JACOBS v. FREEMAN (1980)

OPINION

STATEMENT OF THE CASE

This appeal arises out of an action for specific performance and for damages initiated by appellants, who allege that they entered into contracts with respondent Tenneco West, Inc., for the sale of two parcels of real property. A complaint sounding in both contract and tort was filed by appellants Vincent, Eugene, David and Ugo Antongiovanni, individually and doing business as Antongiovanni Brothers, a farming partnership.¹ The trial court sustained demurrers to portions of the complaint; appellants were given leave to amend. The amended complaint alleged four causes of action against the following defendants: Tenneco West, Inc., and individuals N. W. Freeman, Simon Askin, Melvin Jans and Leon McDonough. The individual defendants were all employees and/or officers of the defendant Tenneco West, Inc. Howard Marguleas, not named in the original complaint, was served as a Doe defendant.

The following theories of liability were asserted. The first cause of action alleged that appellants contracted in writing to purchase certain real property owned by Tenneco West, Inc. Appellants alleged that the land sale contract consists of certain escrow instructions dated May 16, 1973. These instructions were signed by appellants as “buyer.” Melvin Jans and Leon McDonough, senior vice president and assistant secretary respectively of Tenneco West, Inc., signed the instructions for Tenneco as “seller.”²

Appellants' complaint characterized the escrow instructions as a contract subject to “an implied covenant or alternatively, an implied condition.” The instructions contained the following provision:

“IN ADDITION, this escrow is subject to :

“A. Approval hereof by Seller's Board of Directors.” The crucial allegation to establish breach of contract in appellants' first cause of action is:

“Defendants and each of them have also failed to live up to the terms of the contract and are in breach (thereof) inasmuch as the named individual defendants in this action acting for and on behalf of TENNECO WEST, INC., breached the expressed terms of the contract and escrow and further breached the implied term of the contract in escrow to act in good faith and with fairness inasmuch as the individual defendants, acting on behalf of the corporation, did not submit the escrow to that particular entity known as the ‘Board of Directors' of the seller, TENNECO WEST, INC. This failure to act and failure to abide by the implied term of the escrow and contract, amounts to a breach of the escrow and contract . . . .”

It was further alleged by appellants that the defendants, after entering the subject contract, attempted to sell the same property to other parties and that in so doing defendants were guilty of bad faith and malice.

Appellants' first cause of action also alleged that appellants had complied with all conditions or had tendered compliance with all conditions required of them under the escrow instructions. Appellants also alleged they had paid money outside of escrow to Tenneco, and that Tenneco's deposit of this money in its general account had ratified the contract in question.

The relief sought in the first cause of action included: a decree for specific performance, compensatory damages for lost rents and profits, alternatively damages to compensate for the difference between the contract price and the value of the property as of the date of the breach, and exemplary damages in the amount of $500,000.

The second cause of action sounds in tort. Appellants alleged that Tenneco agents made representations concerning the sale which were known to be false at the time made; that appellants relied on these representations that the subject land would be sold to them on the terms set forth in the escrow instructions, “including the implied obligation to submit said escrow instructions and terms of sale to said Board of Directors.” Appellants alleged the false representations were wanton, willful, malicious and amounted to a fraud. They prayed for exemplary damages in the sum of $1,000,000. Appellants also sought compensatory damages in the sum of $100,000 for the difference between the contract price and the actual value of the property at date of breach.

The allegations of the third and fourth causes of action are basically reiterations of the first and second causes of action.

Respondents answered the complaint after their demurrers were overruled. The matter proceeded to jury trial before Judge Davis.³ After appellants presented their case in chief, respondents moved for nonsuit pursuant to Code of Civil Procedure section 581c. The trial court granted the motion for nonsuit in favor of all respondents. Judge Davis gave no formal statement on the record of his reasons for granting the nonsuit; however, he told the jury when explaining the ruling to them that he “ruled in favor of the defendant on the ground . . . , (he) felt there was no way (they) could render a verdict in favor of the plaintiffs in this case in view of the way the escrow instructions were worded.” Appellants filed timely notice of appeal.

