Randall v. Tradewell Stores, Inc. , 21 Wash. 2d 742 ( 1944 )

¹ Reported in 153 P.2d 286. This action was brought to recover damages for alleged breach of contract. In August, 1939, plaintiffs, Randall and Doyle, purchased from defendant, Tradewell Stores, Inc., three retail groceries, two of which were located in Yakima, the third in Toppenish. The contract of sale contained the following provision:

"(5) It is understood that the Seller is on the direct buying list and agrees to buy direct for the Purchaser merchandise from time to time as requisitioned by the Purchaser, the Purchaser agreeing to accompany each requisition with a check in sufficient amount to pay the cost of such merchandise to the Seller. The Seller agrees to render such buying service without charge to the Purchaser until January 1st, 1940. After January 1st, 1940, the Seller agrees to continue to render such service subject to the payment of a fee by the Purchaser in an amount to be mutually agreed upon for the services rendered."

The breach, concerning which damages are claimed, is alleged to have been a refusal of Tradewell to continue to afford the plaintiffs the direct buying privilege thus provided for. Through that privilege they were enabled to purchase commodities at the manufacturers' price, which was from five to seven per cent less than they could be obtained through wholesalers. It was, therefore, manifestly a very valuable right, and the plaintiffs contended, and testified, that without its inclusion they would not have made the purchase.

The action was tried to a jury. The defendant vigorously cross-examined the plaintiffs and their witnesses, and, in so doing, introduced nine or ten documentary exhibits. Other than these exhibits, it offered no evidence, but stood upon its motion for nonsuit or directed verdict made at the close of plaintiffs' case. The jury returned a verdict in the sum of twelve thousand nine hundred dollars.

As to the post-trial motions, the trial judge first rendered a memorandum opinion to the effect that defendant's motion for judgment notwithstanding the verdict should be granted. Some six weeks later, he filed a second and complete memorandum, reviewing and analyzing the case in all its aspects. In this memorandum, he held that the motion for judgment notwithstanding the verdict should be denied, but ordered that a new trial should be granted unless the plaintiffs, within ten days, filed a written consent to the entry of a judgment for five thousand dollars. The plaintiffs duly filed consent, and a judgment for five thousand dollars was entered, from which defendant appeals.

The plaintiffs also complain of the judgment and urge this court to order the entry of judgment in accordance with the jury's verdict.

The defendant-appellant, under the caption "Questions Involved," states seven questions and makes four formal assignments of error. Its contentions may be best stated by quoting the concluding words of its brief:

"We therefore respectfully submit:

"1. That the buying contract was terminable at will by either party.

"2. That there is no evidence upon which a jury could determine the amount of future profits the respondents would have earned or damages which the respondents sustained by reason of the increased price they may have been required to pay.

"3. That respondents wholly failed to make any effort whatsoever to mitigate their damages.

"For these reasons the judgment of the court below must be reversed and the case remanded with instruction to enter judgment in favor of the appellant."

[1] As to contention three: Ordinarily, the verdict of the jury would dispose of the matter of mitigation, and, in the state of the record, we hold that it did. The instructions to the jury have not been included in the statement of facts or in the transcripts furnished us by the parties to the appeal, but that the matter of mitigation was put to the jury is clear from the following portion of the trial court's second and final memorandum. We quote from page 355 of the statement of facts:

"On the question of the plaintiff's duty to mitigate damages, a similar problem is presented. While the court did not feel that the plaintiffs had performed their duty in this regard, it is possible that the jury may have determined that they did all that was reasonably necessary, and that it would have been an unreasonable burden to have required them to seek entry into the Associated Grocers or to have made large purchases of the S. W. line of groceries. According the evidence an interpretation that gives the plaintiffs the benefit of ``all inferences that can be reasonably drawn therefrom,' the Court cannot say that reasonable minds would not differ on the question as to whether or not the plaintiffs had done the things reasonably necessary to mitigate their damages."

We have examined the evidence relating to this point and have arrived at the same conclusion.

The appellant's principal contention is that the buying privilege "was cancellable at will," because no time limit is specified in the contract. Reliance is placed upon the following excerpts from our own decisions:

"It is a little difficult to follow appellant's theory of the case. It appears to us that, if there is a cause of action stated in the complaint, it is by reason of the alleged breach of the washing contract as contained in the letter above quoted. The rule seems to be that, there being no time limit specified in a contract of this kind, it is subject to cancellation at the will of either party. 13 C.J. 604, § 630." Robbins v. SeattlePeerless Motor Co., 148 Wn. 197, 198, 268 P. 594.

