Bland v. Mentor

• Decision Date: 17 October 1963
• Docket Number: No. 36423,36423
• Court: Washington Supreme Court
• Parties: Frankie L. BLAND and Donna L. Bland, husband and wife, Respondents, v. Joseph P. MENTOR, Jr., and Joan Mentor, husband and wife, Appellants, Dean D. Jones, Sheriff of Kitsap County, and James O. Arthur and Terence Hanley, doing business as Arthur & Hanley, a copartnership, Additional Defendants.

Page 150

63 Wn.2d 150

385 P.2d 727

Frankie L. BLAND and Donna L. Bland, husband and wife, Respondents, v. Joseph P. MENTOR, Jr., and Joan Mentor, husband and wife, Appellants, Dean D. Jones, Sheriff of Kitsap County, and James O. Arthur and Terence Hanley, doing business as Arthur &

Hanley, a copartnership, Additional Defendants.

No. 36423.

Supreme Court of Washington, Department 2.

Oct. 17, 1963.

Greenwood & Shiers, Frank A. Shiers, Port Orchard, for appellants.

Arthur & Hanley, Terence Hanley, Bremerton, for respondents.

HAMILTON, Judge.

On July 27, 1956, plaintiffs (respondents) entered into a standard form real-estate contract, by which they undertook to purchase from defendants (appellants) certain residence property situated in northern Kitsap County, Washington, for the sum of $6,000. The plaintiffs made an initial payment of $450, assumed possession of the premises, and agreed to pay the balance together with interest in regular monthly installments. In addition, plaintiffs covenanted to pay all taxes and to keep the buildings in good repair and insured against loss by fire. Between July, 1956, and August, 1960, a total of $1,941.58 was paid on the principal and $1,119.42 in interest. A balance of $4,058.42 plus interest remained due. The taxes for the years 1957 through 1960 were not paid. The premium on the fire insurance policy was due August 13, 1960, although, by its terms, the policy remained in effect until canceled.

In May, 1960, plaintiffs moved from the premises to Tacoma, Washington. On August 22, 1960, defendant Joseph R. Mentor, Jr., went to Tacoma where he obtained the signatures of the plaintiffs upon a standard form statutory warranty deed conveying the premises to defendants. Defendants concede acknowledgment of the deed to be defective. On August 30, 1960, the defendants contracted to sell the property to innocent third persons for $6,500, with a $300 down payment and monthly installments of $55 a month including interest. Plaintiffs requested payment for their equity. Defendants tendered a check in the sum of $100 marked in payment for a stove and plaintiffs' equity. Through an attorney plaintiffs returned the check asking that it be reissued in payment for the stove only and that satisfactory arrangements be otherwise made for payment of their equity. Defendants refused.

Plaintiffs commenced this action seeking nullification of the deed and judgment in the amount of their equity. Defendants failed to answer and a default judgment was entered nullifying the deed and awarding plaintiffs the sum of $2,441.58 for their equity in the premises. Following issuance of a writ of execution upon the judgment, defendants moved for and were granted a stay of execution, vacation of the default judgment, and permission to file an answer, an affirmative defense and a counterclaim. By their pleadings defendants sought affirmance of the deed or, in the alternative, a setoff based upon the fair rental value of the premises during plaintiffs' occupancy and reimbursement of the delinquent taxes, and asked judgment for damages, attorneys' fees and costs in vacating the default judgment and writ of execution. Trial ensued before the court sitting without a jury.

Conflict in the evidence revolved about the representations and understanding of the parties at the time of the signing of the deed on August 22, 1960. In substance, plaintiffs' version indicated defendant Joseph P. mentor, Jr., misresented the nature and the purpose of the document or documents signed, and led plaintiffs to believe that he would sell and pay them for their equity in the premises. The purport of defendants' evidence, on the other hand, was that plaintiffs had neglected, stripped, and abandoned the premises, and that they fully understood the nature of the deed, and were in accord with its purpose, which was to avoid the expense and embarrassment of a forfeiture proceeding.

