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First Connections Inc. v. Hanson

May 27, 1997


Appeal from Superior Court of King County. Docket No: 95-2-23737-1. Date filed: 03/27/96. Judge signing: Hon. Michael J. Fox.

PER CURIAM -- James and Beverly Hanson (the Hansons) appeal entry of a judgment awarding First Connections, Inc. (Northend Rental) $63,092.54. The court found the Hansons personally liable for a rental contract they entered into with Northend Rental to lease a construction crane. The Hansons argue they are not liable because they entered the contract only as agents for a disclosed principal. They also challenge the amount of the judgment, arguing the court used the wrong rental rate. The Hansons also claim the court erred by refusing to admit trade usage evidence and by denying their motions to continue, adjourn and reconsider. Finally, the Hansons assign error to the court's award of attorney fees.

The Hansons arguments effectively request us to retry the facts. This we cannot do. We find the trial court's rulings are supported by substantial evidence and a reasonable exercise of discretion. Therefore, we affirm.

Contractual Liability and Disclosure of Agency

The Hansons contend that they were not personally liable under the terms o f the rental agreement because they entered the contract merely as agents for their disclosed principal, Arctic Sounder Fisheries. Northend Rental maintains they were aware of no such agency relationship and that the Hansons are liable.

The Hansons owned Hanson Metal Fabrication (HMF). In 1986, HMF entered into a credit agreement with Northend Rental, which included the Hanson's personal guarantee. In 1991, the Hansons obtained a 50 percent ownership interest in a corporation called Arctic Sounder Fisheries, formed for the purpose of converting the Hansons' fishing vessel. HMF employees did the conversion under the supervision of Ned Flohr, general manager of Arctic Sounder. Arctic Sounder authorized Flohr to obtain equipment for the project.

HMF arranged to rent a crane for the project from Northend Rental. Hanson and Flohr were together in Northend's office when the rental contract was executed. HMF's account was used to set up the contract and to pay Northend Rental for the first month because Arctic Sounder's account had not yet been established. Hanson admitted he never expressed in writing or verbally that he was acting on behalf of Arctic Sounder and not HMF. Hanson acknowledged he signed invoices and paid them with HMF checks. The invoices refer to HMF as lessee. But Hanson testified that when he signed them, the invoices did not contain that reference.

Robert Green, manager of Northend Rental, either prepared or directly supervised the preparation of the invoices subject to the agreement. He said each invoice would have referred to HMF as lessee before Hanson or one of HMF's employees signed the document. Green testified Hanson signed the original invoice when he first rented the crane. He said neither Hanson nor Flohr told him that Flohr was not connected with HMF. Green said he understood Flohr to b e with HMF, because both Flohr and Hanson signed invoices and worked side-by-side on the Hansons' boat.

Because Hanson entered into the agreement on behalf of HMF, HMF was clearly a party to it. Moreover, Hanson had personally guaranteed HMF's credit extended by Northend Rental. Once the plaintiff establishes the defendant was a party to a contract, the burden shifts to the defendant to show the promise was made solely in the capacity of agent for a disclosed principal. *fn1 An agent who acts for a principal will be personally bound by the obligations of the contract if the name of the principal is not disclosed. *fn2 Disclosure of agency is a question of fact. *fn3

The trial court found HMF made the rental arrangements for the benefit of Arctic Sounder. It also found all of the invoices were written for HMF, and that some of the bills were paid for with HMF checks. Hanson does not challenge these findings, so they are considered binding on appeal. *fn4 The court concluded that HMF was the liable contracting party.

Appellate review of a trial court's factual findings and Conclusions of law is limited to determining whether the findings are supported by substantial evidence and, if so, whether those findings support the Conclusions. *fn5 Substantial evidence is evidence that is sufficient to persuade a fair-minded person of the truth of the declared premise. *fn6 The court's findings are supported by substantial evidence and support its Conclusion. Hanson did not meet his burden of establishing that he disclosed to Northend Rental his agency relationship with Arctic Sounder as principal.

Agreed-upon Rental Rate

The Hansons challenge the court's calculation of the judgment, arguing it erred by concluding the agreed-upon rental rate was $140 per hour. Hanson testified he did not discuss price terms with Robert Green. He said a Northend Rental salesperson named "Jim" guaranteed that if he used the crane for a full month, Hanson would be billed at a monthly rate, which was less than the daily rental price. Hanson said this was the customary billing arrangement with which he was familiar. But Hanson admitted he paid some of the bills, calculated at the $140 rate, without protest.

Green testified he quoted a price of $140 per hour to Hanson and Flohr, an d that no different rates were discussed. Neither Hanson nor Flohr asked about other billing schedules. Green explained that daily, weekly and monthly rates were available for all equipment rented by Northend Rental but for cranes. He admitted the hourly rate and other billing information was not written on the invoices at the time of their signature because it was not standard practice to do so. Rather, that information was filled in later by someone else.

The court concluded the rental rate was $140 per hour. Substantial evidence supports this Conclusion. Green said only the $140 rate was discussed. In addition, Hanson paid some of the bills at the $140 rate without protest. A contracting party's subsequent acts are admissible to assist in ascertaining the intent of the parties. *fn7 We uphold the trial ...

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