"We do not find in the record testimony as to any agreed duration of these standing orders, and, following the case ofRobbins v. Seattle Peerless Motor Company, 148 Wn. 197,268 P. 594, we hold that the contract between the parties to this action, in so far as the standing orders are concerned, was terminable at will by either party. The general doctrine is stated in 13 C.J., p. 604, as follows:

"``The rule seems to be that, there being no time limit specified in a contract of this kind, it is subject to cancellation at the will of either party.'" National Grocery Co.v. Santaella Co., 160 Wn. 262, 264, 295 P. 128.

The respondents, contending that the contract is, on its face, ambiguous, and not merely ambiguous but manifestly incomplete, offered oral evidence, which was admitted over vigorous and continuous objection, and its admission is here relied upon as error. It appears that, after some preliminary negotiations, a written contract was prepared, signed, and acknowledged by the president and secretary of Tradewell on August 11, 1939. On the next day, its secretary, Mr. Eba, took the instrument to Yakima and conferred with the respondents, Randall and Doyle. As the result of this appeal largely turns upon whether the conversations between the parties at this time were admissible in evidence, it is necessary to quote the salient points thereof. Doyle testified, in part, as follows:

"A. We went over the contract, Ray and I sitting on one side of the table in the hotel room, and signed it. Then we asked Mr. Eba that there was one point that we wanted to be clear on. I asked Mr. Eba specifically how much this would cost us. I said, this is a little bit — this is supposed to be mutual, but how much will this cost us after 1940, after this free period has elapsed. He grinned, and he said, well, he said, it is only a small charge for bookkeeping entry, that would be negligible, there wouldn't be hardly any charge, maybe two or three dollars, just to take care of the entries, it wouldn't be any charge to it at all to speak of. That's just the language he phrased to me, so I turned to Ray and said, that's all right as far as we're concerned, we'll give them their copy of the contract. Q. And, at that time, you had signed the contract and you gave them one copy and kept one yourself? A. That's right. Q. Was anything said about the period of time in which this buying clause should operate? A. Mr. Eba said that it would go as long as we owed them any money, why, we could have the advantage of their buying facilities. Q. When was that said? A. At the same time, after we had signed the contract, when I was asking him about the amount that was to be mutually agreed upon."

Randall testified, in part, as follows:

"Q. Will you state the conversation that happened at the time of the signing of this contract and immediately thereafter? A. When we had negotiated the deal to our satisfaction, more or less, we — the question of the buying clause came up. Q. Just a minute. Was it signed first? A. Yes, sir. Q. Then what happened? A. Then we discussed the buying clause. Q. Very well. State the discussion. A. Mr. Doyle brought up the question as to the fee that was to be charged us and for the length of the purchasing agreement, and Mr. Eba assured us that the fee would not be in excess of any reasonable amount and that the contract would run for the period as long as we owed them any money. . . . Q. When was the buying clause in that contract discussed with reference to its importance to the rest of the contract in that meeting? A. Very lengthy discussion, yes, sir. Q. What was said about its importance, if anything? A. It was agreed that the buying clause was very, very essential because it was the means of more or less keeping us competitive with other large operations and Mr. Eba made the remark at the time that to help us in our buying would enable them eventually to collect their money and that was what they were interested in. Q. How long did you operate under that buying clause? A. Until February, 1942. Q. Why did you cease to operate under the buying clause in February of 1942? A. We were informed by Tradewell Stores that would no longer be in effect."

Appellant contends that, although the contract was executed before these conversations took place, there was, in law, no contract until it was delivered, and, therefore, the conversations cannot be regarded as modifying an existing contract; and further, that, since the conversations took place before the contract was completed by delivery, they merged in the contract, and it is said:

"If conversations such as this are admissible, then there is no such thing as a rule against oral testimony to vary the terms of a written contract."

[2] The rule forbidding oral testimony to vary the terms of a written contract, though more than a mere rule of evidence, derives from the just and logical presumption that persons who take the trouble to reduce their engagements to writing naturally include therein the whole of their agreement. When, therefore, a contract shows on its face that it is manifestly incomplete, it is not surprising to find that the parol evidence rule is, to some extent, relaxed. The case of Gaffney v. O'Leary, 155 Wn. 171,283 P. 1091, may serve as an example. It is said in 3 Williston on Contracts (Rev. ed.) 1821, § 633:

"It is generally held that the contract must appear on its face to be incomplete in order to permit parol evidence of additional terms."

