Bremerton Central Lions Club, Inc. v. Manke Lumber Co.

Citations: 604 P.2d 1325; 25 Wash. App. 1; 1979 Wash. App. LEXIS 2809Docket: 3231-II

Court: Court of Appeals of Washington; December 21, 1979; Washington; State Appellate Court

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A dispute arose regarding the damages owed to Bremerton Central Lions Club, Inc. by Charles Minium, Jr. after he failed to fulfill his real estate contract for 80 acres of land, initially priced at $104,300.28, with a $30,000 down payment. The contract allowed Minium to log timber only after paying half of the purchase price. However, prior to making the down payment, Minium sold timber from the property to Manke Lumber Company, Inc. He assured Manke that he had paid the necessary amount to the Lions Club, which was false. After the Lions Club discovered unauthorized logging, it demanded further payment from Minium, who then refused to continue payments. The Lions Club declared a forfeiture of the contract and sought to quiet title and recover damages. The trial court ruled in favor of the Lions Club, awarding $22,150.14 against Minium but dismissed claims against Manke and further damages against Minium under treble damage statutes. The Lions Club appealed the dismissal of claims against Manke and for treble damages, while Minium cross-appealed the judgment against him. The court modified the judgment against Minium, reversed the dismissal of claims against Manke, and remanded the case for further proceedings.

Claims against Minium and Manke involve distinct issues, warranting separate discussion. A key point in Minium's cross appeal is whether seeking forfeiture of a purchaser’s interest in a real estate contract constitutes an election of remedies that prevents the seller from seeking additional damages. The court concludes that the seller has not pursued inconsistent remedies. Washington law recognizes the election of remedies doctrine, which requires (1) two or more available remedies, (2) that these remedies be inconsistent, and (3) the party must have chosen one remedy.

In this case, the inconsistency is the focal point. The court finds no inconsistency in forfeiting a purchaser's interest while also seeking damages for timber conversion. The election of remedies aims to prevent double recovery for the same harm, but here, the remedies are not repugnant but cumulative. The real estate title and timber can be separated, allowing the seller to recover both the title to the land through contract forfeiture and damages for the timber’s value. The court argues that denying recovery for timber conversion would unjustly benefit the wrongdoer at the seller's expense. Thus, the provisions allowing forfeiture and retention of payments as liquidated damages do not conflict with claims for conversion, as the contract is understood with reference to existing law at the time it was made.

Existing law is considered a term of the agreement, establishing that wrongful severance of timber constitutes a tort. Limiting damages for this tort to liquidated damages would contradict the principle that established law is part of the contract, implying that liquidated damages cannot be the sole remedy for both breach of contract and conversion. The Lions Club is entitled to recover for both breach of the real estate contract and the conversion of timber. 

The Lions Club contends that the trial court's awarded damages are insufficient and argues for damages to be assessed under RCW 64.12, which stipulates that the damaged party is entitled to the stumpage value of the timber, unless a greater fair market value is proven. The trial court must evaluate evidence regarding the stumpage or fair market value of the timber, and from this value, the $30,000 down payment made by Minium should be deducted to avoid double recovery. The resultant value should then be trebled as per RCW 64.12.030. Minium cannot demonstrate mitigating factors to warrant single damages under RCW 64.12.040, as he knowingly conveyed timber he did not own and made false representations regarding his payments for the logging rights.

Regarding the dismissal of claims against Manke, the trial court's rationale is unclear, but it is undisputed that the Lions Club was aware of Manke's logging activities and did not act to stop them. The trial court implied the Lions Club waived its claims through inaction, but this assertion lacks support. Manke's timber buyer was aware of the contract between Minium and the Lions Club, which established that Minium sold timber he did not own. Manke is thus charged with knowledge of Minium's obligations under the real estate contract. Efforts by Manke to act in good faith do not absolve it from liability, as even innocent purchasers of converted timber are liable to the rightful owner for its value. The dismissal of claims against Manke is reversed, and the matter is remanded for further proceedings to assess damages.

Manke was aware of the uncertainty regarding Minium's ownership of the timber but chose to proceed, making it liable for damages to the Lions Club. Although Manke acted in good faith, this does not absolve it of liability, yet it prevents the imposition of treble damages under RCW 64.12.030. RCW 64.12.040 allows for single damages in cases of timber trespass with mitigating factors. The Lions Club did not notify Manke of its alleged wrongful actions, which, instead of exonerating Manke, mitigates the potential for treble damages. Manke recognized the questionable legitimacy of its logging rights, and the Lions Club's inaction may bar it from claiming treble damages. Even if the Lions Club's failure to mitigate damages is noted, it does not exempt Manke from liability, although it influences the potential for treble damages. Manke's attempts to verify Minium's title to the timber further support its case. Consequently, Manke and Minium are jointly liable for single damages, while Minium alone is liable for treble damages under RCW 64.12.030. To prevent double recovery, Manke will receive a deduction for Minium's prior payment of $30,000. The case is remanded to the Superior Court to determine the amount of single damages and enter judgment for the Lions Club against both defendants. The decision is reversed and remanded, with concurrence from REED and SOULE, JJ., and reconsideration denied on January 23, 1980, with the Supreme Court denying review on March 7, 1980.