City of Everett v. Estate of Oddmund Sumstad

The Supreme Court of Washington, En Banc
95 Wash. 2d 853, 631 P.2d 366 (1981)

ELI5:

Rule of Law:

The subject matter of a sale is determined by the objective manifestations of intent by the parties, not their subjective intentions. The sale of a locked container can include its unknown contents if the outward words and actions of the parties indicate an intent to sell the container and whatever is inside it.

Facts:

Al and Rosemary Mitchell, proprietors of a secondhand store, attended Alexander's Auction on August 12, 1978.
The auction was selling property from the Sumstad Estate.
The Mitchells purchased a used safe with a locked inner compartment for $50.
The auctioneer informed bidders that the safe was locked, from an estate, and that the key and combination were unavailable.
Several days later, the Mitchells hired a locksmith to open the locked compartment.
The locksmith discovered $32,207 inside the safe.
The locksmith notified the Everett Police Department, which subsequently impounded the money.

Procedural Posture:

The City of Everett initiated an interpleader action in the trial court against the Sumstad Estate (seller) and the Mitchells (buyers) to determine ownership of the found money.
Both the Estate and the Mitchells moved for summary judgment.
The trial court granted summary judgment in favor of the Sumstad Estate.
The Mitchells, as appellants, appealed the decision to the Court of Appeals.
The Court of Appeals affirmed the trial court's judgment in favor of the Sumstad Estate, the appellee.
The Mitchells, as petitioners, were granted review by the Supreme Court of Washington.

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Issue:

Does the sale of a locked safe, where both the buyer and seller are unaware of its contents but are aware that it is locked and no key is available, include the sale of valuable contents discovered inside after the sale?

Opinions:

Majority - Dolliver, J.

Yes, the sale of the locked safe included the sale of its unknown contents. The court applies the objective manifestation theory of contracts, which relies on the outward expressions and acts of the parties, not their unexpressed subjective intentions, to determine the terms of an agreement. The auctioneer's statements that the safe was locked and no key was available, combined with the absence of any reservation of rights to the contents, constituted an objective manifestation of intent to sell the safe and its contents. A reasonable person would conclude that the parties mutually assented to a sale of the safe and whatever it contained, especially since the function of a safe is to hold valuables. The court distinguished this case from precedent where items were included in a sale by sheer inadvertence and where the seller retained documents of title, which served as an objective sign of no intent to sell.

Analysis:

This case serves as a quintessential example of the objective theory of contract formation, emphasizing that a party's intent is judged by their outward words and actions rather than their secret thoughts. The decision establishes that the context of a sale is critical; selling a locked safe, an item designed to hold valuables, creates a reasonable expectation in the buyer that the sale includes any contents. This precedent guides future cases involving the sale of containers with unknown contents, requiring courts to analyze the objective circumstances of the transaction to determine the scope of the agreement. It places the onus on sellers to explicitly reserve rights to unknown contents if they do not intend to part with them.

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