Court Opinion

ID: 9548588
Source: CourtListenerOpinion
Date Created: 2023-08-07 18:05:47.152209+00
Date Added: 2024-06-11T15:19:09.548251
License: Public Domain

Neill, J.
(dissenting in part) — I am in disagreement with the majority opinion regarding defendant Legg and would affirm as to all parties. My difference in view is two-fold: first, in raising the issue of the applicability of RCW 9.54.080 and, second, in the construction given that statute.
This case was tried, briefed and argued solely on the theory of the missing endorsements. During oral argument before a department of this court, a question was raised sua sponte from the bench as to the applicability of RCW 9.54.080. Counsel only cursorily responded. The justices in the department were not in accord as to this new theory; so a rehearing en banc was ordered. At the en banc hearing, but slight attention was paid to this issue and only counsel tor respondents filed a brief on the point. The issue appears to be a matter of first impression in this state and could be of great concern to the construction and financing industries. Nevertheless this court has, on its own, raised and decided that issue without benefit of adequate briefing and full argument. Such procedure is not in keeping with our established principles.
The general rule is that an issue or theory not presented to the trial court will not be considered by this court for •the first time on appeal. Matthias v. Lehn & Fink Prods. Corp., 70 Wn.2d 541, 424 P.2d 284 (1967); Ledgering v. *626State, 63 Wn.2d 94, 385 P.2d 522 (1963); State ex rel. York v. Board of County Comm’rs, 28 Wn.2d 891, 184 P.2d 577, 172 A.L.R. 1001 (1947). There are recognized exceptions to this rule, e.g., matters going to jurisdiction, rights to maintain the action, illegality, invasion of constitutional rights, and lack of a claim for relief. See Capper v. Callahan, 39 Wn.2d 882, 887, 239 P.2d 541 (1952); State v. Lampshire, 74 Wn.2d 888, 447 P.2d 727 (1968); Galvin v. State Tax Comm’n, 56 Wn.2d 738, 355 P.2d 362 (1960).
However, we have consistently held that matters relating to the substance of plaintiff’s case, whether raised by plaintiff or defendant, may not be considered for the first time on appeal even though such consideration might result in the creation or destruction of plaintiff’s cause of action. See Farrell v. Score, 67 Wn.2d 957, 411 P.2d 146 (1966); Magerstaedt v. Eric Co., 64 Wn.2d 298, 391 P.2d 533 (1964); Pedersen v. Immanuel Lutheran Church, 57 Wn.2d 576, 358 P.2d 549 (1961). Even when the record indicates a possible noncompliance with statutes, we have refused to consider an issue or theory not presented to the trial court. Sims v. Horton, 43 Wn.2d 907, 264 P.2d 879 (1953). See also Bellevue School Dist. 405 v. Lee, 70 Wn.2d 947, 425 P.2d 902 (1967). The reason for this view is well illustrated by the instant case. A matter of great importance to property owners, construction contractors, laborers, materialmen and financial institutions, namely, the interpretation and application of statutes on an issue of first impression, should not be raised by this court and decided without benefit of briefs and argument and without the fact finding process and prior attention of the trial court.
The cases cited by the majority do not justify its sua sponte interjection of a new theory of action into the case. Morrill v. Title Guar. & Sur. Co., 94 Wash. 258, 162 P. 360, 163 P. 733 (1917), involved a purely mechanical assessment of damages under a statute. There was no attempt to change the theory of action on appeal; nor was the question of damages raised by us. Damages, in mistaken measure, had been requested at trial. Morrill merely stands for the *627proposition that a remand is not necessary to determine damages when both the proper measure and the mandatory amount are specified by statute. It is not authority for interposing, without so much as invitation by the parties, a totally different theory than that on which the action has proceeded.
The majority also cites Holzer v. Rhodes, 24 Wn.2d 184, 163 P.2d 811, 172 A.L.R. 1173 (1945). There we observed that the general rule against considering on appeal questions not raised in the trial court does not apply when the question raised affects the right to maintain the action. In that appeal, it was asserted for the first time that a statutory prerequisite to an action questioning the validity of a tax sale and deed had not been fulfilled. We refused to consider that assertion, noting that the action had been brought on a different theory than that to which the statute applied. Holzer demonstrates a refusal by this court to inject into a case a different theory than that on which the parties have proceeded. A true reading of that case shows that we are willing to consider for the, first time on appeal procedural prerequisites to the theory of action asserted, but are not willing to posit new theories of action in cases appealed to us. Thus, Holzer is authority against, rather than in support of, the majority rationale.
