Court Opinion

ID: 9460535
Source: CourtListenerOpinion
Date Created: 2023-08-04 21:53:33.456733+00
Date Added: 2024-06-11T17:36:40.232890
License: Public Domain

SNEED, Circuit Judge
(dissenting):
I respectfully dissent.
In holding that Rowland is liable to Fiberchem for sales commissions on general and follow-up orders, the majority draws heavily from two lines of authority. The first, the “latent equity” analysis, is viewed by the majority as standing for the proposition that “the as-signee takes his claim subject to the equities of third persons against the assigned right where he has knowledge of such equities.” In' my opinion this proposition is properly applied only in situations where a third party asserts a claim to the funds also claimed by the assignee. See generally, Comment, “Latent Equities,” 20 U.Chi.L.Rev. 692 (1953). A “latent equity” claim may be derived from a prior assignment, trust principles, agency law, the doctrine of subrogation, or some other source, but it is invariably recognized only in situations where a third party is claiming specific funds also claimed by an assignee.1
In this case Fiberchem is not asserting a claim against the particular funds to which Rowland became entitled by virtue of the assignment of rights and delegation of duties with respect to the Boeing purchase orders; instead it is arguing that, since it procured the orders and because General Plastics can not now pay, Rowland should pay the commissions for which General Plastics is the primary obligor. Fiberchem’s position in this litigation does not significantly differ from that of any other general creditor of General Plastics whose goods and services contributed to the orders which it transferred to Rowland.
I have been unable to find any authority in Washington law or elsewhere to justify treating Fiberchem as a lien holder absent a showing that Rowland was unjustly enriched by Fiberchem. The broad language of the Restatement of Restitution, § 161, justifies imposing a lien under such circumstances.2 As I shall point out, this affords little comfort to Fiberchem because it has not established in this case that Rowland has been unjustly enriched.
*741The second line of authority from which my brothers draw support is Pog-gi v. Tool Research & Engineering Corp., 75 Wash.2d 356, 451 P.2d 296 (1969), a case which is wholly distinguishable from the present controversy. As my brothers indicate, Poggi holds that “termination of a manufacturer’s representation agreement does not cut off the agent’s rights to commissions on orders for which he was the efficient procuring cause, even though the orders had not yet been received in final form at the time of the termination.” If Fi-berchem had brought suit against General Plastics rather than Rowland, Poggi would be controlling. Poggi, however, merely holds that when one has substantially performed his contract he can recover from the other party thereto that which such party promised. But here Fiberchem is not suing that party. It is suing an assignee of such party who expressly disclaimed any liability to the performing party. I know of no authority that makes such a disclaimer contrary to public policy. Nor is there any evidence to suggest that General Plastics’ assignment was a fraudulent conveyance or a preference in bankruptcy.
Inasmuch as there is nothing in the record inconsistent with Rowland’s disclaimer, it follows that recovery can not be based on an implied in fact contract. “Contracts implied in fact arise from facts and circumstances showing a mutual consent and intention to contract.” Chandler v. Washington Toll Bridge Authority, 17 Wash.2d 591, 137 P.2d 97, 101 (1943).
This brings me to what I view as the fundamental issue of this case: Was Rowland unjustly enriched? Since the case was not argued along this line, the district court made no express findings on this issue. Resolution of the quasi-contractual issue on appeal is further complicated by the incompleteness of the Record on the question of unjust enrichment. While it is clear that the parties to the sale of General Plastics’ assets assigned only $1,000 of the $350,000 purchase price to the purchase orders and other intangible assets, their action may be justified by a number of business purposes and, at the very least, is inconclusive on the question of unjust enrichment.
I would therefore remand to the district court for express findings on the question of unjust enrichment. On remand, the district court should also consider the decision of the Washington Supreme Court in Chandler v. Washington Toll Bridge Authority, 17 Wash.2d 591, 137 P.2d 97, 102 (1943), wherein the following language from Cascaden v. Magryta, 247 Mich. 267, 225 N.W. 511, 512 (1929), was quoted with approval:
The courts, however, employ the (quasi contract) fiction with caution, and will never permit it in cases where contracts, implied in fact, must be established, or substitute one promisor or debtor for another.
The possibility that Chandler, as a matter of law, prevents the application of quasi-contractual principles to the present case should be considered. As Chandler makes clear, recovery under a theory of quasi-contract requires the receipt of a benefit the retention of which would be unjust. Mere receipt of a benefit is not enough.
• In sum, I do not believe that the authorities relied upon by the majority provide support for its position. A remand to consider the question of unjust enrichment would be a more appropriate disposition of this case. I would reverse and so remand.

. See, e. g., Brown v. Equitable Life Assurance Society, 75 Minn. 412, 78 N.W. 103 (1899) (assignment absolute in form but in fact merely intended as security for a loan) ; Levenbaum v. Hanover Trust Co., 253 Mass. 19, 148 N.E. 227 (1925) (preferential payment by insolvent debtor); Noland v. Law, 170 S.C. 345, 170 S.E. 439 (1933) (trustee assigned chose to a purchaser for value without notice); Lasser v. Philadelphia National Bank, 321 Pa. 189, 183 A. 791 (1936) (assignment by agent of funds held on behalf of principal).

. Section 161 of the Restatement provides: Where property of one person can by a proceeding in equity be reached as security for a claim on the ground that otherwise the former would be unjustly enriched, an equitable lien arises.