Wallace v. Lechman & Johnson, Inc.

• Decision Date: 09 July 1999
• Docket Number: No. 122,122
• Citation: 354 Md. 622,732 A.2d 868
• Parties: Andy WALLACE, t/a EZ Computers v. LECHMAN & JOHNSON, INC.
• Court: Maryland Court of Appeals

732 A.2d 868

354 Md. 622

Andy WALLACE, t/a EZ Computers v. LECHMAN & JOHNSON, INC.

No. 122, Sept. Term, 1998.

Court of Appeals of Maryland.

July 9, 1999.

Steven C. Rohan, Silver Spring, for Appellant.

Christopher D. Imlay (Booth, Freret, Imlay & Tepper, P.C., all on brief), Washington, DC, for Appellee.

Argued before BELL, C.J., and ELDRIDGE, RODOWSKY, CHASANOW, RAKER, WILNER and CATHELL, JJ.

RODOWSKY, Judge.

Illustrated here is a lay person's misunderstanding of his legal rights. The appellant sold goods on credit without creating a security interest. When certain of the goods came back into the possession of the seller for the purpose of conforming them to the contract, the seller retained the goods while demanding payment of the outstanding balance of the sale price. As we explain below, the appellant thereby converted the goods to his own use and became liable in damages.

The appellee (plaintiff at trial) is Lechman & Johnson, Inc. (the Firm). It is a telecommunications technical consulting firm that performs engineering tasks for clients in the broadcast industry, particularly with regard to matters before the Federal Communications Commission.

Prior to the events hereinafter described, the Firm used several computers in its business operations, none of which were tied into any central network. In June 1992, the Firm decided to place its individual computers on a network, thereby allowing its employees to store, access, and share information among all of the computers in the office. Peter Lechman (Lechman) contacted the appellant (defendant at trial), Andy Wallace (Wallace), trading as EZ Computers, about designing and assembling the network. They entered into evolving oral agreements under the final version of which Wallace would provide and install the equipment necessary to network the Firm's computers in return for which the Firm would pay $10,271.34.

On an agreed exhibit, a bill from Wallace to the Firm dated June 9, 1993, the equipment and services are itemized. The hardware totaled $8,632.23; the labor, $1,155; and sales tax, $434.11. Among the hardware items that Wallace supplied the Firm was a 486 processor tower computer (the 486 Computer) at a price of $2,100. This unit gave the system a capacity of 1028K of memory, in contrast to the 512K capacity of the individual units that the Firm had been operating separately.

Installation of the equipment commenced in November 1992. Under the evidence most favorable to the plaintiff, the prevailing party at trial, the Firm encountered a series of problems with the operation of the network. Lechman testified:

"Each and every time [Wallace] came back to the office to work on a system, he would solve that problem to an extent but then another problem would pop up. And he spent so much time in our office calling 800 numbers and support groups finding out what was wrong with the software or the cards he had purchased to make the system work, and the only answers I got was, oh, we have to get another card. This card is not the right card for the system. And I took his word for it and we had to wait for the card to come in to make the system work."

One of the problems pertained to the 486 Computer's modem and, therefore, the system's fax capabilities.

Wallace visited the Firm's offices on June 3, 1993, and informed Lechman that "he was changing some jumpers, and he installed a new card...." Wallace removed the 486 Computer from the Firm's office, stating that he wanted to take it back to his office "to finalize the repairs on it." This corrective work was to be performed on the modem.

A few days after he took the computer, Wallace informed Lechman that the computer had been repaired. Wallace demanded payment of the outstanding balance on the June 9 invoice, an amount which Wallace stated was some $3,000. At that time Wallace demanded an additional $300 to reinstall the 486 Computer. Lechman would not agree.

On August 10, 1993, Wallace wrote a letter to the Firm demanding payment. The letter reads:

"The balance due is $3026.28 [sic] less proof of the $1000.00 payment will be adjusted either when you FAX me a copy of the canceled check or bring it with you when you finalize the bill. The method of payment for the balance due is cash only to made at this office and does not include charges to reinstall the system. If you wish the system reinstalled please add $150.00 to this amount, otherwise, you may take the system with you. If you fail to make... the payment on or before the final due date, then the system will be sold on September 1st, 1993 for the highest offer."

(Emphasis added).

