Court Opinion

ID: 9789942
Source: CourtListenerOpinion
Date Created: 2023-08-31 01:44:18.638995+00
Date Added: 2024-06-11T07:37:25.307149
License: Public Domain

Dore, J.
(dissenting) — The trial court found that Dar-den, Doman and Stafford Associates (DDS) intended to look solely to the corporation as the party of the contract. There is substantial evidence in the record to substantiate this finding. I would affirm the trial court and dismiss
*484Goodman from the arbitration proceedings.
As the majority states at pages 478-79, as a general rule
where a corporation is contemplated but has not yet been organized at the time when a promoter makes a contract for the benefit of the contemplated corporation, the promoter is personally liable on it, even though the contract will also benefit the future corporation.
Harding v. Will, 81 Wn.2d 132, 139, 500 P.2d 91 (1972) [quoting Refrigeration Eng'g Co. v. McKay, 4 Wn. App. 963, 972, 486 P.2d 304 (1971)].
Promoters are not personally liable, however, on contracts made in the name of a corporation not in existence at the time of contracting, where the intention to make the contract in the future corporation's name is known to the other contracting party. Heintze Corp. v. Northwest Tech-Manuals, Inc., 7 Wn. App. 759, 760, 502 P.2d 486 (1972).
The issue on appeal is thus whether there is substantial evidence in the record that DDS accepted the obligation of a yet-to-be-formed corporation and did not hold John Goodman as an individual responsible. I believe there is.
The record indicates that Goodman was a licensed real estate salesman for West & Wheeler Associates, Inc., from 1973 through 1978, and the department manager of its property management division. In May 1979, he sold an apartment house, Suncrest Apartments, to his friend Dick Gimperle, an architect. As sales agent, he received a small amount of cash, the remainder of his commission to be paid by a $4,000 promissory note. Gimperle assigned his interests in the property to DDS. The partnership was a highly educated and qualified group which included an architect, a Ph. D., and a lawyer. The managing partner was an architect who had extensive experience in constructing condominiums, office buildings and single-family homes. The Suncrest Apartments needed considerable renovation and had about 10 to 12 vacancies at the time of the sale. Gim-perle introduced Goodman to DDS' managing partner, Doman, as a possible contractor to do the renovation work. Originally, Goodman wanted only to be a consultant and *485not the actual contractor, but Gimperle and Doman persuaded him to do the contracting work. Toward the end of the negotiations, Goodman told Doman that he would be forming a corporation to insulate against liability. The record indicates Doman had no objection to Goodman forming a corporation to insulate against liability.
Doman insisted the parties sign an American Institute of Architects' Standard Form of Agreement Between Owner and Contractor. Doman prepared the contract, including the schedule of the repairs, indexed exterior renovation, interior renovation and specifications for the floor plans, etc. Goodman was the first to sign on August 9. On August 18, the other parties signed the contract and it became operative. The first page of the contract contains a typewritten provision stating,
This is a two party agreement. Where ever [sic] third party responsibilities are assigned in this agreement to a third party (Architect) as agent of the Owner, those third party responsibilities are to be assumed by the Owner unless the context clearly indicates to the contrary.
(Italics mine.) Exhibit 1.
I
Immediately after signing the contract, Goodman went to his attorney and directed him to prepare articles of incorporation to insulate against his personal liability. His attorney prepared incorporation documents, which were signed on October 2, 1979. The name they had selected for incorporation was not available, however, and they had to select a new name, "Building Renovation and Design Consultants, Inc." This caused further delay and incorporation was not completed until November 1, 1979. Doman scheduled the project completion date of October 15. The work went slowly, however, and the work was not completed at that time.
Doman made all checks out to the corporate name, Building Design and Development, Inc., at Goodman's request. The original check had been made out to both the *486corporation and Goodman individually, but Goodman had his name deleted and a new check issued in the name of the corporation only. Doman had no objection to this and impliedly acknowledged that he would look to the corporation and not to Goodman as an individual. All of such checks were deposited in the corporation's bank account at Rainier National Bank, Westlake branch. Neither Goodman nor the corporation profited from the Suncrest Apartments contract, and there was no commingling of the personal assets and liabilities of Goodman with the corporation.
On November 1, 1979, a certificate of incorporation was issued to Goodman. The court found that at that time the corporate entity was fully capitalized and operating. DDS was aware of the incorporation and continued to make the checks payable to the corporation. Subsequently, Goodman had the corporation ratify the contract as an action of the corporation.
II
It is clear from the actions of DDS, and its failure to insist upon a personal guaranty from Goodman, that DDS impliedly agreed to look solely to the corporation for performance.
I cannot agree with the majority's conclusion that Goodman's expressed desire to form a corporation to limit his liability does not reflect on the intentions of the members of DDS. If they did not agree with Goodman to look solely to the corporation as the legally responsible entity, the DDS members should have made this clear at the time Goodman brought it up, before the contract was signed. I also cannot agree with the majority that the progress payments made payable to the corporation do not show with reasonable certainty and probability that DDS intended to contract only with the corporation.
Conclusion
The trial court found, in written findings, that DDS knew that the corporation which was a party to the renovation *487contract was not yet in existence at the time the contract was signed; that the members of DDS, by their actions, impliedly agreed to look solely to the corporation for performance under the contract. The trial court further found that at no time did any member of DDS request of Goodman that he be personally liable on the contract; that all money received by the corporation went into the corporate bank account and were used to pay corporate obligations; neither Goodman nor the corporation profited from the contract, and there was no commingling of the personal assets and liabilities of Goodman and the corporation; and that Goodman exercised good faith in moving to have the corporation formed.
There was substantial evidence to support such findings and we must recognize their verity. Thorndike v. Hesperian Orchards, Inc., 54 Wn.2d 570, 343 P.2d 183 (1959).
I would affirm the order of the trial court staying arbitration proceedings as to John Goodman individually.
Utter and Dolliver, JJ., concur with Dore, J.