Court Opinion

ID: 3997092
Source: CourtListenerOpinion
Date Created: 2016-07-06 10:55:04.551512+00
Date Added: 2024-06-11T07:44:29.531917
License: Public Domain

I concur in the result of the per curiam and the Departmental opinion.
This court has held in many cases that findings of fact not mentioned in the assignments of error will be taken as the conclusively established facts on appeal, but all such holdings which have been brought to my attention by citations in the briefs or otherwise have been in legal, as distinguished from equitable, actions. Thus, Hubbell v. Ernst, 198 Wn. 176,87 P.2d 985, 124 A.L.R. 667, was an action against the state director of the department of social security to obtain old age assistance payments; LeCocq Motors, Inc. v. Whatcom County,4 Wn.2d 601, 104 P.2d 475, was an action for labor, materials, supplies, and rental of equipment furnished to a county at its request; Hansen v. Lindell, 14 Wn.2d 643,129 P.2d 234, was an action on a promissory note; and Brydges v.Millionair Club, 15 Wn.2d 714, 132 P.2d 188, and Hafer v.Marsh, 16 Wn.2d 175, 132 P.2d 1024, were actions for unlawful detainer.
It seems to me that, in equity cases, the requirement with reference to predicating specific assignments of error on the findings of fact should not be enforced with the same strictness as in actions at law. No findings of fact are required in an equity action. When findings are made, they are considered and given great weight, but are not binding on the supreme court. The case comes up on appeal for trial de novo, and it is the duty of this court to make an independent examination of all the evidence in order to determine what findings should have been made. Columbia Lbr. Co. v. Bush, 13 Wn.2d 657,126 P.2d 584, and the cases therein cited; Widman v. Maurer, 19 Wn.2d 28,  141 P.2d 135; Wingard v. Pierce County, 23 Wn.2d 296,160 P.2d 1009. *Page 972 
The foregoing firmly established rules would be robbed of much of their meaning if, in an equity case, the findings not specifically assigned as erroneous must be taken as verities; for, manifestly, there would not be an independent examination of all the evidence by this court, but only — and precisely as in an action at law — an examination to the extent necessary to determine whether the evidence is sufficient to sustain the particular findings, if any, against which assignments of error have been directed.
In Wingard v. Pierce County, supra, an equity case, the trial court made findings of fact, but an examination of the briefs discloses that the findings were not even mentioned in the assignments of error, which were, in effect, that the trial court erred in entering judgment quieting title in respondent to certain lands and in refusing to quiet title in appellant. That this court did not accept the findings as verities, although no assignment of error had been predicated upon them, is clearly indicated by the following excerpt from the opinion:
"We realize that this is an equity case, and that in such cases findings of fact are not required; also, that on appeal such cases are tried de novo and that in its consideration of the particular case this court is required to make an independent examination of all the evidence and all of the circumstances disclosed by the statement of facts, and from such examination decide what findings should have been made."
In that case, the findings of fact were considered and described as "valuable" because the evidence appeared to be in conflict and rather equally balanced, and the statement of facts was "in large part unintelligible"; but it is also plainly apparent from the opinion that the court considered the entire record.
In the present case, which appellants and respondents agree is an equity case, there is virtually no conflict in the evidence as to the basic facts. Appellants' objection to the trial court's findings (aside from the conclusions of law which they contain) is not that they are contrary to the evidence, but rather that they do not include many pertinent facts and circumstances which tend to support appellants' theory. Appellants contend, and I think their contention is sound, that these omitted facts and circumstances should be considered by this court in its determination of the issues presented.
The principal question to be decided, clearly pointed out by appellants both in their "Statement of Question Involved" and in their "Assignments of Error," and discussed in their opening brief, is whether the trial court erred "in not declaring that the management contract constituted an assignment of the lease." The circumstances bearing upon that question briefly summarized are as follows:
On September 1, 1943, respondents Morgan and Moorman, the tenants of the theater involved, sold it under a conditional sales contract to respondents Graf and Lamb for the principal sum of twenty thousand dollars, payable seven thousand dollars down and the balance in monthly installments of two hundred fifty dollars and extending to January 31, 1948, the expiration date of the lease. Graf and Lamb made the initial payment of seven thousand dollars, and took over and proceeded to operate the theater. *Page 973 
The lease contained a covenant against assignment without the consent of the lessor, and the lessor, appellant Bedgisoff, refused to consent to an assignment to Graf and Lamb. When an officer of the Independent Theater Owners said to respondent Moorman in the course of a telephone conversation, "You know, Henry, that Bill [Bedgisoff] will not transfer the lease to Graf and Lamb nor to anyone else," Moorman replied, "Well, we have a way to get around that." Shortly thereafter, on September 21, 1943, Morgan and Moorman and Graf and Lamb ostensibly canceled the conditional sales contract and executed the management contract and supplemental contract set out in the Departmental opinion.
By the terms of the contract, Graf and Lamb were employed "as managers" of the theater, and agreed to pay Morgan and Moorman, regardless of whether the operation of the business resulted in profit or loss, two hundred fifty dollars a month from September 1, 1943, to January 31, 1948. Graf and Lamb were to receive all the profits and bear all the losses, and, in any event, Morgan and Moorman were to receive two hundred fifty dollars a month for fifty-two months — precisely the same as the installment payments which would have been required to pay the balance of the purchase price under the conditional sales contract. The management contract executed on September 21, 1943, was made retroactive to September 1, 1943, so that Graf and Lamb were entitled to retain any profits realized from the theater during the three weeks that they had operated it under the conditional sales contract.
