Court Opinion

ID: 9548197
Source: CourtListenerOpinion
Date Created: 2023-08-07 17:59:13.156169+00
Date Added: 2024-06-11T15:18:36.361117
License: Public Domain

Donworth, J.
(dissenting)—I am unable to agree with the majority in holding that there was a sufficient meeting *690of the minds of the parties to create a contract which could be the subject of an action for damages for its breach.
The earnest-money receipt and agreement which the parties signed included, in addition to the provisions described in the majority opinion, this sentence:
“The property is to be conveyed by contract for warranty deed, free of encumbrances except: Subject to mortgage hereinabove referred to.”
(The italicized words were inserted by typewriter in the printed form.)
This instrument shows that the minds of the parties have not met on a complete contract.
In addition, we have the testimony of respondent husband (who at the time was attending law school and also working for a title insurance company) that he had prepared a rough draft of an executory contract for the purchase of the real estate and delivered it to the realtor who was going to prepare such a contract for the signatures of the parties.
He testified as follows:
“Q. On the Saturday following, you said you left a rough draft of the terms of the contract. Had you prepared that? A. I prepared a rough draft of the contract, at least the terms that I wanted included in the contract. Q. Well, were there some terms not included in the earnest money? A. I don’t know. The Court: Your question is not quite clear to me, counsel. Mr. Wyman: Yes. By Mr. Wyman: Q. In your rough draft of the contract to be executed, were there terms which were not set forth in the earnest money? A. I don’t recall. I think perhaps there may have been. Q. Well, you contemplated that a contract to be executed would contain, —that there was another contract to be executed? A. Yes. A real estate contract. Q. And that it would contain terms which were not contained in the earnest money? A. Perhaps as to fire insurance. Q. Payment of taxes? A. Taxes are included in the earnest-money agreement. Specifies they will be pro-rated. Q. Future taxes? A. Taxes as of the current year. Q. Yes, but as to future taxes? A. Future taxes, after pro-ration, they are then paid by the purchaser, as I understand it, as I remember there, that is in the earnest money agreement. Q. At the time you paid the note, was that the,—to the real estate company,—was that the same time that you took in your rough draft copy? A. No. That *691was one week before I took in the rough draft copy. Q. On the Saturday following the execution of the earnest money receipt, when you went back and told the real estate company, or left the rough draft copy, was that the time when you were told that Miss Hurd refused to go ahead? A. No. I took the rough draft copy in, I think it must have been the second Saturday, after signing the earnest money agreement, I took that in early in the morning, on Saturday, and left it with the girl in the office at Square Deal Realty, and told her I would come back, I think at 11 o’clock that morning, to close the transaction. And at that time, she took the rough draft and said that she would prepare the contract. Q. When were you told with relation to that that Miss Hurd wouldn’t go ahead with the,— A. That same day, at 11 o’clock, when I went back to the Square Deal Realty. Miss Hurd had been there in the interim.”
After appellant had received a better offer for the property, she authorized her attorney to advise respondents that she would sell to them for cash in the amount named in the earnest-money receipt. The attorney’s letter stated:
“I write you as attorney for Mildred Hurd. For reasons personal to her, Miss Hurd declines to execute a contract pursuant to the earnest money receipt of January 13, 1953, in connection with Lot 4, and the North half of Lot 5, Block 169, Gilman’s Addition to the City of Seattle.
“It is my opinion that under Washington law Miss Hurd is not required to execute a contract as indefinite as the one called for by the earnest money receipt, and I have so advised her.
“If under your earnest money receipt you wish to make payment of the entire purchase price prior to March 10, Miss Hurd will make all payments due on the mortgage to that date and deliver you a warranty deed subject to the mortgage on the property in accordance with the terms of the earnest money receipt.”
It seems plain to me that both parties construed the earnest-money receipt as being an incomplete contract which required future negotiations, and that an executory contract of sale was to be negotiated and signed by the parties before they could have a meeting of the minds upon several essential matters. In other words, both upon its face and in the contemplation of the parties, the earnest-money receipt was *692a contract to make a second contract, the terms of which had not been agreed upon.
