Opinion ID: 721018
Heading Depth: 2
Heading Rank: 1

Heading: The Whatcom County deed of trust is voidable.

Text: 8 We review a grant of summary judgment de novo. Warren v. City of Carlsbad, 58 F.3d 439, 441 (9th Cir.1995). 9 At the time of the divorce, Ms. Madle had the power to avoid the deed of trust. Contracts which convey or encumber community realty and which the wife does not sign are not void. They are merely voidable, and it is the wife who has the power of avoidance. Tombari v. Griepp, 350 P.2d 452, 454 (Wash.1960). The Whatcom County property was community property, purchased in 1987 when the Madles were married and not yet separated. Although record title to the property stated that the property was owned by Thomas Madle as his separate estate, it is undisputed that the property was actually community property. Ms. Madle never signed the deed of trust, nor was she aware of its existence until the 1992 dissolution proceeding. 10 Under RCW 26.16.095, if the selling spouse alone has record title to community property, sale of the property can be effective notwithstanding claims or objections later raised by the non-selling spouse, if the sale is to an actual bona fide purchaser. Great Western, however, is not a bona fide purchaser. Bona fide purchasers are such persons as purchase without knowledge of the existence of the marriage relation, or who could not, with reasonable diligence, have obtained such knowledge. Dane v. Daniel, 63 P. 268, 272 (Wash.1900). At the same time that Mr. Madle delivered the Whatcom County deed of trust, he also delivered to Great Western the Mason County deed of trust, on which he had forged his wife's signature. Great Western thus had actual knowledge that Mr. Madle was married. Since Great Western is not a bona fide purchaser, Ms. Madle has the power to avoid the deed of trust. 11 II. The dissolution decree does not collaterally estoppel Ms. Madle from denying the validity of the deed of trust. 12 The dissolution court ordered that the proceeds from the sale of the Whatcom County property pay off Great Western's lien before either of the Madles were paid. Great Western argues that this decree collaterally estops Ms. Madle from denying the validity of the deed of trust. The dissolution court, however, lacked jurisdiction to determine the validity of the deed of trust. 13 A prior decision by a court lacking jurisdiction is not entitled to collateral estoppel effect. The prior decision must have been made by a court of competent jurisdiction. Int'l Bhd. of Pulp, Sulfite & Paper Mill Workers v. Delaney, 442 P.2d 250, 254 (Wash.1968); see also Lake v. Butcher, 679 P.2d 409, 413 (Wash.Ct.App.1984) (refusing to give collateral estoppel effect to Iowa court's paternity determination when the Iowa court lacked jurisdiction). 14 The dissolution court lacked jurisdiction to decide the validity of the Whatcom County deed of trust. In Arneson v. Arneson, the Washington Superior Court entered a dissolution decree that awarded real property to the wife, and ordered her to sell the property and to use the proceeds of the sale to discharge various debts to certain creditors in a particular order. 227 P.2d 1016, 1017 (Wash.1951). The Washington Supreme Court observed that persons other than spouses and their children 15 can not be made parties to the action by any statutory form of notice, nor can they intervene therein. It would appear elementary then, that there is no due process of law in a divorce action as to the rights of creditors of the spouses. The judgment can neither conclusively determine their rights, nor be made available on their behalf as a basis for any of the provisional remedies. 16 Since the divorce act nowhere provides for it, the court has no power to compel a liquidation for the benefit of creditors as an incident to a divorce decree.... Nothing can be found in the divorce act authorizing the court to deprive the spouses of their rights to prefer creditors, claim exemptions and/or homesteads, compromise claims, take bankruptcy, invoke statutes of limitation, make contracts, and enjoy their property rights. Their several interests in the property are, of course, determined, as between themselves, by the decree, and are subject to the burdens imposed upon them therein for purposes within the scope of the divorce act. 17 Id. at 1017-18. Great Western argues that Arneson holds only that a dissolution court may not provide provisional remedies to creditors. The holding of Arneson, however, is much broader: a dissolution court lacks power to conclusively determine the rights of creditors, or to compel a liquidation for the benefit of creditors as an incident to a dissolution decree. Id. at 1017. 18 Other cases support this holding. In In re Marriage of Soriano, the divorce court ordered a bank to turn over to the wife certain of the husband's securities in which the bank held a security interest. 722 P.2d 132, 133 (Wash.Ct.App.1986). The Court of Appeals vacated the order under Arneson. The court noted: 19 It is apparent that the court held a hearing and determined the rights of the Bank in the securities as they related to the lien rights granted to the wife. We find nothing in chapter 26.09 RCW, no matter how broadly construed, which gives a trial court the power to determine the rights of the Bank which is here asserting the position of a third party creditor.... 20 The trial court had no statutory authority to determine the substantive rights of the Bank in this dissolution proceeding. 21 Id. at 134. A dissolution court has no power to determine the rights of creditors, either in their favor or against them. The Ninth Circuit has likewise held, noting that under Arneson, a dissolution decree purports only to settle property rights as between husband and wife, leaving unaffected the preexisting rights of third persons. Britt v. Damson, 334 F.2d 896, 901 (9th Cir.1964), cert. denied, 379 U.S. 966 (1965). The dissolution court thus had no jurisdiction to conclusively determine the validity of Great Western's deed of trust. Its determination receives no collateral estoppel effect. 22