Magley v. M & W Inc.

• Decision Date: 17 July 2018
• Docket Number: No. 340507,340507
• Citation: 325 Mich.App. 307,926 N.W.2d 1
• Parties: Charles MAGLEY III, Plaintiff-Appellant, v. M & W INCORPORATED, Defendant-Appellant.
• Court: Court of Appeal of Michigan — District of US

325 Mich.App. 307

926 N.W.2d 1

Charles MAGLEY III, Plaintiff-Appellant,

v.M & W INCORPORATED, Defendant-Appellant.

No. 340507

Court of Appeals of Michigan.

Submitted July 10, 2018, at Grand Rapids.

Decided July 17, 2018, at 9:15 a.m.

Warner Norcross & Judd LLP (by Gaëtan Gerville-Réache and Adam T. Ratliff ) and O’Malley Law Office, PC (by Luke Nofsinger) for plaintiff.

Rodenhouse Kuipers, PC (by C. Christopher Newberg ) for defendant.

Before: Hoekstra, P.J., and Murphy and Markey, JJ.

Per Curiam.

In this tort case arising from the repossession of farm equipment, plaintiff, Charles Magley III, appeals as of right the order granting summary disposition to defendant, M&W Incorporated, under MCR 2.116(C)(10). Because the trial court erred by concluding that defendant could not be held liable when acting as an agent for a third party, and material questions of fact remain regarding the wrongfulness of defendant’s conduct, we reverse the grant of summary disposition to defendant and remand for further proceedings.

Plaintiff is a farmer and the owner of a John Deere tractor. Plaintiff had a loan with Kellogg Community Credit Union (Kellogg) relating to the tractor, and under the terms of plaintiff’s Loan and Security Agreement with Kellogg, the tractor was secured collateral, subject to repossession and sale in the event that plaintiff defaulted on his loan. Defendant is an "asset recovery" company that repossesses property and sells it on behalf of lienholders. Plaintiff defaulted on his tractor loan, and on June 28, 2016, acting on Kellogg’s behalf, defendant repossessed plaintiff’s tractor. Notably, when defendant repossessed the tractor, it also took other farm equipment, specifically a "front-mounted tank" and a "sprayer," both of which plaintiff had recently attached to the tractor in preparation for his annual herbicide spraying of his crops. Unlike the tractor itself, plaintiff owned the sprayer and the tank outright, and these items were not mentioned in the loan documents. Despite plaintiff’s demands for the return of his property, defendant kept plaintiff’s items for approximately one month and posted pictures of the tractor—with the sprayer and the tank attached—on Facebook as a featured item in an upcoming auction. After plaintiff resolved his loan dispute with Kellogg, defendant eventually released plaintiff’s tractor, sprayer, and tank to him.¹ However, by the time the property was released, plaintiff had been deprived of the use of his equipment for a month, he had to pay someone else to spray his crops, and he had suffered damages to his crops because he missed the "most opportune time" for spraying his crops.

Plaintiff filed the current lawsuit against defendant, alleging: (1) common-law conversion, (2) statutory conversion, (3) trespass to chattels, and (4) negligence. Briefly stated, plaintiff alleged that defendant wrongfully repossessed the sprayer and the tank, that defendant wrongfully withheld those items from him, and that defendant wrongfully posted the items for auction, despite plaintiff’s demands for the return of his farm equipment. Defendant moved for summary disposition under MCR 2.116(C)(10), arguing that it acted lawfully when repossessing the tank and the sprayer and that, if there was any wrongdoing, defendant could not be held liable while acting on Kellogg’s behalf on the basis of information provided by Kellogg. The trial court granted defendant’s motion for summary disposition under MCR 2.116(C)(10), stating that it agreed with defendant’s position. Plaintiff now appeals as of right.

On appeal, plaintiff argues that the trial court erred by concluding that defendant could not be held liable for wrongful conduct while acting on Kellogg’s behalf to repossess property. Additionally, plaintiff argues that the tank and the sprayer were not subject to repossession because these items did not qualify as "accessions" within the meaning of the Loan and Security Agreement. Plaintiff acknowledges that, under the Loan and Security Agreement, attached items, even if not accessions, may be taken incidentally to repossession of secured property, but plaintiff argues that defendant’s conduct in this case was nevertheless wrongful because defendant made no attempt to return plaintiff’s items and refused plaintiff’s demands for the return of his property. We agree.

We review de novo a trial court’s decision to grant a motion for summary disposition. Ligon v. Detroit , 276 Mich.App. 120, 124, 739 N.W.2d 900 (2007). "When reviewing a motion under MCR 2.116(C)(10), which tests the factual sufficiency of the complaint, this Court considers all the evidence submitted by the parties in the light most favorable to the non-moving party and grants summary disposition only where the evidence fails to establish a genuine issue regarding any material fact." Sisk-Rathburn v. Farm Bureau Gen. Ins. Co. of Mich. , 279 Mich.App. 425, 427, 760 N.W.2d 878 (2008). "There is a genuine issue of material fact when reasonable minds could differ on an issue after viewing the record in the light most favorable to the nonmoving party." Allison v. AEW Capital Mgt., LLP , 481 Mich. 419, 425, 751 N.W.2d 8 (2008). To the extent this case involves questions concerning the interpretation of a contract or a statute, our review is de novo. Rodgers v. JPMorgan Chase Bank NA , 315 Mich.App. 301, 307, 890 N.W.2d 381 (2016).