STATEMENT OF THE FACTS

The parties are essentially in agreement as to the facts; they differ mainly on the legal significance of the two sets of escrow instructions dated May 16, 1973. These instructions were signed by appellants as buyers and by Melvin Jans and Leon McDonough, senior vice president and assistant secretary of Tenneco West, Inc. designated as the “seller” in the instructions. The instructions pertained to two parcels of land, referred to by the parties as the Northeast Quarter and the South Half of section 19, township 30 south, range 27 east, Mount Diablo Base and Meridian (hereinafter the Northeast Quarter and South Half). According to the escrow instructions, the total consideration for the Northeast Quarter was to be $200,460 $3,000 to be paid outside of escrow, $47,115 to be paid through escrow, and the remainder to be evidenced by a promissory note and secured by a deed of trust. The total consideration for the South Half was, under the terms of the escrow instructions, to be $419,081; $20,000 was to be paid outside escrow, $84,771 to be paid through escrow, and the remainder to be evidenced by a promissory note and secured by a deed of trust. Both parcels were subject to agricultural leases. The escrows were scheduled to close after these leases terminated; the escrow on the Northeast Quarter was to terminate in late December 1973, and the escrow on the South Half was to close in late December 1975.

Finally, the escrow instructions provided that the escrow would be subject to certain conditions, including approval by the seller's board of directors. Eugene Antongiovanni testified that he and his brothers were aware of this condition at the time they signed the instructions. Eugene acknowledged that at the time the instructions were signed he had no information leading him to believe that board approval had already been procured. Eugene testified that Mr. Gilbert Castle, who had represented Tenneco in the negotiations with the Antongiovanni brothers for this land sale, had told Vincent Antongiovanni (who died before the action came to trial) that the escrow instructions had to be approved by Tenneco's board of directors.⁴ The evidence clearly established that the board of directors never approved the subject escrow instructions; in fact, neither these instructions nor any information concerning the sale were ever submitted to the board.

At the time relevant to this action, N. W. Freeman, Simon Askin and Howard Marguleas constituted a majority and quorum of the board of directors of Tenneco West, Inc. The corporation owned large acreages of agricultural property in California. In the early 1970's, it was decided that the corporation should sell off its “surplus lands”; thousands of acres were sold to many buyers between 1970 and 1974.

Mr. Melvin Jans, vice president of Tenneco West, Inc., was in charge of generating the sales of land. He was assisted by Mr. Gilbert Castle who solicitated buyers and negotiated sales prices. When a land sale was contemplated, it was Mr. Jans' function to originate form No. 4283 regarding the proposed sale.

On May 17, 1973, the date after the escrow instructions were prepared, Mr. Jans filled out and signed a copy of form 4283 relative to the sale of the subject parcels. This form set forth information regarding the purchase price and terms of the sale to Antongiovanni Brothers. The form contained a blank space for Howard P. Marguleas' signature; his signature would indicate he recommended the sale on the basis that the land was surplus and the negotiated price was favorable. Jans testified that Marguleas' approval on the form was necessary before the matter would reach the board of directors.

Form 4283, as completed by Jans, was sent to Marguleas for his approval. Apparently the sale died at this point. Marguleas' deposition testimony revealed that he had disapproved the sale by not signing the form. Marguleas stated that his understanding of company policy was that if he did not approve a proposed sale, he was not required to take further action regarding the sale.

Regarding the possibility that the board would have approved the sale despite Marguleas' recommendation against it, Marguleas stated: “(My disapproval) could well be (the final act, so to speak). If it was something of great magnitude I might add that I am sure that there are instances that I disapproved which they overruled me, and I can't think of any offhand but (it) wouldn't have been unusual, or I wouldn't have taken offense . . ..” However, there was also evidence suggesting that a majority of the board would not have approved this sale without Marguleas' recommendation. Mr. N. W. Freeman, a member of the board, explained his reliance on Marguleas' opinion:

“Marguleas was an experienced agricultural man in all phases of agriculture. . . . (P) . . . I am probably the guy that gave the instruction that no agricultural property was to be acquired or sold without Howard Marguleas' approval because I thought he had more he was more knowledgeable in what property we should retain and what property we should sell. . . . (Without Marguleas' approval), I would not as the chief executive officer of Tenneco, I wouldn't have referred it to the Board of Directors of Tenneco, Inc.”