[3] Parol evidence may also be admitted and, sometimes, is necessarily admitted as an aid to interpretation. It is said in the same volume of Williston at page 1817:

"All courts agree that the written memorial must be interpreted according to legal rules, and that, when so interpreted, meanings may sometimes be given to it which would not have been apparent without parol evidence."

That has been the holding of this court. Heaton v. Smith,134 Wn. 450, 235 P. 958. In no case, of course, can parol evidence be admitted which is inconsistent with the written instrument. These rules are universal. See Restatement of Contracts, Vol. 1, chapter 9, Topic (1), Interpretation, and Topic (2), Parol Evidence Rule.

In the contract involved in this case, it was provided that the purchasers should pay five thousand dollars upon its execution, five thousand dollars more when the inventory of stocks on hand should be taken and the keys delivered, plus the amount, if any, that the inventory values might run in excess of ten thousand dollars, and that the purchasers should execute and deliver their promissory note for ten thousand dollars, to be executed as of August 14, 1939, payable in ten equal installments of one thousand dollars each, the first to be due January 1, 1940, and the remainder to be due and payable semiannually on the first day of July and January of each year. There were three operating stores involved in the purchase and an investment of at least twenty thousand dollars. That the right to buy commodities, to be retailed in these stores at from five to seven per cent less than wholesalers' prices, was of the very highest importance to the respondents, needs no argument or demonstration. There can be no doubt but that they bargained for it. It can readily be conceived that, as they claimed, they would not have entered into the contract without it. As we have already seen, the contract reads, in part:

"The Seller agrees to render such buying service without charge to the Purchaser until January 1st, 1940. After January 1st, 1940, the Seller agrees to continue to render such service subject to the payment of a fee by the Purchaser in an amount to be mutually agreed upon for the services rendered."

The service was rendered until January, 1940, as stipulated, and, in fact, until February, 1942. It was then refused. It was contended by the appellant at the trial that, after January 1, 1940, it could cancel that service at will, because (1) the contract provides no time limit, and (2) there was no mutuality.

The obligation to afford the buying privilege is not a collateral one, nor an independent covenant. It is an integral part of the entire contract and an inseparable part of the consideration. Its insertion in the contract was clearly for the mutual benefit of the contracting parties. That it was as to the purchasers, is perfectly evident; and that it was to the advantage of the seller that the purchasers should operate at a profit as long as any portion of the purchase price remained unpaid, is equally manifest.

That it is the intent of the contract that the seller should be bound to render the buying service after January 1, 1940, is unmistakable. The language is: "After January 1st, 1940, the Seller, agrees to continue to render such service," etc. To say that the seller could cancel that promise at will — that is, on January 2nd, or even on January 1st — is to say that it could utterly destroy the promise and avoid its obligation. We, of course, do not construe the word "after" as meaning "forever after," but we think it clearly connotes a measurable segment of time after January 1, 1940. We further think that the trial court might well have held, as a matter of law, that the segment of time intended was the remaining life of the contract.

[4] The trial court, however, apparently decided to leave the determination of that matter to the jury, and, perhaps, this was the better course. It, therefore, admitted evidence of conversations between the parties contemporaneously with the making of the contract, in order that the intention of their contract might be found and its ambiguity resolved. In so doing, the trial court (the superior court in and for Yakima county) went scarcely as far as it did in admitting parol evidence for a like purpose in the trial of the case of J.W. Seavey Hop Corp.v. Pollock, 20 Wn.2d 337, 147 P.2d 310. Yet, on appeal, we approved its rulings as to the admission of parol evidence in that case in a departmental opinion handed down in March of this year.

[5] It will be remembered, however, that the furnishing of service after January 1, 1940, was subject to a condition. The language is:

"After January 1st, 1940, the Seller agrees to continue to render such service subject to the payment of a fee by the Purchaser in an amount to be mutually agreed upon for theservices rendered." (Italics ours.)

It is contended that no evidence was produced from which the jury could find that this amount was ever agreed upon, and that, therefore, the refusal to continue the service was not a breach of contract.

On October 15, 1940, more than nine months after the date the respondents were required by the contract to commence paying a fee for the buying service, the appellant wrote them the following letter:

"Mr. Bean has gone into the matter of our buying set-up for your stores very thoroughly with our attorney in Seattle, and we find that our present arrangement for handling the account is illegal.

"According to the opinion of our attorney the only basis on which we can set this up is on a flat service charge fee. We have tried to arrive at some figure that would be approximately the same as you are now paying on a portion of the cash discount, and we believe that a flat service charge of $5.00 a month would take care of this.

