Western Timber Co. v. Kalama River Lumber Co.

85 P. 338, 42 Wash. 620, 1906 Wash. LEXIS 626

• Court: Washington Supreme Court
• Decided: May 10, 1906
• Docket: No. 5960
• Status: Published

Opinion

Crow, J.

— This action was instituted by the appellant Western Timber Company, a Washington corporation, plaintiff below, against the respondent Kalama Kiver Lumber Company, an Oregon corporation, defendant below, to enforce the specific performance of a contract to sell and convey a large tract of timber land in Cowlitz county, Washington. Some time in the fall of 1904, one Henry Turrish, the principal stockholder of appellant, who; acting as its manager, controlled its business policy although not an officer or director, had an interview at Duluth, Minnesota, with Mark Hessey, president of the respondent corporation, relative to the sale of said lands by respondent. Said Turrish then offered to purchase said lands for the appellant corporation for the sum of $50,000, oner-half cash, the remainder to be payable in one and two years, with five per cent interest, se>cnred by notes indorsed by certain stockholders of the appellant company. In pursuance of this offer, an abstract of title was furnished by respondent and approved by appellant.

On October 21, 1904, the said Mark Hessey, as president of respondent company, called a meeting of its board of directors at Iron Hiver, Wisconsin. At this meeting only three directors were present. The board consisted of five directors, to wit: Mark Hessey, Winfield E. Tripp; their respective wives, and one M. T. O’Connell. These five directors owned all of the capital stock of the respondent company, the wives of Hessey and Tripp holding stock which belonged to their husbands, in order that they might qualify as directors. The directors present at the meeting of October 21, 1904, were Mark Hessey, Winfield E. Tripp, and M. T. O’Connell. At this meeting the following resolution was unanimously adopted and entered upon the minute book of the corporation:

“Eesolved, That the timber lands in township I, north of range 4 east, and township I, north of range 3 east, of the Willamette meridian, now owned by the Kalama Hiver Turn’ her Company, be sold and conveyed to the Western Timber Company for the sum of $50,000; $25,000 to be paid at the sealing and delivering of a warrantee deed to the Western Timber Company, and $12,500 to be paid with notes due on or before one year from date, with interest at 5 per cent per per annum, and $12,500 to be paid with notes due on or before two years from date, with interest at 5 per cent per annum. It is further

“Eesolved, That the cash and notes received for said timber lands shall be divided between the stockholders of the said Xalama Hiver Lumber Company, according to the stock held by the said stockholders, upon the surrendering to the said company their stock, duly assigned and transferred to said company.”

After the adoption of said resolution Mr. Hessey, as president of respondent company, on October 22, 1904, delivered a signed copy thereof to Mr. Turrish, as the representative of the appellant corporation; and also handed to Mr. Turrish the minute book and certain- papers of the respondent corporation, which were in turn referred by Mr. T'urrish to the ah torneys of the appellant corporation, who afterwards prepared a written opinion thereon, calling attention to- certain alleged irregularities in the resolution and proceedings. It is not necessary to state these objections in detail, the principal one being based upon the fact that the board of directors had not met within the state of Oregon. Appellant’s attorneys suggested that certain steps be taken by respondent to perfect said proceedings and to pass the. title. Mr. T'urrish handed their written opinion containing said suggestion to Mr. Hessey, who, accompanied by Mr. Tripps immediately called upon said attorneys and procured from them forms and drafts of the resolutions and proceedings which they had recommended. Mr. Hessey and Mr. Tripps, taking these documents, left the attorneys’ office with the expressed intention of complying with their suggestions and completing the transfer. In the meantime Mr. T'urrish provided funds for the cash payment, and had the notes for the unpaid purchase money properly executed and indorsed in accordance with the suggestion of Mr. Hessey. A subsequent meeting of the directors of the respondent corporation was called for October 27, 1904, at which time said directors, instead of talcing the steps recommended by the appellant’s attorneys, adopted the following resolution:

“Resolved, That the resolution adopted at a special meeting of the board of directors of the Kalama'River Lumber Co., an the 21st day of October, 1904, agreeing to sell all the timber lands of said company in Cowlitz county, Washington, to the Western Timber Company, be and is hereby rescinded.. Also the resolution dividing the cash and notes between the stockholders of said Kalama River Lumber Company adopted on the 21st day of October, 1904, be and is hereby rescinded.”

