Atlas Hotel Supply Co. v. Baney

• Decision Date: 12 December 1975
• Citation: 543 P.2d 289,273 Or. 731
• Parties: ATLAS HOTEL SUPPLY COMPANY, an Oregon Corporation, Plaintiff-Respondent-Cross-Appellant, v. Curtis O. BANEY et al., Defendants-Appellants-Cross-Respondents, and Myrtle R. Baney et al., Cross-Respondents.
• Court: Oregon Supreme Court

Page 289

543 P.2d 289

273 Or. 731

ATLAS HOTEL SUPPLY COMPANY, an Oregon Corporation Plaintiff-Respondent-Cross-Appellant, v. Curtis O. BANEY et al., Defendants-Appellants-Cross-Respondents and Myrtle R. Baney et al., Cross-Respondents.

Supreme Court of Oregon.

Argued and Submitted Oct. 27, 1975.

Decided Dec. 12, 1975.

Keith L. Erickson, Redmond, argued the cause for appellants and cross-respondents. On the briefs were Walter I. Edmonds, Jr., of Bryant, Edmonds & Erickson, Redmond, and Gerald A. Martin, of Gray, Fancher, Holmes & Hurley, Bend.

Dennis C. Karnopp, Bend, argued the cause for respondent. With him on the brief were Panner, Johnson, Marceau & Karnopp, Bend.

Before O'CONNELL, C.J., and McALLISTER, DENECKE, TONGUE, HOWELL and BRYSON, JJ.

TONGUE, Justice.

This is an appeal from a judgment of the trial court, sitting without a jury, awarding plaintiff $75,000 damages for conversion of restaurant equipment. The judgment is against defendants Curtis Baney, Attilio Marastoni and William Jacobson.

These defendants assign as error the holding that no demand was required in order to constitute a conversion under the facts of this case; that defendant Curtis Baney was a joint tortfeasor, and contend that in its award of $75,000 the court applied the wrong measure of damages. Plaintiff cross-appeals from the failure of the trial court to grant judgment against defendants Myrtle Baney and Julia Marastoni.

The facts.

This being an appeal in an action at law from findings and judgment in favor of the plaintiff, we must view the evidence most favorable to the plaintiff, despite contradictory evidence offered by defendants. Hassan v. Guyer, 271 Or. 349, 532 P.2d 227 (1975).

Plaintiff is engaged in the restaurant supply business, including design, engineering work and installation of all equipment and supplies, both large and small, as required for the operation of a restaurant. In February 1970 plaintiff completed such an operation for the Eddie Mays restaurant in Bend. It then entered into an 'equipment lease' agreement with Eddie Mays Company for a total rent of $168,348, payable in monthly 'installments.' Plaintiff assigned its interest in that agreement to Leasing Service Corporation.

Eddie Mays Company was also obligated on a real estate mortgage on which it defaulted in late 1971. It also defaulted on payments due under the equipment lease agreement. The mortgage on the real property was then foreclosed 'subject to the prior and superior interest of defendant Leasing Service Corporation as owner of said personal property * * *.' Meanwhile, that corporation exercised its contract right to have plaintiff assume performance of the equipment lease agreement and in January 1972 plaintiff commenced making the contract monthly payments of $2,805.80 to that corporation and continued to do so up to the time of trial in December 1974.

Defendants Baney, as husband and wife, owned a motel adjacent to the restaurant and were interested in the operation of the restaurant 'to enhance the motel operation.' On March 20, 1972, prior to the foreclosure sale, they entered into a contract with the mortgagee to purchase the restaurant real property. That contract provided that 'prior to closing' they should 'arrive at a settlement with Leasing Service Corporation and/or (plaintiff) with respect to the personal property on the premises leased therefrom * * *.'

Meanwhile, defendant Curtis Baney talked to plaintiff about the possible purchase of the restaurant equipment owned by it. His purpose was to 'put the whole package together for a whole restaurant,' and that included his purchase of plaintiff's restaurant equipment, as well as the real property.

At about the same time defendant Curtis Baney undertook negotiations with defendant Attilio Marastoni as a possible operator of the restaurant. On February 3, 1972, defendants Marastoni and Jacobson (both husbands and wives) filed with the Oregon Liquor Control Commission an application for a retail liquor license for the premises and on March 1, 1972, defendants Baney entered into a lease agreement with defendants Marastoni and Jacobson for the real property 'together with all of the equipment located therein.' Defendants testified that this reference to the equipment was a mistake and was not intended to include plaintiff's equipment. ¹

Defendant Attilio Marastoni then went upon the premises and undertook painting and equipment repairs in anticipation of opening the restaurant upon approval of the application for a liquor license. During that same period, defendant Curtis Baney negotiated with plaintiff for purchase of its restaurant equipment. Those negotiations were unsuccessful.

