Court Opinion

ID: 9594494
Source: CourtListenerOpinion
Date Created: 2023-08-22 00:30:31.234496+00
Date Added: 2024-06-11T15:26:58.777577
License: Public Domain

Dore, J.
(dissenting) — I dissent.
The majority argues that Giger had a business purpose in obtaining her loan because it has not been unequivocally established that she had a personal purpose. I dissent because, in reaching this conclusion, the majority improperly decides an issue of fact. Even if we are entitled to decide the issue, the majority improperly shifts the burden of proof. Finally, even if a question of law rather than of fact is presented, the majority's construction of RCW 19.52.080 is erroneous.
Procedural Posture and the Proper Standard of Review
This case is before us on cross motions for summary judgment. The trial court entered judgment in favor of the lender on its motion, having determined that the exception to the usury statute does apply to the loan in question. The Court of Appeals reversed on the ground that the exception does not apply, in effect granting Giger's cross motion for summary judgment. I would reverse this case and remand it for trial because summary judgment is not proper at all.
In granting summary judgment, the trial court necessarily determined that no disputed facts were in issue. This determination was based on a stipulation of the parties, entered into at the trial court's urging, that the application of the business purpose exception was "solely an issue of *85law." Report of Proceedings, at 2. That purported stipulation is not binding on this court and it does not correctly describe the issues in this case.
The determination that a given issue should be decided by the court or by the jury is clearly always made by the court. Therefore, while the parties are free to stipulate to issues of fact, whether or not a given issue is one of fact or of law is itself an issue of law. This court is not bound by stipulations of law. Rusan's, Inc. v. State, 78 Wn.2d 601, 606, 478 P.2d 724 (1970). We are free to conclude, despite the parties' stipulation, that whether or not the business purpose exception of RCW 19.52.080 applies to this loan is an issue of fact.
The majority's discussion of the case makes it quite clear that this case does present disputed issues of fact and that summary judgment is therefore not appropriate at all. As argued below, questions of credibility concerning who said what to whom are dispositive. Even if the parties might be content to waive their rights to a jury, this appeals court is incapable of making determinations of credibility on the record alone. The issues presented here are clearly factual issues and normal standards appropriate to determinations of fact on summary judgment therefore apply.
The Record Presents a Jury Question
In reviewing a denial or grant of summary judgment, we apply the same standard as a trial court: construing the evidence in the light most favorable to the nonmoving party, we ask whether a reasonable jury could find in favor of that party. The motion is granted if the answer is no. Put another way, the moving party is entitled to prevail as a matter of law if no reasonable person could conclude that he should not prevail. Teagle v. Fischer & Porter Co., 89 Wn.2d 149, 153, 570 P.2d 438 (1977). We do not, of course, weigh evidence. Nevertheless, much of the majority opinion does. The majority notes that:
Giger and Ebling claim that Giger was not a partner in the enterprise and that they never represented to CLS *86that they were partners, or that Giger had any business or investment purpose in loaning the money to Ebling.
Majority, at 77. There was a dispute about this however, which the majority frankly acknowledges:
During that call, Walker claims, Ebling said that Giger would be a partner in the mini-mart venture.
Majority, at 77. Was Giger represented to be a partner or not? We cannot decide that question. We cannot evaluate the credibility of Giger, Ebling and Walker. Whether Giger was represented to be a partner or not is a classic jury question. Yet in holding for the lender, the majority decides that issue.
Similarly the majority argues:
Information Giger and Ebling provided to Walker at the loan interview also suggested Giger's involvement in the mini-mart venture. For one, all the loan proceeds were to be handed over to Ebling for investment in the venture. Additionally, the monthly payments on the loan were to come from Ebling, presumably from profits generated by the mini-mart. Thus, Walker perceived Giger to be a backer even though she told him that she would have nothing to do with the venture.
Majority, at 77-78. We do not have the authority or the means to determine what Walker perceived. Even if we did, Walker's view of the transaction is only half the equation; a jury would have to decide whether that perception was correct or justified. As the majority concedes, Giger told Walker "that she would have nothing to do with the venture. " Was Walker justified in disregarding that disclaimer? Did that disclaimer mean only that Giger was to be a silent partner? If we interpret the disclaimer that way, should we believe Ebling and Giger that they did not represent her as a partner at all, or should we believe Walker that Giger was represented to be a partner?
We cannot and should not answer those questions. This case is before us on summary judgment. If the evidence is in conflict, as the majority opinion suggests, then the case should go to the jury.
*87The Lender Cannot Meet His Burden of Proof
Even if we were capable of deciding this issue of fact, the lender would not be entitled to judgment. We must keep in mind that RCW 19.52.080 is intended for the protection of borrowers, not banks. The burden is on the lender to establish that the borrower had a business or investment purpose. Aetna Fin. Co. v. Darwin, 38 Wn. App. 921, 924-25, 691 P.2d 581 (1984), review denied, 103 Wn.2d 1019 (1985). If the facts show only that Giger's purpose was not clear at the time the loan was made, the lender cannot meet his burden of proof and the borrower is entitled to judgment.
The majority argues that the loan documents establish that the purpose of the loan was business or investment. However, the loan documents are not decisive, or even relevant. The leading case on RCW 19.52.080, as the majority recognizes, is Darwin. In a well reasoned opinion, Judge Reed wrote:
