International Distress Signals, Inc. v. McDowell

• Decision Date: 25 February 1974
• Docket Number: No. 4263,4263
• Parties: INTERNATIONAL DISTRESS SIGNALS, INC., aka I.D.S., a corporation, et al., Appellants (Defendants and Cross-Defendants below), v. Howard D. McDOWELL, substituted party for St. Alban's Episcopal Church, Appellee (Plaintiff and Counter-claim Defendant below).
• Court: Wyoming Supreme Court

Page 224

519 P.2d 224

INTERNATIONAL DISTRESS SIGNALS, INC., aka I.D.S., a corporation, et al., Appellants (Defendants and Cross-Defendants below), v. Howard D. McDOWELL, substituted party for St. Alban's Episcopal Church, Appellee (Plaintiff and Counter-claim Defendant below).

No. 4263.

Supreme Court of Wyoming.

Feb. 25, 1974.

Earl R. Johnson, Jr., Casper, for appellants.

J. T. Langdon, Worland, for appellee.

Before PARKER, C. J., and McEWAN, GUTHRIE, and McCLINTOCK, JJ., and PEARSON, D. J. (R.).

Mr. Justice McEWAN delivered the opinion of the court.

Plaintiff-McDowell in his complaint asked for judgment against the defendants on notes, and foreclosure of the mortgage. The defendant-I.D.S. counterclaimed and asked for damages for the unauthorized use and occupation of the real and personal property by McDowell. The trial court entered judgment and ordered foreclosure but granted no relief to I.D.S. on its counterclaim, from which failure it appealed.

I.D.S. operated a funeral home in a building purchased from McDowell's predecessor. The business was conducted by Chester Frank, an employee of I.D.S., as funeral director. While the property was still owned by I.D.S., McDowell and Frank began operating a funeral home on the premises using the personal property located therein. McDowell subsequently purchased the defendants' notes and secured an assignment of the mortgage. The various transactions and unusual events are set forth hereinafter in detail.

On March 19, 1970, McDowell's predecessor, St. Alban's Parish of Worland, Wyoming, sold and conveyed by warranty deed certain real property and improvements located in Worland, Wyoming to I.D.S. for the total sum of $32,000.00. Five thousand dollars was paid in cash at the time of the purchase, and notes in the amounts of $22,000.00 and $5,000.00 made payable to St. Alban's were executed on behalf of the corporation and individually by defendants Drinkwater and Lee. A mortgage to secure their payment was executed by defendant corporation. The $5,000.00 note was paid although $125.00 of the interest was not. On July 13, 1971, St. Alban's filed its complaint and alleged that there was due on said notes $22,125.00, and prayed for judgment against the defendants and for foreclosure of its mortgage. Thereafter, on November 3, 1971, McDowell purchased the two notes from St. Alban's and received an assignment of the mortgage. On July 7, 1972, McDowell was substituted as party-plaintiff.

On August 5, 1970, I.D.S. obtained a loan of $3,900.00 from the Stockgrowers Bank of Worland. The note was secured by caskets and equipment used by I.D.S. in the operation of a mortuary on the property purchased from St. Alban's. On August 3, 1971, McDowell paid this note on which the principal sum and accrued interest was $3,045.93.

Some time in August of 1971 McDowell moved into the building and, together with Frank, began the operation of a funeral business and conducted thirteen funerals. While the record is not clear it appears that McDowell and Frank discontinued the operation of such business. McDowell paid certain property taxes and insurance premiums.

On May 30, 1973, judgment was entered in favor of McDowell and against the defendants for the balance due on the note together with interest, attorney fees, and reimbursement for taxes and insurance, and the mortgage was ordered foreclosed. The real property was sold at auction.

Accounting for Personal Property

McDowell argued that when he paid off the note at the bank he purchased the personal property given as security. Even though the bank could have sold the personal property pursuant to the terms of the recorded combined financing statement and security agreement, the banker testified there was no effort on the part of the bank to do so. McDowell merely paid the note which the bank marked paid and gave it and a termination statement to him. Although McDowell might have taken an assignment of the note and security agreement and thereby succeeded to all the rights of the bank as the secured party, he did not do so. The property of which he took possession still belonged to I.D.S., and it was entitled to an accounting. I.D.S. agreed that McDowell would be entitled to set off the amount which he paid the bank against the value of the property which was used or disposed of by him. I.D.S., as the claimant, had the burden of proving the value of the property at the time of the conversion (Suchta v. O. K. Rubber Welders, Inc., Wyo., 386 P.2d 931 at 934), and the only evidence was the testimony of McDowell which showed that the total value of the items was less than the amount which he paid to the bank. It therefore did not meet its burden of showing it was damaged and can take nothing under that portion of its counterclaim. Although most of the items of personal property had either been used up by McDowell in the operation of the...