Keys v. Klitten , 21 Wash. 2d 504 ( 1944 )

The written contract concerned in this litigation, as I view it, is simple, definite, and specific in its terms and therefore subject to specific performance. There is no ambiguity in the wording of the earnest money receipt that calls for interpretation by parol evidence. The real property was properly described. Respondent agreed to

". . . execute a lease to Clarence Keys for five years for the above described real property and improvements thereon, consisting of the hotel building, for $375.00 per month, payable monthly in advance, reserving, however, to herself the rental upon the office space located on the east side of said building on the ground floor, she to agree, however, not to rent said space to any person who might be in competition with the purchaser and lessee in the operation of a club or in the hotel or restaurant business.

"The undersigned further agrees that she will vacate her apartment by July 1, 1943, and will allow a credit of $15.00 a month rental until she vacates the same. All fixtures and equipment in said apartment may be removed by her with the exception of hotel equipment now stored in said apartment.

"Immediately upon completion of proper bill of sale, chattel mortgage and lease, the undersigned agrees that she will execute the same and surrender possession, and that the earnest money this day paid will be applied upon the total consideration to be expressed therein."

"Specific performance may be defined as the actual accomplishment of a contract by the party bound to fulfill it, for a decree for specific performance is nothing more or less than a means of compelling a party to do precisely what he ought to have done without being coerced by a court. It is an equitable remedy of very ancient origin. It has been declared to be the most useful of the various equitable remedies, and is available under certain circumstances hereinafter discussed to protect rights under contract.

"The remedy of specific performance of contracts is purely equitable; courts of law have no power to compel specific performance of any kind of contract. The remedy at common law available to a party injured by breach of a contract is an action for damages. In many instances, however, damages at law afford inadequate compensation for breach of a contract, and where the remedy at law is inadequate — where, because of features or incidents of the contract inhering in its subject matter, its terms, or the relation of the parties, an action at law is not maintainable, or the injury cannot be adequately compensated by the recovery of damages — equity takes jurisdiction to require the specific performance of the contract in order to do more complete justice between the parties than can be had in an action at law. Equity proceeds upon the assumption that the normal end or termination of every contract is performance in accordance with the agreement. When parties enter into an agreement, each expects to receive and render performance according to its express terms, and the contract can never be fully satisfied unless its execution is of that character. Neither party has any legal right to refuse to perform the obligations imposed, in the absence of a reservation of the right to terminate the contract upon some contingency, unless because of circumstances subsequently arising there exists some valid legal excuse for nonperformance. Thus, while the right to refuse performance depends upon some justification recognized in the law, the power to violate the contract by refusal to perform, subject to liability in an action for damages, exists when the circumstances are such that the courts will not decree the specific performance of the contract.

"Equity assumes justification where the remedy at law is not adequate to decree specific performance, in order to prevent the travesty of justice involved in permitting parties to refuse performance of their contracts at pleasure by electing to pay inadequate damages for the breach. It acts, however, only on the principle that it would be unjust and inequitable to permit the contract to remain unenforced, or, as has been stated, where nothing can answer the justice of the case but the performance of the contract in specie." 49 Am.Jur., p. 6, Specific Performance, § 2.

The following Washington cases uphold the right to specific performance: Thill v. Johnston, 60 Wash. 393, 111 P. 225;Klitten v. Stewart, 125 Wash. 186, 215 P. 513; Perkins v.Allen, 133 Wash. 455, 233 P. 655; Chapman v. Milliken,136 Wash. 74, 239 P. 4.

The contract mentioned in Thill v. Johnston, supra, provided, in part, as follows:

"`Now, Therefore, it is mutually agreed between the party of the first part and parties of the second part that the party of the first part is to have the said land above described, and parties of the second part are to have all the merchantable timber on the said land. Parties of the second part are to have six years within which to remove said timber from said premises. Party of the first part agrees for a period of six years not to clear land in and among said merchantable fir and cedar timber. After six years from date party of the first part is to have the right to clear land within the area covered by said merchantable fir and cedar timber. All timber on said premises at the end of 8 years from date is to revert to and become the property of party of first part. Party of the first part is to pay two hundred and fifty dollars ($250) of the remaining portion of the purchase price of said premises on the said contract with said James Swan and Stella M. Swan and parties of the second part are to pay two hundred and fifty dollars ($250) of said purchase price on said contract. If said parties of the second part remove said timber at any time before November 2d, 1907, at such time they are to pay said two hundred and fifty dollars ($250) required to be paid by them upon said contract with said James Swan and Stella M. Swan. At time deed of said premises is received from said Swans, parties of the second part will deed their interest in land to party of first part, reserving timber therefrom, but if timber is removed before deed from Swans then parties of second part will deed same premises to party of first part at such time."

