Thompson, J. Shields, A.c.j., and Munson, J., concur.
B.C. Turner appeals a decision refusing to return his down payment on real property paid to Cleon H. and Virginia E. Gunderson. The Gundersons cross-appeal, seeking a remand on the issue of their remedies and right to damages for breach of contract by Turner. We reverse and direct entry of judgment in favor of Turner and deny all relief requested by Gundersons in their cross appeal.
In April 1985, Turner and Ingram, as lessees, entered into a 10-month lease with the Gundersons, as lessors, of commercial property located in Spokane. Concurrently, Gundersons granted Turner and Ingram a 10-month option to purchase. On August 28, 1985, Turner and Ingram entered into a partnership agreement for the purpose of buying the property. The option expired by its own terms on February 1, 1986, without having been exercised. The lease continued on a month-to-month basis.
On March 8, 1986, Gundersons sent a letter to Turner and Ingram offering to renew their option to purchase the property on essentially the same terms as contained in the prior option. Acceptance of the offer was required by March 30.
On March 13, Turner, Ingram and Cleon Gunderson met to discuss the sale. An agreement was reached and a handwritten memorandum agreement prepared. The agreement was signed by Mr. Gunderson, and Turner and Ingram individually. There was no mention of the partnership. A closing was to occur on or about July 15. A down payment of $13,250 was required before closing, and all taxes were to be brought current. Turner paid one-half of the down payment at the meeting.
A closing did not occur by July 15, but on July 30, Gundersons accepted $4,125 from Ingram. Although a new date certain for closing was not established, Gundersons
continued to allow Ingram time to come up with the balance of the down payment.
On January 21, 1987, Gundersons sent a letter to Turner and Ingram entitled "Notice of Intent To Foreclose". The notice stated Ingram still owed $3,000 for the remaining down payment, and if they still wanted to purchase, $3,030 would have to be sent that day, taxes brought current, and new terms agreed to. The new terms demanded by Gundersons included a higher rate of interest, higher monthly payments and a shorter term if the property were seller-financed.
By letter dated January 20, 1987, Turner's attorney notified Ingram of the termination of his partnership with Turner. On January 26, at Gundersons' request, Turner sent Gundersons a copy of that letter. On February 22, Gundersons gave Turner notice of termination of the month-to-month lease and notice to vacate the premises. Turner vacated and returned his keys on February 27. Ingram remained.
Turner commenced a lawsuit against Gundersons for return of his down payment. Gundersons counterclaimed for the purchase price. The case proceeded to mandatory arbitration. The arbitrator awarded Turner his down payment and Gundersons appealed to superior court.
As of July 13, 1989, the time of trial, Ingram still occupied the premises. At the conclusion of the Superior Court trial, the judge orally ruled the partnership between Turner and Ingram had not been terminated and therefore Turner remained liable for rent under the lease. Additionally, the court orally ruled Gundersons were not in violation of the option agreement and, since they held the property off the market, they were entitled to retain Turner's down payment as damages.
Turner moved for reconsideration, new trial, or judgment notwithstanding the oral decision. On reconsideration, the court ruled it erred in awarding judgment against Turner for rent incurred after February 1987, because the partnership terminated in January 1987 and, since the Gundersons
had been so advised, they had no right to rely on Turner for continued payment. All other aspects of the ...