Case Name: John Emory Deno, a Minor, by John Deno, his Guardian ad Litem, et al., Appellants, v. Standard Furniture Company, Respondent, Berman Schoenfeld et al., Defendants
Court: Washington Supreme Court
Jurisdiction: Washington
Decision Date: 1937-04-08
Citations: 190 Wash. 1
Docket Number: No. 26266
Parties: John Emory Deno, a Minor, by John Deno, his Guardian ad Litem, et al., Appellants, v. Standard Furniture Company, Respondent, Berman Schoenfeld et al., Defendants.
Judges: 
Reporter: Washington Reports
Volume: 190
Pages: 1–30

Head Matter:
[No. 26266.
En Banc.
April 8, 1937.]
John Emory Deno, a Minor, by John Deno, his Guardian ad Litem, et al., Appellants, v. Standard Furniture Company, Respondent, Berman Schoenfeld et al., Defendants.
Oscar A. Zabel and A. H. Solomon, for appellants.
J. Speed Smith and Henry Elliott, Jr., for respondent.
Reported in 66 P. (2d) 1158.

Opinion:
Blake, J.
These are actions for damages for personal injuries sustained by plaintiffs as the result of the breaking and giving way of the railing of an outside stairway appurtenant to a tenement house owned by the Standard Furniture Company. The plaintiffs joined, as parties defendant, the Standard Furniture Company, Berman Schoenfeld, L. Kenneth Schoenfeld et ux., Herbert A. Schoenfeld et ux., and Oser Dreck Company, a corporation. The cases were consolidated for trial.
At the close of the plaintiffs' case, the court granted motions for dismissal as to all the defendants except Oser Dreck Company. The trial proceeded as against it, and verdicts were rendered in favor of the plaintiffs. Except as to amounts, identical judgments were entered in the two cases. These judgments were in favor of plaintiffs as against Oser Dreck Company, and against them as to the other defendants. As to the latter, the judgments were as follows:
"It is therefore ordered that the above entitled action as to the defendants, Standard Furniture Company, a corporation, Berman Schoenfeld, L. Kenneth Schoen feld and Ruth G. Schoenfeld, his wife, be and the same is hereby dismissed."
Oser Dreck Company has not appealed.
Plaintiffs gave notice of appeal to Standard Furniture Company
". . . from that portion of said judgments entered heretofore in the above entitled actions in favor of the defendant, Standard Furniture Company," etc.
Respondent has moved to dismiss the appeal on the ground that notice of appeal was not served on Oser Dreck Company and the individual defendants. In support of the motion, respondent cites the following cases: Traders' Bank of Tacoma v. Bokien, 5 Wash. 777, 32 Pac. 744; Dewey v. South Side Land Co., 11 Wash. 210, 39 Pac. 368; Cornell University v. Denny Hotel Co., 15 Wash. 433, 46 Pac. 654; Wax v. Northern Pac. R. Co., 32 Wash. 210, 73 Pac. 380; Davis v. Tacoma R. & P. Co., 35 Wash. 203, 77 Pac. 209, 66 L. R. A. 802.
The rule of those cases was that notice of appeal must be served on all parties who appeared in the action. That rule, however, was mitigated after the enactment of chapter 49, Laws of 1899, p. 79 (Rem. Rev. Stat., § 1734 [P. C. § 7319]), so as to require notice of appeal only on parties to the record affected by the judgment. See Sipes v. Puget Sound Electric R. Co., 50 Wash. 585, 97 Pac. 723. The case of Puget Sound Savings & Loan Ass'n v. Erickson, 138 Wash. 578, 244 Pac. 972, also cited by respondent, illustrates the application of the modified rule. The implication in the cases of this class is that notice of appeal must be served on all parties affected by the judgment— whether favorably or unfavorably. In fact, the rule was so stated in In re Myhren's Estate, 95 Wash. 101, 163 Pac. 388:
"It is suggested that, if the appeal should be entertained and the decree of the lower court should be reversed, such a disposition of the case would redound to the benefit and advantage of the omitted parties. But this is not the test by which necessary parties to an appeal are determined. It is not for the court to presume to speak upon that question in behalf of litigants who seem to be satisfied with the decree of the lower court and who do not appeal therefrom. The suggestion that the interests of the omitted parties will be favorably affected by a reversal of the decree is an implied admission that their interests are involved, and the true criterion by which to determine necessary parties to an appeal is whether the interests of the parties in question will be affected by a reversal or a modification of the judgment, order, or decree from which the appeal is prosecuted."
