Cugnini v. Reynolds Cattle Co.

• Decision Date: 04 September 1984
• Docket Number: No. 82SC92,82SC92
• Citation: 687 P.2d 962
• Parties: 39 UCC Rep.Serv. 112 Duane CUGNINI and Pat Cugnini, d/b/a Hi-Country Cattle Co., a partnership, Petitioner, v. REYNOLDS CATTLE CO., a Colorado corporation; and Wally Grant, Buck Grant and Charles Grant, d/b/a Platte Valley Feeders, Respondents.
• Court: Colorado Supreme Court

Page 962

687 P.2d 962

39 UCC Rep.Serv. 112

Duane CUGNINI and Pat Cugnini, d/b/a Hi-Country Cattle Co. a partnership, Petitioner, v. REYNOLDS CATTLE CO., a Colorado corporation; and Wally Grant, Buck Grant and Charles Grant, d/b/a Platte Valley Feeders, Respondents.

No. 82SC92.

Supreme Court of Colorado En Banc.

Sept. 4, 1984.

I.H. Kaiser, P.C., I.H. Kaiser, Denver, for petitioner.

Hutchinson, Black, Hill, Buchanan & Cook, William D. Meyer, James L. Carpenter, Jr., Boulder, for Reynolds Cattle Co.

Holme, Roberts & Owen, Stephen E. Snyder, Denver, for Platte Valley Feeders.

ROVIRA, Justice.

We granted certiorari to review the court of appeals' decision in Cugnini v. Reynolds Cattle Co., 648 P.2d 159 (Colo.App.1981), reversing the trial court's ruling that the plaintiffs, Duane and Pat Cugnini, d/b/a Hi-Country Cattle Company (the Cugninis), are entitled to recover on their action for conversion against defendant Reynolds Cattle Company (Reynolds). The court of appeals held that the livestock bill of sale laws must be complied with to pass title to cattle, but since neither the Cugninis nor Reynolds complied with those laws, Colorado's version of the Uniform Commercial Code (UCC) should apply, and, under it, title to the cattle passed from the Cugninis to Reynolds, so the Cugninis' action for conversion must fail. We affirm the result reached by the court of appeals.

I.

The Cugninis were in the business of buying, selling, and feeding cattle. In October 1978, the Cugninis paid J.R. Kroeger, who owns LU Cattle Company, $116,643.80 for 335 cattle. Kroeger bought the cattle from Jerry Wilger, who raises cattle at the Mill Creek Ranch. When the Cugninis were concluding the purchase, they consulted Dave Williams, a Colorado State Brand Inspector, who filled out a brand inspection certificate that shows the specific brands involved and how many of the purchased cattle carry which brands. The certificate lists "Mill Creek Ranch" under "owned by" and "Duane Cugnini" under "sold to." No explanation appears in the record as to why Wilger and not Kroeger is listed as the seller to Cugnini.

A portion of the brand inspection certificate is entitled "bill of sale." That portion is signed by Wilger as the seller. But blanks on the bill of sale for the seller's address, the buyer's signature and address, and a witness' signature and address were not filled out. Nonetheless, this transaction, the brands involved, and various associated data are listed in a "Report of Colorado Cattle Inspector" entered in the records of Colorado's Department of Agriculture.

The Cugninis then agreed to sell the cattle to Jerry Russell, who was in the business of buying and selling cattle. The Cugninis had experienced some difficulties with Russell ¹ prior to this transaction. Duane Cugnini testified that, due to these difficulties, he told Russell that he would not "release" the cattle until Russell provided the money due. Russell testified ² that no such condition was mentioned. In any event, Russell told Duane Cugnini to ship the cattle to Platte Valley Feeders (PVF). Although Cugnini had never done business with or heard of PVF before, he followed Russell's direction and arranged for the cattle to be shipped to PVF by truck. In the four bills of lading accompanying the shipment, Duane Cugnini is listed as the "shipper." In the spaces following "consigned to," the four bills contain the following phrases: "Duane Cugnini c/o Platte Valley Feeders," "same, Platteville [sic] Valley Feeders," "Platteville [sic] Valley Feeders," and "Platte Valley Feeders." Russell, who had had business dealings with PVF for approximately a year and a half, called John Shaffer, PVF's manager, and said that he was sending 335 of his (Russell's) heifers to PVF. Russell asked Shaffer to hold the cattle overnight and to dip them the next day. Shaffer agreed. The parties stipulated that Russell never paid the Cugninis for the cattle.

