Taylor Distributing Co., Inc. v. Haines

• Decision Date: 02 March 1982
• Docket Number: No. 4058-III-5
• Citation: Taylor Distributing Co., Inc. v. Haines, 641 P.2d 1204, 31 Wn.App. 360 (Wash. App. 1982)
• Parties: TAYLOR DISTRIBUTING CO., INC., a Washington corporation, Appellant, v. Judith C. HAINES, Respondent.
• Court: Washington Court of Appeals

Page 360

31 Wn.App. 360

641 P.2d 1204

TAYLOR DISTRIBUTING CO., INC., a Washington corporation, Appellant, v. Judith C. HAINES, Respondent.

No. 4058-III-5.

Court of Appeals of Washington, Division 3, Panel One.

March 2, 1982.

Dennis W. Reynolds, Gustafson & Reynolds, Spokane, for appellant.

Bernard J. Gallagher, Spokane, for respondent.

GREEN, Judge.

Taylor Distributing Co., Inc. (Taylor) appeals from a judgment dismissing its real estate mortgage foreclosure action against Judith C. Haines and Maurice J. Haines and the award of statutory attorney's fees and costs to Mrs. Haines. The trial court held the mortgage was void because only Mrs. Haines executed it.

Taylor states the issue as follows:

Can a party (Mrs. Haines) to a defunct marriage, after executing a note and mortgage subsequent to (an) oral decision by the court dissolving the marriage relationship and awarding that party the property that secured the note, default in payment of the note and take advantage of her own act and now assert improper execution of the mortgage and note on community property principles?

The facts are not in dispute. Mrs. Haines commenced a dissolution action against her husband. Mr. Haines moved out of their family home approximately February 1, 1977. On March 30, following the dissolution hearing, the court orally granted the dissolution and awarded the home acquired by the parties during marriage to Mrs. Haines. A lien on the property was granted in favor of Mr. Haines.

During the marriage, Mrs. Haines operated a retail carpet business and incurred a debt to Taylor. On April 1, 1977, Mrs. Haines executed a promissory note and mortgage on the home to Taylor in payment of the debt. Mr. Haines was unaware of this transaction. On May 12, the decree of dissolution was entered and, in conformity with the court's oral decision, the home was awarded to Mrs. Haines as her sole and separate property. The decree also provided that Mrs. Haines assume and pay the balance owed to Taylor. The lien orally granted by the court to Mr. Haines was confirmed in the amount of $6,500 to be satisfied within 12 months of the date of the decree.

On January 20, 1978, Mrs. Haines filed a petition for bankruptcy and claimed a homestead exemption in the home. With leave of the bankruptcy court, Taylor then brought this foreclosure action on May 30, 1979, naming Mr. and Mrs. Haines as parties. Mr. Haines was served by publication. He contacted Mrs. Haines when he was told about the article appearing in the newspaper. She informed him Taylor was suing her and he had been named in the suit. He did not enter an appearance in the proceedings. Based on the foregoing facts, the trial court granted judgment in favor of Mrs. Haines and Taylor appeals.

Taylor contends the court erred in determining the mortgage was void because Mr. Haines did not sign it. It argues the mortgage was voidable only at the option of the nonsigning spouse, Mr. Haines, and since he did not disaffirm it, the mortgage was enforceable. On the other hand Mrs. Haines argues the 1972 amendments to the community property law, RCW 26.16, voids any transaction encumbering real property without both spouses' signatures. She further argues Mr. Haines did nothing which would estop him from claiming the transaction was void or show he ratified or authorized it.

RCW 26.16.030(3) states:

Neither spouse shall sell, convey, or encumber the community real property without the other spouse joining in the execution of the deed or other instrument by which the real estate is sold, conveyed, or encumbered, and such deed or other instrument must be acknowledged by both spouses.

This section changed the wording of the former statute, ¹ only to the extent of equalizing the rights and duties of the spouses; the nonjoining spouse, either male or female, now has the power to disaffirm the transaction where that spouse has not joined in its execution. H. Cross, Equality for Spouses in Washington Community Property Law-1972 Statutory Changes, 48 Wash.L.Rev. 527, 535 (1973). The current statute, like its predecessor, does not state its effect is to void the instruments signed by only one spouse. The legislature is presumed to have been aware of prior judicial interpretations on this point and has not seen fit to change those interpretations. Therefore, the cases defining the extent of a spouse's transfer power under the former statute are applicable here. See, e.g., In re Marriage of Little, 96 Wash.2d 183, 189-90, 634 P.2d 498 (1981); H. Cross, The Community Property Law in Washington, 49 Wash.L.Rev. 729, 783 (1974).

In Stabbert v. Atlas Imperial Diesel Engine Co., 39 Wash.2d 789, 791-92, 238 P.2d 1212 (1951), after reviewing several cases which had used the terms "void" or "invalid" when referring to an instrument not signed by one of the spouses, the court concluded those terms were "used in the sense that the document in question was enforcible ..." under the particular facts of that case. The court then quoted 1 S. Williston, Contracts § 15, 22 (rev. ed.):

An agreement which produces no legal obligation is frequently called a void contract. Though the phrase is often convenient, it is a contradiction in terms. If an agreement is void it is not a contract. A voidable contract, however, is common in the law. Such a contract is defined in the Restatement of Contracts (1 Restatement of the Law of Contracts 12, § 13) as one 'where one or more parties thereto have the power, by a manifestation of election to do so, to avoid the legal relations created by the contract; or by ratification of the contract to extinguish the power of avoidance.' Infancy, fraud, mistake, duress, some kinds of illegality, all afford ground for rescinding or refusing to perform a contract. Unless rescinded, however, a voidable contract imposes on the parties the same obligations as if it were not voidable." Cf. 1 Corbin on Contracts 11, § 6 et seq.

Stabbert held the lease was voidable, not void, and the power of avoidance was possessed by the wife, whose signature did not appear on the document. This analysis finds support in other decisions. See Sadler v. Neisz, 5 Wash. 182, 194, 31 P. 630 (1892); Koth v. Kessler, 59 Wash. 641, 110 P. 540 (1910); Tombari v. Griepp, 55 Wash.2d 771, 350 P.2d 452 (1960); Sander v. Wells, 71 Wash.2d 25, 426 P.2d 481 (1967).

Mrs. Haines argues since Mr. Haines had no knowledge of and did not participate in executing the mortgage, his right to disaffirm the transaction has not been extinguished. Under the facts here, we disagree. In this case, only a skeleton of the marriage remained at the...