Opinion
No. 20659
Decided October 13, 1947.
Bailments — Bailee's right to sublet part of work undertaken by bailment contract — Question of fact to be determined, how — Evidence — Custom in community and knowledge thereof by parties — Delivery of bailed property by bailee to subcontractor conversion, when.
1. The question of the right of a bailee to send the property received in a "locatio operis faciendi" type bailment to a third person for the purpose of accomplishing some part or all of the bailment purpose is a question of fact to be determined by the bailment contract and the surrounding circumstances.
2. The delivery of the bailed property by the bailee to a third person for the accomplishment of all or some part of the bailment purpose without the express or implied consent of the bailor constitutes a conversion of the property.
3. Where a contract of bailment does not directly give the bailee the right to send the property bailed to a third person to accomplish the bailment purpose, the existence of such right becomes a question of fact to be determined from all the surrounding circumstances, the character and value of the property, and whether the personal satisfaction of the bailor was involved.
4. The bailee, in attempting to establish the right under the bailment contract to deliver the property to a third person to accomplish the bailment purpose, may offer evidence tending to establish a custom in the community by which persons engaging in like business conduct such business in whole or in part through subagents and that such custom or usage was known to the parties expressly or by implication and that the bailment contract was made with reference thereto.
APPEAL: Court of Appeals for Cuyahoga county.
Messrs. McKeehan, Merrick, Arter Stewart, for appellant.
Messrs. Calhoun, McLeod Fricke, for appellee.
This appeal comes to this court on questions of law from a judgment for the defendant entered in the trial court. Mrs. Edith Goldsmith delivered her fur coat to The Higbee Company for storage. Several weeks after it received the fur coat from Mrs. Goldsmith, The Higbee Company called her, suggesting that the coat needed repairing. Whereupon Mrs. Goldsmith called at the fur department of the defendant and signed an order for the repairs as follows:
"8/30/44 The Higbee Company.
"Please make necessary repairs as suggested by your fur department, not exceeding $26 in addition to sales tax and the regular storage charges.
"(signed) Mrs. W.A. Goldsmith."
The contract for storage of the coat between The Higbee Company and Mrs. Goldsmith placed the value of the coat at $100, which amount was determined by her. The contract provided that the charges for the storage should be determined on such valuation and that the company's liability in case of loss or damage should not be greater than that amount.
The defendant, The Higbee Company, in carrying out the order of Mrs. Goldsmith to repair and clean the coat and without obtaining her consent, delivered the coat to The New Process Fur Cleaning Company to be cleaned, and while in the cleaning company's possession it was stolen by armed highwaymen.
The Higbee Company then paid Mrs. Goldsmith $100, claiming that to be the limit of its liability under the bailment contract.
The plaintiff, Aetna Casualty Surety Company, had, prior to the date of the loss, issued a policy of insurance to Mrs. Goldsmith, by which the fur coat was insured against loss by theft in the sum of $1,000. The plaintiff, therefore, paid Mrs. Goldsmith $1,000 and received from her a subrogation receipt by which she assigned to plaintiff all her rights against The Higbee Company because of the loss of the fur coat, to the extent of $1,000 and released The Higbee Company from any further claim in excess of that amount.
The trial court found that although the defendant's conduct in sending the coat to the cleaning company constituted a conversion, the defendant's liability was limited by the bailment contract to $100 and having paid that amount to Mrs. Goldsmith had discharged its full duty to her and therefore found for the defendant.
It is the claim of the plaintiff:
1. That the delivery of the coat to The New Process Fur Company constituted conversion.
2. That the limitation of value contained in the contract of bailment does not protect the defendant from the full amount of the damages sustained where it is guilty of conversion.
An examination of the record discloses that the defendant did not directly notify Mrs. Goldsmith that it proposed to send the coat to another company for the purpose of having it cleaned. She testified that she presumed defendant would do all the work although nothing was said about it. Quoting from her testimony, she said:
"As far as I know, I gave Higbee's the job to do and it was Higbee's job."
The defendant attempted to offer evidence to establish a "custom" in this community that retail fur dealers and fur departments of department stores for the most part send out to others the work of cleaning articles made of fur and that such custom is well known to the people of the community so that when a customer contracts with a retail dealer with respect to the repair and cleaning of articles made of fur, the contract is made with knowledge of such custom and the customer thereby is impliedly presumed to consent to such means of accomplishing the work contracted to be done by the bailee. The court sustained the plaintiff's objection to such testimony. In this the court committed prejudicial error.
The rule to be applied when a custom is claimed as a means of interpreting the contract between a bailor and a bailee is well stated in 55 American Jurisprudence, 282, Section 21:
"In addition to the important requisites heretofore noted, it is almost universally required, in order to hold a person bound by an alleged custom or usage, that he have either actual or implied knowledge of such custom; if it does not appear that he had actual knowledge of it, the custom or usage should be one so general that he will be presumed to have knowledge of it."