When the shipment arrived at PVF, three of the cattle had died. The remaining 332 cattle were put in PVF's lot. Russell tried to sell the cattle to PVF, but after considering the proposition for a few hours, PVF decided not to buy them. Russell then sold the cattle to Reynolds, whose feedlot is adjacent to PVF's lot. Reynolds, who had never experienced problems in previous dealings with Russell over approximately two years, presumed that Russell owned the cattle and paid him $115,599.80 for them. Russell gave Reynolds a purported bill of sale which lists the price, the date, Jerry Russell as the seller, "332" in a column labelled "QUAN.," "Mixed Heifers" in a column labeled "DESCRIPTION," and "Reynolds Cattle Co." in a space after "Name." No signature or address of a witness appears on the bill. It does not contain the buyer's signature or address. The cattle are not specifically identified by brand or otherwise. No indicia of prior ownership appears on the bill, but Russell promised that he would provide Reynolds with a brand inspection certificate for the cattle at a later date. The cattle were moved from PVF's lot to Reynolds'.

Approximately ten days after Duane Cugnini shipped the cattle to PVF, he received a call from his father indicating that Russell was "in trouble" and the cattle "weren't going to be paid for." Duane Cugnini then went to see Reynolds and argued about the cattle. After Reynolds refused to return them, what the trial court described as "an episode reminiscent of the tales of the Old West" occurred. Armed with revolvers and riding on horses, the Cugninis and a group of men entered Reynolds' property and drove the cattle in question to a nearby ranch. Later, Reynolds regained the cattle with the aid of a sheriff.

The Cugninis sued Reynolds and PVF to recover the cattle and damages. Reynolds counterclaimed for damages arising from the trespass. Pursuant to a pretrial order, the cattle were sold and the proceeds were deposited with the district court. The trial court held that compliance with the livestock bill of sale laws, sections 35-54-101 to -106, 14 C.R.S. (1973), must occur before title to cattle passes, that the Russell/Reynolds transaction did not satisfy the statute, and, therefore, Reynolds converted the cattle when it failed to comply with the Cugninis' demand for them. In addition, the trial court entered judgment in favor of PVF on the Cugninis' claims against it, and in favor of Reynolds on its trespass claim.

The court of appeals affirmed the judgment in favor of PVF and the judgment on the trespass claim, but reversed the conversion judgment against Reynolds. The court reasoned that the livestock bill of sale laws control passage of title to cattle, but that since neither the sale to Reynolds nor the sale to the Cugninis complied with those statutes, the UCC should be applied to determine who is entitled to the money deposited with the district court. It held that, pursuant to section 4-2-403, 2 C.R.S. (1973), the Cugninis entrusted possession of the cattle to Russell, who was then able to convey good title to Reynolds, who, accordingly, is entitled to the proceeds of the sale of the cattle. We granted certiorari to review the three issues discussed below as to the Cugninis and Reynolds. We did not grant certiorari to review the judgment as to the Cugninis' claim against PVF.

II. The Livestock Bill of Sale Law

One of the elements that the Cugninis must prove to prevail in their action for conversion is that they, rather than Reynolds, held title to the cattle immediately prior to the sale ordered by the district court. See Byron v. York Investment Co., 133 Colo. 418, 296 P.2d 742 (1956); Herbertson v. Cohen, 132 Colo. 231, 287 P.2d 47 (1956). Accordingly, we must determine whether title passed from the Cugninis as a result of their dealings with Russell and his subsequent transaction with Reynolds. But before we reach that issue, we must determine what law applies to the transfer of title of cattle.

Colorado's livestock bills of sale statutes, sections 35-54-101 to -106, 14 C.R.S. (1973), set guidelines for such bills of sale and penalties for noncompliance. Section 35-54-101 states in part that "[n]o person ... shall sell ... nor shall any person ... buy ... livestock, unless the person so selling ... gives, and the person buying ... takes, a bill of sale, in writing, of the livestock ...." Section 35-54-103(2) provides:

"Both the seller and the buyer shall sign a bill of sale, giving the post-office address of each, in the presence of a witness, who also signs with his name and address, and who is a legal resident of the county where the transfer of the described livestock takes place. The bill of sale shall be dated the day of the transaction."

The court of appeals correctly stated that neither the sale to the Cugninis nor the sale to Reynolds satisfied the requirements of section 35-54-103(2). Even if more than one document can be used to constitute a bill of sale, ³ Reynolds' bill still lacked a witness' signature and address, and the buyer's address. The Cugninis' bill lacked at least the buyer's signature and address, and the seller's address. ⁴

However, noncompliance with the livestock bill of sale requirements does not necessarily prevent transfer of title. Section 35-54-105(1), 14 C.R.S. (1973), states:

"Any person who sells or offers for sale or trades any livestock upon which such person has not his recorded mark or brand, or for which the person so offering has neither bill of sale nor power of attorney from the owner of such livestock authorizing such sale, is guilty of theft, unless such person upon trial shall establish and prove that he was at the time the actual owner of the livestock so sold or traded, or offered for sale or trade, or that he acted by the direction of one proven to be the actual owner of such livestock."

Thus, the livestock bill of sale statutes contemplate that being an "actual owner," i.e., holding valid title, is not necessarily dependent...