On May 3, 1972, the liquor license was granted and on May 6, 1972, defendants Marastoni and Jacobson opened the restaurant for operation with the consent of defendant Curtis Baney. Plaintiff, however, had not consented to the use of its equipment and on May 9, 1972, notified defendants that it considered the use of the equipment to constitute conversion.

Since then defendants Marastoni and Jacobson have remained in possession and control of the restaurant equipment and have used it in their restaurant operation until the trial of this case, without payment to plaintiff, but in the hope of negotiating a purchase of the equipment. Negotiations in an attempt to agree upon a purchase price continued until September 1972. During that period no demand was made by plaintiff for return of the equipment, but on September 7, 1972, defendants made a demand upon plaintiff to remove the equipment or accept $60,000 for it. Plaintiff then filed this action.

1. The trial court did not err in holding that no demand for return of the equipment was necessary to entitle plaintiff to bring an action for conversion.

Defendants contend that defendants Baney were lawfully in possession of the restaurant real property by their purchase of that property; that they then became involuntary bailees of plaintiff's equipment; that they could have required plaintiff to remove its equipment; that plaintiff chose not to do so and that under these facts there could be no conversion of the equipment until plaintiff made a demand for its return, followed by a refusal to respond to that demand. In support of this position defendants cite Jeffries v. Pankow, 112 Or. 439, 223 P. 745, 229 P. 903 (1924); Lee Tung v. Burkhart, 59 Or. 194, 116 P. 1066 (1911); Bliss v. Southern Pacific Co. et al, 212 Or. 634, 321 P.2d 324 (1958); Davis v. American National Bank of Denver, 149 Colo. 34, 367 P.2d 325 (1961); and Restatement of Torts 2d § 237 (1965).

In support of this position defendants also refer to testimony by plaintiff's president to the effect that no demand was made for return of the equipment because of negotiations for its purchase, which was still pending when the restaurant was reopened; that he assumed that the equipment would be used in the operation of the restaurant by the buyer of the equipment and hoped to sell the equipment 'in place,' but did not acquiesce in the use of the equipment and within two or three days after the reopening of the restaurant 'wrote a letter' which notified defendants that plaintiff considered their use of the equipment to constitute a conversion of it.

Assuming, however, that defendants Baney became involuntary bailees of plaintiff's equipment when they purchased the real property on which it was located, that fact did not give them the right to use the equipment, much less the right to deliver it to a third party. The conversion of plaintiff's equipment took place when defendants Baney entered into the lease of the real property to defendants Marastoni and Jacobson 'together with all of the equipment located thereon,' and delivered to them both the restaurant real property and the restaurant equipment owned by plaintiff and when those defendants accepted the delivery of that property.

It is well established in Oregon that when a conversion has already taken place by the wrongful delivery of property to a third party no demand is necessary as a condition of the right to bring an action for conversion of the property. Eade et al v. First Nat. Bank of Condon, 117 Or. 47, 51, 242 P. 833 (1926). See also Gowin v. Heider, 237 Or. 266, 305, 386 P.2d 1, 391 P.2d 630 (1963); Miller v. Lillard, 228 Or. 202, 205, 364 P.2d 766 (1961); Montgomery v. U.S. Nat'l Bank et al, 220 Or. 553, 568, 349 P.2d 464 (1960). Jeffries v. Pankow, supra, and other Oregon cases cited by defendants involved different facts and do not hold to the contrary.

It follows that the trial court did not err in this case in holding that no demand for return of the restaurant equipment was necessary to entitle plaintiff to bring an action of conversion under the facts of this case.

2. The trial court did not err in holding that defendant Curtis Baney was a joint tortfeasor.

Defendants concede the rule to be that '(A)ll persons who aid, advise or assist in the commission of a tort are as fully liable as if they personally committed the objectionable act' (citing Perkins v. McCullough, 36 Or. 146, 59 P. 182 (1899)), but contend that '(B)efore the defendant Baney can be held liable for a conversion of plaintiff's property, it must appear that he had exercised some act of dominion or control over it inconsistent with his rights or have aided or assisted some other person to do so' (citing Walker v. First National Bank, 43 Or. 102, 72 P. 635 (1903)), and that 'mere acquiescence' does not constitute 'aiding' (citing State v. Stark, 7 Or.App. 145, 490 P.2d 511 (1971)). Defendants further contend that 'no proof exists of any personal assistance' by defendant Baney and that evidence of his negotiations for purchase of the equipment was 'unrelated.'

In this case, however, there was ample other evidence to support a finding that defendant Baney at least 'aided' and 'assisted' in the commission of the tort of conversion....