Opinion
Docket No. 22027
Filed October 3, 1997 Reversed. See Peasley Transfer Storage Co. v. Smith, 132 Idaho 732, March 12, 1999. Rehearing denied July 9, 1999.
Appeal from the District Court of the Fourth Judicial District, State of Idaho, Ada County. Hon. Renae Hoff, District Judge Pro Tem; Hon. Michael McLaughlin, Magistrate.
Order of the district court, on appeal from the magistrate division, affirming summary judgment and award of attorney fees, reversed; judgment on cross-claim, vacated; order awarding advancement of fees and costs on appeal, reversed. Case remanded.
Vernon K. Smith, Jr., Boise, for appellant, Victoria H. Smith.
Davison, Copple, Copple, Copple Ludwig, Boise, for respondent Peasley Transfer and Storage. E. Don Copple argued.
Swafford Law Office, Chtd., Idaho Falls, for respondent Sharon K. Smith. Ronald L. Swafford argued.
Mark J. Guerry, Buhl, argued for respondents Ada County, Ada County Sheriff's Department and Vaughn Killeen. Mark J. Guerry argued.
SUBSTITUTE OPINION THE COURT'S PRIOR OPINION DATED JULY 23, 1997, IS HEREBY WITHDRAWN
Peasley Transfer Storage Co. became the depository of personal property levied upon pursuant to a writ of execution on a judgment obtained by Sharon K. Smith against Vernon K. Smith. Ownership and the right to possession of the property were subsequently disputed, and Peasley filed suit against Sharon, Vernon, Victoria Smith (Vernon's mother), Ada County and the Ada County Sheriff's Department, and Sheriff Vaughn Killeen in an effort to recover payment of outstanding storage fees incurred over a three-year period. On the basis of a claimed warehouseman's lien, Peasley was awarded judgment in the sum of $4,956.34 against Victoria H. Smith, whom the magistrate found to be the true owner of the property. Victoria appealed to the district court, which affirmed the magistrate's judgment, including an award of fees to Peasley, and the magistrate's dismissal of Ada County, the Ada County Sheriff's Department and Vaughn Killeen from the action. The district court also affirmed the judgment and an award of attorney fees to Sharon on Victoria's cross-claim entered by the magistrate after a court trial. Victoria appealed.
Although there is evidence to support the magistrate's finding that Victoria was the owner of the property, we hold that the magistrate erred in declaring that Peasley possessed a valid warehouseman's lien as against Victoria. We also hold that it was error for the magistrate to dismiss Ada County, the Ada County Sheriff's Department and Vaughn Killeen without scrutinizing the timeliness of the sheriff's actions upon receipt of Victoria's third party claim to the property which was the subject of the execution. We vacate the judgment in favor of Peasley and the order dismissing the sheriff. We also vacate Sharon's judgment on Victoria's cross-claim, and we remand for a determination of the parties' obligations for the costs of the transfer and storage of Victoria's property in keeping with our opinion herein.
I.
FACTUAL AND PROCEDURAL BACKGROUND
In their dissolution of marriage action, Vernon K. Smith and Sharon K. Smith were each awarded certain separate personal property items and a share of the property of the community. Sharon was awarded a judgment in the sum of $202,526.13, plus interest, which was to be paid pursuant to the terms contained in the decree of dissolution filed on February 11, 1991. As long as Vernon complied with the plan for payment, the decree specified that Sharon was not to execute on the judgment. The decree also purported to secure the payment of the judgment to Sharon by granting her "a lien in all of the community property awarded to Vernon."
On April 23, 1991, in order to collect on her judgment, Sharon obtained a writ of execution requesting the Ada County Sheriff's Department to levy upon the personal property which had been awarded to Vernon in the divorce decree. The sheriff took possession of the property on May 1, 1991, engaging Peasley Transfer Storage Co. to pick up the items and to store the property pending an execution sale.
