McCowen v. Pew , 147 Cal. 299 ( 1905 )

This appeal is from a judgment in favor of the defendant and an order denying plaintiffs' motion for a new trial. The plaintiffs being the owners of a certain tract of land in Mendocino County near Willits, on the sixteenth day of October, 1899, executed an agreement, as parties of the first part, and defendant J.W. Pew, as party of the second part, whereby "for value received by said party of the first part from said party of the second part, and to induce said party of the second part to undertake the disposition of said property, said party of the first part has granted unto said party of the second part, his representatives and assigns, for the period of twelve months from the date hereof, an exclusive and irrevocable option to acquire from said party of the first part for said party of the second part, or his assigns, or such parties as he may negotiate with, for the sum of fifteen dollars per acre, a good and sufficient title to the property situate in Mendocino County, state of California, and more particularly described as follows [then giving the description], containing 1,160 acres more or less. In consideration of the foregoing, the said party of the second part, has agreed, without cost to said party of the first part, to use his best endeavors to dispose of said property, either by acquiring same or selling the same to others. Provided, however, that nothing herein contained shall require said party of the second part, his representatives or assigns, to pay or account to the said party of the first part any sum realized in such acquisition or disposition above the consideration herein fixed as the value of said property." This agreement was duly acknowledged and recorded in the recorder's office of Mendocino County. It appears that at the making of said agreement defendant Pew was not acting in his own interest or behalf, but for others associated with him, and that said agreement was made for the benefit not only of himself but also of said others associated with said defendant Pew, although made and taken solely in his name as party of the second part; that at the time said agreement was made defendant Pew and the persons so associated with him were contemplating and preparing for the building of a railroad from some point on the line of the railroad of the San Francisco and North Pacific Railroad Company into some portion of Mendocino County from which timber and wood could be procured in large quantities; that at said time different locations or routes for said road were under consideration by them, and it had been determined by them to so build said railroad; and one of the contemplated locations was from Ukiah northerly to Willits in said county of Mendocino, and that the building of said railroad along the route last mentioned greatly increased the value of the lands described in the agreement to sell, or option to buy, by making the timber thereon accessible to a market, and that the selection of the route and location depended largely upon securing options upon timber lands along the line of the proposed railway; and that these facts were known to the plaintiffs at the time of the making of said agreement, and said agreement was made by them in order to induce the building of said railway from Ukiah to Willits in preference to other routes. That between the date of the making of the agreement mentioned and October 11, 1900, the plaintiffs cut and removed or destroyed, or caused to be cut and removed or destroyed, from or on said lands a large quantity of redwood, pine, and oak timber; that on October 11, 1900, defendant Pew gave written notice to each of the plaintiffs that he elected to exercise the option granted to him in said agreement of October 16, 1899, and offered to purchase and pay for said land according to the terms of said agreement upon proper compensation and deduction from said purchase price for the depreciation in value thereof caused by the destruction and removal of the timber standing upon said land at the time of entering into the agreement, but the plaintiffs refused to execute or deliver a deed to said premises, except upon the payment of the sum specified in the agreement, less an allowance not to exceed six hundred dollars for the destruction and removal of said timber and cordwood.

The parties being unable to agree upon the proper amount of deduction or allowance, in consequence of the cutting and removing and destruction of timber by the plaintiffs as aforesaid, the plaintiffs, on March 1, 1901, brought this action, setting forth the agreement in question, and alleging the failure to comply with the same on the part of the defendant Pew, and asking that the same be declared void and of no validity, and that the defendants have no estate or interest whatever in said land and premises adverse to the plaintiffs.

To this complaint defendant Pew interposed and answered, and also filed a cross-complaint. In the cross-complaint (as amended) the making of the agreement in question and the facts already stated are set forth, and, further, that said defendant and persons associated with him in the said agreement had secured the selection of a route and location for said railroad to Willits, and had surveyed and located the same, and it was in process of construction, and being rapidly built and pushed toward completion, and that the consideration and inducement causing preference to be given to said location was the option given in said contract of the privilege of purchasing said land, and other similar contracts with reference to other lands adjacent thereto. And that said options were all had and said contracts all entered into solely for the purpose of securing freight for said railroad, and the added valuation that would be given to said lands by the construction of the railroad in excess of the price set forth in said contracts respectively.