"Of course, some months you would not be buying anything, or very little, and in other months your purchases would amount to considerably more on a cash discount basis than the $5.00. On an entire year's purchases we believe this figure of $5.00 would not be excessive for the service we render, and this arrangement would put us in the clear as far as any legal technicalities are concerned.

"If this does not meet with your approval, please let us know at once, giving us your suggestion for an equitable figure. If you think our suggestion is fair, please forward us your check the first of each month covering this service charge. We would appreciate your prompt reply."

It is clear from the foregoing letter that, prior to its date, October 15, 1940, and presumably since January 1, 1940, the respondents had been paying a fee for the buying service. It would seem from the second paragraph that it was paid by deducting a certain percentage from allowable discounts. However that may be, and this is the essential fact, it appears clearly enough that the jury could find that it was paid pursuant to an agreement between the parties. The appellant speaks of it in the first paragraph of the letter as "our present arrangement," and, in the third paragraph, proposes another and substitute "arrangement," that is, a flat fee of five dollars per month.

The material part of respondents' prompt note in reply to appellant's letter enclosing a check for five dollars was as follows: "We will send you a check for $5.00 per month until we promote a change in that policy."

Appellant contends, and correctly, that this was not an unqualified acceptance of the proposition made in its letter. It is further urged that it must be concluded that no mutual agreement on a five dollar monthly fee was arrived at by this exchange of letters. That would seem to be a sound contention also. But if the attempt to make a substitute agreement failed, would it not leave the existing agreement under which the parties had been operating for the previous nine months in full force and effect? It is unnecessary to pursue this inquiry, however, for there is other evidence in the record from which the jury could find that the five dollar monthly fee was in fact agreed upon. We quote from the evidence of respondent Doyle, as it appears on page 27 of the statement of facts:

"Q. After January 1st, 1940, what arrangement was made to continue purchases in that manner? A. Arrangements, after 1940, were for $5.00, $5.00 a month during the balance of the contract. Q. Do you mean to say that you paid them $5.00 a month for this buying charge? A. Yes, we did. MR. BOUNDS: Now, just to them. To whom? THE WITNESS: We paid that to Tradewell Stores, I think. Tradewell Stores is who we sent the checks' to. Q. And how long did you continue that manner of buying? A. We paid the $5.00 a month up till the time they refused to buy for us, in February of this year."

No witnesses were called by the defendant and, at the close of the trial, the above testimony stood unrebutted and unimpeached.

Since "this year" was 1942, it is apparent that the jury was entitled to find that, from November 1, 1940, to February, 1942, the respondents paid, as a fee for the service rendered, five dollars per month for fifteen consecutive months, and that the appellant, for fifteen consecutive months, accepted these payments as and for a fee for the rendition of the service. Clearly, the jury could reasonably infer that the five dollars monthly charge had been mutually fixed and agreed upon, and, the appeal being from a judgment rendered on a jury verdict, the respondents are entitled to the benefit of all favorable inferences that may reasonably be drawn from the evidence.

Since we have concluded that there was a time limit as to appellant's obligation to furnish the buying service, and that the jury could so find, the two cases upon which the appellant has principally relied, that is, Robbins v. Seattle PeerlessMotor Co., 148 Wn. 197, 268 P. 594, and National GroceryCo. v. Santaella Co., 160 Wn. 262, 295 P. 128, need not be discussed. To such a state of facts they are clearly inapplicable, since they apply only to situations where no time limit is indicated in the contract. It remains necessary, however, to discuss the matter of damages, which, the appellant urges, are wholly speculative.

[6] It is clear that the evidence is such as not to permit a calculation of damages with mathematical certainty. That is rarely, if ever, possible in this type of case. But there is, in our opinion, sufficient to afford a basis for a judgment of five thousand dollars, which, in the present state of the matter, is the amount with which we are concerned. We cannot take the space that would be required to analyze the great volume of evidence as to damages, which is both oral and documentary, the latter class comprising probably more than two thousand pages of accounts. We confine ourselves to the following general observations:

In the first place, the respondents were conducting an established business, and there is quite definite proof of experience in the use of the buying privilege from late August of 1939 to February of 1942. This is followed by documentary evidence of the marked and steady growth of the volume of the business. It is stoutly maintained by appellant, and with good reason, that due to the war many of the commodities, concerning which the buying privilege would probably have been used, became wholly unobtainable; and further, that it was itself refused buying privileges by the General Food Products Company. We think, however, that such objections, together with the objection that the appellant sold the note to another corporation which owned all of its stock, and that corporation extended the time for payment, were compensated for by the ultimate entry of a judgment for five thousand dollars on a verdict for twelve thousand nine hundred dollars. We are satisfied that there is ample evidence to support a judgment for the lesser amount, under the rules laid down in Belch v. BigStore Co., 46 Wn. 1, 89 P. 174; Loutzenhiser v. Peck,89 Wn. 435, 154 P. 814; and Seeley v. Peabody, 139 Wn. 382,247 P. 471.