On May 15, 1991, prior to the date of sale, Vernon's mother, Victoria H. Smith, asserted an interest in some of the property levied upon. She filed a third party claim of exemption, authorized under I.C. Section 11-203, with the magistrate division of the district court in the dissolution action and with the Ada County Sheriff's Office. Victoria's interest in the personal property was grounded upon an assignment and bill of sale, dated April 10, 1991, from Vernon to Victoria, which was signed pursuant to a power of attorney granted by Vernon to counsel who was representing Vernon at the time. Although the sheriff did not proceed with the scheduled execution sale on May 29, 1991, no action was then taken by the sheriff on the third party claim.
On June 20, 1991, Sharon's counsel notified the sheriff to release all the property levied upon, "pursuant to the filing of a bankruptcy proceeding by Vernon K. Smith." The sheriff, on the same day, notified Peasley by letter to release to Vernon, or his agent, the property subject to the execution, which was being stored at Peasley's warehouse. The sheriff's letter also advised Peasley that storage costs incurred through June 21, 1991, would be paid by sheriff's check.
Peasley attempted unsuccessfully to have Vernon pick up the property and pay for storage costs that continued to accrue after June 21, 1991. Peasley initiated this action against Vernon in October 1992. Peasley amended its complaint in April 1993, seeking recovery of its storage costs from Victoria, as well as from Ada County, the Ada County Sheriff's Department and Vaughn Killeen, (hereinafter referred to collectively as the "sheriff"). Additionally, Peasley requested authority to foreclose its warehouseman's lien to satisfy the outstanding indebtedness.
In ruling on Peasley's motion for summary judgment, the magistrate issued a memorandum decision finding that Peasley possessed a valid warehouseman's lien on the property in its possession, which could be enforced through a sale of the goods. The magistrate further held that any deficiency after the sale could be recovered by Peasley from either Victoria or Sharon. The magistrate absolved the sheriff from any liability for storage costs beyond June 20, 1991, and dismissed the sheriff from the action after concluding that the sheriff had performed its duties in compliance with the relevant statutes.
The only remaining cause of action-the cross-claim by Victoria against Sharon-was tried to the magistrate on September 20, 1993. The magistrate found that Vernon had made a bona fide sale of the property to Victoria, but that Sharon had no actual or constructive notice of the transfer to Victoria. The magistrate found there was no showing of any fraudulent or wrongful attachment by Sharon, holding that the execution which was conducted on Sharon's behalf was proper. The magistrate then determined that, in response to Vernon's bankruptcy filing, the sheriff duly released the property upon notification by Sharon. Finally, the magistrate concluded that Victoria should not recover on her cross-claim, which was deemed frivolous and without foundation, and awarded attorney fees to Sharon.
The findings and conclusions with respect to the cross-claim were signed by the magistrate on October 4, 1993, but not filed with the court until July 1, 1994. On October 21, 1993, an amended decision of the magistrate revised the memorandum decision on Peasley's motion for summary judgment. For reasons that are not disclosed in the record, in this amended decision the magistrate awarded summary judgment in favor of Peasley only as against Victoria, thereby absolving Sharon of liability for storage costs and for any deficiency remaining following foreclosure of Peasley's warehouseman's lien securing the judgment.
Victoria appealed from the judgment entered against her and in favor of Peasley, the judgment and attorney fee award entered in favor of Sharon on the cross-claim, and an order dated April 20, 1994, granting Sharon an award for advancement of attorney fees and costs on appeal to the district court. By memorandum decision dated August 17, 1994, the district court affirmed the magistrate's rulings. Victoria filed a timely appeal to this Court.
II.
DISCUSSION
Where the issues before the appellate court are the same as those presented to the district court sitting in its appellate capacity, the appellate court will review the trial court record with due regard for, but independently from, the district court's intermediate decision. In re Baby Boy Doe, 123 Idaho 464, 849 P.2d 925 (1993), cert. denied, sub nom. Swenson v. Oglala Sioux Tribe, U.S., 114 S. Ct. 173, 126 L. Ed. 2d 133 (1993); Haley v. Clinton, 123 Idaho 707, 851 P.2d 1003 (Ct.App. 1993). We will uphold findings of fact made by the magistrate if they are supported by substantial, although conflicting, evidence. Everitt v. Higgins, 122 Idaho 708, 711, 838 P.2d 311, 314 (Ct. App. 1992). As to questions of law, we will exercise free review. Id.
