First Sec. Bank of Utah, N.A. v. J.B.J. Feedyards, Inc.

• Decision Date: 20 July 1982
• Docket Number: 17270,Nos. 17269,s. 17269
• Citation: 653 P.2d 591
• Parties: FIRST SECURITY BANK OF UTAH, N.A., Plaintiff and Respondent, v. J.B.J. FEEDYARDS, INC., a corporation, et al., Defendants, Don Allen, dba Mt. Nebo Cattle Company, Intervenor and Appellant, FIRST SECURITY BANK OF UTAH, N.A., Plaintiff and Appellant, v. J.B.J. FEEDYARDS, INC., a corporation, et al., Defendants, Don Allen, dba Mt. Nebo Cattle Company, Intervenor and Respondent.
• Court: Utah Supreme Court

Page 591

653 P.2d 591

FIRST SECURITY BANK OF UTAH, N.A., Plaintiff and Respondent, v. J.B.J. FEEDYARDS, INC., a corporation, et al., Defendants, Don Allen, dba Mt. Nebo Cattle Company, Intervenor and Appellant, FIRST SECURITY BANK OF UTAH, N.A., Plaintiff and Appellant, v. J.B.J. FEEDYARDS, INC., a corporation, et al., Defendants, Don Allen, dba Mt. Nebo Cattle Company, Intervenor and Respondent.

Nos. 17269, 17270.

Supreme Court of Utah.

July 20, 1982.

Thomas S. Taylor of Christensen, Taylor & Moody, Provo, for Don Allen and defendants.

Don B. Allen, Patrick B. Nolan of Ray, Quinney & Nebeker, Salt Lake City, for First Sec. Bank of Utah.

HALL, Chief Justice:

Plaintiff First Security Bank of Utah and intervenor Allen separately appeal a decision awarding damages to intervenor for plaintiff's wrongful attachment of 266 head of cattle owned by intervenor.

On February 7, 1973, plaintiff filed suit against defendant J.B.J. Feedyards to recover money owed to it by J.B.J. On the same day, pursuant to a writ of attachment, plaintiff attached 342 cattle kept in the J.B.J. Feedyard, some of which belonged to J.B.J. itself and some of which were later found to belong to Allen. On February 9, 1973, Allen intervened in the action, filing a motion to quash plaintiff's writ of attachment, which motion was granted on April 6, 1973. Meanwhile, the parties had stipulated that the attached cattle would be sold at the highest possible price and the proceeds held by plaintiff in a special account pending determination of ownership.

On March 9, 1973, Zions First National Bank, holder of a security interest in intervenor's cattle, filed a separate action against plaintiff, asserting intervenor's ownership of and Zion's own first lien on the attached cattle. In that action, the trial court determined that 266 of the attached cattle had belonged to intervenor and that he should receive $114,459.07 of the sales proceeds. Although the trial court entered judgment on June 4, 1974, intervenor received only $40,467.08 at that time; plaintiff continued to hold most of the sales proceeds while it appealed that judgment. On April 15, 1975, this Court affirmed the trial court's decision. ¹ Plaintiff paid to intervenor the remainder of the $114,459.07 in sales proceeds (less $12,873.79 feed costs), along with court costs and interest from the date of judgment.

In the suit originally filed by plaintiff against defendants, plaintiff and defendants eventually resolved by stipulation all issues between them and the decision of the trial court concerned only a claim for damages raised by intervenor against plaintiff. In that decision, the court found that at the time of the attachment, plaintiff had actual and constructive notice of intervenor's ownership of the 266 cattle, that it attached the cattle without probable cause and that its actions showed malice. The court awarded to intervenor damages for loss of use of the $114,459.07 and attorney fees incurred in quashing plaintiff's writ of attachment. That award resulted in the present appeal.

Plaintiff appeals on the grounds that it did have probable cause to attach intervenor's cattle and that intervenor has failed to show any specific items of damage. In turn, intervenor claims that the damages awarded are insufficient and that the trial court erred in refusing to grant three additional items of damage claimed by him at trial. We consider first the alleged wrongfulness of plaintiff's attachment and second whether sufficient evidence supports the specific damages awards made by the trial court.

I

Plaintiff claims that intervenor has failed to establish malice or lack of probable cause in its actions and that in the absence of such a showing, no damages can be awarded. However, substantial evidence supports the trial court's findings that plaintiff had notice of intervenor's ownership of the cattle and that it lacked probable cause to attach them. At the time of attachment, intervenor's cattle were branded with the symbol "V-5," a brand registered with the Utah Department of Agriculture by intervenor's business, Mount Nebo Cattle Company. A financing statement filed by Zions First National Bank with the Utah Secretary of State also showed the brand "V-5" as belonging to Mount Nebo Cattle Company. Plaintiff admits that it did not check either of these public records to determine ownership of the "V-5" brand.

