Opinion ID: 1190550
Heading Depth: 1
Heading Rank: 3

Heading: individual contracts

Text: We now turn to the question of whether the plaintiffs achieved contractual relations with any of the defending parties on an individual basis. If a contract existed between the plaintiffs and Whitworth College, Inc., its embodiment was plaintiffs' exhibit No. 23: WHITWORTH COLLEGE Spokane, Washington June 24, 1959 Mr. Philip C. Corbit, President Corbit Equipment Co., Inc. North 1125 Monroe Street Spokane, Washington Re: Corbit Equipment and J.I. Case Warehouse (N.P. Industrial Park) Dear Mr. Corbit: In accordance with discussions which you have had with Mr. S.A. Postell and Mr. J.R. Rosamond, we hereby wish to advise you that Whitworth College is willing to accept your proposal for the construction of a warehouse building according to the following terms: 1. The total cost of land and buildings on this proposal will approximate $300,000 to $315,000. Proposed improvements are to be built on land comprising approximately 7.33 acres located at the southwest corner of the N.P. Industrial Park adjacent to the Broadway overpass of the valley freeway. Corbit Equipment Co., Inc. and Philip C. Corbit and wife are to execute a lease for 25 years agreeing to pay a net rental of 8 1/2% of the total cost of land, buildings and other improvements mentioned above. In addition to the net rental of 8 1/2%, lessee is to pay for all taxes, assessments, hazard and liability insurance, maintenance of building, and any other expenses pertinent to the use of said building. (The lease which was prepared by Mr. Rosamond and your attorney, Mr. Brook, is acceptable to the College as to its terms.) 2. It is hereby understood that plans and specifications will need to be prepared on this proposal which will be acceptable to both parties, which plans will be submitted to at least two reputable and reliable Spokane contractors for bid. 3. The purchase price for the above described land shall be forty cents per square foot, which price is to be approved by the J.I. Case Co. 4. In the option to purchase clause of the aforesaid lease, there is to be inserted an additional clause as follows: If lessee exercises his right of option to purchase, the purchase price shall not be less than the original investor's cost of land, buildings and other improvements plus 1% per year to the time of exercising the option to purchase, regardless of appraised value. This is to be a minimum price only and is not to be construed as a maximum, if appraised value is higher. 5. J.I. Case Co., Manufacturer, is to execute a memorandum agreement with the Corbit Equipment Co., Inc. as Dealer wherein they assume certain responsibilities under the aforesaid lease. The last agreement submitted to Mr. Rosamond is acceptable as to terms of this agreement and said memorandum agreement is to become a part of the aforesaid lease. 6. This commitment letter shall be null and void if not accepted within 30 days from date hereof and acceptance of this commitment shall be construed to be execution of the aforesaid lease by the lessee. If there are any further questions regarding this matter, please contact Mr. Rosamond. Very truly yours, WHITWORTH COLLEGE Werner Rosenquist [signed] Werner Rosenquist Secretary [4] This document cannot operate as the written memorial of a bargained-for exchange of promises between the parties; nor can it be termed an offer by Whitworth College unless the person who executed it had express, implied, or apparent authority to so act on behalf of the college. Curiously enough, the instrument was not drafted by the purportedly authorized corporate secretary-signator, but it was drafted by one James Rosamond, a local real estate agent. There is uncontradicted testimony to the effect that Rosamond simply intended the letter to be a starting point or sample and that Rosenquist would redraft it upon college stationery and insert whatever additional conditions he felt necessary to limit Whitworth's undertaking. Instead, Rosenquist signed the letter as drafted by Rosamond, simply adding to it his dubious status or identity as secretary of the board of trustees of Whitworth College. The record is devoid of any evidence showing express authorization to Rosenquist to bind Whitworth College in this particular transaction or in transactions of this general nature or scope. Furthermore, Rosenquist, as the uncompensated secretary of the 36-man board of trustees of a nonprofit, educational institution, would not, just by the nature of his office, possess either implied or inferred authority to bind the college to purchase real estate, to invest a very considerable amount of funds therein, and to lease it back for a period of 25 years to the vendor of the land, i.e., Corbit. [5] There