However the rule may have been stated from time to time subsequent to the enactment of chapter 49, Laws of 1899, p. 79 (Rem. Rev. Stat., § 1734 [P. C. §7319]), the practical application of the rule required service of notice of appeal only upon those parties to the record whose interests might be adversely affected by the decision of this court on the appeal. In Cole v. Washington Motion Picture Corp., 112 Wash. 548, 192 Pac. 972, it was said:
"This court has held that the object and purpose of the legislature was to require all interested parties to jointly prosecute their appeals and cross-appeals, so that the same cause might not appear in the appellate court by piecemeal. Sipes v. Puget Sound Elec. R. Co., 50 Wash. 585, 97 Pac. 723. It held in the same case, and has held in later cases, that this object was accomplished when all parties who appeared in the action and whose rights in the judgment or order appealed from could be adversely affected by the action of the appellate court were served, even though a party may be omitted who would be included by a literal interpretation of the statute. But further than this the court has not gone. It has uniformly insisted that all parties to an action or proceeding who have appeared therein and whose rights in the judgment or order appealed from may or can be adversely affected by the judgment of the appellate court must be served with the notice of appeal, else the appeal will be ineffectual and a dismissal necessitated. The cases need not be here collected. Sufficient of them to illustrate the principle are found in the briefs of counsel, and others will be found in the footnotes to the sections-of the statute cited where found in the code from which they are taken."
This statement of the rule has since been expressly approved in Stone v. Brakes, Inc., 172 Wash. 644, 21 P. (2d) 524, and, by implication at least, in United Truck Lines v. Department of Public Works, 181 Wash. 318, 42 P. (2d) 1104.
In applying the rule to the situation here presented, it is to be remembered that Oser Dreck Company has not appealed from the judgments, and the individuals could not. See Sipes v. Puget Sound Electric R. Co., supra. Nor have plaintiffs appealed from the judgments as against Oser Dreck Company. Whatever judgment this court may render on the appeal from the judgment dismissing the Standard Furniture Company from the actions, can in no wise adversely affect Oser Dreck Company or the individual defendants. Sipes v. Puget Sound Electric R. Co., supra. It was therefore unnecessary to' serve them with notice of appeal. The motion to dismiss the appeal is denied.
Respondent has also moved to strike the statement of facts, because notice of filing was not served on Oser Dreck Company and the individual defendants, as provided by Rem. Rev. Stat., § 389 [P. C. § 7817]. The motion is denied. Such notice is not required to be served on parties who are not necessary parties to the appeal. Mogelberg v. Calhoun, 94 Wash. 662, 163 Pac. 29.
Respondent has also moved to strike appellants' abstract of the record. While appellants have not con densed the testimony into narrative form to the extent they might have, we do not feel warranted in striking the abstract. The motion is denied.
On the merits, the following are the salient facts as disclosed by the record: For many years, the respondent, Standard Furniture Company, has been the owner of lots 10, 11 and 12, Block 17, Sarah A. Bell's Second Addition to Seattle, upon which was a three-story frame building known as the "Denny House." Prior to September, 1932, the premises were leased to a Mrs. Folcolt, who was purchasing from Standard Furniture Company, under a conditional bill of sale, some, if not all, of the furniture and furnishings in the house. Mrs. Folcolt became financially involved, and a receivership resulted. Standard Furniture Company repossessed the property and furniture.
At that time, the trustees of Standard Furniture Company were Berman Schoenfeld, Herbert A. Schoenfeld, and Melville Monheimer. Herbert A. Schoenfeld was vice-president, and had particular supervision of the company's real estate holdings. Mr. Monheimer was the legal adviser of the company.
Standard Furniture Company is wholly owned by the Schoenfeld family. Berman Schoenfeld and Herbert A. Schoenfeld were brothers. The latter died in April, 1933. Also active in the business of the company were the former's son, Berman Schoenfeld, Jr., and Herbert A. Schoenfeld's sons, L. Kenneth and Herbert. After Herbert A. Schoenfeld's death, Berman, Jr., became manager of the properties. He and Herbert A.'s sons were rotated on the board of trustees, and held the offices of vice-president, treasurer and secretary.
In January of 1933, Mr. Monheimer, at the instance of Herbert A. Schoenfeld, prepared articles of incorporation of Oser Dreck Company. These articles pro vided for one hundred shares of no-par value. The trustees named in the articles were Berman Schoenfeld, Jr., and L. Kenneth Schoenfeld. Upon the consummation of incorporation, however, they resigned, and Monheimer and his law partner, Van Griffin, succeeded as trustees. These latter also subscribed to all of the capital stock. They paid for the stock by assigning to the company a leasehold interest in the Denny House, $150 in cash, and the equity in the unpaid balance of a conditional sales contract on the furnishings which formerly had been held by Mrs. Folcolt.