It is further alleged in said amended cross-complaint that, subsequent to the making of said agreement and prior to the eleventh day of October, 1900, and during the years covered by the option, the plaintiffs knowingly and wrongfully violated the rights of the defendant arising out of said contract by cutting and removing from said lands large and valuable quantities of timber and wood products, giving the quantity so cut, removed, and destroyed, and that the lands described in said contract and agreement were thereby depreciated in value and were worth four thousand dollars less than before such destruction and removal, and that said defendant Pew and the persons associated with him, as aforesaid, suffered damages thereby in the sum of four thousand dollars. That defendant had duly performed all the conditions of said agreement on his part to be performed, and ever since the making thereof had been ready, willing, and able, and still was ready, willing, and able, to fulfill said agreement on his part, wherefore the defendant asked judgment against the plaintiffs that the court ascertain, fix, and adjudge the amount due and which should be paid to complete the said purchase in accordance with the contract, and allow due and equitable deductions from the price named in the contract on account of the wrongful cutting, destruction, and removal of the timber aforesaid, and also that an allowance be made on account of certain encumbrances therein mentioned and described, and the defendant offered to complete the purchase upon a proper compensation for the wrongful removal and destruction of the timber on the property in controversy. (The encumbrances referred to, however, at the date of the trial, December, 1901, had been satisfied of record.)

The court found against the plaintiffs, and substantially according to the allegations of the defendants' amended cross-complaint, and assessed the damages caused by the removal and destruction of the timber in the amount of $3,787.36, and judgment upon the findings was accordingly entered that the plaintiffs take nothing, and that the agreement set forth in the cross-complaint be specifically performed, and the plaintiffs execute and deliver to the defendant Pew a good and sufficient conveyance upon the premises in question, on payment by defendant Pew of the sum of $13,537.04, being $15 per acre, as mentioned in the agreement, less the sum of $3,787.36, damages for the destruction or cutting and removal of the timber standing on said premises at the date of said agreement.

One of the main contentions on the part of the appellants is, as stated by their counsel, "that the option in this case was merely an offer to sell the property, and that in order to made a valid contract, capable of specific performance, it was necessary for the defendant Pew, within the time set in the option and before its withdrawal, to accept the offer in theexact terms in which it was made. . . . An acceptance of an offer to purchase the property must be unconditional in order to create a contract, and the slightest condition attached to an attempted acceptance of the option prevents an agreement of the parties." This contention cannot be maintained. In Burks v. Davies, 85 Cal. 110, it is said that the vendor of an option to purchase is in duty bound to be ready at all times within the period of the option given, during which a conveyance may be demanded by the purchaser to convey a good title to all the land which he has agreed to sell. In this case, as admitted by the appellants, the land, at the time of executing the agreement to sell, or option, as it is termed, was "chiefly valuable for timber," and it is stated and found by the court that the consideration moving the defendant in securing the option was the construction of the contemplated railroad by the tract of land in question for the purpose of obtaining the timber upon said land, and within the time allowed by the option by the act of the plaintiffs the land was depreciated, as found by the court, by the removal of the timber in question, in the sum of $3,787.36. The plaintiffs, therefore, did not hold themselves ready at all times during the period of the option to convey the land in question which they had agreed to convey, — that is, with the timber standing on it, which was, as stated, a very material part of the realty. Defendant within the year had the right to accept the option and have the land conveyed to him as it existed at the date of the agreement, and inasmuch as the plaintiffs could not convey the land in such condition, the defendant had the right to have it conveyed as it was at the expiration of the year, upon payment of the price agreed to be paid, less the deficiency in the value of the property caused by the act of the plaintiffs. In Marshall v. Caldwell, 41 Cal. 611, the contract showed that the plaintiff in said action sold the whole of the land in question, but it appeared he only held an undivided interest therein, and it is said the plaintiff would not be allowed to aver, in the face of the agreement, that he sold less than the whole title to the land. "Upon the discovery by the vendee, that the plaintiff held only the undivided half of the land, he was entitled to proceed at once to rescind the contract; but he was not obliged to adopt that course. He was entitled to proceed, as he has done in this case, to have the contract specifically enforced to the extent of the plaintiff's interest in the land."Spires v. Urbahn, 124 Cal. 110, was a case involving the construction of a contract of option something similar to the one here under consideration. The complaint in that case alleged that the plaintiff's assignor built and put in operation an electric road in pursuance of the agreement within the time limited. The court found the allegation of the complaint to be true. The point contended by the appellant there was that there was no consideration or mutuality in the contract. The court say: "It is now too well settled to permit of controversy that in such cases the completion of the work is an executed consideration which is sufficient to give mutuality to the contract. . . . These contracts have become familiar as stimulants to the construction of railroads and other public works, the inducement to the promisor, whether expressed or presumed, being the probable enhancement of the value of property by the construction. That such contracts or mere offers, unilateral at first, may be enforced when mutuality is secured by an executed consideration, is sustained upon well-recognized principles. The consideration takes its strongest form when it is executed." The same question was also under consideration in this court in the case of Thurber v. Meves, 119 Cal. 35, and Sayward v. Houghton, 119 Cal. 545. In the latter case it was said: "An original lack of mutuality in the right to specific performance will not preclude the enforcement of the contract where this want has been removed at the time the action is brought." As already stated, the road was laid out from Ukiah to Willits on the route as contemplated in case the option was secured, and was under construction at the time the action was brought; and at the trial was so far completed as to allow trains to pass over the same.

