Topline Equipment, Inc. v. Stan Witty Land, Inc.

• Decision Date: 15 January 1982
• Docket Number: No. 3610-II,3610-II
• Citation: 639 P.2d 825,31 Wn.App. 86
• Parties: TOPLINE EQUIPMENT, INC., an Oregon corporation, Appellant, v. STAN WITTY LAND, INC., a Washington corporation; Stanley R. Witty and Diane Witty, husband and wife, Respondents and Cross appellants.
• Court: Washington Court of Appeals

Page 86

31 Wn.App. 86

639 P.2d 825

TOPLINE EQUIPMENT, INC., an Oregon corporation, Appellant, v. STAN WITTY LAND, INC., a Washington corporation; Stanley R.

Witty and Diane Witty, husband and wife,

Respondents and Cross appellants.

No. 3610-II.

Court of Appeals of Washington, Division 2.

Jan. 15, 1982.

R. Dewitt Jones, Vancouver, for appellant.

D. Bruce Morgan, Seattle, for respondent.

REED, Chief Judge.

This action arose out of an attempt by Topline Equipment, Inc. (Topline), an Oregon corporation, to recover the balances owed by Stan Witty Land, Inc. (Witty), a Washington corporation, on three conditional sales contracts. The central issue on appeal concerns the applicability to these three contracts of various interest and usury provisions in RCW 19.52. The trial court limited Topline's interest rate to 6 percent per annum pursuant to RCW 19.52.010, but refused to impose the usury penalties provided for in RCW 19.52.030. Topline also challenges a jury award of $40,000 for tortious contract interference. Finding no error, we affirm the trial court in all respects.

Over a two-year period from 1974 to 1976, Witty entered into three separate conditional sales contracts with Topline for the purchase of logging equipment. These contracts were executed on forms supplied by CIT Finance Company (CIT), and provided Topline with an article IX security interest in the equipment being sold. Immediately upon execution, each of the three contracts, along with the security interests, was assigned to CIT subject to recourse against Topline.

The contracts called for monthly installments. Both parties concede that these payments embodied a "time price differential," ¹ which was equivalent to an annual interest charge of 12 percent or less. However, neither the specific rate of interest, nor sufficient information from which such rate could be computed, was set forth in any of the agreements.

In July 1977, Witty entered into a memorandum agreement with Northwest Auction of Portland (Northwest) with the intention of auctioning off a substantial portion of its logging equipment, including the three pieces covered by the contracts. Witty and Northwest then contacted CIT in order to work out an arrangement for payoff of the contracts. CIT responded by submitting an agreement, to be signed by Northwest and Witty, providing that CIT would not oppose the auction of the secured equipment if the contracts were brought current and full payment guaranteed.

At this point, Topline, through its attorney, sent a letter to Northwest indicating that it would not permit the auction of the logging equipment unless Witty made provisions to pay not only the amounts secured by contract, but certain unsecured claims totaling $15,000 as well. These claims were the subject of litigation then pending between the parties. There was also evidence that Mr. Gold, Topline's credit manager, told Witty that, if necessary, he would serve legal papers to stop the auction. Topline subsequently retreated from this hard line position and informed Witty that it would not insist on payment of the disputed unsecured claims prior to the auction. However, Witty and Northwest maintained that the auction had already been canceled by the time they received this information.

After the cancellation of the auction, Witty became further delinquent under the contracts. Consequently, the contracts were reassigned to Topline and this lawsuit was initiated. Uncontroverted testimony established that the balance owing on the contracts at the time of trial was $41,215.95. Witty asserted the defense of usury and counterclaimed for damages based on Topline's intentional interference with the auction agreement between itself and Northwest.

The trial court withdrew the issue of usury from the jury but refused to award Topline the entire amount owing on the contracts. Instead, because the contracts failed to specify the exact rate of interest being charged, the court reduced the interest rate to 6 percent pursuant to RCW 19.52.010. This resulted in a balance of principal and interest of $30,043.13.

Topline moved for a judgement notwithstanding the verdict on the issue of intentional business interference. The trial court denied this motion and proceeded to offset the contract balances found owing to Topline, along with the reasonable attorneys' fees and costs provided for in the contract, by the amount of the jury verdict in favor of Witty. The offset resulted in a net judgment for Witty of $8,328.87. The court further held that Topline's security interests in the three items of equipment were extinguished as a result of the offsetting judgments.

