Case Name: William E. Bowen, Appellant, v. Dempsey Lumber Company, Respondent
Court: Washington Supreme Court
Jurisdiction: Washington
Decision Date: 1908-06-29
Citations: 49 Wash. 690
Docket Number: No. 7318
Parties: William E. Bowen, Appellant, v. Dempsey Lumber Company, Respondent.
Judges: 
Reporter: Washington Reports
Volume: 49
Pages: 690–694

Head Matter:
[No. 7318.
Decided June 29, 1908.]
William E. Bowen, Appellant, v. Dempsey Lumber Company, Respondent.
Vendor and Purchaser — Contracts—Performance. A contract by a vendee to build a mill on the property purchased by January 1st, 1907, is substantially complied with so as to avoid the payment of §20,000 stipulated damages for failure to do so, where it appears that the contract stipulated that if the vendee failed to secure reasonable assurance of the construction of a spur track to the mill fr,om a railroad company, then it should have fourteen months from and after receiving such assurance within which to complete the contract, and it appeared that the vendee only received an expression of opinion and no positive assurance as to the spur track until April 15, 1906, and completed the mill April 27, 1907.
Appeal from a judgment of the superior court for Pierce county, Carey, J., entered November 26, 1907, upon findings in favor of the defendant, after a trial on the merits before the court without a jury, in an action on contract.
Affirmed.
E. R. York and T. W. Hammond, for appellant.
James M. Ashton and W. H. Hayden, for respondent.
Reported in 96 Pac. 427.

Opinion:
Hadley, C. J.
This is an action to recover liquidated damages for an alleged breach of contract. The defendant had for several years been purchasing timber in the state of Washington, and had, after investigation of different sites, determined to construct a sawmill at Everett, for the purpose of manufacturing the timber into lumber. About this time the Tacoma chamber of commerce learned of the purpose of the defendant, and at once sought to induce it to locate its mill in Tacoma. A proper site for the mill purposes being an important element, the plaintiff and the defendant were brought together through the instrumentality of the chamber of commerce, to negotiate for a site upon certain Tacoma tide lands for the purchase of which the plaintiff held a contract from the state of Washington. The plaintiff in his own name held the contract for the purchase from the state, but he in fact represented a syndicate composed of several persons. In this way he held the contract with the state for the purchase of about one hundred and four acres of tide lands lying east of the Puyallup river, in front of Tacoma, and he and his associates were seeking a purchaser.
After negotiations, the plaintiff and defendant reached an agreement whereby the plaintiff was to transfer to the mill company forty acres of this land, the consideration being that the mill company should pay $1,000 per acre and build on the land conveyed a sawmill with capacity equal to that of the new mill of the St. Paul & Tacoma Lumber Company. The agreement provided that the mill company should commence the construction of the mill during the year 1905, and have the same finished and in actual operation on or about the 1st day of January, 1907, and in default thereof should pay the plaintiff the sum of $20,000 as agreed and liquidated damages. It was, however, recited in the agreement that the mill company was then negotiating with the Northern Pacific Railway Company for the construction of a spur track from its railroad to the land, and it was agreed that, if the mill company failed to receive from the railway company during the year 1905 reasonable assurance that it would construct the spur track to the mill site, then the mill company should be allowed sufficient additional time within which to complete the mill to make fourteen months from and after the date of receiving such assurance. Under this agreement the mill company paid the plaintiff the $10,000 cash on the purchase price, and undertook the construction of the mill on the terms aforesaid and as an additional part of the purchase price. The lands were at the time valued at materially more than $1,000 per acre, and the plaintiff accepted the prospective enhancement in value of his adjoining tide lands by reason of the construction of the mill as the equivalent of the additional value. The remaining lands were after-wards sold by plaintiff for $3,000 per acre.
In pursuance of the aforesaid agreement, the mill company repeatedly negotiated with the railway company and urged the latter to give reasonable assurance that the spur track would be built. During these negotiations the mill company learned that the railway company would not enter into an agreement obligating it to construct the spur, and furthermore that it was not in position to make such agreement or give reasonable assurance that it would build the extension, for the reason that it had not a franchise from the city or the permission of the government to bridge and cross the Puyallup river, or a right of way across private property, all being necessary in order to reach the property of the mill company. On December 13, 1905, the engineer of the railway company wrote a letter to the mill company, expressing his belief that the spur would be constructed by April 15, 1906, the letter being a mere expression of opinion and containing no positive assurance or obligatory promise that it would be constructed. After that time the railway-company was engaged in litigation concerning its right of way over private property for this spur track, the litigation involving the actual right to condemn, it being contended that the purpose was for a private and not a public use. These legal impediments were not finally terminated and removed until the latter part of June, 1906. Meantime the mill company had proceeded with the construction of its mill, but inasmuch as the spur track was necessary for the delivery of the heavy machinery at the mill, the forwarding of the machinery was delayed until the difficulties in the way of the spur track construction were removed. Thereupon the machinery was ordered forward, and the mill construction proceeded, approximately $300,000 cash having been expended thereon before January 1, 1907. The latter date, it will be remembered, was the date for the completion of the mill if the reasonable assurance of the construction of the spur track should be forthcoming in the year 1905. The mill was finally completed in substantial particulars, and operated on April 27, 1907.
The plaintiff alleged, as a breach of the agreement to build the mill, that the work of construction was not commenced in the year 1905; but this was abandoned at the trial. It was also alleged that the mill was not completed and operated by January 1, 1907; and as a further breach it was alleged that the mill was not completed within fourteen months after the reasonable assurance was received that the spur track would be constructed. Judgment was demanded for $20,000, the amount specified in the agreement as liquidated damages. These allegations were denied. The cause was tried by the court without a jury, and resulted in a judgment for the defendant, from which the plaintiff has appealed.
There can be but little dispute about the most of the facts above stated. The appellant disputes that the mill was fully completed and in operation at the time we have stated. The court found that the respondent did not, during the year 1905, receive reasonable assurance that the railway company would construct its spur track, and that it did not receive such assurance until about June SO, 1906; that notwithstanding the want of such assurance, respondent commenced the construction of its mill plant during the year 1905, and proceeded therewith in good faith; that it was the intent of the agreement concerning the construction of the mill, as appears from its terms and all the facts and circumstances entering into and surrounding its execution, that respondent should have the use and benefit of the spur track in the construction of its mill; that it did not secure such use and benefit until July 26, 1906; that it completed its mill plant and had the same in operation with the capacity required by the conditions of the agreement, on April 27, 1907, and within fourteen months after receiving from the railway company the reasonable assurance contemplated by the agreement. As one of the conclusions of law, the court found that reasonable assurance, under the particular circumstances of this agreement, is equivalent to positiveness or certainty, which cannot exist until the party assuring has the power and ability to make good such assurance. We think the findings and the facts we have stated in detail are amply sustained by the evidence in the record. The record of the testimony is extensive, and we shall not undertake to discuss it. The conclusions of law and judgment properly follow from the facts. There was a substantial compliance with the terms and spirit of the contract, the benefit of which has been reaped by the appellant; and we believe it manifestly appears from the evidence before us that it would be unjust to now require respondent to pay appellant $20,000, or any other sum.
The judgment is affirmed.
Fullerton, Rudkin, Root, and Mount, JJ., concur.
Dunbar and Crow, JJ., took no part.