A. Summary Judgment in Favor of Peasley
As her first issue on appeal, Victoria asserts that the magistrate erred in finding that Peasley had a valid warehouseman's lien. Victoria alleges, as evidenced by her third party claim, that she was the true owner of the property seized by the sheriff and that the lien was thus invalid as to her. Therefore, she argues that the magistrate's award of summary judgment to Peasley, which was based on the finding of a valid warehouseman's lien, should be overturned.
In finding a valid warehouseman's lien on the goods stored in Peasley's warehouse, the magistrate relied on I.C. Section 28-7-209 and Lang v. Burleigh County Sheriff's Dept., 496 N.W.2d 24 (N.D. 1993). In Lang, the court found that the sheriff's contract with the warehouseman to move and store Lang's goods in order to satisfy a judgment of foreclosure had the like effect as if done by Lang, pursuant to Rule 70, N.D.R. Civ. P. The court therefore found that the warehouseman had a valid storage agreement covering Lang's goods and a lien on the goods for its storage charges, which was enforceable by selling the goods and applying the proceeds to the unpaid storage charges, pursuant to U.C.C. Section 7-210 (1986). Id. at 26.
To ascertain whether Peasley had a valid warehouseman's lien, we must look to the governing statutes. Idaho Code Section 28-7-209 provides in relevant part:
(1) A warehouseman has a lien against the bailor on the goods covered by a warehouse receipt or on the goods covered by a warehouse receipt or on the proceeds thereof in his possession for charges for storage or transportation (including demurrage and terminal charges), insurance, labor, or charges present or future in relation to the goods, and for expense necessary for preservation of the goods or reasonably incurred in their sale pursuant to law . . . .
. . . .
(3)(a) A warehouseman's lien for charges and expenses under subsection (1) . . . is also effective against any person who so entrusted the bailor with possession of the goods that a pledge of them by him to a good faith purchaser for value would have been valid. . . .
(emphasis added). The specific language of Section (3)(a), as interpreted by another state court, "makes it clear that a lien is created against the owner of the property only if the owner of the property acts as a bailor or authorizes another to act as a bailor." Moore v. Republic Moving Storage, Inc., 548 N.E.2d 1211, 1213 (Ind.App. 1990). See also Young v. Warehouse No. 2 Inc., 540 N.Y.S.2d 654 (1989) (warehouseman's lien against the owner of goods effective only where the depositor in an unauthorized bailment case would have the power to pledge the goods).
The evidence adduced at the hearing on Peasley's summary judgment motion revealed that the property seized by the sheriff and stored in Peasley's warehouse was believed by the sheriff to be Vernon's property and thus subject to execution to satisfy the judgment obtained by Sharon in the divorce decree. Before the execution sale took place, however, Victoria filed a third party claim, asserting her rights in the property and an entitlement to damages caused by the sheriff's purported wrongful execution of her property. As a result of Vernon's bankruptcy filing and pursuant to the automatic stay provisions, Sharon notified Peasley and the sheriff to release the property to Vernon. Although Sharon paid all of the costs incurred to the date of release on June 20, 1991, the property continued to be stored in Peasley's warehouse, accruing the storage charges that are at issue in this case.
To secure the payment of the judgment awarded to Sharon in the divorce decree, the magistrate purported to grant Sharon a lien in all of the community property awarded to Vernon. Although the lien in question on this appeal is the warehouseman's lien authorized under I.C. Section 28-7-209, we take this opportunity to refute that any lien is created upon personal property through the recording of a judgment.
Idaho Code Section 10-1110 states:
[T]he judgment recorded becomes a lien upon all real property of the judgment debtor in the county, not exempt from execution, owned by him at the time or acquired afterwards at any time prior to the expiration of the lien.