Subsequent to the time Messrs. Hessey and Tripp had conferred with appellant’s attorneys, and prior to the meeting of October 27, the respondent corporation received by wire from Portland, Oregon, an offer of $70,000 for the land. Notice was afterwards given to the appellant, that the respondent’s directors had adopted the rescinding resolution of October 27, refusing to complete the sale, and thereupon this action was immediately commenced.

On the trial, findings of fact were made, from which it in substance appears that .the respondent owns the lands in Cowlitz county; that Henry Turrish is the principal stockholder of the appellant, living at Duluth, Minnesota, and at the solicitation of Mark Hessey, president of respondent corporation, offered to buy said lands for the. sum of $50,000, one-half cash, the balance in one and two years, at five per cent interest; that Mark Hessey, president of respondent, called said meeting of the board of directors at Iron River, Wisconsin, on October 21, 1904, at which meeting three directors being present, the resolution first above set forth was unanimously adopted; that said resolution, the minutes of said meeting, and other papers of the respondent corporation, were thereafter handed by said Mark Hessey, president of respondent, to said Henry Turrish, and by said Henry Turrish were handed to appellant’s attorneys, Washburn, Bailey & Mitchell; that on October 22, 1904, the attorneys made a written report or opinion thereon, containing certain objections to the form of the proceedings; that said written opinion was by Mr. Turrish handed to Mr. Hessey, and thereafter Mr. Hessey and Mr. Tripp; another director of respondent, called upon said attorneys for such stockholders’ resolutions, directors’ resolutions^ proxies-, etc., as said attorneys desired to be executed; that said Hessey and Tripp left said attorneys’ office with said resolutions and directions, with the intent and piurpose of calling a meeting to adopt the same ; and that said parties called a special meeting of the board of directors, which was held in Iron River, Wisconsin, on October 27, 1904, all five directors being present, at which time the second resolution above set forth was adopted.

The appellant took no exceptions to these findings. It, however, requested the court to make the following additional findings , which were refused: That upon receiving such resolution of October 21, 1904, Mr. Turrish, on behalf of the appellant, then and there assented to all of its conditions, and proceeded to- comply therewith by procuring the notes covering the deferred payments^ and that at no time thereafter did appellant alter or modify the same or refuse to carry out the terms thereof; that at the trial appellant offered to piay into court, at such time as the court should direct/ said sum of $25,000, for respondent, and to deliver the notes of appellant company for $25,000, payable one-half on or before one year, and one-half on or before two years from October 22, 1904. To the court’s refusal to make these findings, appellant has excepted. Conclusions of law being made in favor of respondent, judgment was entered thereon, dismissing the action, and this appeal has been taken.

The appellant insists that the trial court erred, (1) in its conclusions of law; (2) in its refusal to make the additional findings requested by appellant; (3) in its refusal to' make the conclusion's of law requested by appellant, and (4) in entering judgment for respondent and refusing to< enter judgment for appellant.

The respondent corporation was formed for the purpose, among other things, of buying and selling timber lands in the state of Washington. The directors were therefore acting within the scope of their authority when they agreed to sell said lands. It appears from the evidence that all of the capital stock of the respondent corporation was owned by its five directors, and as it was anticipated that, ini compliance with the suggestions of appellant’s attorneys, all of said directors would he present at the second meeting of October 27, 1904, said attorneys waived any objection to the fact that the meeting of said hoard of directors would he held in the state of Wisconsin and not in the state of Oregon, their view being that all stockholders present would be estopped from denying the validity of the sale or transfer. The appellant contends that the first resolution of October 21, 1904, authorizing the sale of said real estate, which contains all the essential elements of a valid written memorandum as to terms, and which was signed by the president and secretary of the respondent corporation constituted a full compliance with the requirement of the statute of frauds, as being a memorandum in writing signed by the party to b© charged, and as such memorándum had been made and so signed, the respondent’s contract to convey can be specifically enforced. We think the resolution was a sufficient written memorandum to■ constitute a compliance with the requirements of the statute; Brown, Statute of Frauds (5th ed.), § 346; Texas etc. R. Co. v. Gentry (Tex.), 8 S. W. 98; Argus Co. v. Mayor, 55 N. Y. 495, 14 Am. Rep. 296; Tufts v. Plymouth Gold Min. Co., 14 Allen 407; Central Land Co, v. Johnston, 95 Va. 223, 28 S. E. 175; Grimes v. Hamilton County, 37 Iowa 290.