In passing upon the issue presented, this court said:

"It is contended in behalf of appellants that the contract is too uncertain in its terms to entitle respondent to a decree of specific performance, in that the time for the removal of the timber is uncertain. Passing the question of such uncertainty rendering the contract unenforcible, we think that, in view of all the provisions of the contract relating to the removal of the timber, it can readily be seen that the parties intended the appellants to have eight years for that purpose without forfeiture of their rights to the timber. The six-year clause standing alone would seem to indicate otherwise, but following that clause are the words: `After six years from date party of the first part is to have the right to clear land within the area covered by said merchantable fir and cedar timber.' These words clearly indicate that the appellants were still to have some right on the land after the expiration of the six years named, and by the language following this clause of the contract it is evident that such right consisted of the right to the timber for two years longer subject to this clearing right. This necessarily gave them the right to go upon the land and remove the timber during that time. We are of the opinion that the contract is sufficiently certain to warrant a decree of specific performance."

The exchange and commission contract construed in Chapman v.Milliken, supra, provided that a certain property should be conveyed subject to a mortgage. In passing, we said:

"It is also contended that the contract is too indefinite and uncertain to be reformed, or to be specifically performed, because it does not provide for the length of the term of the mortgage referred to, nor the rate of interest to be paid under the mortgage assumed.

"This objection is not valid. The offer of appellants in the contract did not specify that respondents were to convey subject to a mortgage of record, or which actually existed and was to be paid in a certain length of time, or at any specific rate of interest; but agreed, as a matter of fact, to convey subject to a mortgage of $3,500, which was done; and any rate of interest within the legal rate of six per cent would be deemed agreed to under our statute, none being otherwise specified."

I find the following in the Klitten case just cited:

"In November, 1920, the respondents, Klitten, sold to the appellant, Stewart, the furniture and equipment of a hotel in the city of Kennewick, and also leased to her the hotel building for a term of five years. The consideration for the furniture and equipment was $15,000. Of this sum Mrs. Stewart paid a part in cash and in negotiable securities which were converted into cash, gave a mortgage on the furniture for the sum of $2,100 for another part, and for the balance, $8,000, assigned to the respondents certain notes secured by a mortgage on real property situated in the state of South Dakota. The notes mentioned were, at the time the negotiations began, in the possession of a bank in South Dakota, and were forwarded by the bank to a bank at Kennewick. When examined, the mortgage given to secure them was found to be a second mortgage on the property, and a lien was claimed upon the instrument by the Dakota bank for the sum of $800. A banker in South Dakota, to whom an inquiry had been sent, made a favorable report on the securities, but the respondents were not satisfied therewith. The appellant thereupon agreed, in case the notes were not paid at their maturity, to give a chattel mortgage on the hotel equipment as further security. This agreement was evidenced by a writing in the following form:

"`November 30, 1920.

"`In case the note of $2,000 which is due Mch. 1, 1922, and the $3,000 note due Mch. 1, 1923, and the $3,800 note due Mch. 1, 1924, are not paid, I agree to give a mortgage on furniture for above notes. Mrs. E.M. Stewart.'

"Thereafter the deal was closed and the appellant was put into possession of the property.

"When the first of the notes secured by the Dakota property matured, it was not paid, nor was the interest then due on the remaining notes paid, and inquiry developed that the notes were practically valueless. The respondents then demanded of the appellant a mortgage on the hotel equipment to secure them. The appellant refused to execute the mortgage, whereupon the respondents began the present action to enforce a specific performance of the agreement. The trial resulted in a decree of the court directing the appellant to execute within ten days a chattel mortgage on the hotel property, securing the notes according to their tenor and effect, appointing the clerk of the court a commissioner to execute the mortgage in the case the appellant failed so to do. . . .

"It is next contended that the agreement is not one of which a court of equity will decree a specific performance, in that it is not sufficiently direct and certain in its terms. But we think the contract sufficiently definite in this respect. It is not, it must be admitted, entirely free from ambiguity. But construing it in the light of the surrounding circumstances, it is plainly a contract to give the additional security should it become evident that the notes would not be paid by the persons bound thereon. The evidence was ample to justify the conclusion that they would not be so paid. Foreclosure of the first mortgage had been instituted, and inquiry on the ground by one of the respondents developed that the sale of the property would bring no more than the amount of the mortgage, and that the makers of the notes and the indorser thereof were without other unincumbered property."

The majority seem to stress the words "proper lease," and conclude that those words indicated that something was to be added or included in the lease at the time it was prepared. To my mind, a "proper lease" could be only one which embodied those things mentioned in the earnest money receipt. There should be enforced in this case the execution of the lease of the described property for a period of five years from May 6, 1943, at a rental value of $375 per month, payable monthly in advance, with a reservation of the office space located on the east side of the building on the ground floor, with the further agreement not to rent the reserved space to any person who might be a competitor of the lessee. Such a lease would be a proper one, and would carry out the definite intention of the parties as disclosed by the written instrument signed by respondent.