Court Opinion

ID: 9630279
Source: CourtListenerOpinion
Date Created: 2023-08-22 10:07:16.970209+00
Date Added: 2024-06-11T18:07:35.636516
License: Public Domain

Thompson, J.
(dissenting)—I dissent. Under the real estate contract, Mountain View agreed to sell Sackman "the 1982 fruit crop and the following legally described real property in Douglas County, Washington, with title free of encumbrances and defects . . .". (Italics mine.) The majority rewrites the parties' contract by inserting a semicolon in a strategic manner. I believe such a reformation is justified only if the evidence clearly shows both parties intended that no warranty against encumbrances apply to the fruit crop. The record does not support such a finding.
At most, the quoted contract term is ambiguous with respect to whether the italicized warranty language refers *710to the fruit crop as well as to the real property. In determining the intent of the contracting parties, the court considers the circumstances surrounding the making of the contract. Leija v. Materne Bros., Inc., 34 Wn. App. 825, 829, 664 P.2d 527 (1983) (quoting Stender v. Twin City Foods, Inc., 82 Wn.2d 250, 254, 510 P.2d 221 (1973)). The bill of sale is a contemporaneous writing. In it, Mountain View clearly promised to defend against persons claiming the fruit crop. Based on this fact, the trial court correctly interpreted the real estate contract, holding that Mountain View had expressly warranted the fruit crop against encumbrances existing at closing.2
The sale documents need not mention the storage charges specifically. Under RCW 60.60.010,3 Welch's storage charges constituted a lien on the stored goods. Nor is the express warranty defeated because Sachman generally was aware of the existence of the charges. Covenants of warranty are held to warrant against known as well as unknown defects and encumbrances. Cf. Fagan v. Walters, 115 Wash. 454, 457, 197 P. 635 (1921); Foley v. Smith, 14 Wn. App. 285, 292, 539 P.2d 874 (1975) (construing effect of warranty of title given under a statutory warranty deed).
The majority states that Welch, in claiming storage charges, was not claiming the fruit crop. It focuses on the fact that before this lawsuit was commenced, Welch had *711released the apples for sale and deducted its storage charges out of the sale proceeds. The majority reasons that any lien held by Welch was thereby extinguished. Conversely, it would appear the warranty against encumbrances was breached on the closing date when Mountain View made it. On the date of closing, Welch had the apples in its possession and the charges in question were due and owing. Because of the industry custom allowing a storage house to control sale proceeds, Welch was able to secure payment of its charges without making a direct claim against the fruit crop itself. I see no reason why this circumstance should work to benefit Mountain View. The charges were in existence at the time of closing and constituted an encumbrance against the apples at that time.
Finally, Mountain View is not aided by its argument that the parties assumed Welch's costs would be prorated.
Where both parties share a common assumption about a vital existing fact upon which they based their bargain and that assumption is false, the transaction may be avoided if, because of the mistake, a quite different exchange of values occurs from the exchange of values the parties contemplated, unless the risk is otherwise allocated by agreement, custom or law.
(Italics mine.) J. Calamari & J. Perillo, Contracts § 9-26, at 379 (3d ed. 1987). See also Restatement (Second) of Contracts §§ 152, 154 (1981). The parties' intent as expressed in their agreement was that Mountain View would be responsible for any encumbrances existing at closing. The fact the parties may not have known that the storage and bin rental costs were incurred when Mountain View delivered the apples to Welch is immaterial. The warranty related to encumbrances in general, not to what the parties thought particular charges would be. Cf. PUD 1 v. WPPSS, 104 Wn.2d 353, 362, 705 P.2d 1195 (1985) (parties must be mistaken as to basic assumption of contract and the party seeking avoidance must not have borne the risk of the mistake).
*712For the foregoing reasons, I would affirm the judgment and the award of attorney fees to Sackman.
Reconsideration denied February 15, 1990.
Review denied at 114 Wn.2d 1022 (1990).

The majority bases its opposing conclusion on the fact that the warranty states it is subject to "Schedule 2" which contains a description of the realty and the encumbrances against it. The majority concludes that the warranty applies only to the realty. However, it can also be argued that the reference to Schedule 2 was to clarify that the warranty, as it applied to the real estate, did not protect against the encumbrances listed in the legal description. This clarification does not exclude the fruit crop from the scope of the warranty.

RCW 60.60.010 provides:
"Every person, firm or corporation who, as a . . . storage warehouseman, . . . shall carry or store . . . personal property, shall have a lien thereon, so long as the same remains in his possession, for the charges for . . . storage . . .".