Century 21 Products, Inc. v. Glacier Sales

875 P.2d 1238, 74 Wash. App. 793, 1994 Wash. App. LEXIS 292
CourtCourt of Appeals of Washington
DecidedJuly 7, 1994
DocketNo. 11604-2-III
StatusPublished
Cited by4 cases

This text of 875 P.2d 1238 (Century 21 Products, Inc. v. Glacier Sales) is published on Counsel Stack Legal Research, covering Court of Appeals of Washington primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Century 21 Products, Inc. v. Glacier Sales, 875 P.2d 1238, 74 Wash. App. 793, 1994 Wash. App. LEXIS 292 (Wash. Ct. App. 1994).

Opinions

Munson, J.

Glacier Sales appeals a judgment of $13,210.09 based on a jury verdict in favor of Century 21 Products, Inc. Glacier argues the trial court erred (1) in submitting the question of the validity of an oral guaranty to the jury; (2) in refusing to give its proposed jury instruction on mitigation of damages; and (3) if the guaranty should be valid, in failing to discharge its obligation because Century 21 impaired its collateral.

The parties to this case are in the processed potato industry. Century 21 is a supplier of raw potatoes. Typically, Cen[795]*795tury 21 purchases potatoes from farmers, washes, sorts, and grades them. The lower grades of potatoes are then sold to potato processors. Sun Russet Potatoes, Inc., was such a potato processor. Sun Russet’s primary product was hash browns. Glacier is a dealer in processed potatoes. Glacier would buy from various potato processors and sell to its customers. Although Glacier handles other fruits and vegetables, most of its sales are of frozen processed potatoes. While there was no formal agreement, Sun Russet sold most of its output to Glacier. By custom, most transactions in the industry are conducted by telephone, rather than in writing.

According to George Yoshino, president and principal shareholder of Century 21, Emmett Byrnes, vice president and director of Glacier, telephoned and asked Century 21 to sell potatoes to Sun Russet. Mr. Yoshino declined, stating Sun Russet had a bad credit history and had not paid for purchases from his prior employer. He stated Mr. Byrnes told him Glacier controlled Sun Russet’s accounts receivable and would guarantee Century 21 was paid. Century 21 then sold potatoes to Sun Russet. There was no written contract or confirmation of the guaranty.

Mr. Byrnes denied saying Glacier would guarantee Sun Russet’s debt to Century 21. He admitted, however, that he may have said Glacier would help Century 21 if there were a problem. Mr. Byrnes testified he had been a director of Sun Russet for most of its operating life. He also stated he loaned money from his pension plan to Sun Russet at a favorable rate.

Sun Russet paid for some of the purchases from Century 21, but owed $13,210.09 when it filed bankruptcy. When Mr. Yoshino learned Sun Russet had filed bankruptcy, he contacted Mr. Byrnes asking Glacier to honor its guaranty. Mr. Byrnes replied Glacier had not guaranteed Sun Russet’s debt. Century 21 attempted to recover from Sun Russet’s bankruptcy estate, but was unsuccessful. This suit followed, and the jury found Glacier liable for the full amount.

[796]*796Oral Guaranty

Glacier contends the oral guaranty was void and unenforceable under the statute of frauds, RCW 19.36.010. We disagree.

The statute of frauds, RCW 19.36.010, requires a contract to be in writing if it is a "special promise to answer for the debt, default, or misdoings of another person . . .”. Here, Century 21 admits Glacier’s promise to answer for Sun Russet’s debt was not in writing. However, courts have held where the "primary purpose” or "leading purpose” of the guaranty is to benefit the guarantor, the promise will be upheld without a writing. See Morrison-Knudsen Co. v. Hite Crane & Rigging, Inc., 36 Wn. App. 860, 863, 678 P.2d 346, review denied, 101 Wn.2d 1020 (1984). Primary purpose analysis is often phrased in terms of whether the guaranty was an original promise or a collateral promise. It is an original promise if the primary purpose is to benefit the guarantor. See Washington Belt & Drive Sys., Inc. v. Active Erectors, 54 Wn. App. 612, 774 P.2d 1250 (1989), review denied, 113 Wn.2d 1035 (1990).

Glacier relies on Seiffert Co. v. Wright, 108 Wash. 616, 619, 185 P. 577 (1919) for the proposition that whether the leading object exception is met is a question of law. Glacier misconstrues Seiffert. The holding in Seiffert is clearly limited. "There being no substantial conflict in the testimony, the question ... is one of law.” Seiffert, at 619. Here, there was a substantial conflict in testimony; the question was properly submitted to the jury.

The jury’s general verdict for Century 21 necessarily implies it found the primary purpose for Glacier’s guaranty was Glacier’s own benefit. The trial court instructed the jury as follows:

The plaintiff has the burden of proving the following propositions:
1. Sun Russet Potato entered into a contract with the plaintiff to purchase potatoes, of which the sum of $13,210.09 remains unpaid;
2. That the defendant, Glacier Sales, made a promise to pay for the debt owed by Sun Russet Potato; and
[797]*7973. That the promise to pay for the debt to the plaintiff was for the leading benefit to Glacier Sales.

(Italics ours.) Instruction 4. The court further instructed the jury:

An oral promise to guarantee the debt of another is legally binding and enforceable if the leading purpose of the promise is to benefit the person or entity making the promise.

Instruction 6.

"In reviewing a jury’s finding of fact this court’s inquiry is limited to whether that finding is supported by substantial evidence.” Strother v. Capital Bankers Life Ins. Co., 68 Wn. App. 224, 234, 842 P.2d 504 (1992), rev’d on other grounds sub nom. Ellis v. William Penn Life Assur. Co. of Am., 124 Wn.2d 1, 873 P.2d 1185 (1994). Substantial evidence exists where the record contains evidence in sufficient quantum to persuade a fair-minded, rational person of the truth of the declared premise. Robinson v. Safeway Stores, Inc., 113 Wn.2d 154, 157, 776 P.2d 676 (1989). Here, there was substantial evidence of a close relationship between Glacier and Sun Russet and that Sun Russet was one of Glacier’s significant suppliers. There was testimony that Glacier had entered contracts to sell the hash browns it was to receive from Sun Russet and, if Sun Russet did not supply those hash browns, Glacier would have to purchase hash browns on the open market — at a potentially higher price. The jury was free to infer Glacier’s primary purpose in making the guaranty was to ensure itself a supply of hash browns. We will not disturb the jury’s finding. The oral guaranty is within the primary purpose exception to the statute of frauds and is valid.

Mitigation op Damages

Glacier argues the trial court erred in rejecting its proposed jury instruction on mitigation of damages. Again, we disagree.

A trial court may not give an instruction that is not supported by the evidence. State v. Benn, 120 Wn.2d 631, 654,

Related

Gens v. Resolution
First Circuit, 1997
Gens v. Resolution Trust Corp.
112 F.3d 569 (First Circuit, 1997)
Century 21 Products, Inc. v. Sales
129 Wash. 2d 406 (Washington Supreme Court, 1996)
Century 21 Products v. Glacier Sales
918 P.2d 168 (Washington Supreme Court, 1996)

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875 P.2d 1238, 74 Wash. App. 793, 1994 Wash. App. LEXIS 292, Counsel Stack Legal Research, https://law.counselstack.com/opinion/century-21-products-inc-v-glacier-sales-washctapp-1994.