Surrounding circumstances revealed by the evidence were to the effect that plaintiffs had, without objection by defendants, previously made late payments on the contract (the last payment being made on June 21, 1960), had received no tax notices, had listed the premises for sale with one or more realtors, made some arrangements for upkeep of the premises after moving to Tacoma, were desirous of retaining their equity until sold, and that plaintiff husband was not well versed in business matters. The evidence further indicated that defendants, although feeling plaintiffs had neglected, stripped, and abandoned the premises, had taken no formal steps to forfeit the contract, attempted to persuade plaintiffs to return to the premises and their work in Kitsap County, agreed to pay plaintiffs something for their equity, had the deed notarized after August 22, 1960, and canceled plaintiffs' real-estate listing on the property prior to August 30, 1960.

The trial court, believing plaintiffs' version, found, in essence, (a) plaintiffs were not in substantial default and had not abandoned their contract, (b) defendant husband in bad faith represented to plaintiffs he would sell the premises for them and account for their equity, (c) pursuant to such representations plaintiffs executed the document in question, believing they were signing a sales agreement, and (d) consideration being given to the sale price of $6,500, the delinquent payments and taxes, expenses of sale, and prevailing discount rates, plaintiffs' net equity was of the value of $1,800. Based upon such findings, the trial court (1) reformed the instrument of August 22, 1960, making it effective as a quitclaim deed; (2) declared a constructive trust, to the extent of plaintiffs' equity upon defendants' interest in the property; (3) dismissed defendants' counterclaims; and (4) entered judgment against defendants individually and against their marital community in the sum of $1,800, together with costs in the sum of $82.10.

Defendants appeal.

Defendants by their written and oral arguments have limited their assignments of error to three basic contentions. They are: (1) A challenge to the sufficiency of the evidence supporting the trial court's findings of misrepresentation and constructive trust; (2) a claim of error in denying defendants' claim of setoff; and (3) a claim of error in dismissing defendants' claim for damages, attorneys' fees and costs incident to the default judgment and writ of execution.

Defendants, in support of their first contention, assert plaintiffs' testimony (particularly that of plaintiff wife), as to the events occurring on August 22nd, is inconsistent with the trial court's findings, is incredible, and is otherwise unworthy of belief. Thus, defendants urge, it lacks the requisite substance to constitute clear, cogent, and convincing proof essential to a finding of fraud or the imposition of a constructive trust.

We have defined substanticl evidence as that character of evidence which would convince an unprejudiced thinking mind of the truth of the fact to which the evidence is directed. Wharton v. Department of Labor & Industries, 161 Wash.Dec. 285, 378 P.2d 290.

We have said that the phrase 'clear, cogent, and convincing' evidence denotes a quantum or degree of proof greater than a mere preponderance of the evidence. Cheesman v. Sathre, 45 Wash.2d 193, 273 P.2d 500; Lewis Pac. Dairymen's Ass'n v. Turner, 50 Wash.2d 762, 314 P.2d 625; Holmes v. Raffo, 60 Wash.2d 421, 374 P.2d 536. We do not deem the term connotes proof beyond a reasonable doubt.

What constitutes clear, cogent, and convincing proof necessarily depends upon the character and extent of the evidence considered, viewed in connection with the surrounding facts and circumstances. Whether the evidence in a given case meets the standard of persuasion, designated as clear, cogent, and convincing, necessarily requires a process of weighing, comparing, testing, and evaluating--a function best performed by the trier of the fact, who usually has the advantage of actually hearing and seeing the parties and the witnesses, and whose right and duty it is to observe their attitude and demeanor.

The appellate function should, and does, begin and end with ascertaining whether or not there is substantial evidence supporting the facts as found. Gilbert v. Rogers, 56 Wash.2d 185, 351 P.2d 535.

In Nicolai v. Desilets, 185 Wash. 435, 436, 55 P.2d 604, 605, we have defined a constructive trust as:

'* * * the device used in equity to compel those who unfairly hold a property interest which they obtained or retain by reason of unjust or unconscionable means to convey that interest to, or to hold it for, another to whom it justly belongs; or, as Mr. Justice Cardozo, in Meinhard v. Salmon, 249 N.Y. 458, 164 N.E. 545, 548, 62 A.L.R. 1, said:

"A constructive trust is, then, the remedial device through which preference of self is made subordinate to loyalty to others."

We have held that fraud, misrepresentation, bad faith, or overreaching usually forms the base upon which a constructive trust is erected. Rozell v. Vansyckle, 11 Wash. 79, 39 P. 270; Saunders v. Visser, 20 Wash.2d 58, 145 P.2d 898; Bangasser &...