Lechman responded with a letter dated August 27, 1993. He admitted that he was "very much aware of our financial responsibility to EZ Computers" but demanded return of the computer and suggested that Wallace had broken the law by holding the computer "as collateral for the remaining monies due."

Subsequently Wallace agreed that the Firm had paid $1,000 on the bill that Wallace had not credited. Thus, the Firm had paid $8,245, leaving a balance of $2,026.34 remaining on the invoiced price.

Wallace continued to hold the 486 Computer, and, on July 20, 1994, the Firm instituted this suit in the Circuit Court for Prince George's County, alleging that Wallace converted the computer to his own use. The Firm demanded the "immediate return" of the computer and all associated software, $15,000 in compensatory damages, and punitive damages.¹ In his answer, Wallace claimed that he had retained the computer lawfully under an artisan's lien securing the balance of the monies owed under his contract with the Firm. Wallace also filed a counterclaim for breach of that contract, alleging that he had fully performed under the contract, but that the Firm had failed to pay the balance.

The dispute proceeded to a bench trial, resulting in a judgment for the Firm on the claim and counterclaim. The court found that Wallace "did not fulfill his obligation to provide a satisfactory computer system in accordance with [the] verbal contract [with the Firm] and therefore [Wallace's] refusal to return the computer amounted to conversion." The court awarded $8,245 in damages to the Firm, representing the "amount paid by [the Firm] for the computer which was not returned to it." On this amount the court, in its discretion, awarded prejudgment interest.

Wallace noted an appeal to the Court of Special Appeals. This Court issued a writ of certiorari on its own motion before consideration of the matter by the intermediate appellate court. Additional facts will be stated in our analysis.

I

Wallace argues that he "had a statutory lien upon the repaired item and was not required to return same until such time as the lien was discharged." The Firm correctly points out that the lien amount claimed by Wallace is not for work done on the goods after the goods were temporarily put in Wallace's possession, and that, at a maximum, Wallace could claim a lien only for advance payment of the reinstallation services.

Artisan's liens in Maryland were initially founded on the common law. See Wilson v. Guyton, 8 Gill 213 (1849). In Wilson, the Court held that the finder of lost property has a lien on the property if the owner has offered a fixed reward. In recognizing the existence of such a lien, the Court stated generally: "The doctrine of lien is more favored now than formerly; and it is now recognized as a general principle, that wherever the party has, by his labor or skill, improved the value of property placed in his possession, he has a lien upon it until paid." Id. at 214-15.

Artisan's liens were partially codified by Chapter 653 of the Acts of 1912, which provided that "upon all articles left or given to jewelers or silversmiths for repairs or work on, the jewelers or silversmith shall have a lien on said article or articles for cost of repairs, work on and material put on or in such article." This statute was expanded over the years to include liens by other types of artisans. Prior to its revision in 1975, the statute read:

"Upon all articles of merchandise of every kind left or given to artisans, tradesmen, mechanics, laborers or other persons by the owner or by any other person with his authority, express or implied, for repairing, mending, improving, or other work thereon, the said artisans, tradesmen, mechanics, laborers or other persons shall have a lien on said article or articles for cost of repairs, work on and material put on or in such article."

Md.Code (1972 Repl.Vol.), Art. 63, § 40 (emphasis added).

In 1975 the General Assembly revised the provisions relating to artisan's liens, enacting the current statute, Md.Code (1975, 1990 Repl.Vol.), §§ 16-301 and 16-302 of the Commercial Law Article (CL). The relevant language now reads: "Any artisan who, with the consent of the owner, has possession of goods for repair, mending, improving, dry cleaning, laundering, or other work, has a lien on the goods for the costs of the work done." CL § 16-302. The revisor's note states that § 16-302 merely contains new language "derived without substantial change from Art. 63, § 40."

That an artisan may assert this statutory lien on an item repaired only to the extent of the costs of repairing that particular item is also consistent with the common law. Winton Co. v. Meister, 133 Md. 318, 105 A. 301 (1918), involved the lien claim of an automobile repair mechanic at a time when no statute expressly recognized the lien. This Court said: "While there is no statute in this State creating a repairman's lien for repairs to an automobile, it is clear that a common law lien would exist on such property until the charges for the labor and expenses are paid." Id. at 320, 105 A. at 302. As support for this proposition, the Court cited 17 W.M. McKinney & B.A. Rich, Ruling Case Law, at 600 (1917), where the editors stated:

"A specific lien is a charge upon a particular piece of property, by which it is held

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