On February 4, 1933, Standard Furniture Company executed a lease of the Denny House for a term of two years to Oser Dreck Company. This lease was unacknowledged. At about the same time, Standard Furniture Company sold to Oser Dreck Company, under conditional bill of sale, the furniture and furnishings located in the building.
Monheimer placed a manager in charge of the premises, who, at all times with which we are concerned, was in immediate charge of the property. Rents went into the office of Monheimer and Griffin, and disbursements were made through their office. It appears, however, that the manager of the Denny House was instructed to purchase all running supplies possible from Standard Furniture Company. That was done, with the result that Oser Dreck Company became indebted to Standard Furniture Company on open account as well as under the conditional sales contract. In buying fuel for Denny House, Oser Dreck Company purchased from one Francis, who was indebted to Standard Furniture Company. Instead of getting cash for wood sold to Oser Dreck Company, Francis got credit on his account with Standard Furniture Company.
It is fairly inferable from the evidence that whatever returns came in from the property over and above operating expenses found their way into the treasury of Standard Furniture Company. These returns, however, were not sufficient to keep up the payments due on the conditional sales contract. In the spring of 1935, Standard Furniture Company repossessed the personal property, and had the Denny House torn down.
In the meantime, Paul Dudley's family became tenants in the Denny House. They occupied apartment No. 28, which was on the second floor. As we have intimated, there was an outside wooden stairway in the rear of the building for the use of the tenants. On the afternoon of February 27, 1935, Paul, accompanied by Emory Deno, went to the apartment. On leaving, they started down the back stairway. At the landing between the first and second floors, Emory leaned up against the railing, which gave way. As Emory started to fall, Paul caught hold of him, but instead of saving Emory, Paul himself was pulled over, and both boys fell to the ground twelve feet below, sustaining injuries on account of which they seek to recover in these actions.
That the railing was so rotten as to be incapable of withstanding the pressure of a person leaning against it, was fairly established by the evidence. That the condition of the railing might have been ascertained by reasonable inspection, is also fairly established. So that, under the evidence, someone is chargeable with negligence. The legal responsibility of Oser Dreck Company is established by the judgment, from which it has not appealed. But it is financially irresponsible. It has always been insolvent.
The question now is whether the Standard Furniture Company can be held legally responsible. It is appellant's contention that it can be, because Oser Dreck was the alter ego of the Standard Furniture Company; that the former was merely the instrumentality by which the latter operated and managed the Denny House; the Oser Dreck Company was simply the conduit through which the revenues from the operation of the Denny House flowed into the treasury of the Standard Furniture Company.
On the other hand, respondent contends that the undisputed testimony is that the operation of the Denny House by Oser Dreck Company was the personal venture of Monheimer and Griffin, wholly dissociated from Standard Furniture Company. This testimony all came from interested witnesses. Upon such testimony, in face of the facts and circumstances surrounding the relationship between Standard Furniture Company and Oser Dreck Company, the court was not warranted in saying, as a matter of law, that the latter was not alter ego of the former. Coey v. Darknell, 25 Wash. 518, 65 Pac. 760; Gosline v. Dryfoos, 45 Wash. 396, 88 Pac. 634; Gibson v. Chicago, M. & P. S. R. Co., 61 Wash. 639, 112 Pac. 919; Bond v. Werley, 175 Wash. 659, 28 P. (2d) 318. In Gosline v. Dryfoos, supra, the court quoted with approval from Chandler v. Attica, 22 Fed. 625, as follows:
"A witness may be contradicted by circumstances as effectually as by the statements of other witnesses. Conjecture is not to be substituted for probative indicia; but where these exist, a judge or a juror is not bound to surrender his convictions and blindly accept the statement of a witness, because no other witness has contradicted it, and the character of the witness is not impeached. The authorities are numerous that a judge or jury, in the exercise of judicial discretion, is at liberty to reject the statements of witnesses in the situation of the witnesses here, and under the circumstances of this case."
The relationship of, and the course of dealing between, the two corporations and their officers were such as to make a question for the jury as to whether Oser Dreck Company was merely an instrumentality or conduit of Standard Furniture Company, in the maintenance and operation of the Denny House. Platt v. Bradner Co., 131 Wash. 573, 230 Pac. 633; Wilson v. Washington Concrete Pipe Co., 178 Wash. 545, 35 P. (2d) 71.
The judgments dismissing Standard Furniture Company from the actions are reversed.
Steinert, C. J., Main, Tolman, Beals, Geraghty, and Robinson, JJ., concur.