Also, in Section 22 on page 283, it is stated:
"The element of knowledge is particularly applicable to usages and customs alleged to create or affect contractual obligations. To be thus available, the custom or usage must be so well established, notorious, general, or universal in its application as reasonably to induce the belief of a party's knowledge of it and to raise the presumption that he dealt with reference to it, or he must be shown to have had actual knowledge of the practice if nothing is said to the contrary. To be regarded as part of a contract, a usage or custom must be actually or constructively known and must be consistent with the contract. * * *"
Whether the defendant could sublet to a third person the work of cleaning the fur coat of Mrs. Goldsmith depends entirely upon the proper interpretation of the contract she made with The Higbee Company, when considered in the light of the surrounding circumstances, and the defendant should have been permitted to introduce such evidence as was available and relevant, tending to establish its contention as to the terms of such bailment contract.
It is also the contention of the defendant that even though actual consent on the part of the bailor that a part of the work called for by the bailment contract could be sublet was not established, or that by custom such consent was presumed, the bailee had the legal right to accomplish the purposes stipulated in the contract by any means reasonably suited for such purposes, and if the bailee desired to do so it could sublet a part of the work, and no liability would result from such subletting even though the article bailed was lost while in the hands of the subcontractor, so long as such bailee and the subcontractor used ordinary care, diligence and skill in carrying out the contract, unless the personal services of the bailee were actually contracted for by the bailment agreement. Defendant relies strongly, in attempting to support this theory, on the cases of Rourke v. Cadillac Automobile Co. of Boston, 268 Mass. 7, 167 N.E. 231, and Travelers Fire Ins. Co. v. Brock Co., 30 Cal.App.2d 112, 85 P.2d 905 (retrial, 47 Cal.App. [2d], 387, 118 P. [2d], 25).
In the Rourke case, the plaintiff left his automobile with the defendant for repairs and painting. The defendant, without notifying the plaintiff, sent the automobile to a paint shop for that part of the work. While there the automobile was damaged by fire. Suit was brought on two causes of action, the first for negligence and the other for conversion. The court held that upon the evidence a verdict for the defendant on the first cause should be sustained but that it was error for the court to direct a verdict for the defendant on the second cause of action because the question of whether there was a conversion was one of fact to be submitted to the jury under proper instructions. In the opinion the court said, at page 9:
"Seemingly, there is no wrongful assumption of control by a bailee to whom articles are sent for repair in placing them with another person to do some or all of the work undertaken by the bailee, Eaton v. Lynde, 15 Mass. 242; Hollingsworth v. Dow, 19 Pick., 228; Leck v. Maestaer, 1 Camp., 138; Story, Bailments (9th Ed.), Section 428, unless expressly or by implication there is an understanding that the bailee himself should perform all the work."
In commenting on this case in 28 Michigan Law Review, 196, the author said:
"It is the owner's right to say who shall paint his vehicle; if the bailee presumes to exercise that right, unless permitted by the bailment contract, it is an exercise of dominion over the property inconsistent with the right of the owner, and therefore a conversion. Laverty v. Snethen, 68 N.Y. 522; Staley v. Colony Union Gin Co. (Tex. 1914), 163 S.W. 381; Boldewahn v. Schmidt, 89 Wis. 444, 62 N.W. 177. Defendant would then be liable for damage occasioned to the automobile while in possession of S, no matter from what cause and entirely regardless of the question of negligence. Fryer v. Cooper (S.D. 1928), 220 N.W. 486. As a general rule, it is sufficient if the `bailee does the work by the means of other persons, or subagents, if the work be such as may ordinarily be done by others in an equally satisfactory manner.' But where the work is such that the talent and skill of the particular bailee may fairly be presumed to be contracted for, `he is not allowed to substitute another person, without consent of the bailor.' Story, Bailments (8th Ed.), Section 428, p. 366; Russell's Express v. Bray's Garage, 94 Conn. 520, 109 A. 722. In the instant case it was in the province of the jury to find, if such were the evidence, that the contract of bailment contemplated performance of all the work by defendant. Goad v. Harris, 207 Ala. 357, 92 So. 546; Dolphin v. Davis, 183 Ill. App. 118. It was improper, therefore, to hold as the lower court did, that as a matter of law defendant was not guilty of conversion in sending the car to S."
This case does not, therefore, fully support the defendant's theory.
In the case of Dolphin v. Davis, supra, the plaintiff left a fur cape with defendant to have a muff and collarette made therefrom. The defendant sent the cape to another to do the work and while in the possesion of such third party it was stolen. The court in the first paragraph of the syllabus said:
"Where a fur manufacturer is entrusted with a fur cape out of which he agrees to make a muff and collarette but sends the cape to a third person to do the work, and the cape is stolen from the store of such third person, held that the manufacturer was liable for conversion."
See, also, Wellberg v. Duluth Auto Supply Co., 146 Minn. 29, 177 N.W. 924.
In bailment contracts there is no legal presumption that the bailee may accomplish the bailment purpose by subletting the work to a third person. It is a question of fact in each case to determine whether the personal services of the bailee are contracted for, taking into consideration the character and value of the article, whether the work to be accomplished involves the personal satisfaction of the bailor and all of the other surrounding circumstances.