Mr. Simon Askin, another member of the board, also said that without Marguleas' approval, a transaction would not even be referred to the board. Thus, there were two directors who said in retrospect the proposal would not have received board approval without Marguleas' prior approval.

It is unclear from the evidence exactly when Marguleas decided not to approve the sale of the subject lands. Marguleas could not pinpoint when he determined to disapprove the sale.⁵ He testified only that it was “at some point between May 17, 1973 (the date the escrow instructions were prepared) and September 26, 1973.” On September 26, 1973, Gilbert Castle sent a letter to appellants informing them that the board of directors of Tenneco, Inc., had not issued approval of the sale. Castle advised that Tenneco would therefore have to withdraw from the transaction. Enclosed with the letter was a check reimbursing appellants for $23,000 paid to Tenneco outside of escrow. Appellants had given Mr. Castle two checks, in the amounts of $20,000 and $3,000 respectively. These checks were dated June 27 and 28, and were paid outside of escrow as provided in the escrow instructions. The checks from appellants were deposited in Tenneco's general account; the funds were retained by Tenneco from late June 1973 until September 26 of that year when Tenneco reimbursed the funds.

Counsel for appellants thereafter sent a letter to Mr. Castle indicating that appellants were ready, willing and able to proceed with the deal. When Tenneco refused to proceed with the transaction, this lawsuit for specific performance and damages was instituted.

DISCUSSION

Although the trial judge did not explain in any detail his reason for granting the nonsuit, he did state that his ruling was compelled by the wording of the escrow instructions. The judge was apparently convinced by the argument of respondents' counsel that no binding contract arose between the parties because of the express provision that the escrow was subject to approval by the seller's board of directors. Respondents' argument misconceives the law. As we shall explain, upon the signing of the escrow instructions, an executory bilateral contract to sell the land was created obligating the seller to convey the land upon board approval. Furthermore, we hold that the seller's agents were required to act in good faith by seeking board approval for the transaction, and the board was required to consider the proposal in good faith. Hence, the trial court erred in granting the nonsuit on the ground of the absence of proof of a contract to sell the land. Whether a nonsuit could nonetheless be granted because of appellants' failure to adequately prove damages resulting from the breach of contract, will also be discussed for the guidance of the court and parties on remand.

Preliminarily we note the general principles governing a motion for nonsuit:

“A nonsuit . . . may be granted ‘only when, Disregarding conflicting evidence and giving to plaintiff's evidence all the value to which it is legally entitled, herein indulging in every legitimate inference which may be drawn from that evidence, the result is a determination that there is no evidence of sufficient substantiality to support a verdict in favor of the plaintiff if such a verdict were given.’ (Citations.) Unless it can be said as a matter of law that, when so considered, no other reasonable conclusion is legally deducible from the evidence, and that any other holding would be so lacking in evidentiary support that a reviewing court would be impelled to reverse it upon appeal, . . . the trial court is not justified in taking the case from the jury. . . .” (Estate of Lances (1932) 216 Cal. 397, 400, 14 P.2d 768, 769; see also 4 Witkin, Cal. Procedure (2d ed. 1971) s 353, pp. 3152-3153.)

A nonsuit may be granted as to one of several Parties without affecting the others; however, a nonsuit should not be granted as to particular issues for the result would be more than one appealable judgment. (Estate of Jamison (1953) 41 Cal.2d 1, 5, 256 P.2d 984.) Where there is sufficient evidence on one cause of action to survive nonsuit, and insufficient evidence on other theories, the proper procedure is to instruct the jury on the issues, rather than granting a nonsuit (4 Witkin, Cal. Procedure, Supra, s 350, p. 3150).

