Mapledge Corp. v. Coker, 3446

• Decision Date: 05 December 1958
• Docket Number: No. 3446,3446
• Citation: 167 Neb. 420,93 N.W.2d 369
• Parties: MAPLEDGE CORPORATION, a Maine Corporation, and Rolland E. Irish, its Temporary Receiver, Appellants, v. J. B. COKER, also known as John B. Coker and Regina W. Coker, Appellees.
• Court: Nebraska Supreme Court

Page 369

93 N.W.2d 369

167 Neb. 420

MAPLEDGE CORPORATION, a Maine Corporation, and Rolland E. Irish, its Temporary Receiver, Appellants, v. J. B. COKER, also known as John B. Coker and Regina W. Coker, Appellees.

No. 3446.

Supreme Court of Nebraska.

Dec. 5, 1958.

Syllabus by the Court.

1. A conversion is any unauthorized act which deprives the owner of his property permanently or for an indefinite period of time.

2. In an action for conversion of property the motive which prompted the defendant to dispose of, or appropriate to his own use, the property of the plaintiff is an immaterial issue.

3. Unsecured creditors of a pledgor of chattels are entitled to have the lien of the pledge agreement foreclosed as required by law, and a sale or transfer of the pledged chattels otherwise than as the law provides is no protection to those participating in the transfer or sale.

4. A lien upon chattel property, though valid, is not evidence of ownership of the property by the lienholder.

5. It is the duty of the trial court to submit to and instruct the jury upon all material issues raised by the pleadings and supported by competent evidence. Ordinarily it is error to submit issues which are outside the scope of the pleadings.

6. In an action for conversion the measure of damage is the value of the property at the time and place of conversion, with interest from the date of the conversion.

Viren, Emmert, Hilmes & Gunderson, Omaha, for appellants.

Crawford, Garvey, Comstock & Nye, Omaha, for appellees.

Heard before SIMMONS, C. J., and CARTER, MESSMORE, YEAGER, CHAPPELL, and BOSLAUGH, JJ.

CARTER, Justice.

This is an action to recover from the defendants the value of a quantity of bowling pins alleged to have been converted by the defendants to their own use. The verdict of the jury was for the defendants and the plaintiffs have appealed.

The plaintiffs are the Mapledge Corporation, a Maine corporation which we shall hereafter refer to as Mapledge, and Rolland E. Irish, its receiver whom we shall refer to as the receiver. The defendants are John B. Coker and Regina W. Coker, husband and wife. We shall refer to the husband as Coker and the wife as Mrs. Coker. The Eagle Lake Lumber Mills, Inc., a Maine corporation, is indirectly involved in this litigation, and for convenience we shall hereafter refer to it as Eagle Lake. The Development Credit Corporation of Maine, a Maine corporation, is also involved in the action, and for brevity we shall refer to it as Development.

In 1951 Eagle Lake was incorporated for the purpose of engaging primarily in the manufacture of bowling pins. Its manufacturing plant and office headquarters were located in the city of Eagle Lake, Maine. The defendants invested $10,000 in the capital stock of Eagle Lake. In February 1952, Eagle Lake borrowed $45,000 from Development to finance its operations. On May 29, 1952, Coker became a director of Eagle Lake.

Shortly after the incorporation of Eagle Lake, Mapledge was organized to handle the sales and distribution of bowling pins manufactured by Eagle Lake. Qualifying shares of stock were issued to three individuals who became the directors of the corporation. Eagle Lake subscribed for $44,290 in stock in Mapledge for which payment was not made. On November 15, 1953, Coker purchased the share of stock held by one of the owners of the qualifying shares of stock hereinbefore mentioned. Coker became the president and a director of Mapledge in 1953. Eagle Lake and Mapledge operated out of the same office in Eagle Lake, Maine, and one Michaud became the secretary and bookkeeper for both corporations. Mapledge was considered a subsidiary of Eagle Lake, its directors also being directors of Eagle Lake.

The $45,000 loan to Eagle Lake was secured by a factor's lien upon the material, goods in process, merchandise, and stock of Eagle Lake. On October 10, 1953, Eagle Lake was in default in its payments on the loan made by Development. To secure forbearance by Development in the collection of its loan and to insure the manufacture and delivery of bowling pins to it, Mapledge on January 9, 1954, assigned to Development all merchandise, present and future accounts receivable, and all proceeds from the sale or disbursement of its products as further security for the loan.

The evidence shows that Coker resided in San Diego, California. He had long been and continued to be a jobber of bowling pins. He had purchased and paid for a large quantity of bowling pins from Mapledge over the years, the total purchase price being in excess of $340,000. The evidence shows that Coker, prior to August 1954, had made advancements on pins which he had in Omaha in the amount of $46,000. In August 1954, Coker paid $20,000 in cash and turned the pins back to Mapledge, accepting stock in Mapledge in the amount of $66,000 as payment of these two amounts. During the same month Mapledge moved its bank account to Omaha and authorized Coker to draw checks on its account.

In the spring of 1955 Eagle Lake closed down its operations. In July following, Development took possession of the assets of Eagle Lake under its factor's lien and sold the same. On July 22, 1955, Development advised Coker and Mapledge that it was claiming all cash, accounts receivable, and stock inventory of Mapledge under the assignment of January 9, 1954. On August 1, 1955, Development filed an action in the Supreme Judicial Court of Maine to secure the appointment of a receiver for Eagle Lake and Mapledge, and for an order restraining the two corporations and its officers from transferring or disposing of any of the assets of the corporations. Coker employed legal counsel who appeared in the action. A restraining order was entered as prayed for. On January 13, 1956, the temporary receiver was appointed. On March 2, 1956, this action was commenced in the district court for Douglas County, Nebraska. Jurisdiction of the subject matter existed by virtue of an attachment of a quantity of bowling pins in an Omaha warehouse which the receiver contended belonged to Mapledge but had been converted by Coker to his own use. Coker appeared in the action and the case was tried, with the result hereinbefore noted.

A primary question for consideration is whether the attached bowling pins were the property of Coker or whether they belonged to Mapledge and were converted by Coker to his own use. The defendants rely on the validity of the pledge agreement to Mrs. Coker dated January 14, 1955, and the assignment of the bowling pins to her on August 12, 1955. In this respect it is not disputed that Mrs. Coker had advanced $40,000 to Mapledge and that it was indebted to her in that amount.

The evidence shows that there were 1,875 sets of bowling pins in the warehouse at the time of the attachment, and that they had a value of $21,000, according to Coker who is amply qualified to fix their value. It shows also that $6,300 worth of pins had been sold from the warehouse, which amount was being held by the warehouseman subject to the order of the court. The evidence of Coker is that he paid the Moore Bowling Pin Company $2,000 for 400 sets of pins which were placed in the warehouse. He purchased 139 sets of pins for $4,517.50 from Mapledge, which were left in the warehouse. He purchased 278 sets for $5,185.78 from Mapledge which were also left in the warehouse. These 817 sets of pins were admittedly purchased and paid for prior to August 12, 1955. There were 17 sets of pins sold from the warehouse by mutual agreement of the parties. We necessarily conclude that there were 1,058 sets of pins in the warehouse, or cash on hand in lieu thereof, over and above the pins purchased by Coker and sold by the agreement of the parties.

The record clearly demonstrates that Coker, over a long period of time, engaged in the practice of paying in advance for pins ordered by him and had...