The majority also cites Wright v. Corbin, 190 Wash. 260, 67 P.2d 868 (1937), to the effect that, in a suit on a contract, the illegality of that contract may be raised at any time in the proceedings. This is correct as a general statement. But in its application we must bear in mind the difference between an illegal contract and a contract used illegally. As is aptly stated in People v. Brophy, 49 Cal. App. 2d 15, 30, 120 P.2d 946 (1942):
The law is clear and decisive on the question of the enforceability of a contract even though one of the parties thereto has knowledge of an intended purpose of the other party, by means of the contract, or the performance thereof, to violate some law or public policy of the state. The rule in that regard is thus stated in 53 A.L.R. 1364 at page 1366:
*628“The rule, according to the great weight of authority, is to the effect that a contract legal in itself is not rendered unenforceable by the mere fact that one of the parties thereto has knowledge of an intended purpose of the other party thereto, by means of the contract or subject-matter thereof, to violate some law or public policy of some state; . . .”
Thus, unless the contract itself is illegal, Wright v. Corbin does not operate. It is my view that the assignment agreement was not in and of itself an illegal contract. It was merely the legal means by which Mr. McCann effected an illegal act. There is no support here for the majority’s initiative.
To proceed then to my second objection. This court, having seen fit to reverse the trial court on a theory completely outside the record, construes RCW 9.54.080 as being applicable to the assignee, Mr. Legg. I am not convinced that such interpretation is in accord with legislative intent.2
The construction placed by the court on RCW 9.54.010 and 9.54.080 places the assignee of funds from a contractor under the obligation to apply those funds to lienors of the project creating the funds, to the exclusion of his own or other claims. Under such an interpretation, a financing-agency could not secure loans to a contractor by an assignment of monies: payable to the contractor on a construction project.
That interpretation has already been rejected by this court, at least impliedly, in Globe Elec. Co. v. Union Leasehold Co., 166 Wash. 45, 6 P.2d 394 (1931). That case was an action to foreclose a materialman’s lien. The owners argued’ that the materialman was party to a wrongful diversion by the contractor of funds paid to him by the owners. We-noted that the materialman had, indeed, taken trade acceptances from the contractor for materials supplied on-prior jobs, and that he knew the contractor would be likely to pay off these trade acceptances with money received from the owners on the present job. We also noted that the-*629owners had made no effort to protect themselves from the possibility that the contractor would misapply the funds and had paid the money to the contractor without reservation or attempt to control his disposition thereof. We affirmed the foreclosure of the materialman’s lien. In that case, the facts of which are quite similar to the case now before us, we did not extend the criminal liability under the statute to those who receive the funds diverted. We refused to so extend the statute even though the issue was raised and argued by the parties.
The fallacy of the majority’s position is in its reading of the term “agent” in the statute. It is the contractor (Mr. McCann) who is the statutory agent within RCW 9.54.080 and who is proscribed from a diversion of funds. Relating RCW 9.54.080 to the facts of this case, the statute states:
Every person having entered into a contract to supply any labor or materials [McCann] for . . . which any lien might lawfully be filed upon the property of another [Maynard], who [McCann] shall receive the full price . . . shall be deemed within the meaning of . . . [larceny statute], to receive the same as the agent [Mc-Cann] of the party with whom such contract was made [Maynard], . . . for the purpose of paying all claims for labor and materials supplied.
The trial court found, and plaintiff affirms, that Mr. Legg had no business dealings whatsoever with the owners. Obviously, then, Mr. Legg was not a person who had “entered into a contract to supply labor and materials” and is not the statutory agent to whom the proscription is addressed.
Neither the fact that Mr. McCann may have violated the statute (see State v. Williams, 141 Wash. 148, 251 P. 155 (1926)), nor the fact that a purpose of the statute is protection of the owner requires the extension of liability to those dealing with him. See discussion in Annot., 55 A.L.R.2d 481 (1957); Brower Co. v. Noise Control of Seattle, Inc., 66 Wn.2d 204, 401 P.2d 860 (1965). The criminal liability imposed by the statute extends to those enumerated in its terms and no others. Mr. Legg is not a person so enumerated.
*630Accordingly, I dissent from that portion of the majority opinion which injects the applicability of RCW 9.54.080 and applies that statute to Mr. Legg. I would affirm as to all parties.
Donworth, J. Pro Tern., concurs with Neill, J.
April 24,1970. Petition for rehearing denied.

 Contract-Violation of Statute, Annot., 55 A.L.R.2d 481 (1957), contains discussion of this issue.