On appeal from the granting of a nonsuit, the reviewing court should consider only the grounds which were before the trial court. The reason for this rule is that the plaintiff should be given the opportunity to correct the deficiencies in his proof before a nonsuit is granted. As observed by Witkin: “If the court Grants the motion, the appealing plaintiff should be able to insist that the reviewing court confine its consideration to the grounds specified below notwithstanding the existence of other good grounds” (Id., s 362, p. 3159). Thus, in this situation the appellate courts do not follow the general rule that a judgment should be upheld if it is correct even though the reasons relied upon may be incorrect. (Lawless v. Calaway (1944) 24 Cal.2d 81, 92-94, 147 P.2d 604.)

Three interpretive principles compel our conclusion that a contract to sell the real property was formed when the parties affixed their signatures to the escrow instructions:⁶ First, a contract must receive such an interpretation as will make it lawful, Operative, definite, reasonable And capable of being carried into effect, if this can be done without violating the intention of the parties (Civ.Code, s 1643). This rule accords with the primary goal in contract interpretation which is to give effect to the mutual intention of the parties as it existed at the time of contracting, so far as the same is ascertainable and lawful (Civ.Code, s 1636).

The second principle is that “(i)n every contract there is an implied covenant of good faith and fair dealing that neither party will do anything which injures the right of the other to receive the benefits of the agreement.” (Brown v. Superior Court (1949) 34 Cal.2d 559, 564, 212 P.2d 878, 881, quoted with approval in Murphy v. Allstate Ins. Co. (1976) 17 Cal.3d 937, 940, 132 Cal.Rptr. 424, 553 P.2d 584; see also Schoolcraft v. Ross (1978) 81 Cal.App.3d 75, 80, 146 Cal.Rptr. 57; 1 Witkin, Summary of Cal. Law (8th ed. 1973) Contracts, s 576, p. 493; 3 Corbin on Contracts (1960) s 571, p. 349 et seq.; Comment (1975) 22 UCLA L.Rev. 847, 851.) The implied covenant imposes upon the parties an obligation to do everything that the contract presupposes they will do to accomplish its purpose.

Third, in the case of an uncertainty as to the meaning of a contract, when the uncertainty is not remedied by other rules of interpretation, the language should be construed most strongly against the party who caused the uncertainty to exist. Tenneco West, Inc. is responsible for the uncertainty here since its agents prepared the instructions (Civ.Code, s 1654; 3 Corbin on Contracts, Supra, s 559, p. 262 et seq.; 4 Williston on Contracts (3d ed. 1961) s 621, p. 760 et seq.).

Applying these principles, it is clear that the parties who negotiated the sale of the property and signed the escrow instructions intended the board approval to be a condition precedent to the seller's duty to perform rather than a condition precedent to the formation of a contract and that they also intended the seller's agents would submit the contract to the board of directors for its approval. Furthermore, a reasonable person standing in appellants' shoes would have believed that the seller's agents who were executive officers of the seller corporation would Recommend approval of the sale to the board and that the board would honestly consider the sale. That this was actually contemplated by the seller is evidenced by the language contained in form 4283 completed and signed by Mr. Jans, the seller's senior vice president who also negotiated the sale and signed the escrow instructions. Form 4283, as completed by Jans, states, “Sale is recommended on the basis that the land is surplus to (corporate) needs and the negotiated price is most favorable.” A blank space for Marguleas' signature followed this wording.

1 We find this case to be distinguishable from Shortell v. Evans-Ferguson Corp. (1929) 98 Cal.App. 650, 660, 277 P. 519 and other similar cases relied on by respondents for the proposition that where a principal reserves the right to approve a contract made by his agent, no contract results until such approval is forthcoming. The present case does not involve an agent contracting on behalf of a disclosed third party principal as, for example, a real estate broker who contracts to sell a house on behalf of an owner. In such a case, there would be no enforceable contract until the owner approved the sale. The case at hand involves a contract entered into by a corporation through its executive officers having full authority to negotiate the terms and conditions of the sale of the corporate property, subject only to the approval of the board of directors. Unlike a third party principal having the authority to sell its own property, a corporation may act only through its agents; it has no power to act otherwise. Thus, Tenneco West, Inc., became a party to the contract when it was signed by Tenneco's officers on its behalf.