The magistrate found that Victoria was the rightful owner of the property being stored in Peasley's warehouse, a finding which has not been challenged on appeal. This finding, however, is in conflict with the magistrate's determination that Peasley acquired a valid warehouseman's lien as against Victoria, under the terms of I.C. Section 28-7-209(3)(a) above stated. Because the deposit of the property was neither made by Victoria nor done pursuant to her authorization, we conclude that Peasley's claim of lien was unfounded and invalid.
Peasley next argues that to the extent "household goods" were stored, I.C. Section 28-7-209(3)(b) provides for a warehouseman's lien that is effective against all persons if the depositor was the legal possessor of the goods at the time of delivery to the warehouse. Peasley asserts that the sheriff in this case was a legal possessor, citing Lang v. Burleigh County Sheriff's Dept., 496 N.W.2d 24 (N.D. 1993) and Wegwart v. Eagle Movers, Inc., 441 F. Supp. 872 (Wis. 1977). Peasley relies on these cases in support of its position that, when the sheriff removes property to a storage facility in carrying out a writ of execution, the sheriff is a legal possessor. Peasley also relies on authority from two states, which did not adopt Section (3)(b) of U.C.C. Section 7-209, implying that the court might have found a warehouseman's lien on the goods deposited by the sheriff, had that section of the statute been adopted. See Disch v. Raven Transfer Storage Co., 561 P.2d 1097 (Wash.App. 1977); Cordle v. Lincoln Moving Storage, Inc., 19 U.C.C. Rep. Serv. 1204 (Neb. Dist. Ct. 1976).
However, these cases are distinguishable from the case at hand in that they do not entail any claim that the judgment creditor was not entitled to execute on the goods which were transported and delivered into storage. See Kampsen v. County of Kandiyohi, 426 N.W.2d 917 (Minn.App. 1988) (For purposes of a bailee's statutory lien, deputy sheriffs who lawfully impounded a pickup truck were "legal possessors."). We agree that in order for Peasley to have a valid lien on the household goods as against all persons, including Victoria, the sheriff must have been the legal possessor of the goods. I.C. Section 28-7-209(3)(b). Only if the sheriff seizes the property of the judgment debtor, pursuant to court order, is the sheriff the legal possessor for purposes of I.C. Section 28-7-209(3)(b). Because, as previously noted herein, the sheriff seized property which was mistakenly identified as belonging to Vernon, the judgment debtor, and which was found by the magistrate to be owned by Victoria, the sheriff's status as the legal possessor of Victoria's goods has not been established. As such, no valid warehouseman's lien under I.C. Section 28-7-209(3)(b) was created in Peasley's favor. We therefore reverse the determination of the magistrate with regard to the existence of a valid lien.
By holding that the sheriff was not the "legal possessor" for purposes of I.C. Section 28-7-209(3)(b), we imply no opinion whether the sheriff bears liability as a consequence of the attachment of Victoria's property. Similarly, we do not deal here with the sheriff's failure to act on Victoria's third party claim in accordance with the provisions of I.C. Section 11-203. Indeed, the liability on the part of the sheriff, or any defenses thereto under the Idaho Tort Claims Act, I.C. Section 6-901 (1970), or other law is a different issue from the question of whether Peasley had a valid lien as against the stored property owned by Victoria.
We vacate the summary judgment entered in Peasley's favor and against Victoria, which was erroneously based on that determination. Thus, we also vacate the award of attorney fees to Peasley as the prevailing party.
B. Denial of Victoria's Cross-claim Against the Sheriff
Victoria challenges the magistrate's dismissal of the sheriff from the action as part of its ruling on Peasley's motion for summary judgment. In particular, Victoria contests the magistrate's finding that the sheriff acted in compliance with the statutes applicable to a writ of execution and its conclusion that the sheriff was not responsible for the storage costs. By so holding, the magistrate denied Victoria the opportunity to move for summary judgment against the sheriff and to otherwise litigate her cross-claim. Victoria further maintains that a question of fact existed as to whether the sheriff complied with the applicable statutes, which question precludes the entry of summary judgment dismissing the sheriff from the action.