can be no apparent authority to bind the college in this instance because apparent authority arises only out of manifestations by an alleged principal to the person asserting an agency, or to the community in general, that there is an agency relationship. Restatement (Second), Agency § 8 (1958). Insofar as indicated by the record herein, the college made no such manifestations to either the community in general or the plaintiffs; nor had Mr. Corbit had any prior dealings with Mr. Rosenquist which would have indicated that Mr. Rosenquist was so empowered. Thus, Mr. Rosenquist's signature to plaintiffs' exhibit No. 23 was of no legal effect with respect to the college. The so-called commitment letter is neither a contract nor an offer to enter into one. But, even if we disregard the above-discussed agency problem and assume, arguendo, the operative legal effect of Mr. Rosenquist's communication as an offer, that offer was never accepted. Paragraph No. 6 of the so-called commitment letter clearly specifies the time and manner in which acceptance by Corbit was to be consummated. The time specified was 30 days. The manner of acceptance precisely prescribed was by execution of a lease by Mr. and Mrs. Corbit and Corbit Equipment Co., Inc., in which the J.I. Case Company, also, was to assume certain responsibilities under the aforesaid lease. Corbit certainly did not accept within the 30 days specified. Mr. and Mrs. Corbit never signed the lease in their personal and individual capacities. The J.I. Case Company definitely did not assume any responsibility and/or liability for any portion of the rent under the proposed 25-year lease in the event the Corbit Equipment Co., Inc. and the Corbits, personally, were financially unable to pay. These seem to be most critical and dubious factors as to any acceptance by the Corbits of Whitworth's alleged offer to construct and lease a warehouse for the amorphous Corbit-Case dealer-distributorship. [6] In determining the nature of the legal relationship, if any, between Northern Pacific Railway Co. and the plaintiffs, we are concerned with the problem of whether the plaintiffs ever accepted the railway company's offer. Northern Pacific frankly admits, as it must, that it extended a firm offer to the plaintiffs to sell the land in question, but it strongly emphasizes that it expressly conditioned its offer to execute a deed to the property upon tender and receipt of the plaintiffs' check for $80,733.75. The plaintiffs allege that they accepted the railroad's offer, yet nowhere in the evidence does it appear that a check was tendered. Instead, the plaintiffs requested an option of 6 months on September 2, 1959, some 50 days after the making of the original offer by Northern Pacific. There is a dispute as to whether the railway ever accepted this request for an option, which was unaccompanied by consideration. It would seem more likely that the situation described by Restatement, Contracts § 38 (1933) is apropos: A counter-offer by the offeree, relating to the same matter as the original offer, is a rejection of the original offer, unless the offeror in his offer, or the offeree in his counter-offer states that in spite of the counter-offer the original offer shall not be terminated. (Italics ours.) At any rate, assuming arguendo the acceptance of the Corbit's request for an option, the only legal concomitant as to such a manifestation would be a continuation of the power of acceptance in the plaintiffs. But again, the request for an option was unaccompanied by consideration, and, thus, defendant's offer was not irrevocable. Restatement, Contracts § 46 (1933). The plaintiffs never accepted Northern Pacific's offer by complying with the conditions set out by the offeror. Inasmuch as the offer was not irrevocable, any legal power of acceptance still existing in the plaintiffs after their counter-offer of September 2, 1959, was effectively revoked upon receipt by the plaintiffs of the railroad's letter of October 5, 1959. There should have been a directed verdict in Northern Pacific's favor as to plaintiffs' claim for damages arising out of an alleged existing contract between these two parties for a sale of real estate in question. As to the liability of J.I. Case Company for breach of contractual duty, we are convinced that there must be a new trial. The aforementioned confusion of plaintiffs' theory as to an over-all contract with the other four theories of recovery so permeated the conduct of the trial and the court's instruction to the jury that it is most difficult to segregate with any clarity the basis upon which the jury may have found liability as to Case and what portion of the damages, if any, the jury awarded for breach of contractual duty by J.I. Case Company.