On appeal Topline first contends that the trial court's recomputation of the contract balances at the statutory rate of 6 percent pursuant to RCW 19.52.010, constituted an impermissible modification of the terms of the conditional sales contracts. At all times pertinent hereto, RCW 19.52.010 provided that

(e)very loan or forbearance of money, goods, or thing in action shall bear interest at the rate of six percent per annum where no different rate is agreed to in writing between the parties. ²

Topline maintains that this statute was inapplicable in the instant case because the parties had written contracts which incorporated interest rates of 12 percent. ³

Topline's argument is unfounded. RCW 19.52.010 clearly limits interest charges to 6 percent per annum in the absence of a written agreement specifying a different rate. We believe that in order to satisfy the writing requirement embodied in the statute, the parties must have a written agreement which expressly states an interest rate or, at the very least, contains sufficient terms so that the determination of the rate is merely a matter of calculation. Cf. Community Sav. & Loan Ass'n v. Fisher, 409 S.W.2d 546 (Tex.1966); see also Hazard v. Maxon, 1 Wash.Terr. 584 (1878) (under the original statute governing interest rates only the legal rate of interest could be recovered on a contract which was so ambiguous as to render it uncertain whether more than such rate was stipulated for). Here, it is undisputed that the specific rate of interest being charged was not disclosed in any of the conditional sales contracts. Moreover, none of the contracts provided sufficient information, (i.e., the original cash price of the items or the aggregate finance charges) from which the rate of interest could be computed. To make the situation even more misleading, the rate of interest prior to maturity is actually stated on all three contracts at "0" percent per annum. Against this evidentiary background, the trial court's recomputation of the contracts pursuant to RCW 19.52.010 was appropriate.

Topline next contends there was insufficient evidence to support Witty's claim of tortious business interference and that consequently the trial court erred in refusing to grant its motion for judgment n. o. v. The basic elements which must be established to support a wrongful interference claim are: (1) the existence of a valid contractual relationship or business expectancy; (2) knowledge of the relationship or expectancy on the part of the interferor; (3) intentional interference inducing or causing a breach or termination of the relationship or expectancy; and (4) resulting damage to the party whose relationship or expectancy was disrupted. Calbom v. Knudtzon, 65 Wash.2d 157, 396 P.2d 148 (1964); Singer Credit Corp. v. Mercer Masonry, Inc., 13 Wash.App. 877, 538 P.2d 544 (1975). Topline challenges the sufficiency of the evidence with respect to the first 3 of these elements. It is well established that on an appeal of this type the evidence, and all reasonable inferences therefrom, must be considered in the light most favorable to the prevailing party. Bland v. Mentor, 63 Wash.2d 150, 385 P.2d 727 (1963); Singer Credit Corp. v. Mercer Masonry, Inc., supra.

Topline's allegations that there was insufficient evidence to establish the existence of a business relationship between Witty and Northwest which could provide a basis for the tortious interference claim is without merit. The record indicates that both parties had signed a memorandum agreement to hold the auction and that Northwest had inspected and appraised the items to be sold. Additionally, the major items had been advertised and arrangements made with CIT to pay off the secured debts. This evidence clearly warranted the jury's conclusion that there was a valid business relationship between the parties.

Topline's argument that the evidence failed to establish that it had the requisite knowledge of the auction agreement to support a claim of tortious interference is also unfounded. It is not necessary that the interferor understand the precise legal nature of the relationship with which he is interfering.

Although knowledge of the existence of the business relationship in issue is an essential element in establishing liability for interference therewith, it is sufficient if the evidence reveals that the alleged interferor had knowledge of facts giving rise to the existence of the relationship. It is not necessary that the interferor understand the legal significance of such facts.

Calbom, 65 Wash.2d at 165, 396 P.2d 148. Here, the record reveals that Topline communicated with both Witty and Northwest on several occasions and was aware of some kind of business arrangement regarding the auction of the logging equipment.

We also find unpersuasive Topline's contention that there was insufficient evidence to establish that the claimed interference on its part actually induced the cancellation of the auction. Topline presented evidence that it had retracted its demands regarding payoff on the unsecured claims prior to Northwest's decision to cancel. However, Northwest denied this and testified that the cancellation was directly motivated by Topline's threats of legal intervention. When viewed in the light most favorable to Witty,...