It is a significant circumstance that Morgan and Moorman did not return to Graf and Lamb the down payment of seven thousand dollars which the latter had made. There is no mention of that payment in either the management contract or the supplemental contract. When all the parties met September 21, 1943, Mrs. Morgan made a check, in the amount of seven thousand dollars, payable to Graf and Lamb and handed it to the attorney who represented her and Moorman. The attorney then gave the check to respondent Graf's attorney. After a notation to the effect that it was canceled by mutual consent had been endorsed upon the conditional sales contract, and the management contract had been signed, respondent Graf's attorney handed the seven thousand dollar check back to the attorney for Morgan and Moorman and the attorney then gave it to his clients.
As stated, the result of all this was that Morgan and Moorman retained the seven thousand dollars which they had received as a down payment on the purchase price of the theater. In an effort to explain why they had retained it, respondent Lamb testified as follows:
"Q. It had no connection with the Management Contract in any way, did it? A. The $7,000? Q. Yes. A. Well, yes. We did figure that the $7,000 was part of the good will, and so forth, that we would go through with our part of the Manager's Contract. Q. I don't quite follow you, Mr. Lamb. Do you mean that you were supposed to put up $7,000 to secure your performance of the contract? A. To a certain degree. There are certain things in a theater you could wreck pretty quick, you know. Q. Was there any written agreement with reference to the $7,000? A. Not that I know of."
Respondent Moorman testified with reference to the check transaction: *Page 974 
"Q. Then after the Management Contract was signed up, what was done with the $7,000, or this check? A. Well, they [Graf and Lamb] felt that the seven thousand dollars, they would put that up for the privilege of having the Manager's Agreement. Q. In other words, it was consideration for the lease [management] arrangement? A. That's right."
Respondent Graf's attorney testified that the seven thousand dollars had been given to Morgan and Moorman as "consideration or part of the consideration" for the management contract and as "security for its performance."
None of the explanations offered are satisfactory or convincing, to say the least. It is inconceivable that, in a transaction where both parties were represented by counsel, one party would pay over to the other the sum of seven thousand dollars, either as consideration or as security for performance, without making any mention of the matter in the written contract or in any separate writing. It is equally inconceivable that Graf and Lamb would pay seven thousand dollars as consideration for a contract of employment which, by its express terms, provided that it could be canceled at any time on thirty days' notice by the employer, and that, upon such cancellation, Graf and Lamb would be entitled to receive only one hundred dollars a week for their services previously rendered.
It seems clear to me that it was the intention and purpose of the parties to the management contract to carry out, in a different form and under a different name, substantially the same transaction as the attempted transfer under the conditional sales contract; and that the management contract was, in fact, a subterfuge designed to circumvent the covenant against assignment of the lease. Ordinarily, Morgan and Moorman could have employed managers to operate their theater on whatever terms they saw fit, it is true. But, in a situation such as we have here, this court will look beyond mere surface appearances and consider the motive and purpose of the parties, as disclosed by the attendant circumstances, to determine the actual character of the transaction.
The recent case of State ex rel. Livingston v. Ayer, 23 Wn.2d 578,  161 P.2d 429, involved the question of the constitutionality of a statute, enacted at the 1945 session of the legislature, creating in each county of the state a statistics commission, composed of various county officers, to gather and record certain data concerning members and veterans of the armed forces of the United States.
The members of the commission were to receive compensation in addition to their official salaries as county officers, and it was contended that this feature of the statute violated the constitutional prohibitions against increasing the salary of a county officer or public officer during his term of office. It does not appear to be questioned that the legislature had the power to create statistics commissions and to provide compensation for their members, or that county officers were eligible to serve on such commissions. This court, however, looked beyond the superficial appearances of regularity and considered all of the surrounding circumstances to determine the real motive and purpose of the legislature. *Page 975 
At the 1945 session, the legislature had raised the salaries of county officers, to become effective when their current terms of office expire. The statistics commission statute, which, in effect, gave such officers substantially the same monthly salary increase, contained an emergency clause to make it effective immediately, and, according to its terms, it was to expire January 1, 1947. The effect of the statistics commission act, therefore, was to give county officers indirectly an increase in pay which would begin at once and continue until the direct increase in their salaries became operative. Furthermore, the statistics commission act did not say what was to be done with the records to be prepared by the commission or to whom the information was to be available. After considering all the circumstances, this court held the act unconstitutional as to its salary provisions as "nothing more nor less than an attempt to evade the constitutional provisions hereinbefore set out, in that the act did in fact purport to increase the salaries of county officers during the terms of office for which they were elected." The reasoning on which the holding rests is indicated by the following quotation from the opinion:
"In approaching this question, we are mindful of the rule as to the presumption of constitutionality of legislative acts, and we are also mindful that it is not within the province of a court to question the wisdom of a legislative act. But we also have in mind the fact that when it becomes the duty of this court to pass upon the constitutionality of an act of the legislature, we must determine whether or not such act does in fact violate some provision of the constitution, and, in doing this, if the court performs its full duty, it will not shut its eyes to obvious facts which would compel a conclusion that the act is unconstitutional, and rest a decision that the act is constitutional upon the mere presumption of constitutionality, or upon the rule that we cannot question the wisdom of the legislature in passing the act, or upon some declared policy orpurpose contained in the act, which policy or purpose cannot besubstantiated." (Last italics mine.)
In the instant case, the writer of the Departmental opinion, likewise, has taken a realistic view of the situation, and, looking to the purpose and effect of the management contract, rightly has concluded that the covenant against assignment has been breached.
ROBINSON, JEFFERS, BLAKE, and BEALS, JJ., concur with DRIVER, C.J.