The first issue on appeal is whether defendant may be held liable when repossessing property on behalf of Kellogg on the basis of information provided by Kellogg.² "Agency in its broadest sense includes every relation in which one person acts for or represents another by his authority." Saums v. Parfet , 270 Mich. 165, 171; 258 N.W. 235 (1935) (quotation marks and citation omitted). Generally, an agent may be held personally liable for his or her own tortious conduct, even when acting on behalf of a principal. See Dep’t of Agriculture v. Appletree Mktg., LLC , 485 Mich. 1, 17-18 & n. 39, 779 N.W.2d 237 (2010). More fully, our Supreme Court has quoted with approval from 2 Restatement Agency, 3d, stating:

An agent is subject to liability to a third party harmed by the agent's tortious conduct. Unless an applicable statute provides otherwise, an actor remains subject to liability although the actor acts as an agent or an employee, with actual or apparent authority, or within the scope of employment. [ Appletree Mktg., LLC , 485 Mich. at 17 n. 39, 779 N.W.2d 237, quoting 2 Restatement Agency, 3d, § 7.01, p. 115.]

However, under this rule, an agent is only liable for his or her own "tortious conduct" and cannot be held liable for torts committed by "the agent’s principal that do not implicate the agent’s own conduct[.]" 2 Restatement Agency, 3d, § 7.01, comment d, p. 120.

Notably, with regard to the tort of conversion in particular, a defendant who wrongfully exerts dominion over property is not shielded from liability on the basis that the action was undertaken in good faith on behalf of a third party. "Conversion, both at common law and under the statute, is defined as any distinct act of domain wrongfully exerted over another's personal property in denial of or inconsistent with the rights therein." Aroma Wines & Equip., Inc. v. Columbian Distrib. Servs., Inc. , 303 Mich.App. 441, 447, 844 N.W.2d 727 (2013), aff’d 497 Mich. 337 (2015) (quotation marks and citation omitted).³ Conversion is "an intentional tort in the sense that the converter's actions are willful ...." Foremost Ins. Co. v. Allstate Ins. Co. , 439 Mich. 378, 391, 486 N.W.2d 600 (1992). However, conversion "can be committed unwittingly if [the defendant is] unaware of the plaintiff's outstanding property interest." Id . See also Lawsuit Fin., LLC v. Curry , 261 Mich.App. 579, 591, 683 N.W.2d 233 (2004). Good faith, mistake, and ignorance are not defenses to a claim of conversion. See Moore v. Andrews , 203 Mich. 219, 233, 168 N.W. 1037 (1918) ; Willis v. Ed Hudson Towing, Inc. , 109 Mich.App. 344, 349, 311 N.W.2d 776 (1981) ; see also 90 CJS, Trover and Conversion, § 31, pp. 29-30. Thus, for example, under the common law, when "an auctioneer receives and takes the property into his possession" from a third party, "and sells it, paying over the proceeds, less his commission, he is liable, although he has no knowledge of want of title in the party for whom he sells, and acts in good faith." Kearney v. Clutton , 101 Mich. 106, 111-112, 59 N.W. 419 (1894). Likewise, in the absence of governmental immunity, a sheriff or court officer is liable for conversion for unlawfully seizing personal property, "even if he or she does so in the execution of a court order." Aroma Wines & Equip., Inc. , 497 Mich. at 35-353, 871 N.W.2d 136. As one Court succinctly explained: "It is not a defense to say, ‘I supposed I had authority to do so.’ " Kenney v. Ranney , 96 Mich. 617, 618, 55 N.W. 982 (1893). Instead, a defendant’s actions in reliance on the asserted rights of a third party are only lawful when the third party actually has a "legal right" to the property. Gibbons v. Farwell , 63 Mich. 344, 349, 29 N.W. 855 (1886) (emphasis omitted).

It follows that in this case, contrary to the trial court’s conclusions, defendant may be held liable for its own torts, including conversion, even if acting on Kellogg’s behalf. Although defendant purports to have repossessed plaintiff’s property in reliance on Kellogg’s "Summary of Account" document and repossession request, a mistaken belief that Kellogg had a right to the items is not a defense.⁴ Moore , 203 Mich. at 233, 168 N.W. 1037 (1918) ; Kearney , 101 Mich. at 111-112, 59 N.W. 419 ; Willis , 109 Mich. App. at 349, 311 N.W.2d 776. Instead, the question is whether Kellogg truly had a legal right to the property, Gibbons , 63 Mich. at 349, 29 N.W. 855, and it was defendant’s obligation to ensure that it exercised only those rights that Kellogg possessed, see Kenney , 96 Mich. at 618, 55 N.W. 982 ; Kane v. Hutchisson , 93 Mich. 488,...