Plaintiff claims that knowledge of Mount Nebo's ownership of the brand would not have affected its decision to attach the "V-5" branded cattle because it did not know that the Mount Nebo Cattle Company was associated with intervenor. Testimony by William Barth Boswell, an agent of J.B.J., contradicts this assertion. Boswell testified that shortly before the attachment, he told plaintiff's officer Roy Broadbent that the cattle belonged to intervenor and that plaintiff had no claim on them. According to Boswell, he also "continually" informed other representatives of plaintiff of the independent ownership of the Mount Nebo Cattle Company cattle.

Broadbent testified that he did not recall the conversation reported by Boswell and that at the time of attachment, he believed J.B.J. to be the owner of the "V-5" branded cattle. However, the trial court found that the "V-5" branded animals were "never directly associated with the cattle in which the First Security Bank held a secured interest." Even if plaintiff did believe that the cattle belonged to J.B.J., it had a duty to verify this assumption by checking public records and making inquiries before taking the cattle into its possession. Plaintiff has introduced no evidence of any such efforts on its part to verify ownership. In the absence of such evidence, the trial court correctly found that plaintiff acted without probable cause.

In addition to lack of probable cause, the trial court found legal and actual malice in plaintiff's actions, providing the basis for awards of punitive damages and mental anguish damages to intervenor. The court found that the total value of the assets attached by plaintiff was approximately five times the amount of J.B.J.'s debt. It found that even after intervenor asserted his ownership and demanded return of the cattle, plaintiff unlawfully retained the cattle and handled them in such a way as to fail to mitigate damages. Regarding plaintiff's purpose in carrying out the attachment, the court found as follows:

[A]t the time of the attachment First Security Bank knew that there was a substantial probability that the owner of the [cattle] was not J.B.J. Feedyards, Inc., its [debtor], and intentionally chose to disregard that possibility in order to enhance the position of FIRST SECURITY BANK....

These findings, together with those concerning probable cause, led to the court's determination that plaintiff "with actual malice ... unlawfully converted and used intervenors' assets." The record, when viewed in the light most favorable to intervenor, contains substantial evidence to support the court's findings and we will not disturb them. ²

II

Having determined that plaintiff acted with actual malice and without probable cause, the trial court awarded the following damages to intervenor: 1) excessive interest paid to Zions First National Bank as a result of intervenor's inability to repay a loan, 2) lost profits in intervenor's Montana livestock trade, 3) attorney fees, 4) damages for mental anguish, 5) punitive damages, and 6) prejudgment interest. The court refused to award three additional items of damages sought by intervenor: 1) loss on the sale of the attached cattle, 2) loss on the forced sale of intervenor's Central Montana Livestock Company, and 3) lost profits in the cattle futures market.

As to each of the latter three items of claimed damages, the evidence presented by intervenor clearly fell short of establishing either the fact of damages or the causal connection between alleged damages and the actions of plaintiff. We affirm the trial court's finding that intervenor failed to carry his burden of proof on these three items.

The six items of damages which the trial court did allow are discussed individually below.

A. Excessive Interest Paid to Zions First National Bank

The trial court found that because of the two-year delay in delivery of the cattle sales proceeds to intervenor, he was unable to repay a $50,000 loan from Zions First National Bank which fell due four months after the attachment. The court awarded $14,506.56 in damages to reimburse intervenor for interest incurred on the loan between July 2, 1973, the due date of the loan, and May 16, 1975, the date when intervenor received the sales proceeds. Plaintiff challenges this award on the ground that intervenor failed to show that he would have repaid the loan on time if the attachment had not occurred. However, intervenor's testimony provided evidence from which the trial court could have reached this conclusion. Intervenor and his wife both testified that they had invested most of their working capital in the cattle attached by plaintiff and that the unavailability of this capital made it difficult for them to meet their financial obligations. Intervenor also testified that they used most of their available funds during the period of attachment to pay debts owed to Montana institutions and that they were unable to borrow additional funds with which to pay Zions. The trial court properly awarded damages for the extra interest payments necessitated by plaintiff's delay in returning intervenor's money.

However, in awarding the entire amount of excessive interest claimed by intervenor, the trial court partially duplicated an interest payment which they had already received from plaintiff. The Satisfaction of Judgment issued in the case which determined intervenor's ownership of the cattle (which constitutes part of the record before us) shows that on May 16, 1975, when Zions received its share of the $114,459.07 judgment money,...