Gillingham v. Phelps

• Citation: 119 P.2d 914,11 Wn.2d 492
• Decision Date: 03 December 1941
• Docket Number: 28513.
• Parties: GILLINGHAM et ux. v. PHELPS et al.
• Court: United States State Supreme Court of Washington

119 P.2d 914

11 Wn.2d 492

GILLINGHAM et ux. v. PHELPS et al.

No. 28513.

Supreme Court of Washington

December 3, 1941

Department 1.

Action by Hubert B. Gillingham and wife against Dora S. Phelps and others, to determine to whom should be awarded the proceeds of an insurance policy covering property destroyed by fire. From the judgment, plaintiffs appeal.

Affirmed.

Appeal from Superior Court, Spokane County; R. M Webster, Judge.

B. J Onstine and M. E. Mack, both of Spokane, for appellants.

Glen E Cunningham and Roy A. Redfield, both of Spokane, for respondents.

MILLARD Justice.

The purpose of this action, which was Before us on appeal from judgment of dismissal following sustaining of demurrer to the third amended supplemental complaint in Gillingham v. Phelps, 5 Wash.2d 410, 105 P.2d 825, is to determine to whom should be awarded the proceeds of an insurance policy which covered property that was destroyed by fire.

Trial of the cause (on the same third amended supplemental complaint which was challenged by demurrer in Gillingham v. Phelps, supra) to the court sitting with a jury resulted in verdict in favor of Dora S. Phelps. From judgment entered on the verdict against plaintiffs and the insurance company, motions for new trial and for judgment notwithstanding the verdict having been overruled, plaintiffs appealed. The insurance company did not appeal.

In Gillingham v. Phelps, 5 Wash.2d 410, 105 P.2d 825, the allegations of fact, together with the reasonable inferences therefrom, in the complaint which were admitted by the demurrer to be true were as follows:

September 22, 1936, the owner of a certain six-story building in the city of Spokane leased the top floor of that building to Dora S. Phelps, for a period ending August 31, 1939, where Mrs. Phelps operated a pinochle club. March 9, 1938, Mrs. Phelps assigned the lease and transferred to Lawrence J. and Frank S. Fiman under a conditional sales contract the personal property which was used in operation of the club. The Fimans later returned the property to Mrs. Phelps who continued to operate the club under her lease until February 7, 1939, when she entered into an oral agreement with Hubert B. Gillingham (who, some time prior to that date, purchased the six-story building in which Mrs. Phelps' pinochle club was located) to sell to Gillingham the property in question in consideration of the cancellation of her indebtedness for back rent in the amount of $767.36 and payment to her by Gillingham of $350 in cash. The sale contract was to be later reduced to writing and a bill of sale given to the purchasers. Mrs. Phelps was the beneficiary of a fire insurance policy in which the Gillinghams were not mentioned.

The Gillinghams went into possession of the property and operated the club for a period of twenty-three days when the property was destroyed by fire. The contract and bill of sale had not been executed, nor had the consideration of $350 been paid when the fire occurred.

An action was instituted by Hubert B. Gillingham and wife against Dora S. Phelps, the two Fimans, the assignee of the two Fimans and the fire insurance company to recover the insurance money in excess of $350 which amount was due from the Gillinghams to Mrs. Phelps as part of the purchase-price of the club property. Mrs. Phelps, whose demurrer to the complaint was sustained, claimed, as owner of the insured property, the entire sum of two thousand dollars insurance money. On appeal of the plaintiffs we reversed the judgment of dismissal and remanded the cause with direction to the trial court to overrule the demurrer.

The first error assigned is the granting, over objection of appellants, of a jury trial on request of respondent Phelps. Counsel for appellants argue that we held in Gillingham v. Phelps, supra, that Mrs. Phelps would be considered trustee of a constructive trust for the appellants in disposition of the proceeds of the insurance policy; hence the action is one in equity and not triable to a jury.

The assignment is without substantial merit. The legal effect of the demurrer in Gillingham v. Phelps, supra, that appellants Gillingham owned the property at the time of the fire was an admission of the truth of the allegation. The admission made by the demurrer was made merely for testing the sufficiency of the complaint and was binding upon respondent demurrant only insofar as the ruling upon the demurrer is concerned. Our remand of the cause with direction to the trial court to overrule the demurrer was a determination that the complaint was good as against the objection that it did not state a cause of action. When the trial court, after remand, overruled the demurrer and respondent pleaded over any admission by the demurrer was removed by the answer denying the allegations admitted. In the second place the substantial issues, questions of fact, were properly triable by a jury and if it developed that there was an equitable issue involved in the action disposition of that issue could be made by the court.

The risk of loss rested upon the person who had the property in the goods when they were destroyed. Rem.Rev.Stat. § 5836-22. The basic issue in the cause was whether appellants or respondent had the property in the goods at the time of the fire. Even if, as alleged by appellants, a contract of sale were made between appellants and Mrs. Phelps February 7, 1939, the question whether the parties intended title to pass on that date or at the time the written documents were to be executed and delivered was one of fact.

'(1) Where there is a contract to sell specific or ascertained goods, the property in them is transferred to the buyer at such time as the parties to the contract intend it to be transferred.

'(2) For the purpose of ascertaining the intention of the parties, regard shall be had to the terms of the contract, the conduct of the parties, usages of trade and the circumstances of the case.' Rem.Rev.Stat. § 5836-18, subd. 1 & 2.

Rem.Rev.Stat. § 5836-19, Rule 4, subd. 2, provides that where, in pursuance of a contract to sell, the seller delivers the goods to the buyer he is presumed to have unconditionally appropriated the goods to the contract.

Rem.Rev.Stat. § 5836-20, subd. 1, provides that where one contracts to sell specific goods such seller, by the terms of the contract, may reserve the property in the goods until certain conditions have been fulfilled notwithstanding the delivery of the goods to the buyer.

In the determination of the question whether the parties intended that the property in the subject-matter of the oral agreement pass at the time of the oral agreement or at the time of the execution and delivery of the written contract and bill of sale let us examine the Uniform Sales Act. One section of that statute provides that under a contract to sell specific goods the property in the goods is transferred to the buyer at such time as the parties intend it to be transferred. Rem.Rev.Stat. § 5836-18. If the seller, pursuant to the contract to sell, delivers the goods to the buyer the presumption obtains, in absence of proof of a different intention, that the property in the subject-matter of the contract passed to the buyer at the time of delivery of the goods. Rem.Rev.Stat. § 5836-19. The right of property in the subject-matter of the contract may be reserved by the seller, until certain conditions have been fulfilled, notwithstanding the delivery of that subject-matter to the buyer.

When the cause was Before us in Gillingham v. Phelps, supra, no evidence of intention of the parties was in the action; the appeal was from judgment of dismissal following sustaining of demurrer to the complaint. The presumption under that state of facts that title had passed under the provisions of Rem.Rev.Stat. § 5836-19 was...