Case Name: Warren, McKernan & Evers, Appellant, v. Edwin Ivey et al., Respondents
Court: Washington Supreme Court
Jurisdiction: Washington
Decision Date: 1930-03-31
Citations: 156 Wash. 171
Docket Number: No. 21742
Parties: Warren, McKernan & Evers, Appellant, v. Edwin Ivey et al., Respondents.
Judges: Mitchell, O. J., Fullerton, French, and Holcomb, JJ., concur.
Reporter: Washington Reports
Volume: 156
Pages: 171–188

Head Matter:
[No. 21742.
En Banc.
March 31, 1930.]
Warren, McKernan & Evers, Appellant, v. Edwin Ivey et al., Respondents.
Grinstead, Laube & Laughlin and R. J ohn Lichty, for appellant.
Shank, Belt & Fairbrook, for respondents.
Reported in 286 Pac. 27.

Opinion:
Parker, J.
The plaintiff, Warren, McKernan & Evers, a corporation, a real estate brokerage concern, seeks recovery of a commission claimed to be owing to it in pursuance of a commission contract entered into with the defendants Ivey and wife for procuring for them a prospective lease tenant for property owned by them situated in Seattle. A trial upon the merits in the superior court for King county, sitting without a jury, resulted in findings and judgment denying to the plaintiff recovery, from which it has appealed to this court. The cause is before us upon the admitted commission contract and the trial court's findings, none of the evidence being before us.
' The commission contract is in the form of a letter addressed to appellant, and, in so far as need be here noticed, reads as follows:
"April 7, 1927.
"Warren, McKernan & Evers,
"4544 University Way,
"Seattle, Wash.
"Gentlemen:
"Confirming my recent conversation with your Mr. Evers, in consideration of services to be rendered, I hereby give to your firm an exclusive right, for a period of 90 days from date, to negotiate a lease for the rental of my property on University way, being lots 2 and 3, block 8, University Heights addition, on the following terms and conditions, to wit:
"The lessee to agree to pay me in a lease, which shall be executed, an annual rental of $6,000 payable $500 monthly, in advance, for the full term of the ninety- nine years; the lessee further to pay all taxes and assessments that may, from the date of leasing the property, become a lien on the above described property; also to pay all water bills, light bills, fire insurance, and all other bills of whatsoever kind and nature which might incumber the property.
"The lessee to put up $5,000 cash deposit on the lease, said deposit to draw interest at the rate of 5% per annum, to be deducted from the rent of the last month in each year; lessee to build a permanent building on the premises to cost not less than $40,000, said building to be completed on or before ten years from date of lease, at which time the $5,000 deposit is to be returned. All buildings on the premises at the expiration of the lease to revert to the lessor. . . .
"It is understood and agreed that the lessee, prior to beginning of construction of said building as referred to herein, shall furnish to the lessor herein, a surety bond for the faithful completion of said building to be free and clear from liens and incumbrances of any nature whatsoever, for the full cost of the building in the amount of $40,000.
"In the lease to be executed, the lessee shall have an option of purchasing the above described property at any time within five years of the date of execution of the lease at the price of $90,000, one-half cash and the other half by a first mortgage of 6% per annum, payable on or before five years; any time during the second five years, during the life of the lease, the lessee shall have an option to purchase the above described property at $100,000, one-half cash and one-half on or before five years, secured by a first mortgage at 6% per annum. . . .
"The proposed lessee, his successor or assigns, under this agreement shall be a party of good standing and acceptable to the lessors.
"In consideration of services above mentioned we agree to pay you the commission of $3,225 in cash when the lease is signed by both parties.
"Tours very truly,
' ' Elizabeth Ivey,
"Edwin Ivey."
As to what was done by appellant under this contract and as to respondents' refusal to accept the proposed lessee, we quote from the court's findings as follows :
"(VII) That thereafter plaintiff did find a.party of good standing, one, H. W. Soules, who was ready, able and willing to enter into a lease of said premises upon the terms and conditions as set forth in the listing contract, and the said H. W. Soules signed an earnest money receipt in which he did so agree to enter into a lease, and deposited with plaintiff $100 as earnest money to evidence his good faith.
"(VIII) That thereafter, the plaintiff introduced the said H. W. Soules to the defendants, and the defendants made np objections to the said H. W. Soules, and agreed that a lease should be prepared leasing the property to the said H. W. Soules, upon the terms and conditions as set forth in the said listing agreement.