The general rule applicable to such cases heretofore recognized by this court in actions for damages for breach of contract is stated in 12 Am. Jur. 521, § 24, as follows:
“Agreement to Make Contract.—An agreement to agree to do a certain specified thing, all the conditions of the postponed agreement being specified, is simply an agreement in praesenti to do it. A contract between two persons, upon a valid consideration, that they will, at some specified time in the future, at the election of one of them, enter into a particular contract, specifying its terms, is undoubtedly binding, and, upon a breach thereof, the party having the election or option may recover as damages what such particular contract to be entered into would have been worth to him, if made. Unless an agreement to make a future contract is definite and certain upon all the subjects to be embraced, however, it is nugatory. An agreement that they will in the future make such contract as they may then agree upon amounts to nothing. To be enforceable, a contract to enter into a future contract must specify all its material and essential terms and leave none to be agreed upon as the result of future negotiations. Where a final contract fails to express some matter, as, for instance, a time of payment, the law may imply the intention of the parties; but where a preliminary contract leaves certain terms to be agreed upon for the purpose of a final contract, there can be no implication of what the parties will agree upon.”
The comment under § 26 of Restatement of the Law of Contracts (paragraph b) illustrates the application of the rule by stating:
“b. The matter may be put in this way: If the parties indicate that the expected document is to be a mere ‘memorial’ of operative facts already existing, its non-existence does not prevent those facts from having their normal legal operation. What that operation is must be determined largely by oral testimony, or by preliminary or only partially complete writings. If the parties indicate that the expected document is to be the exclusive operative consummation of the negotiation, their preceding communications will not be operative as offer or acceptance. This also must be shown largely by oral testimony.”
*693This court has held, in at least seven cases involving actions for damages for breach of contract (no specific performance being sought), that, where parties negotiating a contract intend their final agreement shall be evidenced by a written instrument, there is no meeting of the minds until the writing is executed: McDonnell v. Coeur d’Alene Lbr. Co., 56 Wash. 495, 106 Pac. 135; Stanton v. Dennis, 64 Wash. 85, 116 Pac. 650; Weldon v. Degan, 86 Wash. 442, 150 Pac. 1184; Chinook Lbr. & Shingle Co. v. McLane Lbr. & Shingle Co., 107 Wash. 587, 182 Pac. 625; Empson Packing Co. v. Lamb-Davis Lbr. Co., 112 Wash. 75, 191 Pac. 833; Jammie v. Robinson, 114 Wash. 275, 195 Pac. 6; Pennington & Co. v. Hedlund Box & Shingle Co., 116 Wash. 292, 199 Pac. 235.
Respondent husband testified (as above quoted) that he prepared a rough draft of a real-estate contract and gave it to the realtor to use in preparing such a contract for execution by the parties. It is obvious that both parties intended that their final agreement should be entirely embodied in an executory contract for the sale of the real estate, and that it would contain terms (in addition to those mentioned in the earnest-money receipt) which remained yet to be negotiated. Hence, there was no meeting of the minds of the parties and no contract to support an action for damages for its breach.
The decisions of this court cited above fully support my conclusion. To quote applicable portions of those decisions would unduly lengthen this dissent. I, therefore, am of the opinion that they should be followed in this case unless the majority is willing to expressly overrule them.
While I agree with the rule discussed in the majority opinion that a contract which is too indefinite to be specifically enforced (as in Hubbell v. Ward, 40 Wn. (2d) 779, 246 P. (2d) 468) may be certain enough to be the basis of an action for damages for its breach, I cannot, for the reasons stated above, find that the earnest-money receipt in this case is sufficiently definite even for the latter purpose.
I think that the judgment should be reversed with directions that respondents’ recovery must be limited to such *694sums, if any, as were paid by them directly or in escrow pursuant to the earnest-money receipt and agreement.
SCHWELLENBACH, J., COnCUTS with DONWORTH, J.
December 13, 1955. Petition for rehearing denied.