The borrower's intended use for the loan proceeds must be characterized according to the manifestations of intent, if any, that the borrower made to the lender at the time the parties entered into the loan contract. See National Bank of Commerce v. Thomsen, 80 Wn.2d [406,] 410, 415 [495 P.2d 332 (1972)]; Janzen v. Phillips, 73 Wn.2d 174, 178, 437 P.2d 189 (1968). However, a borrower's acquiescence in a scheme to avoid the usury law does not make the transaction qualify for the exemption in RCW 19.52.080.
Darwin, at 927-28. This makes sense. A lender eager to grant, and a borrower eager to receive, an illegal loan can be expected to conceal a nonbusiness purpose. Consequently, a fact finder examining the transaction should look only at the express intentions of the borrower at the inception of the transaction and not at "facts" and recitals that may well constitute an evasion of the usury law.
Contrary to the majority's assumption, therefore, Darwin does not state a totality of the circumstances test. The totality of the circumstances might well include a number *88of things by which the lender, with the acquiescence of the borrower, has concealed a nonbusiness purpose. Clearly one of the easiest ways to do this would be to recite a business or investment purpose in the loan documents. Under Darwin, the loan documents have no bearing on the case. Instead, we should look only to the statements of intent actually made by Giger.
Based on that evidence, the lender is clearly not entitled to judgment. As the majority concedes, Giger expressly disclaimed a business purpose in her meeting with Richard Walker, the lender's representative. She was never asked whether she had an investment purpose. Walker testified at his deposition as follows:
Q. When you use the term "backer," [in reference to Giger] what does that mean?
A. She was supplying the money.
Q. Did you discuss whether she was going to receive any share of the profits?
A. That is none of my business.
Mr. East: The answer is no?
The Witness: No.
Mr. East: Let's keep the answers to the question.
Q. Did you ask her about this, about what role she was going to be playing in the business?
A. Yes.
Q. Do you recall that conversation, what you asked her and what she answered in general?
A. I asked who was going to be active in the business. Neil was going to be active in the business. I had asked Sharon if she was going to be active in the business and she said no.
Q. Do you recall asking her what was in it for her or something to that [e]ffect?
A. No.
Deposition of Richard D. Walker, at 15-16. Giger's testimony is consistent with Walker's.
Q. Do you specifically recall anything that was said by you or by Mr. Ebling to Mr. Walker as for the reason for this loan?
A. I remember being asked what my part in this would be.
*89Q. Your part in what?
A. In the business.
Q. In the mini-mart?
A. Yes.
Q. The mini-mart was discussed?
A. Yes. And, the restaurant, the combination.
Q. What did you say in response to that?
A. I remember being embarrassed and saying nothing. I had nothing to do with it.
Deposition of Sharon Giger, at 21-22. She also testified:
Q. What specifically did you tell Mr. Walker the purpose of this loan was?
A. I didn't say. He asked what I was going to do in this business, and I said "nothing."
Q. That's all that was said?
A. That I can remember. I remember being embarrassed.
Q. Why were you embarrassed?
A. To make [sic] a loan and not have anything to do with it.
Deposition of Sharon Giger, at 43.
On this evidence, the lender has failed to meet his burden of proof and any fact finder would be obliged to conclude that Giger did not have a business purpose. At best, Giger's purpose was unclear. It is undisputed that the only expression of purpose Giger made was to deny involvement in the business. She had no investment purpose because she did not receive profits as a silent partner or even interest on the money she lent to Ebling. The majority asserts that Giger never had control of the loan proceeds because she endorsed the loan check over to Ebling. Just the opposite conclusion follows from that endorsement: it is itself an absolute exercise of control over the loan funds. Giger turned the money over to her friend, without expectation of gain, as an act of friendship. That is not only an exercise of control, it is a use of the loan for a nonbusiness, noninvestment purpose. Therefore, even if this court were entitled to decide the issue of fact presented here, Giger, not the lender, would be entitled to judgment.
*90Ambiguity as to Purpose Must Be Construed Against the Lender
The same conclusion follows even if this court accepts the parties' purported stipulation that only an issue of law is presented. The majority opinion, apparently accepting that premise, frames the issue of law this way: since Giger did not make a nonbusiness purpose clear to the lender at the time the loan was made,2 is the lender entitled to judgment on that basis? The majority answers yes. The correct answer is no. If the borrower's purpose is unclear, that ambiguity must be construed against the lender, both because he has the burden of proof on the issue of purpose and because any other rule would open the door to evasion of the usury statute by intentional ambiguity on the subject of borrowers' purposes.
Walker testified that he did not ask Giger any questions about the purpose of her loan because he considered it "none of my business." On the contrary, it clearly was his business to find out whether Giger was to receive profit from this venture. A lender cannot be permitted to leave the purpose of a loan in an ambiguous state; he has the burden of clarifying the matter. Any other rule would leave the door wide open to evasions of the usury statute by purposeful ambiguity. If we construe an ambiguous transaction against the borrower, we invite lenders to avoid the usury statute by asking as little as possible about the purposes of loans they suspect to be personal in nature. That method of evading the usury statute would harm both lenders and borrowers.
Therefore, even if we accept the parties' purported stipulation that only a question of law is presented, the majority decides the case on a patently erroneous construction of RCW 19.52.080. If the facts are ambiguous, that ambiguity should be construed against the lender, and we should *91grant judgment to the borrower. If Giger's purpose was unclear to the lender, she is entitled to judgment because the lender has the duty of establishing what the borrower's purpose is.
Conclusion
As the subject record presents disputed issues of fact, summary judgment should be set aside, and the case remanded to the trial court for trial.

This appeals court considers only undisputed facts. The undisputed facts establish, at best, that Giger did not make a nonbusiness purpose clear to the lender at the time the loan was made.