In ruling on Peasley's motion for summary judgment, the magistrate, pursuant to I.R.C.P. 56(d), identified controverted, material facts and also those facts not in dispute. That the sheriff was served with a third party claim by Victoria on May 15, 1991, is undisputed. It is also undisputed that the third party claim was prepared pursuant to I.C. Section 11-203, which prescribed the procedure to be followed by the sheriff in notifying the person in whose favor the execution runs and in releasing the property if the executing plaintiff fails to indemnify the sheriff against the third party claim. However, the magistrate did not have before it a motion for summary judgment from the sheriff or Victoria and, thus, was not asked to address the appropriateness of the sheriff's action upon receipt of Victoria's third party claim to the property that was seized. The parties were not on notice of the need to present evidence regarding the reasonableness of the sheriff's action in delaying release of the property for more than one month after Victoria presented her third party claim.
Section 11-203, as in effect in May 1991, provided in part:
If the property levied on be claimed by a third party as his property, . . . by a written claim verified by the oath of said claimant, setting out his title thereto, his right to the possession thereof, and stating the grounds of such title or of such claim of exemption, . . . and served upon the sheriff, the sheriff is not bound to keep the property, unless the plaintiff, or the person in whose favor the writ of execution runs, on demand, indemnify the sheriff against such claim by an undertaking qualifying in the state of Idaho.
Provided, however, that if plaintiff or the person in whose favor the attachment or execution runs, by failure to so indemnify the sheriff, or otherwise, releases said claimed property, the sheriff shall release the property to the defendant, or his agent, from whom the property was taken.
This section was amended effective July 1, 1993. 1993 Idaho Sess. Laws ch. 165, Section 10, p. 395.
We conclude that the magistrate erred in dismissing the sheriff from the action upon Peasley's summary judgment motion. Summary judgment is appropriate only when there are no genuine issues of material fact and the case can be decided as a matter of law. Ambrose v. Buhl Joint School District 412, 126 Idaho 581, 887 P.2d 1088 (1994). We hold that the magistrate should not have determined the timeliness of the sheriff's release because that issue pertained to Victoria's cross-claim and was not put at issue by Peasley's summary judgment motion. Furthermore, the dismissal of the sheriff was based, in part, on the magistrate's incorrect conclusion that the sheriff's delivery of the goods to Peasley created a valid lien in Peasley's favor. Therefore, we vacate the magistrate's order dismissing the sheriff from the action upon Peasley's summary judgment motion.
C. Victoria's Cross-claim Against Sharon
Victoria urges this Court to reverse the magistrate's judgment on her cross-claim, which was awarded to Sharon following trial. Victoria disputes the magistrate's conclusion that there was no showing by Victoria of any fraudulent or wrongful attachment by Sharon and thus, no evidence of conversion. Maintaining that her property was improperly levied upon, Victoria argues that she should not be required to pay the cost of returning the property and restoring it to her rightful possession. She also seeks reversal of the award of fees granted to Sharon on the cross-claim.
In pronouncing his findings, the magistrate found that Sharon had no notice of the change of ownership of the personal property which was effectuated by the bill of sale from Vernon to his mother, Victoria. The magistrate concluded that Sharon's attachment was neither fraudulent nor wrongful and that, as a result, there was no evidence of conversion. The magistrate also concluded that no prima facie case had been made in the absence of any proof of damages. The magistrate denied Victoria any recovery on her conversion claim.