It is contended by the respondent that, even though it be conceded that a contract had been entered into between it and the appellant, and although it had signed a written memorandum thereof, still such contract cannot be specifically enforced in equity, for the reason that it is not mutual but unilateral, and that the respondent should not be held to a specific performance for the reason that the appellant, not having’ signed any written memorandum thereof, could not be held liable in an action for the purchase price; In answer to this suggestion, appellant contends that, by promptly filing a bill in equity and demanding specific performance, it placed itself in a position to have a decree rendered in favor of respondent, forcing it to pay the purchase price; As the adoption of the resolution of October 21, 1904, by respondent was a sufficient compliance with the requirements of the statute of frauds, w© think the contention of the appellant that the contract can be specifically enforced must be sustained. The weight of authority seems to be that the statute of frauds is satisfied if the memorándum he signed by the party defendant in an action for specific performance. The party not signing is not bound unless, as is held by some authorities, hé has accepted the same as a valid, subsisting’ contract. Want of mutuality arising from the failure of one party to sign cannot be successfully pleaded as a defense by the other party who did sign, as the act of filing a hill for a specific performance hinds the former, makes- him liable;, and renders the contract mutual. See, Woodruff v. Woodruff, 44 N. J. Eq. 349, 16 Atl. 4, 1 L. R. A. 380; South etc. R. Co. v. Highland Ave. etc. R. Co., 98 Ala. 400, 13 South. 682, 39 Am. St. 74; Fry, Specific Performance, §§ 448-459; Waterman, Specific Performance, § 201; Pomeroy, Specific Performance, § 170.

“Equity will not direct a performance of the terms of the agreement of one party when, at the time of such order, the other party is at liberty to reject the obligations of such agreement ; yet, as in a case where an agreement which the statute of frauds requires to he in writing has been signed by one of the parties only, or when the contract, by its terms, gives to one party a right to the performance which he does not confer upon the other, upon the filing of a bill for enforcement in equity by the party who was before unbound, he thereby puts himself under the obligation of the contract. The contract then ceases to be unilateral; for by his own act the- unbound party malms the contract mutual, ’ and’ the other party is enabled to enforce it.” 2 Warvelle, Vendors, p. 748.

In Perry v. Paschal, 103 Ga. 134, 29 S. E. 703, the supreme court of Georgia says:

“If a contract for the sale of laud, required by the statute of frauds to he in writing, is evidenced by a writing signed by one party only, but sufficient to charge the party signing, such party would be bound to perform the contract. While in such a contract there is want of mutuality of obligation, still if the party in whose favor the writing is executed, though not ho-und because it is not signed by him, sees proper to waive bis right to- insist upon the invalidity of the contract, and as evidence of such waiver files a proceeding in a court of equity to enforce it, thus affirming in writing his willingness to be bound by the stipulations in the contract, he will by such proceeding, though previously not bound, put himself under the obligation of the contract. The contract then ceases to be unilateral; for by the act of the party who was in no way .originally bound by the writing the contract becomes mutual, and the other party is thereby enabled to enforce it against him.”

In Engler v. Garrett (Md.), 59 Atl. 648, the court of appeals of Maryland says:

“Was the contract mutual? This is not disputed in the pleading or in the evidence. It is said that it is not signed by the plaintiff, but this is not necessary, even under the statute of frauds, which only requires the signature of the party to be charged. ‘There may be a mutual contract to which both parties have given their assent, though the evidence of such assent may exist in a different form as to the two parties. As to one, it may be verbal, while the other’s is expressed by his signature in writing.’ Waterman on Specific Perf., § 201. The testimony as to the plaintiff’s acceptance of the contract is ample, and, besides this, if there had been doubt on this question, it disappeared when he filed his bill to enforce it.”

See, also, Browne, Statute of Frauds (5th ed.), § 366; Brown v. Munger, 42 Minn. 482, 44 N. W. 519; Central Land Co. v. Johnson (Va.), 28 S. E. 175; Cummins v. Beavers (Va.), 48 S. E. 891; Miller v. Cameron, 45 N. J. Eq. 95, 15 Atl. 842, 1 L. R. A. 554.

