Merchants Leasing Co. v. Clark

540 P.2d 922, 14 Wash. App. 317, 1975 Wash. App. LEXIS 1611
CourtCourt of Appeals of Washington
DecidedSeptember 29, 1975
Docket2732-1
StatusPublished
Cited by8 cases

This text of 540 P.2d 922 (Merchants Leasing Co. v. Clark) 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
Merchants Leasing Co. v. Clark, 540 P.2d 922, 14 Wash. App. 317, 1975 Wash. App. LEXIS 1611 (Wash. Ct. App. 1975).

Opinion

Andersen, J.—

Facts Of Case

The written agreement out of which this litigation arose is entitled “Lease of Personal Property.” The property which was the subject of the agreement was a pressure cooker to be used for cooking chicken at Smokey Joe’s Tavern in Snoqualmie, Washington.

Signing the document as “lessee” was the tavern proprietor, Jake G. Clark. He and his then wife, Sherry L. Clark, who are the defendants in this case, for convenience will be referred to as “lessees.”

Signing as “lessor” was the assignor of Merchants Leasing Company, the plaintiff herein. No issue is raised here as to the legal significance of the assignment, so for the purposes of this appeal both assignor and assignee will be treated as though they were a single party and will be referred to as “lessor.”

The agreement purported to be a noncancelable 60-month lease whereby the lessees agreed to pay $97.62 per month over the full term of the lease. Thereafter lessee was given the option to renew the lease for not more than three successive 1-year terms at a rate of $97.62 a year.

The agreement provided that title was to remain in the lessor. It did not give the lessees an option to purchase. There was no testimony at the trial concerning any practice or side agreement with respect to the granting of such an option to the lessees. Neither was there any testimony that the agreement was intended as other than that which it purported to be, a lease of personal property.

The agreement by its terms provided certain remedies to the lessor in the event of the lessees’ default in their monthly payments.

The agreement provided in clause 21 (Appendix), that one of the ways in which the lessor could proceed on default by the lessees was as follows: accelerate the rental by *319 declaring all unpaid rental for the entire term of the lease due and payable; repossess the property; dispose of the property in any commercially reasonable manner after giving notice to the lessees; and recover from the lessees the deficiency remaining (after giving credit for the proceeds of the sale of the property) together with certain of lessor’s costs including reasonable attorneys’ fees.

The lessees defaulted in their payments under the lease and the lessor undertook to proceed along the course outlined. The uncontroverted testimony at the trial was that Mr. Clark had left the area and Mrs. Clark succeeded him in the operation of the tavern. It was likewise uncontro-verted that the lessor had difficulty in locating and repossessing the property until ultimately Mrs. Clark telephoned the lessor and advised where it could be obtained.

For reasons not material to this appeal, no notice was given by the lessor to the lessees that it intended to sell the property in question. The lessor proceeded to sell the pressure cooker and credited the $1,000 sales price to the deficiency claimed from the lessees.

The uncontroverted testimony at the trial was that the lessor sold the property in an arm’s length transaction to an independent tavern supplier for the sum of $1,000.

The lessor sued the Clarks as lessees along with their marital community. A default was taken as to Mr. Clark. After trial to the court, findings of fact, conclusions of law and a judgment were entered against Mr. Clark and the former marital community. No judgment was entered against Mrs. Clark individually. The judgment was in the amount of $5,419.97 and taxable costs. The principal items of damage included in the judgment were the unpaid lease rental and $1,000 as attorneys’ fees.

A cross claim had been filed by Mrs. Clark and the marital community and following the trial, it was dismissed with prejudice by the trial court. The cross defendants, Merchants Finance Company and William Danz, were dismissed out of the case by that same order. No appeal was taken from those dismissals or from the judgment against *320 Mr. Clark. The case is here on this appeal brought by Mrs. Clark on behalf of the former marital community.

Issue

Under the “Lease of Personal Property” agreement herein, did the repossessing lessor which repossessed the equipment covered by the agreement and then sold it without giving notice to the lessees, thereby lose its right to recover a deficiency judgment against the lessees?

Decision

After personal property covered by an equipment lease has been repossessed by the lessor, the rights of the lessor and lessees are determined by the lease itself and by the law of bailment. In the present case, the lessor did not lose its right to a deficiency judgment against the lessees by selling the repossessed equipment without giving the lessees notice of the sale as required by the lease. The lessees were, however, entitled to have any damages caused to them by such lack of notice credited against the deficiency judgment.

Equipment leases have become increasingly popular in the business community over recent years. They enable the financer of the equipment to protect its investment by retaining title to the property while at the same time admitting of a number of distinct financing, accounting, tax and other advantages.

In the construction of a lease, as with any other contract, the primary rule of construction is that the court will endeavor to ascertain the intent of the parties as expressed by the language of their agreement. Schorzman v. Kelly, 71 Wn.2d 457, 460, 429 P.2d 217 (1967).

The lessee who brings this appeal argues that the acknowledged failure of the lessor to give notice of the sale of the repossessed property as required by the terms of the agreement, was a breach of a condition precedent requiring reversal of the trial court’s judgment.

The giving of notice is not a condition precedent to the operation of the acceleration clause, by which all of the unpaid rental was declared due and owing. The agreement *321 provides in that connection that in the event of default the lessor may “ [w] ithout notice to Lessee, accelerate the rental . . No authority has been presented to this court that this acceleration clause is not valid and enforceable.

The notice proviso is found in that portion of clause 21 of the agreement which relates to the lessor’s right to dispose of repossessed property. It reads as follows:

Lessor shall give Lessee at least ten (10) days written notice of a date after which Lessor will dispose of said property. Prior to the giving of such notice the leased property shall be deemed to be held by Lessor for the benefit of Lessee, and at any time after repossession by Lessor and before the date set in said written notice as the date after which Lessor will dispose of said property, Lessee shall have the right to regain possession of the leased property for the unexpired balance of the term of this lease by paying to Lessor the then unpaid balance of the rental due for the entire term of this lease, plus costs of repossession and other costs and charges to be paid by Lessee under the terms of this lease.

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Cite This Page — Counsel Stack

Bluebook (online)
540 P.2d 922, 14 Wash. App. 317, 1975 Wash. App. LEXIS 1611, Counsel Stack Legal Research, https://law.counselstack.com/opinion/merchants-leasing-co-v-clark-washctapp-1975.