We come now to a determination of whether the limitation of liability provided for by the contract is to be applied where it has been established that the defendant was guilty of conversion.
The limitation of liability as provided for in the contract between Mrs. Goldsmith and The Higbee Company was only for damages that might be sustained in carrying out the terms of the contract and not where the damage claimed is for the value of the property in an action for conversion. Conversion is the wrongful appropriation of the goods of another and is accomplished by exercising dominion and authority over the property of another inconsistent with the owner's rights. Where a bailee converts to his own purposes the property of a bailor, the bailor may treat the bailment contract as terminated and bring action for the value of the goods taken. Such action is not founded upon the provision of the bailment contract but rather is based on the tortious conduct of the defendant and the measure of damages is the value of the goods taken.
The Supreme Court had this question for consideration in the case of Conkle v. George K. Scott Co., Inc., 147 Ohio St. 487, 72 N.E.2d 82. The plaintiff had stored certain household furniture with one Lloyd McMillan who subsequently stored it with the defendant. The plaintiff paid McMillan for the storage but McMillan failed to pay the defendant. The defendant thereupon without complying with the provisions of Section 8489, General Code, sold the property for $45. Section 8489, General Code, provides for the manner in which a warehouseman may satisfy his lien for storage, which, among other provisions, requires written notice to the person on whose account the goods are stored. The provisions of the warehouse receipt had a limitation of liability as to each package or piece of property stored. The court held:
"A provision in a warehouseman's receipt limiting his liability `in case of loss or damage' connotes negligence and is not applicable in an action predicated on intentional, wilful misconduct."
The court in that case distinguishes the principle of law applicable when the loss or damages is caused by the negligent conduct of the warehouseman (Central Storage Warehouse Co. v. Pickering, 114 Ohio St. 76, 151 N.E. 39) and cases where the warehouseman's act causing the damage is wrongful. On page 490 of the opinion the court, after quoting from the Pickering case, says:
"It is readily apparent that that pronouncement does not involve a wrong that is inflicted intentionally and wilfully, as in the instant case."
Conversion is the wrongful assuming of unauthorized control over the personal property of another, whether it is done purposely or not. In the case of Gulbrandsen, Admr., v. Chaseburg State Bank, 236 Wis. 391, 295 N.W. 729 (1941), it was held that if a person entrusts another with goods for the accomplishment of a particular purpose and such bailee puts them into the hands of a third person contrary to orders, it is a conversion and wrongful intent is not essential, it being sufficient if the owner has been deprived of his property by the act of another assuming an unauthorized control over it. If a wrongful act is intentionally done by a bailee with regard to the subject of the bailment, it matters not that it was done with a mistaken notion of the bailee that he was acting within his legal right.
If, therefore, the plaintiff is able to establish by the proper degree of proof that the defendant was guilty of conversion in sending the coat to an outside cleaner where it was lost, the $100 limitation of liability would not apply.
One other consideration must be given to the facts as applicable to the limitation of liability contained in the storage contract between The Higbee Company and Mrs. Goldsmith. The storage contract was concluded on May 16, 1944, the coat having been delivered to defendant on May 2, 1944. The contract of storage of May 16, 1944, wherein defendant agreed to store the coat for $2 contained the limitation of liability of $100 for each article stored. Subsequent to the date of this contract, to wit, August 30, 1944, for the consideration of not to exceed $26, The Higbee Company agreed to make certain repairs and to clean the coat, which charge was to be in addition "to sales tax and the regular storage charge." The evidence therefore tends to establish that the contract for repairs was a new contract entered into entirely independent of the contract for storage. It was in the performance of this contract that The Higbee Company delivered the coat to The New Process Fur Cleaning Company from whose possession it was stolen. It seems, therefore, if it be established that the contract for repairs was separate and distinct from the storage contract, that the limitation of liability had no application to such contract for repairs.
The judgment of the trial court is therefore reversed and the cause is remanded for further proceedings according to law, for the reason that the defendant was prevented from introducing evidence on the question as to whether there is a custom in this community with regard to the method by which fur dealers accomplish the dry cleaning of customers' fur garments through the agency of a subcontractor, and if there be such custom, whether it was expressly or impliedly known to the plaintiff's assignor, and the contract of bailment entered into with regard to such custom; and further for the reason that the question of whether defendant's conduct in sending Mrs. Goldsmith's fur coat to a subcontractor for cleaning constituted a conversion is a question of fact to be determined by a proper consideration of all the competent evidence, and if such act constituted a conversion then, as a matter of law, the limitation of liability contained in the bailment contract between Mrs. Goldsmith and The Higbee Company would have no application to the rights of Mrs. Goldsmith or this plaintiff in the instant action. On the other hand, if the right to accomplish the cleaning of the fur coat by a subcontractor was within the terms of the contract, then such provision as to limitation of liability would apply.
For the foregoing reasons the judgment of the trial court is reversed and the cause remanded for further proceedings according to law.
Judgment reversed and cause remanded.
HURD, P.J., and MORGAN, J., concur.