City of St. Peters v. Hill
| Decision Date | 26 October 1999 |
| Citation | 9 S.W.3d 652 |
| Parties | (Mo.App. E.D. 1999) . City of St. Peters, Missouri, Plaintiff/Appellant, v. John Hill, et al., Defendants/Respondents. Case Number: ED74423 Missouri Court of Appeals Eastern District Handdown Date: |
| Court | Missouri Court of Appeals |
Appeal From: Circuit Court of the City of St. Louis, Hon. Lucy D. Rauch
Counsel for Appellant: V. Scott Williams
Counsel for Respondent: Joel D. Brett
Opinion Summary: Plaintiff, City, appeals judgment for defendants on their counterclaim for conversion and denial of interest as an addition to its judgment for unpaid rent.
REVERSED AND REMANDED.
Division Four holds: (1) Defendants, as lessees, abandoned the personal property as provided in the lease agreement, thus, their conversion claim fails. (2) The court erred in denying plaintiff's claim for pre-judgment interest on its liquidated damages claim for unpaid rent.
Plaintiff, City of St. Peters, brought an action against various parties, including defendants, John and Thelma Hill, for unpaid rent under a commercial lease agreement and subsequent assignments of the lease agreement. Defendants filed a counterclaim against plaintiff for conversion of furniture and fixtures. The court entered a judgment of $21,749.80 for plaintiff on the rent claim. It denied any pre-judgment interest. It entered a judgment of $21,749.80 for defendants on their counterclaim for conversion. Plaintiff appeals, arguing the trial court's orders denying its motion for directed verdict and motion for judgment notwithstanding the verdict on the counterclaim should be reversed because: (a) defendants failed to offer evidence to support a finding that they owned or had a right to possess the personal property at the time of the alleged conversion; (b) the property was abandoned and became the property of plaintiff, as lessor, under the lease agreement; and (c) defendants' evidence did not identify the property with a reasonable degree of certainty. Plaintiff also appeals the judgment on its petition, arguing it is entitled to pre-judgment interest on liquidated damages. We reverse the judgment on the claim for conversion. We remand for the court to determine pre-judgment interest on the liquidated damages.
Plaintiff owns restaurant space located at the St. Peters Civic Center and Golf Course. The original lease was made with Art and Greg Scarato as owners of Dorato's Italian Food. The Scaratos assigned the lease to defendants. Thereafter, defendants assigned the lease to Jim Mulry, Todd Neiting and Joe Vallero (Valleros). In each assignment, all the parties expressly agreed to undertake the obligations of the original lease.
When defendants became sub-lessees, they purchased equipment and inventory from the Scaratos. Subsequently, defendants sold the equipment and inventory to the Valleros. In order to finance a portion of the sale, the Valleros gave defendants a purchase money note and a security interest in the equipment to secure the debt.
On or about September 6, 1990, the Valleros ceased operating their restaurant. They returned the building keys to plaintiff. At that time, the Valleros and Hills were in default on the rent payments under the lease agreement in the amount of $21,749.80, and were in default on their purchase note held by defendants. Plaintiff sued the original lessees and all of the assignees to collect the unpaid rent. After filing the petition, the Valleros filed for bankruptcy. The case then proceeded against the Scaratos and defendants.1
Defendants filed a counterclaim against plaintiff for conversion of certain items of personal property and equipment left in the restaurant by the Valleros. A list of the property was attached to the counterclaim and was valued at $75,000.
The case was tried before a jury in the St. Charles County Circuit Court on February 17, 1998. At the conclusion of defendants' evidence on the counterclaim for conversion, plaintiff moved for a directed verdict. The court denied plaintiff's motion. The jury entered its verdict for plaintiff on the claim of unpaid rent in the amount of $21,749.80. The jury also entered its verdict for defendants on their counterclaim for conversion, awarding them $21,749.80. At the time of the verdicts, plaintiff asked the court to add pre-judgment interest to the jury verdict because its rent claim was for liquidated damages. The court denied this request. The court entered its judgment in conformity with the jury verdicts on February 25, 1998. Thereafter, plaintiff filed its motion for judgment notwithstanding the verdict or for new trial. The court denied this motion.
A directed verdict, and a subsequent judgment notwithstanding the verdict, are drastic actions. Gesellschaft Fr Geratebau v. GFG America Gas Detection, Ltd., 967 S.W.2d 144, 146 (Mo. App. E.D. 1998). A directed verdict is proper when reasonable minds could not differ as to the correct disposition of the case. Id. Upon review, we view the evidence in the light most favorable to the verdict. Id. In reviewing a denial of a judgment notwithstanding the verdict, we must determine whether the plaintiff made a submissible case. Brown v. Hamilton Insurance Co., 956 S.W.2d 417, 419 (Mo. App. E.D. 1997).
In its first point on appeal, plaintiff argues that defendants did not offer sufficient evidence to make a submissible case for conversion. In order to make a submissible case of conversion, defendants must present evidence of the following: (1) their possession, right to possession, or ownership which carries with it the right to immediate possession; (2) taking against their will; and (3) damages resulting from the conversion. Runny Meade Estates v. Datapage Technologies Int'l, Inc., 926 S.W.2d 167, 170 (Mo. App. E.D. 1996).
Plaintiff contends that defendants were not the owners of the property at the time of the alleged conversion. The question is whether there is evidence in the record to support finding that defendants had the right to possession or ownership, which includes the right to immediate possession, of the property at the time of the alleged conversion. Id. "In the context of secured transactions, a cause of action for conversion will not lie until the party seeking to impose liability has the right to immediate possession of the collateral." MFA Inc. v. W.L. Pointer, 869 S.W.2d 109, 111 (Mo. App. W.D. 1993).
In order to decide whether defendants had the required right to immediate possession of the property, we must first determine whether they had a valid security interest in the claimed property. Id. A security interest in collateral cannot not be enforced against the debtor or third parties and does not attach unless the following conditions are met:
(a) the collateral is in the possession of the secured party . . . or the debtor has signed a security agreement which contains a description of the collateral . . .;
(b) value has been given; and
(c) the debtor has rights in the collateral.
Section 400.9-203(1), (2) RSMo Cum. Supp. 1998; First Tennessee Bank v. Graphic Arts Centre, Inc., 859 S.W.2d 858, 863-64 (Mo. App. E.D. 1993); Pointer, 869 S.W.2d at 111.
Plaintiff does not argue that defendants failed to offer evidence to support finding that a security interest attached under section 400.9-203(1) on some personal property. However, it argues that defendants' evidence was insufficient to support a finding on what property was left at the premises by the Valleros or what was retained by plaintiff.
Section 400.9-110 provides that "[f]or purposes of this article any description of personal property or real estate is sufficient whether or not it is specific if it reasonably identifies what is described." Section 400.9-110 RSMo 1994. Here, the parties attached a list of the restaurant equipment and personal property to the security agreement, which constituted the collateral under the agreement. The security agreement contains a list that reasonably describes the collateral. Thus, for our purposes, defendants' evidence supported finding that they had a valid security interest in the listed personal property.
Section 400.9-503 provides, inter alia, with regard to a secured party not in possession, "[u]nless otherwise agreed a secured party has on default the...
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