Eureka Springs Sales Co. v. Ward

• Decision Date: 21 May 1956
• Docket Number: No. 5-963,5-963
• Citation: 290 S.W.2d 434,226 Ark. 424
• Parties: EUREKA SPRINGS SALES CO., Appellant, v. Charles J. WARD et al., Appellees.
• Court: Arkansas Supreme Court

Page 434

290 S.W.2d 434

226 Ark. 424

EUREKA SPRINGS SALES CO., Appellant, v. Charles J. WARD et al., Appellees.

No. 5-963.

Supreme Court of Arkansas.

May 21, 1956.

Concurring Opinion May 28, 1956.

J. E. Simpson, Berryville, for appellant.

J. B. Milham, Eureka Springs, H. G. Leathers, Berryville, for appellees.

McFADDIN, Justice.

This appeal involves an auctioneer's liability arising from the sale of some stolen cattle.

The appellant, Eureka Springs Sales Company, is a domestic corporation and operates a sales barn in Eureka Springs. On August 28, 1954, a man, giving his name as Clyde Williams, transported six cows to the barn of appellant for sale at auction that day. Four of the cows, which he said belonged to Edgar Ray, were sold for a gross of $418.63; and, after deducting a commission of $13.56, appellant's check--drawn on the Bank of Eureka Springs for the net of $405.07 and payable to Edgar Ray--was delivered to the said Clyde Williams. The other two cows, which Clyde Williams said belonged to him, were sold for $183.66; and, after deducting $6.01 commission, a check for $177.65 was delivered by appellant to the said Clyde Williams.

Later, in the course of the auction sale, Clyde Williams bought two cows for a total of $124; and, at his suggestion, he redelivered to the appellant its check for $177.65 and, in return, received appellant's check for $53.65 drawn on the Bank of Eureka Springs, and also received the two purchased cows, which he loaded in his truck and took with him and proceeded--it later developed--from Eureka Springs to Harrison. At Berryville, enroute, Clyde Williams stopped at the grocery store of Shirley Williams and endorsed the said $53.65 check and received therefor some groceries and the balance in cash. Shirley Williams deposited the check in his bank and it was duly paid by the Bank of Eureka Springs when presented.

Clyde Williams proceeded from Berryville to Harrison, and there dropped his alias and became Edgar Ray, which was his real name. He had some time previously purchased a truck from J. P. Williams, a used car dealer in Harrison, and owed a balance of $325 on it, for which title had been retained. On August 28, 1954, Edgar Ray tendered to J. P. Williams appellant's said check of $405.07, and received therefor a receipt for the $325 balance due on the truck. J. P. Williams cleared the title to the truck and gave Ray $80.07 balance in cash. J. P. Williams deposited the $405.07 check in the Security Bank of Harrison; and, when it reached Eureka Springs in due banking channels, payment was stopped by the appellant.

The reason payment was stopped was because the six cows which Ray (alias Williams) had taken to the Eureka Springs Sales Company had been stolen from the appellee, Charles J. Ward, a farmer in Oklahoma. Ward had discovered the theft on August 28, 1954, and had diligently traced the cattle to the appellant's sales barn. Ray was apprehended and remained in jail in Harrison for some time; and while there he delivered the two cows (for which he had bid $124 at appellant's sale, as aforesaid) to Shelby Morris to apply on a past-due grocery bill. In due time, Ray was tried in Oklahoma and convicted for cattle theft and sentenced to the Oklahoma penitentiary, where he was a prisoner at the time of the trial below.

Ward, the owner of the six cows, sued appellant, Eureka Springs Sales Company, for $602.29, the amount for which appellant sold the six cows at auction. Appellant tendered $602.29 into court, and interpleaded Shirley Williams, J. P. Williams and Shelby Morris, and asked affirmative relief against each of them. The various parties set up their respective claims and defenses; and trial in the Chancery Court resulted in a decree adverse to the appellant and in favor of each of the other parties; and from that decree appellant brings this appeal.

I. Appellant's Liability to Ward. The Trial Court was correct in rendering judgment of $602.29 for Ward. There was evidence that the six cows might have been worth more, but Ward claimed only the amount appellant had received from the sale of the cattle, which sale was an act of conversion.

The general rule--as regards all personal property except money and negotiable paper--is, that a purchaser from a thief acquires no title against the true owner, in the absence of limitations and estoppel (and neither of these is involved in this case). Section 68-1423, Ark.Stats., being a portion of the Uniform Sales Act, is recognition of such rule. In the early case of Phelan v. Dalson, 14 Ark. 79, this Court said:

'* * * it is clear that where property has been obtained from the owner by a felonious act, his unqualified ownership is not in the least changed, and he may peaceably take it, in whose hands soever he may find it.'

To the same effect see Russell v. Brooks, 92 Ark. 509, 122 S.W. 649; and see also 46 Am.Jur. 622. In 42 Am.Jur. 227, in discussing theft of personal property as affecting the owner's title and civil rights as against an innocent purchaser from the thief, the holdings are summarized:

'Even though such a purchaser may be treated as having title and the right to their possession as against every one but the rightful owner, a sale by the thief or by any person claiming under the thief does not vest any title in the purchaser as against the owner, though the sale was made in the ordinary course of trade and the purchaser acted in good faith.'

Thus, Ward never lost title to his cows; and appellant, ¹ by selling them at auction, became liable to Ward since such sale was a conversion. In 5 Am.Jur. 489, in discussing the liability of an auctioneer, there are these statements:

'The authorities are practically unanimous in holding that an auctioneer who sells property in behalf of a principal having no title thereto is personally liable to the true owner for conversion, regardless of whether he had notice of the true owner's title, or whether he acted with the utmost good faith in total ignorance thereof, * * *. The fact that the auctioneer has sold the goods and turned over the proceeds to his principal in innocence and good faith affords him no protection. The rule of liability on the part of the auctioneer applies where he innocently sells stolen property; * * *.' ²

In an Annotation in 20 A.L.R. 135, many cases are cited to sustain this text:

'An auctioneer who makes sale of property which does not belong to the one employing him, and passes the title to the purchaser, is personally liable to the true owner for the conversion.'

Appellant, by selling Ward's cattle, became liable to him for $602.29 for the conversion; and the Chancery Court was correct in so holding.

II. Appellant's Liability to J. P. Williams. The Chancery Court was correct in rendering judgment against appellant in favor of J. P. Williams for $405.07, being the amount of the check on which appellant had stopped payment. As heretofore stated, the rule--that a thief can convey no title to stolen personal property--has no application to a thief transferring money or negotiable paper to a bona fide purchaser for value without notice. In 42 Am.Jur. 227-228, the text reads:

'A different rule, however, applies in the case of stolen money and negotiable securities, including travelers' checks. * * * The rule is well settled that a bona fide purchaser of a negotiable bill, bond, or note, although he buys from a thief, acquires a good title, if he pays value for it, without notice of...