Respondents' argument that a contract does not arise when an agreement is executed with the understanding it will not become operative until approved by another person or body, begs the issue. It is only where it can be said that reasonable persons would have understood that the agreement would Not be effective when originally signed that the rule applies. For example, in Helperin v. Guzzardi (1951) 108 Cal.App.2d 125, 238 P.2d 141 and Los Angeles Rams Football Club v. Cannon (S.D.Cal.1960) 185 F.Supp. 717, the evidence was clear that the parties intended the contract to take effect only when the necessary approval was obtained. The court in Helperin stated: “. . . (I)t was understood between Guzzardi and Prindle that the agreement would not constitute a binding contract or be made use of unless and until it was signed by Mrs. Guzzardi” (108 Cal.App.2d at p. 127, 238 P.2d at p. 142). In Los Angeles Rams Football Club v. Cannon, the agreement expressly provided that it “shall become valid and binding upon each party hereto only when, as and if it shall be approved by the Commissioner.” (185 F.Supp. at p. 721.)⁷

Respondents' reliance on cases holding that when one of the parties to an agreement reserves an Unqualified right to escape its obligations under the agreement, the promise is illusory and thus cannot constitute a binding contract, is also misplaced. As we have explained, the condition of board approval does not give respondent corporation the absolute right to escape its obligations under the agreement since there was an implied obligation on the part of the seller's officers to carry out the objective of the contract in good faith by submitting the proposal to the board. Moreover, a part of the implied obligation of good faith would be that the Board would actually confer and decide whether to approve the proposed sale.

Where a contract makes a duty of performance of one of the parties conditional upon his satisfaction, the modern trend is to avoid holding these contracts illusory by implying a requirement that the promisor's determination that he is not satisfied be exercised in good faith. (See, for example, Rodriguez v. Barnett (1959) 52 Cal.2d 154, 160-161, 338 P.2d 907; Mattei v. Hopper (1958) 51 Cal.2d 119, 122-123, 330 P.2d 625; see also 1 Corbin on Contracts, s 149, at p. 657.) As Corbin has observed:

“It has been thought, also, that promissory words are illusory if they are in form a promise that is conditional on some fact or event that is wholly under the promisor's control and his bringing it about is left wholly to his own will and discretion. This is not true, however, if the words used do not leave an unlimited option to the one using them. It is true only if the words used do not in fact purport to limit future action in any way.” (Ibid., fn. omitted.)

Since there was an implied obligation on the seller's part to submit the sale to the board for approval, the seller's promise made through its executive officers to convey the land once board approval was obtained was not illusory.⁸

Having determined that an executory contract to sell land arose by virtue of the escrow instructions and that the implied covenant of good faith and fair dealing required the seller's officers to submit the contract to the board for its approval, it follows that the seller breached the contract by failing to seek board approval. Although we have concluded that the judgment must be reversed because the trial court could not grant a nonsuit on the theory that no contract existed between the parties, we now proceed to discuss, for guidance on remand, other hurdles of proof which appellants must overcome in order to survive nonsuit.

In order to recover at law or in equity for breach of the implied obligation to submit the contract to the board, appellants must prove a causal connection between the breach and the injury suffered (1 Witkin, Summary of Cal. Law, Supra, Contracts, s 638, p. 542). In the present case, it was incumbent on appellants to introduce evidence that “but for” the failure to submit the contract to the board, appellants would have been entitled to the land. The trial court could not grant a nonsuit on this theory if appellant presented proof sufficient to sustain a finding that if respondents had submitted the contract to the board as they were impliedly required to do, the board would have approved the sale. Conversely, if the evidence established as a matter of law that the board would not have approved the sale after considering the question in good faith, then appellants have not been injured by the breach of contract, at least as to their claim for specific performance or, in the alternative, for damages for the difference between the contract price and the value of the property as of the date of breach.⁹

