Seattle-First Nat. Bank v. Marshall, SEATTLE-FIRST

• Decision Date: 01 March 1982
• Docket Number: No. 8267-1-I,SEATTLE-FIRST,8267-1-I
• Citation: 641 P.2d 1194,31 Wn.App. 339
• Parties: NATIONAL BANK, as Executor of the Estate of Blanche Agnethe Olsen, deceased, Respondent, v. Burt W. MARSHALL and Nel T. Marshall, his wife, Appellants.
• Court: Washington Court of Appeals

Page 339

31 Wn.App. 339

641 P.2d 1194

SEATTLE-FIRST NATIONAL BANK, as Executor of the Estate of Blanche Agnethe Olsen, deceased, Respondent, v. Burt W. MARSHALL and Nel T. Marshall, his wife, Appellants.

No. 8267-1-I.

Court of Appeals of Washington, Division 1.

March 1, 1982.

Schweppe, Doolittle, Krug, Tausend & Beezer, Alfred Schweppe, Seattle, for appellants.

William R. Roetcisoender, Seattle, for respondent.

DURHAM, Judge.

Defendants Burt and Nel Marshall appeal from a judgment ordering them to pay the estate of Blanche Agnethe Olsen $164,649.40; a figure representing her 20 percent partnership interest, plus $78,071.04 interest from the date of Olsen's death.

On July 1, 1950, Burt Marshall, Roy Marshall and Blanche Olsen executed a partnership agreement for the M & M Investment Company. The purpose of the partnership was to acquire land and lease it for billboard advertising. Each of the Marshalls contributed $4,000, and Olsen contributed $2,000. After Roy Marshall died, the partnership agreement was amended to give Burt Marshall an 80 percent interest in the partnership and Olsen a 20 percent interest in the partnership.

Blanche Olsen died October 29, 1971. Seattle-First National Bank (Seattle-First) was named executor of her will. In valuing Olsen's partnership interest as part of her estate, the bank valued the partnership's land only, without taking into account other assets or any liabilities. Olsen's 20 percent interest was valued at $151,055.37 for purposes of federal estate and state inheritance taxes.

The partnership agreement contains a buy-sell provision: in the event of the death of one of the partners, the surviving partners would purchase the interest of the deceased partner. Seattle-First offered to sell Olsen's interest to Marshall, the only surviving partner, for $151,000. In a letter dated September 30, 1974, Marshall strenuously objected, stating that the interest was overpriced because Seattle-First improperly computed the net worth of the partnership.

In June of 1973, Seattle-First obtained a summary judgment compelling Marshall to purchase the partnership interest in conformance with the partnership agreement. In January of 1978, Seattle-First filed an amended complaint to compel Marshall to purchase Olsen's interest pursuant to the partnership agreement. Finally, in July of 1979, Seattle-First moved for entry of a dollar amount of the judgment pursuant to the terms of the summary judgment.

The partnership agreement provides for the determination of the reasonable market value of a deceased partner's share. To compute the reasonable market value of the partnership interest, the partnership assets must be valued to determine the net worth of the partnership. The partnership agreement provides for appraisal of certain partnership assets, including real estate, in the event that the parties cannot agree on their current market value. To arrive at the value of the partnership's real estate, Marshall and Seattle-First each appointed appraisers pursuant to the partnership agreement. Because the two appraisers could not agree on the value of certain parcels of real estate, they appointed a third appraiser, again pursuant to the partnership agreement. The real estate owned by the partnership was appraised at $998,050.

Using an affidavit supplied by one of Seattle-First's officers, the trial court determined the net worth of the partnership and the reasonable market value of Blanche Olsen's interest in the partnership. Judgment was entered for Seattle-First as executor of the Olsen estate in the amount of $164,649.40. The trial court also awarded Olsen's estate 6 percent interest on the value of the partnership interest from October 29, 1971, the date of Olsen's death.

Marshall's first contention on appeal is that the trial court erred in not dismissing the case. Marshall argues that Seattle-First's motion for entry of a judgment in the amount of $164,649.40 was barred by the determination of a lower value for the partnership interest in the probate proceeding.

The theory under which Seattle-First would be prohibited from asserting a higher value for the partnership interest than was established in the probate proceeding is that of judicial estoppel. The term "judicial estoppel" is sometimes used to indicate estoppel arising from sworn statements made in the course of judicial proceedings. A sworn statement made in one proceeding does not necessarily operate as an estoppel in another proceeding involving different parties unless some other element of estoppel is present. See 28 Am.Jur.2d Estoppel and Waiver § 71, at 700-701 (1966).

