DeVore v. McClure Livestock Commission Co., 46007

• Decision Date: 12 June 1971
• Docket Number: No. 46007,46007
• Citation: 485 P.2d 1013,207 Kan. 499
• Parties: Floyd DeVORE, Appellee and Cross-Appellant, v. McCLURE LIVESTOCK COMMISSION CO., Inc., a Kansas Corporation, Appellant and Cross-Appellee, Dale Young, Rachel Young and Larry Perry, Defendants.
• Court: Kansas Supreme Court

Page 1013

485 P.2d 1013

207 Kan. 499

Floyd DeVORE, Appellee and Cross-Appellant, v. McCLURE LIVESTOCK COMMISSION CO., Inc., a Kansas Corporation, Appellant and Cross-Appellee Dale Young, Rachel Young and Larry Perry, Defendants.

No. 46007.

Supreme Court of Kansas.

June 12, 1971.

Syllabus by the Court

1. A factor or commission merchant who receives property from his principal, sells it under the latter's instructions and pays him the proceeds of the sale, is guilty of a conversion if his principal had no title thereto or right to sell the property, and generally the factor may not escape liability to the true owner for the value of the property by asserting he acted in good faith and in ignorance of his principal's want of title.

2. The Federal Packers and Stockyards Act does no relieve livestock commission agents licensed thereunder as marketing agencies from tort liability for wrongful conversion.

3 It is a defense to an action against a commission agent for tort liability for wrongful conversion of property that the agent was misled by the owner of the property or that the owner consented to the sale.

4. A commission agent who sells livestock for one joint adventurer who has an interest in and authority to market such livestock, and who deivers the proceeds of such sales to that joint adventurer, cannot thereafter be held guilty of conversion if that joint adventurer fails to account to his co-venturer for such proceeds and converts the same to his own use.

5. In an action for damages against a commission agent for conversion of livestock consigned to it, wherein plaintiff and another had entered into a joint adventure in raising and marketing the livestock and plaintiff's joint adventurer had sold certain of the livestock in his own name, in a fictitious name and through his employee, and had retained the sales proceeds, under circumstances stated in the opinion, the record on appeal is examined and the livestock commission agent is held not liable to plaintiff.

W. Jay Esco, Wichita, argued the cause and was on the briefs for appellant and cross-appellee.

Karl W. Friedel, of Martin, Cooper, Churchill & Friedel, Wichita, argued the cause, and Dale H. Cooper, Wichita, was with him on the brief for appellee and cross-appellant.

HARMAN, Commissioner:

In district court the action was one for damages against a livestock commission company for conversion of hogs allegedly owned by plaintiff and sold by others to the commission company. In trial to the court plaintiff prevailed as to a part of his claim and the commission company has appealed. Plaintiff has cross-appealed as to the denial of the remainder of his claim.

On January 27, 1964, plaintiff Floyd DeVore entered into a written agreement with Dale Young. This writing, scant in nature, recited merely it was entered into by the parties 'for the purpose of going into the hog business', that it was for a period of two years from March 1, 1964, plaintiff was to advance Young the sum of not to exceed $1,400 during the first six months 'and after that, 50% of the net profit on the Hog Operations to each party' and further, '(Young) to do all the work and management and handle the operations to the best of his ability and judgment'. Plaintiff had previously known Young and had confidence in him, believing him to be honest and hard-working.

Hog raising was commenced under the foregoing arrangement. The method of operation was that plaintiff was to furnish all capital and physical facilities for the enterprise and Young was to furnish all labor and skill necessary in the purchase, feeding, breeding, raising and marketing of the hogs. Plaintiff was to maintain all business records. Hogs were to be marketed through McClure Livestock Commission Co., Inc., defendant-appellant herein. Plaintiff gave no directions to Young as to the name under which hogs should be marketed and gave no notice or directions to McClure respecting disposition of proceeds of hog sales made by Young.

In all, sales of more than 8,000 hogs in the sum of nearly $400,000 were made through McClure at the Union Stockyards at Wichita during the period of operations through the year 1966. These sales were all made by Young, either individually or by his stepson, Larry Perry, at Young's direction. The hogs were marketed under the following names: DeVore & Young Dale Young, A. E. Perry, Rachel Young (Dale Young's wife) and Larry Perry, and consigned to McClure for sale. No hogs were ever marketed in plaintiff's name.

The procedure employed at the stockyards was as follows: Livestock was received and counted by an employee of the stockyards company; a drive-in record was made which record showed the name of the trucker, the name of the owner, the number and kind of animals, and the name of the commission company which was to handle the sale; the animals were unloaded, counted again by a stockyards company employee and delivered to pens assigned to the commission company; the animals were then sold by the commission company and delivered to the scales where a stockyards employee weighed them and issued a scales ticket; the scales ticket and a copy of the drive-in ticket were returned to the accounting office of the commission company; there a written account of the sale was made and a check for the net amount of the sale, after deductions, was made out in the name of the owner as shown by the drive-in record and delivered to the trucker, unless otherwise requested. As a matter of general procedure the commission company made no inquiry respecting ownership but relied on the name shown on the drive-in record.

At the end of the calendar years 1964, 1965 and 1966 an inventory of hogs on hand was taken and a profit and loss statement was prepared by plaintiff's accountant. The 1964 and 1965 inventories were made by Young; plaintiff made the 1966 inventory. Most of the hogs were sold in the name of DeVore & Young, a trade name chosen by Young. Young's usual custom was to endorse to commission company's checks made out to DeVore & Young over to plaintiff and periodically to receive back from plaintiff his share of the net profits. Plaintiff endorsed almost all the checks made out to DeVore & Young. Eventually plaintiff discovered that Dale Young had not been accounting to him for all the hogs sold by Young through McClure, his defalcation having commenced in July, 1964. Briefly summarized, his delinquencies consisted of the following sales of 1962 hogs for which Young kept the proceeds, depositing the funds in his personal bank account: In 1964, 1965 and 1966 sales in the name of Dale Young amounting to $31,800.46; in 1965 sales in the name of A. E. Perry amounting to $8,478.78; in 1965 and 1966 sales in the name of Larry Perry amounting to $5,678.25, and in 1964 sales in the name of Rachel Young amounting to $362.32, or a total default of $46,319.92. In all these instances except one the checks were made out by McClure in the name listed as the owner making the sale. In at least one instance Young endorsed over to plaintiff a small check made out in Young's name, being the proceeds of livestock sold in Young's name. (Young was also guilty of converting to his own use a tractor and feed corn paid for by plaintiff-of no concern here).

The name A. E. Perry was a fictitious one used by Dale Young when he personally marketed some of the hogs; hogs sold by Larry Perry in his own name were so marketed at Young's specific direction and Perry turned most of the sale proceeds over to Young. Perry was hired and paid by Young to assist in the hog-raising enterprise.

The head of McClure's hog division knew who plaintiff was, knew Young was...