Ace Supply, Inc. v. Rocky-Mountain Machinery Co.
| Decision Date | 13 August 1974 |
| Docket Number | No. 11408,ROCKY-MOUNTAIN,11408 |
| Citation | 96 Idaho 183,525 P.2d 965 |
| Parties | , 15 UCC Rep.Serv. 324 ACE SUPPLY, INC., an Idaho corporation, Plaintiff-Respondent, v.MACHINERY COMPANY, an Idaho corporation, Defendant-Appellant. |
| Court | Idaho Supreme Court |
Robert M. Kerr, Jr., Blackfoot, for defendant-appellant.
William F. Yost, III, Nampa, for plaintiff-respondent.
This is an appeal by defendant-appellant Rocky-Mountain Machinery Company from a judgment in favor of plaintiff-respondent Ace Supply, Inc. in the amount of $4,000 as damages for conversion of a tractor.
The following facts were found by the district court and are not in dispute herein. Rocky-Mountain was a corporation selling John Deere equipment in the area of Bingham County, Idaho. A majority of its stockholders and directors became involved as stockholders and directors in Bannock Machine Company. Their purpose was to establish a dealership for John Deere farm equipment in Bannock County, Idaho. The directors of Rocky-Mountain as individuals guaranteed the debts of Bannock Machine Company to John Deere Company. Leon Dance was the general manager of Bannock Machine Company and apparently owned one-sixth of the stock in the corporation. Bannock Machinery, through its manager Dance, and over a period of time made several purchases of farm equipment from Ace Supply, Inc. Those transactions were conducted by one Delwin Woerman, the president and principal stockholder of Ace Supply. Bannock is not a party to this action.
On or about November 5, 1969, Bannock was indebted to Ace Supply in an amount exceeding $4,000. On or about that date Woerman and Dance, while on the Bannock premises, negotiated toward the payment of that debt. Dance, on behalf of Bannock, agreed to sell Ace Supply a used model 4020 John Deere tractor. The consideration for the sale of that tractor was to be the cancellation of Bannock's indebtedness to Ace. The tractor was valued at at least $4,000. Dance determined that the tractor could possibly be sold to another party for more than $4,000 and therefore the sale agreement provided that the tractor would remain on the Bannock premises until needed by Ace and that during that period of time Bannock would have the right to sell the tractor for a sum in excess of $4,000 and keep all proceeds which were received above and beyond the sum of $4,000. Dance kept a duplicate of the writing setting forth that agreement as a part of the ordinary business records of Bannock.
At approximately the same time the directors of Bannock Machine Company decided to liquidate that business. All but one of the directors of Bannock were also directors of Rocky-Mountain and were stockholders of both corporations. They determined to move all of the assets of Bannock, including the disputed tractor to Rocky-Mountain's premises in Bingham County. Since the directors of Bannock were individually liable for the then indebtedness from Bannock to John Deere they caused Rocky-Mountain to assume a part of that indebtedness and to give John Deere Company a floor plan security for the assumed debts.
Further findings of the district court, which are in dispute herein, are as follows:
The manager of Rocky-Mountain, one Howard Harrington, had actual knowledge of the transaction involving the tractor sale from Bannock to Ace. Ace made demand on Rocky-Mountain for possession of the tractor but Rocky-Mountain refused that demand; Rocky-Mountain rented the tractor to other persons on several occasions. After the commencement of this action Rocky-Mountain in the spring of 1971 sold the tractor to an unidentified third party; that the assets of Bannock were moved in bulk to Rocky-Mountain's premises in Bingham County for the purposes of liquidation.
The district court concluded that Dance, on behalf of Bannock, had apparent authority to enter into the contract for the sale of the tractor to Ace in satisfaction of its indebtedness to Ace, and that Dance had actual authority to act for Bannock in matters of liquidation. The court determined that no fraud was involved in this transaction between Bannock and Ace and that Rocky-Mountain gained no greater title to the tractor than Bannock had at the time of the transfer in bulk. The court also concluded that Rocky-Mountain, because of its joint directorship and ownership with and of Bannock, was chargeable with all knowledge that Bannock had regarding the sale of the tractor to Ace and the subsequent entrusting of possession of the tractor to Bannock. Finally, the court determined that the conduct of Rocky-Mountain constituted an unlawful conversion of the tractor.
Rocky-Mountain contends on this appeal that Dance had no actual or apparent authority to sell the tractor to Ace in satisfaction of the debt since the board of directors of Bannock had voted that no further business would be transacted after October 15, 1969. It was admitted, however, that no notice...
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