It is contended by the respondent that the resolution adopted by its directors on October 21, 1904, did not constitute a contract upon its part; that it did not result from a previous oral agreement, but that it was merely an offer to convey upon terms named, which offer was never accepted by the .appellant, and that by reason of such non-acceptance, no contract was in fact made. On the other hand, it is contended by appellant that the resolution of October, 21, 1904, was the result of a previous oral agreement entered into by Mr. Turrish on behalf of the appellant corporation, and Mr„ Hessey on behalf of the respondent corporation, and which was to be submitted by Mr. Hessey to the respondent for its approval; and that the resolution constituted a valid written memorandum of a contract which appellant never refused to pea’form. The trial conrt, when requested by tbe appellant to find that it assented to all the terms of the contract, and proceeded toi comply therewith, refused to do so. It failed to find that the contract was either accepted or rejected by appellant.

Hpon the evidence we think the conrt should have found that the contract was accepted by the appellant prior to the adoption of the rescinding resolution; that it was at all times ready, willing and able to completely perform the same, and we now make such finding. It is true, there is a conflict of evidence upon this issue. Witnesses for the appellant testified that the contract was accepted, and that appellant was at all times ready, able and willing to complete the purchase, while witnesses for the respondent testified to> the contrary. We, however, regal’d the testimony of the witnesses for appellant as the more eonvincing on this question, it being strongly corroborated by all the surrounding circumstances. Mr. Hessey and Mr. Tripp' certainly did not call upon appellant’s attorneys for any other purpose than that of procuring copies of any resolutions said attorneys might desire the respondent to adopt in completing the transfer. They accepted said resolutions and left said attorneys with an apparent intent to have them adopted. In fact, the trial conrt found that such intent existed. From a careful examination of the entire record, we find no intention or desire upon the part of respondent to refuse a completion of the contract, until it received the offer of $70,000 for the land, when, hoping to obtain a higher price than that to be paid by appellant, it first conceived the idea of rescinding its former resolutions of October 21 and refusing to adopt the additional resolutions suggested by appellant’s attorneys. It is undisputed that the appellant had the money ready to make the cash payment, and had procured the execution of the notes in exact accordance with the request of respondent.

It is further contended hy respondent that, as Mr. Turrish was not an officer or director of the appellant corporation, he was without authority to contract in its behalf. It appears that the acts of Mr. Turrish were ratified hy the appellant corporation, ini that it executed and its officers and stockholders endorsed the promissory notes for the deferred payments of purchase money. It has at all times been ready to make the cash payment, deliver said notes, and perform the contract on its paid. The record fails to show that respondent ever made any demand of performance, nor does it show any refusal by appellant. Appellant has again ratified the acts of Mr. Turrish hy its prompt procedure in bringing and prosecuting this action. Mr. Turrish is shown to have been the principal stockholder of the appellant corporation, to have acted as its manager, and to have at all times controlled its business policy. The claim of want of authority upon his part seems to have been aru afterthought, conceived by respondent for the purpose of escaping liability in this action. We think it is in no position to make any such contention.

Respondent contends that the contract was not accepted hy appellant, because it asked the adoption, of further resolutions hy respondent. The mere fact that appellant, out of an abundance of caution, desired further steps to' he taken looking towards the completion of the transfer of the title, does not show any refusal upon its part to accept the offer of respondent. On the contrary it indicates an opposite intention. Had respondent tendered the appellant an unacknowledged deed for the land, it would he just as reasonable to contend that a request for a corrected deed would constitute a refusal hy appellant to accept the contract or complete its performance. Our view is that the appellant’s acts clearly indicated a fixed intention to accept and perform the contract, rather than any inclination to refuse acceptance.

From a careful examination of the entire record and the authorities-, we conclude, (1) that the- resolution of October 21, 1904, was a sufficient compliance with the requirements of the statute of frauds; (2) that the appellant at no time refused to accept or perform the contract; (3) that the¹ offer of respondent was accepted by appellant prior to- the adoption of the rescinding resolution, and (4) that the contract is one that can he specifically enforced against the respondent. This being true, the trial court erred in dismissing the action. It is ordered that the judgment of the honorable superior court be reversed, and the cause remanded with instructions to enter a decree for specific performance in accordance with the prayer of the complaint.

Mount, O. J., Dunbab, Hadley, Rudkin and Root, JJ., concur.