Conversion has been defined as a distinct act of dominion wrongfully exerted over another's personal property in denial of or inconsistent with his rights therein, such as a tortious taking of another's chattels, or wrongful exercise of dominion over another's goods, depriving him of possession, permanently or for an indefinite amount of time. Luzar v. Western Surety Co., 107 Idaho 693, 692 P.2d 337 (1984); Wiseman v. Schaffer, 115 Idaho 537, 768 P.2d 800 (Ct.App. 1989). A right of action accrues in favor of the owner of goods as soon as they are wrongfully taken from his possession or wrongfully converted. Davidson v. Davidson, 68 Idaho 58, 188 P.2d 329 (1948). To create liability for conversion, it is not necessary that the actor intends to commit a trespass or a conversion, and the actor may be liable where he has in fact exercised dominion or control, although he may be quite unaware of the existence of the rights with which he interferes. RESTATEMENT (SECOND) OF TORTS Section Section 222, 223, 224.
Victoria's cross-claim properly set forth facts which constitute a claim of conversion and asserted that she was deprived of her property by the actions of Sharon or her agent. Sharon's intent in executing on the property is immaterial to whether or not a conversion occurred. The law of conversion does not relieve an actor of liability due to his belief, because of a mistake of law or fact not induced by the other, that he is otherwise privileged to act. RESTATEMENT (SECOND) OF TORTS Section 224(c).
Thus, the magistrate erred in holding that Sharon was not liable for conversion because of her mistaken, but good faith, belief that the property was Vernon's. Holding that the property was wrongfully executed upon, we also conclude that the expense of having the property transported back to Victoria's possession should not lie on the wronged owner, as the magistrate held. We also note that any proof of damages to be presented in further proceedings on remand need not be limited to the evidence presented at the original trial. Finally, we observe that because the magistrate erroneously granted summary judgment in favor of Peasley and the sheriff, those two parties did not participate in the trial at which ownership of the property was determined. Consequently, issues decided through that trial are subject to relitigation by all parties on remand. Therefore, in light of the magistrate's erroneous legal conclusions, we reverse the judgment entered on the cross-claim, and we vacate the attorney fee award to Sharon on the cross-claim. We also deem it necessary to vacate the judgment on Peasley's claim against Sharon, which was entered after the trial on Victoria's cross-claim. We award no attorney fees on appeal.
At oral argument counsel advised the Court that, after the trial, Victoria paid the storage and transport charges in order to have her property returned. These charges would likely be asserted by Victoria in a subsequent proceeding as a measure of damages proximately caused by the wrongful removal and storage of her property.
D. Attorney Fees
The remaining claim of error raised by Victoria deals with the award of attorney fees made to Sharon, by the magistrate, as an advance to allow her to defend the appeal to the district court. Victoria contends that it was error for the magistrate to order that she pay $4,000 toward Sharon's attorney fees and costs to defend the appeal in the district court.
At a hearing on Sharon's motion for advancement of attorney fees and costs on appeal, the magistrate found that Sharon had demonstrated her indigency and her inability to pay attorney fees and costs to defend the appeal filed by Victoria. The magistrate also found that Victoria was not only able to pay, but was not incurring attorney fees and costs as she was being represented by her son, Vernon, in the matter. After due consideration of I.R.C.P. 83(I) and I.A.R. 13(b)(12), the magistrate granted the motion and ordered Victoria to pay to Sharon $4,000 as an advancement toward fees and costs to be incurred in defending the appeal.
The above rules provide that the magistrate shall have the power and authority to make any order which it deems appropriate in its discretion for the payment or advancement of attorney fees and anticipated costs on appeal by one party to the other, subject to the order of the Supreme Court determining the right to, and amount of, attorney fees on appeal. Therefore, although the magistrate was authorized to make the award, it can only stand upon a determination by this Court on appeal that the party who received the advance of fees and costs is entitled to fees and costs on appeal. Having remanded the matter for further proceedings and having denied all requests for attorney fees on appeal, we vacate the award of fees which was granted in the form of an advancement to Sharon.
III.
SUMMARY
Consistent with our holdings herein, the parties can, in proceedings following remand, proceed anew on their respective claims. The named defendants can then assert the appropriate defenses and pursue their respective counterclaims or cross-claims.
Each party is to bear its own attorney fees. However, costs on appeal are awarded to appellant, Victoria H. Smith.
Chief Judge WALTERS and Judge LANSING, CONCUR.