Title: Senfour Inv. Co. v. King County

State: washington

Issuer: Washington Supreme Court

Document:

66 Wn.2d 67 (1965) 401 P.2d 319 SENFOUR INVESTMENT CO., INC., Respondent, v. KING COUNTY, Appellant.[*] No. 37546. The Supreme Court of Washington, Department One. April 15, 1965. Charles O. Carroll, James E. Kennedy, and William L. Paul, Jr., for appellant. Croson, Johnson & Wheelon, by Willard Hatch, for respondent. OTT, J. The Heart of Seattle Hotel Co., Inc., commenced this action to recover from King County $2,000 which had been paid, under protest, contending the payment was a double assessment of a real-estate transfer tax. It was stipulated that Senfour Investment Co., Inc., be substituted as plaintiff, it having obtained title to the claim by virtue of an assignment. The cause was tried to the court, which found the following facts: From the judgment entered accordingly, King County has appealed. Appellant asserts that "There is no issue of fact in this case. The conflict is between legal theories." Appellant's theory is that the facts established two sales and two taxable events, and respondent's theory is that there was but one sale and one taxable event. RCW 28.45.010 and King County Ordinance 7.04.010 define "sale" as follows: The stipulated facts admit that the individual incorporators held title to the property in trust for the corporation from October 3, 1961, to November 24, 1961: The facts established that Thomas F. Gates sold the property to the trustees, who held title to it until the corporation could be formed. This sale constituted a taxable event. The statutory requirement that a sale be for a "valuable consideration" was met, and the tax paid. [1] When the trustees promptly conveyed the title by quitclaim deed to the newly formed corporation, the transfer *70 was simply the mechanical performance of the obligation of the admitted trust. Such a transfer does not constitute a sale in "its ordinary meaning." Deer Park Pine Industry v. Stevens Cy., 46 Wn.2d 852, 857, 286 P.2d 98 (1955). Appellant relies upon Washington Sav-Mor Oil Co. v. State Tax Comm'n, 58 Wn.2d 518, 364 P.2d 440 (1961). In the cited case, the beneficial interest in the property had been vested for nearly 10 years in the Time Oil Company. There was no contention that Time Oil Company had been holding the property involved as a trustee for its subsidiary, Washington Sav-Mor Oil Company. Nor was there any evidence which would sustain such a finding. In the case at bar, the earnest-money receipt expressly contemplated the establishment of a Washington corporation to accept the title. The incorporators accepted title only because the legal processes necessary to form the corporation had not been completed at the closing date. They did not, as individuals, own a beneficial interest in the property, but, as stipulated, they held the property as trustees for the corporation during the interim period. As soon as the corporation was formed, they performed the obligation of their trust and conveyed the property to the corporation. Such a conveyance is not a sale for a valuable consideration, as required by the statute. [2] Finally, appellant contends that a trustee cannot hold property for a cestui que trust which is not in being at the time the trust is established. We do not agree. Parties may legally contract to establish a trust for the benefit of another, as long as the agreement is not against public policy. Slemmons v. Shotwell, 64 Wn.2d 595, 392 P.2d 1007 (1964). We find nothing against public policy for persons to agree to hold the title to property in trust, to be conveyed promptly to a corporation then in the process of being chartered. It is not necessary that the cestui que trust be in existence at the time of the creation of the trust. Bruun v. Hanson, 103 F.2d 685 (1939); Restatement, Trusts § 112 Comment e, p. 291. The judgment is affirmed. *71 ROSELLINI, C.J., HILL and HALE, JJ., and BARNETT, J. Pro Tem., concur. September 20, 1965. Petition for rehearing denied. [*] Reported in 401 P.2d 319.