusively on the language of the contract, finding that it was an unambiguous document that was "not subject to parol evidence or the intent of the parties". Partial Report of Proceedings, at 21-22 (Nov. 5, 1991).

The Court of Appeals affirmed. After rejecting Alpine's contention that the contract was ambiguous, the appellate court held that the timber purchase agreement was not a series of options, but an installment contract. Syrovy v. Alpine Resources, Inc., 68 Wash.App. 35, 41, 841 P.2d 1279 (1992). It further held that impossibility of performance was not available as a defense to the contract, and that it was not necessary to offset Syrovy's damages by the amount he received on resale of the timber; neither argument raised issues of fact precluding summary judgment. 68 Wash.App. at 41-44, 841 P.2d 1279. We granted Alpine's petition for review, and now affirm. ³

Option or Installment Contract

Alpine claims that the timber purchase agreement falls within the definition of an "option contract" found in Whitworth v. Enitai Lumber Co., 36 Wash.2d 767, 770-71, 220 P.2d 328 (1950). In that case, this court stated that:

An option to purchase property is a contract wherein the owner, in return for a valuable consideration, agrees with another person that the latter shall have the privilege of buying the property within a specified time upon the terms and conditions expressed in the option. If no consideration passes, the transaction resolves itself into a mere offer which may be withdrawn by the optionor at any time before acceptance by the optionee. But when supported by a consideration, as in the case at bar, the execution of the agreement results in a contract binding upon the optionor which may not be withdrawn by him during the time set forth therein.

Whitworth, 36 Wash.2d at 770, 220 P.2d 328. Although this matter is governed by the provisions of the Uniform Commercial Code (U.C.C.), ⁴ RCW Title 62A, the common law definition of "option contract" contained in Whitworth is controlling because the U.C.C. does not address option contracts. See RCW 62A.1-103 ("Unless displaced by the particular provisions of this Title, the principles of law and equity ... shall supplement its provisions."); Gorge Lumber Co. v. Brazier Lumber Co., 6 Wash.App. 327, 334, 493 P.2d 782 (1972) (common law contract principles not specifically replaced by the U.C.C. are adopted by it).

To support its contention that the timber purchase agreement and supplement create an option contract, Alpine first claims that it "gave a valuable consideration, $1,000 for the option". Petition for Review, at 8. This argument is spurious. The contract, in clear and plain language, states that the $1,000 payment was for earnest money. Moreover, the supplement to the original agreement deletes the provision for earnest money altogether, and the record shows that this money was returned to Alpine.

Next, Alpine argues that the language of the contract and supplement making payments due prior to commencing with harvesting creates an option. ⁵ The contractual language Alpine relies upon is inapposite. It is more fairly read to link the timing of the payment to Alpine's progress in harvesting. Most likely, Syrovy did not want timber removed from his land prior to the receipt of payment. This does not mean, however, that payment was optional. As Syrovy points out, "surely a contract with provisions for payments at installment points in the overall job does not create mere options in favor of the buyer". Brief of Respondent, at 5.

Likewise, Alpine's argument that the supplement provision granting it "the right to enter onto and harvest all the commercial timber" somehow creates an option fails to persuade. If the parties had wanted to make logging of the various sections optional, they would have used specific language to that effect. As the Court of Appeals pointed out, nowhere in either the original contract or the supplement is the term "option" or the word "choice" utilized. 68 Wash.App. at 41, 841 P.2d 1279. If anything, the "time is of the essence" provision mandating that "harvesting will be completed and delivered within the term of this contract [2 years]" suggests that Alpine's performance of its contractual obligations was not a matter of choice, but a requirement. ⁶

The nature of the timber purchase agreement is clear from its language; it creates an arrangement where payment is to occur in timed installments. For these payments, Alpine agreed to purchase all merchantable timber it could harvest during the 2-year period. As we have frequently stated, "[i]t is the duty of the court to declare the meaning of what is written, and not what was intended to be written." Berg v. Hudesman, 115 Wash.2d 657, 669, 801 P.2d 222 (1990) (quoting J.W. Seavey Hop Corp. v. Pollock, 20 Wash.2d 337, 349, 147 P.2d 310 (1944)). "Where contractual language is...