The purposes of the doctrine are to preserve respect for judicial proceedings without the necessity of resort to the perjury statutes; to bar as evidence statements by a party which would be contrary to sworn testimony the party has given in prior judicial proceedings; and to avoid inconsistency, duplicity, and the waste of time. See King v. Clodfelter, 10 Wash.App. 514, 519, 518 P.2d 206 (1974); 2 L. Orland, Wash.Prac. § 382, at 434 (3d ed. 1972).

In support of his position, Marshall cites Mueller v. Garske, 1 Wash.App. 406, 461 P.2d 886 (1969). Mueller obtained a default judgment, then in a subsequent action denied that the judgment was taken by default. The court held that Mueller was estopped from denying that the judgment was taken by default:

A party is not permitted to maintain inconsistent positions in judicial proceedings. It is not as strictly a question of estoppel as it is a rule of procedure based on manifest justice and on a consideration of orderliness, regularity and expedition in litigation.

Mueller at 409, 461 P.2d 886. However, Mueller is inapplicable in this case. Mueller maintained positions that were diametrically opposed to one another; first he obtained a judgment by default, then denied that the judgment was taken by default. Seattle-First did not take such divergent positions in the probate proceeding and in the later action compelling Marshall to purchase Olsen's partnership interest.

A case more directly on point is Northwest Trust & Safe Deposit Co. v. Thurston County, 99 Wash. 564, 170 P. 125 (1918). Thurston County stipulated to the value of a water plant in a condemnation proceeding. The County then assessed the personal property of the water company at a value higher than the stipulated value. The water company challenged the assessment, arguing that the County could not say that the fair market value of the property exceeded the amount earlier stipulated. The Supreme Court held that the County was not precluded from asserting a higher value for the property than the value stipulated in the condemnation proceeding.

Similarly, we find that Seattle-First is not estopped from asserting a higher value for Olsen's partnership interest than was established in the probate proceeding. We note that Marshall was not misled by Seattle-First's initial valuation of the partnership interest. No later than 1974, Marshall told Seattle-First that the $151,000 figure did not correctly represent the value of Olsen's partnership interest. Had Marshall relied on the initial valuation, the case for holding Seattle-First estopped by a proceeding to which Marshall was not a party would be much stronger.

Also, many of the reasons for applying the doctrine of judicial estoppel are absent. Although Seattle-First has asserted two different values for the partnership in two different proceedings, those positions are not inconsistent in the sense of being diametrically opposed. There is no showing that the different values established for Olsen's partnership interest represent duplicity or a lack of respect for judicial proceedings on the part of Seattle-First. Seattle-First was apparently in error in its initial valuation of the partnership interest. However, under the circumstances, it is not appropriate to correct that error by the application of an equitable doctrine which would deprive Olsen's estate of the full worth of her partnership interest.

Marshall next contends that the partnership agreement, as well as a court order, required that the appraisers' reports be sent to the partnership accountant, who would then determine the net worth of the partnership. Marshall made a similar argument to the trial court, which determined that it could perform the necessary calculations as well as an accountant. Using the affidavit of Yale W. Gifford, an officer of Seattle-First, the trial court determined the net worth of the partnership and the reasonable market value of Olsen's interest in the partnership. We agree with the trial court that it was unnecessary for the partnership accountant to be involved in the final stages of the valuation process.

Marshall bases his argument in part on a court order dated July 17, 1974. That order did indeed direct that the appraisers' reports be given to the partnership accountant, who would determine the net worth of the partnership. However, that order was modified on November 14, 1974 to state that Olsen's interest be valued pursuant to the partnership agreement.

The partnership agreement does not require the partnership accountant to make the determination of the partnership's net worth when a surviving partner is required to purchase a deceased partner's interest. Paragraph 14 of the partnership agreement provides that upon the death of a partner, the surviving partners shall purchase the deceased partner's interest at the "reasonable market value" of that interest at the time of the party's death. Paragraph 15 defines "reasonable market value" as "the value determined by multiplying the net worth of the partnership by the interest of the deceased or selling partner". Paragraph 15 also details the procedures to be used in valuing the partnership assets to determine net worth. No mention is made of an accountant's services. The partnership agreement does require the partnership accountant to...