We reject respondents' argument that the evidence establishes conclusively that the board of directors would have withheld approval of the sale if the transaction had been submitted to them. Respondents point out that both Simon Askin and N. W. Freeman said they would not have approved the sale without the prior approval of Howard Marguleas. Since Askin, Freeman and Marguleas constituted a majority of the board, that ends the question according to respondents. However, the problem with the testimony of these board members is that it was given several years after the fact. The subject property had greatly appreciated in value after the contract was executed. The “hindsight” testimony of these board members does not establish conclusively that they would have disapproved the transaction if the question had been submitted to them Within a reasonable time after the escrow instructions were signed. The jury should have been allowed to determine the weight to be given to Askin's and Freeman's testimony (Evid.Code, s 312, subd. (b)). These witnesses had an obvious interest in giving such testimony to shield their corporation from liability. A jury could have reasonably concluded that Askin and Freeman might have gone against Marguleas' recommendation if the transaction had been Promptly submitted to the board.¹⁰ There was evidence the board had on occasions gone counter to Marguleas' recommendation. Marguleas testified: “(My disapproval) could well be (the final act, so to speak). If it was something of great magnitude I might add that I am sure that there are instances that I disapproved which they overruled me, and I can't think of any offhand but (it) wouldn't have been unusual, or I wouldn't have taken offense . . . .” (Emphasis added.) In view of this testimony, it cannot be held as a matter of law that appellants have failed to prove a causal connection between their injury and the failure to submit the contract to the board of directors.

We turn now to appellants' fraud action. In their second cause of action appellants allege that respondents represented they would submit the contract to the board for its approval; that at the time of such representation, respondents knew it was false; and that said representation was wanton, willful and malicious. However, there was no substantial evidence that Tenneco agents expressly told appellants the contract would be submitted to the board (see fn. 4, Ante ). The obligation to submit the contract to the board for its approval arises only by implication from the implied covenant of good faith and fair dealing. Such an implied representation will not support a tort action for fraud or deceit (see Civ.Code, ss 1572, 1709, 1710; see also 4 Witkin, Summary of Cal. Law, Supra, Torts, ss 445, 446, 447, pp. 2710-2712).

In the final analysis, what respondents were guilty of was a failure to disclose that the sale was subject to the approval of Howard Marguleas since the evidence shows that Marguleas' approval was a necessary prerequisite to board approval in most instances. This fact was concealed from appellants by Tenneco's executive officers when they signed the contract. Although appellants did not allege this act of concealment in their complaint as a basis for their fraud action, they now assert this theory on appeal. However, even assuming the failure to disclose Marguleas' part in obtaining board approval was a fraudulent nondisclosure of a material fact, appellants would be faced with a problem of proving their damages resulting from the failure to disclose.

After reviewing the evidence, we hold that appellants have not proved they were damaged by their ignorance of the role played by Marguleas in the Tenneco corporate hierarchy for approving land sale transactions. Assuming appellants believed that board approval would be forthcoming because they reasonably assumed the sale would go before the board with the recommendation of the parties who negotiated the sale, there is an insurmountable obstacle to appellants' recovery on a fraud theory. We cannot perceive that it would have made any difference if appellants knew of Marguleas' pivotal role in forwarding the transaction to the board. There is no evidence to suggest that appellants could have convinced Marguleas to approve the sale if they had known of his part in the transaction. Simply stated, appellants have not been injured by their ignorance. Any injury they suffered was a result of the breach of contract discussed above, not the concealment of the corporate procedures for securing approval of the sale.

If appellants could prove that their reliance on this contract caused them to lose another opportunity to purchase comparable land to satisfy their needs, then they would be in a position to argue they were damaged by their reliance on the anticipated approval of the transaction. However, the evidence establishes there was no other comparable land available which would have satisfied appellants' needs. They wanted the subject parcels because they were adjacent to land already owned by Antongiovanni Brothers, and it was their intention to farm these parcels as a unit. Consequently, we conclude that appellants cannot prove they were damaged as a result of respondents' concealment of Marguleas' function and their resulting reliance that the transaction would be forwarded to the board for approval. The fraud action is an inappropriate vehicle for appellants to recover the benefits they expected to receive from this transaction; they must recover such damages, if at all, under a contractual theory.

The trial court erred in granting a nonsuit on the contract cause of action. As to the fraud cause of action, this could be withheld from the jury on the basis of the present record, because appellants failed to prove an express representation that the sale would be submitted to the board. Unless appellants prove such an express representation on remand, the fraud cause of action need not be submitted to the jury.

The judgment is reversed.

