## Facts

- Norman and Mary Ann Cimoch, as a marital community, jointly owned Northwest Underwriters (NWU), a community business that acted as general agent for an insurance company later succeeded by Consumers Indemnity Company (CIC).
- Consumers negotiated with Norman for Norman to purchase CIC through a stock purchase agreement costing about $2.95 million, payable partly in stock and partly in monthly cash installments.
- Mary Ann did not sign the purchase agreement, did not participate in the negotiations, and did not know the agreement’s essential terms or the extent of the obligations.
- The trial court found (and the findings were not challenged on appeal) that Mary Ann did not consent to the purchase and that the acquisition was outside NWU’s ordinary course of business.
- Norman defaulted on the payment obligations.
- Consumers sued Norman, Mary Ann, and the marital community, asserting (1) community liability under RCW 26.16.030 and (2) Mary Ann’s separate liability based on alleged ratification by acceptance of benefits.
- The trial court held Norman individually liable for breach of contract, dismissed claims against Mary Ann and the marital community, and awarded Mary Ann attorney’s fees.

## Issues

1. Whether a spouse’s unilateral agreement to purchase corporate stock and incur substantial related obligations binds the marital community under RCW 26.16.030 when the transaction is outside the ordinary course of the community business and the other spouse did not consent or join.
2. Whether the nonconsenting spouse became separately liable by ratifying the agreement through acceptance or retention of benefits despite lacking knowledge of the agreement’s material terms.
3. Whether the prevailing nonconsenting spouse was properly awarded attorney’s fees.

## Decision

- The Court of Appeals affirmed the dismissal of Consumers’ claims against the marital community and against Mary Ann individually.
- The court held the community was not liable because the stock acquisition was a major, non-routine transaction outside NWU’s ordinary course of business and lacked Mary Ann’s consent or joinder as required by RCW 26.16.030.
- The court held Mary Ann did not ratify the agreement because ratification requires full knowledge of material facts and unequivocal conduct showing intent to adopt the transaction, which the trial court’s unchallenged findings negated.
- The court affirmed the award of attorney’s fees to Mary Ann and allowed fees on appeal as the prevailing party.

## Legal Principles

- Under RCW 26.16.030, significant, non-routine transactions undertaken in connection with a community business—such as acquiring another business through a substantial corporate stock purchase—do not bind the marital community without the other spouse’s consent or joinder.
- Unchallenged trial court findings are treated as verities on appeal and control the legal analysis.
- Ratification of an unauthorized act requires (1) knowledge of all material facts and (2) an unequivocal manifestation of intent to adopt the transaction; mere acceptance or retention of incidental benefits is insufficient without such knowledge and intent.
- A prevailing party entitled to attorney’s fees at trial under applicable authority is generally entitled to fees on appeal when successfully defending the judgment.

## Conclusion

The court held that a spouse’s unilateral, multi-million-dollar corporate stock acquisition outside the ordinary course of a community business did not impose community liability without the other spouse’s consent, and that the nonconsenting spouse did not incur separate liability because ratification was not shown absent knowledge of material facts and clear intent; attorney’s fees for the prevailing spouse were affirmed.


Consumers Ins. Co. v. Cimoch, 69 Wash. App. 313, 848 P.2d 763 (Wash. Ct. App. 1993)