"(IX) That thereafter, the said H. W. Soules caused his attorney to prepare a form of lease which he desired to have executed by the defendants, and delivered the same to plaintiff for transmittal to the defendants.
"(X) That said proposed form of lease did not conform to the terms of the listing agreement in several respects, and the said form of lease, as prepared, indicated that the lessee would be a corporation and not the said H. W. Soules.
"(XI) That thereafter, Volney P. Evers, one of the stockholders and officers of plaintiff corporation, delivered said proposed form of lease to the defendants, and the defendants examined the .same and were not satisfied therewith, and they particularly objected to the fact that the lessee in the proposed lease was an unnamed corporation, and indicated that they desired the lease to be executed by the said H. W. Soules.
"(XII) That said H. W. Soules thereafter informed the defendants that he would rather have the lease run to a corporation, which he was to organize, but that he would, if the defendants desired the same, execute the lease in his individual capacity, and he requested the defendants to have their attorney prepare a form of lease which would he acceptable to them, aud that if the same conformed to the listing agreement, he would execute such lease.
"(XIII) That thereafter, for a period of several days, a member of the plaintiff corporation repeatedly called the defendants and requested that they prepare such lease and present it to the said H. W. Soules.
" (XY) That by reason of the conduct of the plaintiffs the defendants became suspicious, and before a lease which was satisfactory to defendants was presented for signature announced to the plaintiffs that the said H. W. Soules was not acceptable to them and they Would not execute a lease to him."
It is contended in behalf of appellant that the provision of the commission contract that "the proposed lessee . . . shall be . . . acceptable to the lessors" did not give to respondents the unqualified privilege of deciding that Soules was not acceptable to them as lessee. It is argued that the contract and the facts found by the court demonstrate that respondents were in law bound as reasonable persons to accept Soules as lessee and execute to him a lease in accordance with the contract.
There is a class of contracts wherein a similarly expressed reserved election right in a party thereto will not permit him to exercise such election without fair reason therefor, though the terms of the contract, read literally, indicate otherwise. An ordinary building construction contract providing that the structure shall be according to agreed specifications and to the satisfaction of the one for whom it is to be constructed is of this class, and the law will not permit him to arbitrarily say he will not accept and pay for the building when it is in fact constructed for him according to agreed specifications.
There is another class of contracts wherein a simi larly expressed reserved election right in a party thereto will permit him to exercise such election without right of inquiry by the other party as to the reasonableness of such election. A contract to construct or furnish a work of art solely to gratify the individual taste or preference of the one for whom it is to be constructed or furnished is of this class.
In dealing with provisions of this nature in contracts falling clearly within one or the other of these two classes, the courts have not usually found much difficulty in determining the right of election so reserved; but when it comes to determining such right in terms reserved in a contract of doubtful classification between these two classes, the decisions of the courts do not seem to furnish any rule capable of any sort of formulation in general terms.
The case before us is manifestly somewhere between these two classes. Here, we have a contemplated lease contract which may run for a period longer than the lifetimes of those who would become parties to it. True, it does not involve individual taste or preference such as is sought to be satisfied in the acquisition of a work of art. On the other hand, it does not involve any utilitarian purpose to be certainly accomplished as a finished product or a finished business transaction during the lifetimes of those who would be parties to it. It contemplates numerous dealings between the parties covering a long period of time, as to which dealings there is manifestly opportunity for numerous differences of opinion to arise between them as to their respective rights.
We are of the opinion that the right of personal choice of a lessee reserved in respondents by the express terms of the commission contract is substantially of the same nature-as it would have been had the commission contract been for the furnishing to respond ents of a work of art. We do not mean to say that the choice of a lessee by respondents in this proposed lease, as specified in the commission contract, is or would be a choice to gratify their personal artistic taste; but it manifestly is a choice in which an equally 'indefinable personal preference may well be their controlling consideration, in view of the nature of the proposed lease.
Some contention is made in behalf of appellant rested upon the theory that respondents accepted Soules as a proposed lessee. This is rested upon the trial court's finding No. VIII, above quoted. There might be some ground for this contention if upon that supposed acceptance of Soules as lessee he had also then agreed to become such lessee. But he did not do so. Instead he offered a proposed lease which was not in accordance with the proposed lease which appellant was employed to procure for respondents. Plainly, we think respondents' election to accept or reject Soules as a proposed lessee remained open to them; because their minds and the mind of a proposed lessee did not meet at any time.
The judgment is affirmed.
Mitchell, O. J., Fullerton, French, and Holcomb, JJ., concur.
Beals, J., concurs in the result.