The agreement or option was executed, as appears, to the defendant Pew and his representatives or assigns, and the allegation of the cross-complaint and the finding of the court are that others were associated with him in the transaction. In fact, the testimony shows that the real party was a general development company, a corporation, in which Pew was a stockholder, and that this general development company built the road from Ukiah to Willits. It is, therefore, claimed on the part of the plaintiffs that defendant Pew could not maintain a cross-action in his own name. "An executor or administrator, or trustee of an express trust, or a person expressly authorized by statute, may sue without joining with him the persons for whose benefit the action is prosecuted. A person with whom, or in whose name, a contract is made for the benefit of another, is a trustee of an express trust, within the meaning of this section." (Code Civ. Proc., sec. 369.) Although Pew was interested in the corporation, he was, nevertheless, in the transaction under consideration, a trustee within the meaning of the code.(Giselman v. Starr, 106 Cal. 651-657.)

There is nothing in the contention that the option was not accepted on the part of the defendant Pew within the time specified. Notice of acceptance was given within the year, as already shown, and it was alleged in the cross-complaint and so found by the court that the option was accepted within the time. In fact, the only question remaining, as appears by the notice from the plaintiffs to the defendant Pew, was the amount of damages or deduction to be allowed in order to carry out the contract. The defendant Pew claimed as the amount of damages the value of the timber taken or destroyed during the period of the running of the option — in other words, according to the enhancement of the value of the property to he purchased by the completion of the railroad, including the timber standing thereon. And, on the other hand, the allowance proposed by the plaintiffs of six hundred dollars deduction of damages was based upon the value of the timber so cut and removed from the land in question at the date of the agreement; and, while this controversy as to the amount to be allowed was pending, the plaintiffs brought the suit in question. The action of the plaintiffs in the premises was a waiver of any tender of the amount stipulated in the agreement. The proper sum to be tendered at the time had not been ascertained and could not be until the true amount of damages caused by the wrongful act of the plaintiffs themselves in cutting and removing the timber in question had been determined; and it further appears that the plaintiffs refused to make a conveyance except for the full amount specified in the option less the sum of six hundred dollars, which they estimated as being the damages. (Dowd v. Clarke, 54 Cal. 48; Merrill v.Merrill, 95 Cal. 338; Sheplar v. Green, 96 Cal. 218; Barsolou v.Newton, 63 Cal. 226.)

The testimony offered on behalf of the plaintiffs in reference to the value of the timber or stumpage referred to the time as of a date before the building of the road, and without regard to the same, which testimony was admitted subject to objection and motion to strike out, and at the conclusion of the trial the court granted defendant's motion and struck out said testimony, and thereupon plaintiffs moved to strike out defendant's testimony as to the value of the lumber, wood, and tanbark as of a time when the road was located and built, which motion was denied by the court. Clearly the rule insisted upon by the plaintiffs would not afford an equitable compensation to the defendant for the wrongful acts of said plaintiffs in stripping the land in question, after the agreement of option had been entered into. At the time when the defendant was required to take said land and pay the amount stipulated in the agreement, the true measure of compensation and amount to be deducted from the price would seem to be the difference in value between the land as stripped and the land with all the timber standing and growing upon the same.

We have examined the other alleged errors and improper rulings as claimed by the appellants, but are of the opinion that if any errors were committed, as claimed, they are not of sufficient importance to be of any substantial injury to the appellants or to justify a reversal.

For the foregoing reasons the judgment and order denying motion for new trial must be affirmed, and it is so ordered.