[7, 8] Although the respondents have not cross-appealed, they pray for entry of judgment upon the verdict, relying upon Laws of 1933, chapter 138, p. 482, § 2 (Rem. Rev. Stat. (Sup.), § 399-1 [P.C. § 8225-1]), which is as follows:

"If the trial court shall, upon a motion for new trial, find the damages awarded by a jury to be so excessive or inadequate as unmistakably to indicate that the amount thereof must have been the result of passion or prejudice, the trial court may order a new trial or may enter an order providing for a new trial unless the party adversely affected shall consent to a reduction or increase of such verdict, and if such party shall file such consent and the opposite party shall thereafter appeal from the judgment entered, the party who shall have filed such consent shall not be bound thereby, but upon such appeal the supreme court shall, without the necessity of a formal cross-appeal, review de novo the action of the trial court in requiring such reduction or increase, and there shall be a presumption that the amount of damages awarded by the verdict of the jury was correct and such amount shall prevail, unless the supreme court shall find from the record that the damages awarded in such verdict by the jury were so excessive or so inadequate as unmistakably to indicate that the amount of the verdict must have been the result of passion or prejudice."

It is contended that this court must review this cause denovo, and that, unless on such review it affirmatively finds that the jury verdict was so excessive as unmistakably to indicate that the amount thereof must have been the result of passion and prejudice, it must order the entry of judgment for twelve thousand nine hundred dollars.

Some doubts have been expressed as to the competence of the legislature to enact § 2 of chapter 138 of the Laws of 1933, if the section be given a literal and mandatory interpretation. We shall not enter into that inquiry, because we think that it appears on the face of the statute that § 2 is not applicable to the instant case. The right of a trial court to tender a plaintiff a choice between a new trial or a judgment less than the verdict rendered by the jury was not created by § 2 of chapter 138, Laws of 1933, for it was previously held inUlvestad v. Dolphin, 158 Wn. 629, 292 P. 106, a case decided in 1930:

"In this jurisdiction, the court may, when it deems the verdict excessive, tender the plaintiff a judgment for a less sum than that returned by the jury, and give him the option to take a judgment for the sum tendered or submit to a new trial."

Nor does § 2, chapter 138, Laws of 1933, restrict the right of the trial judge to tender such an option to a case where he deems a verdict excessive as a result of passion and prejudice, for subdivisions 5 and 6 of § 1 of that very act (Rem. Rev. Stat. (Sup.), § 399), setting out the grounds for a new trial, are as follows:

"5. Damages so excessive or inadequate as unmistakably to indicate that the verdict must have been the result of passion or prejudice;

"6. Error in the assessment of the amount of recovery, whether too large or too small, when the action is upon a contract, or for the injury or detention of property."

This is an action on contract. Furthermore, § 2 of chapter 138, Laws of 1933 (Rem. Rev. Stat. (Sup), § 399-1), clearly applies only to new trials granted under subdivision (5) of § 1 of that act (Rem. Rev. Stat. (Sup.), § 399). This subdivision is quoted above. It will be noted how clearly its language is followed in the opening sentence of § 2, which states the conditions under which the section is operative, as follows:

"If the trial court shall, upon a motion for new trial, find the damages awarded by a jury to be so excessive or inadequateas unmistakably to indicate that the amount thereof must havebeen the result of passion or prejudice, the trial court may order a new trial or may enter an order providing for a new trial unless the party adversely affected shall consent to a reduction or increase of such verdict, . . ." (Italics ours.)

There is nothing whatever in the record indicating that the trial judge, in entering the order granting a new trial unless the plaintiffs should consent to reduction of the verdict, did so because he found the verdict excessive as the result of passion or prejudice. In the long memorandum opinion which ends with the pronouncement of the order itself, the words "passion or prejudice" are nowhere found. On the other hand, in the five pages of the memorandum devoted to showing his right to make the order, the trial judge repeatedly refers to his duty to make it if, in his opinion, substantial justice has not been done, citing many authorities to that effect. We, therefore, come to the end of the matter, for, manifestly, we cannot review a finding that the verdict was the result of passion or prejudice when no such finding, formal or otherwise, can be found in the record.

The judgment from which this appeal is taken is affirmed.

BLAKE, JEFFERS, and MALLERY, JJ., concur.