FOOTNOTES

1.  Vincent Antongiovanni died during the pendency of this action, and it was stipulated by the parties that the administratrix of his estate, Olga Jacobs, would be substituted in place of decedent.

2.  The above mentioned parties signed two sets of escrow instructions which were virtually identical except that they referred to different parcels of land and different purchase prices. This appeal embraces appellants' claims to both parcels, which have been referred to by the parties as the “Northeast Quarter” and the “South Half” respectively. Although the complaint originally referred only to the Northeast Quarter, it was stipulated by the parties that appellants' claims to the South Half would also be made a part of the action.

3.  The case proceeded to trial against all defendants, except Leon McDonough. McDonough was dismissed as a defendant's pursuant to a motion by counsel for appellants.

4.  Eugene had earlier intimated that Castle expressly represented to Vincent Antongiovanni that the escrow instructions Would be submitted ; however, he modified this earlier testimony by stating that to the best of his recollection the exact words were the instructions Had to be approved by the board of directors. Mr. Castle, on direct examination by appellants' counsel, testified that he told Vincent Antongiovanni that the proposed sale would be submitted to the board. On cross-examination he admitted it was difficult to reconstruct a conversation “or even whether it occurred four years ago” and to the best of his recollection it would have been his “practice” only to tell prospective buyers that the sale was subject to board approval. Since we hold that the duty to submit the sale to the board for approval is implied by law in the contracts, the question whether Mr. Castle so advised Vincent is irrelevant to the action for breach of contract.

5.  Marguleas gave the following reasons for his disapproval of the subject sales: “I guess it was a twofold reason: One, that we had sold such an enormous amount of land in the previous 24 months that I felt it was not in the best interest of Tenneco to continue to sell this land; and . . . we wanted to become a viable and increasingly important factor in the area of agricultural production and marketing.” However, there was evidence that the value of the lands had increased rapidly. There was also evidence that Tenneco had considered other proposals for disposing of the subject lands, before the corporation determined not to sell to appellants.

6.  . Since there is no conflicting evidence bearing on the proper interpretation of the escrow instructions, this court is required to Independently interpret the writings to ascertain their meaning (Parsons v. Bristol Development Co. (1965) 62 Cal.2d 861, 865-866, 44 Cal.Rptr. 767, 402 P.2d 839; Davies Machinery Co. v. Pine Mountain Club, Inc. (1974) 39 Cal.App.3d 18, 23, 113 Cal.Rptr. 784; see also 6 Witkin, Cal. Procedure, Supra, Appeal, s 260, pp. 4250-4251).

7.  That Tenneco West understood this distinction is evidenced by the escrow instructions dated May 21, 1974, received as plaintiffs' exhibit 6, involving a sale of a parcel of Tenneco's land to Calplan Farms and Partners. These escrow instructions provide as follows:“IN ADDITION, this escrow is subject to :“A. Approval hereof by Seller's Board of Directors. Promptly following opening of this escrow, Seller's executing officers will attempt to gain such approval and if successful will notify Buyer and escrow holder thereof in writing. If unsuccessful, written notice to that effect will be given to both Buyer and the escrow holder and This escrow shall thereupon automatically terminate and neither party shall have any further obligation or responsibility to the other party except as hereinafter provided.” (Emphasis added.)The underlined provision expresses a clear intent that the agreement is not to become binding unless approved by the board.

8.  We venture to suggest that if the land value had Depreciated suddenly after the escrow instructions had been signed and the buyers attempted to get out of the contract before the seller had approved the sale, the seller would proclaim loud and clear that the buyers were bound to purchase the land.

9.  Appellants, however, would be entitled to damages for the loss of use of their $23,000 from the time it was paid until September 26, 1973. This obviously would have been within the contemplation of the parties at the time they entered into the contract, because the escrow instructions required that these funds be paid outside of escrow.

10.  We note that Gilbert Castle testified the normal procedure was that after form 4283 was prepared and submitted to the board, it was returned “within a week or two, week or 10 days.”

FRANSON, Acting Presiding Justice.

HOPPER and FRETZ (Assigned by the Chairperson of the Judicial Council), JJ., concur.