McClung v. Thompson

• Citation: 401 F.2d 253
• Decision Date: 02 October 1968
• Docket Number: 19191.,No. 19190,19190
• Parties: W. A. McCLUNG, Appellant, v. W. C. THOMPSON, Appellee. W. C. THOMPSON, Appellant, v. W. A. McCLUNG, Appellee.
• Court: United States Courts of Appeals. United States Court of Appeals (8th Circuit)

401 F.2d 253 (1968)

W. A. McCLUNG, Appellant, v. W. C. THOMPSON, Appellee.

W. C. THOMPSON, Appellant, v. W. A. McCLUNG, Appellee.

Nos. 19190, 19191.

United States Court of Appeals Eighth Circuit.

October 2, 1968.

Ohmer C. Burnside, Jr., Lake Village, Ark., and H. B. Stubblefield, Little Rock, Ark., for W. A. McClung.

Don F. Hamilton, of House, Holmes & Jewell, Little Rock, Ark., for W. C. Thompson.

Before MATTHES, GIBSON and BRIGHT, Circuit Judges.

MATTHES, Circuit Judge.

These appeals present two basic questions. In No. 19,190 the question is whether W. C. Thompson, who instituted this action, is entitled to recover damages from W. A. McClung for an alleged conversion of a rice allotment; in No. 19,191 we must decide whether Thompson should have been permitted to offer parol evidence in support of his claim that he had not assumed payment of interest on a mortgage negotiated by McClung on land purchased by Thompson. The district court granted McClung's motion for directed verdict on the interest question. Thompson's claim, based on conversion, was submitted to the jury which found he had been damaged in the amount of $15,000. Both parties have appealed from the court's judgment. McClung contends that the court should have granted his motion for summary judgment or in any event his motion for a directed verdict on both claims. Thompson appeals from the court's refusal to submit the interest question to the jury. Diversity of citizenship and the amount in controversy established jurisdiction.

By a written contract of sale and a separate escrow agreement entered into on March 18, 1965, Thompson agreed to purchase from McClung 1212.5 acres of land in Desha County, Arkansas, for $280,000. Thompson paid $25,000 in cash, agreed to assume a mortgage in the principal amount of $175,000, which was to be negotiated by McClung, and to pay the remainder of $80,000 in installments on specified dates. The sale was to be consummated on or before January 20, 1966.

Thompson, who had been engaged in buying and selling real estate for a number of years, contracted with H. L. Cooper and his wife on April 16, 1965, for the sale of 800 acres of the McClung tract for $200,000. On January 14, 1966, Thompson agreed to sell the remaining approximate 412 acres to W. H. Hanna and T. G. Tuggle for $95,000. Hanna and Tuggle paid $12,500 in cash, agreed to pay $22,500 on or before January 20, 1966, and assumed $60,000 of the mortgage which McClung had obtained from the Northwestern Mutual Life Insurance Company.

Shortly before the closing date of January 20, 1966, a dispute developed between McClung and Thompson over payment of the accumulated interest on the $175,000 mortgage which McClung had obtained. In order to satisfy the escrow agent and to be in a position to consummate the purchase from McClung and the sales to Cooper, Hanna and Tuggle, Thompson was required to and did pay the disputed amount of interest. He seeks to recover that amount in this action.

Thompson alleged in his complaint that the 1212 acre tract had a history of 100 acres of rice allotment; that "under regulations then existing, these allotments were not subject to reservation, transfer or assignment, but were allocated to the land. Subsequent to the contract for sale, * * * and the date of conversion, January 20, 1966, rice allotments became assignable or transferable." He alleged further that McClung had transferred the rice allotment and that this decreased the value of the land. McClung pleaded that the purported assignment was not permitted by law and hence was without legal effect.

Defendant's motion for a summary judgment was filed on June 8, 1966. Supporting data consisted in part of defendant's affidavit, a letter from the Northwestern Mutual Life Insurance Company to the effect that interest on the loan to January 1, 1966, amounted to $7,913.04, and a letter dated May 11, 1966, from the Desha County Office Manager of the Agricultural Stabilization and Conservation Service to the defendant informing him that there was no record in that office of any rice allotment on the 1212 acres of land during defendant's ownership. The letter also stated:

"In regard to the sale of rice allotments, the Agricultural Stabilization and Conservation Service does not permit the sale or assignment of rice acreage from one person or farm to another. Rice acreage can only be traded for cotton acreage. Therefore, any sale or assignment executed in January, 1966 of any rice allotments from one person to another would be invalid and not recognized."

Plaintiff resisted the motion for summary judgment. Included in the supporting documents is a copy of an agreement between McClung and Hayden J. Harper and his wife, executed on January 8, 1966, and filed in the district court on August 15, 1966, describing two tracts owned by McClung containing 912.5 acres and land owned by the Harpers. By this instrument the parties purported to transfer all rice allotted to the McClung tracts to the land owned by Harper. Subsequent to the filing of the McClung-Harper agreement in the district court, defendant filed an amendment to his motion for summary judgment supported in part by an attached affidavit of W. H. Hanna and T. G. Tuggle, purchasers of the 412 acres. This affidavit recites that the question of whether any part of the 412 acres had been allotted for rice was not discussed in affiants' negotiations with McClung:

"We Hanna and Tuggle purchased said lands from W. C. Thompson for use in growing other crops and are not concerned in any way about whether or not there is any rice allotment on or that goes with the ownership of this land."

The court, entertaining the view that a genuine issue of fact existed as to both of plaintiff's claims, denied the motion for summary judgment.

I. THE RICE ALLOTMENT ISSUE

Plaintiff's theory, framed by his complaint and which he endeavored to establish, is that defendant had wrongfully converted to himself or transferred to another person (Harper) the rice acreage allotted to the 1212 acres.¹

Conversion in law is defined as an "unauthorized assumption and exercise of the right of ownership over goods or personal chattels belonging to another, to the alteration of their condition or the exclusion of the owner's rights. * * * Any unauthorized act which deprives an owner of his property permanently or for an indefinite time." Black's Law Dictionary 402 (4th ed. 1951). Another recognized authority defines the term as "any distinct act of dominion wrongfully exerted over another's personal property in denial of or inconsistent with his rights therein, such as a tortious taking of another's chattels, or any wrongful exercise or assumption of authority, personally or by procurement, over another's goods, depriving him of the possession permanently or for an indefinite time." Ballentine's Law Dictionary 286 (2d ed. 1948). The district court, apparently on the authority of Plunkett-Jarrell Grocery Co. v. Terry, 222 Ark. 748, 263 S.W.2d 229, 44 A.L.R. 2d 917 (1953), instructed the jury that "from a legal standpoint, a conversion consists either in the appropriation of the thing or things to the party's own use and beneficial enjoyment, or in its destruction, or in exercising dominion over it to the exclusion of or in defiance of the owner's rights, or in withholding the possession of the property from the owner under a claim of title or ownership inconsistent with that of the owner. * * * Constructive conversion takes place when a person does such acts in reference to the property of another as amount in law to the appropriation of the property to himself or his beneficial use. Direct conversion is where actual physical possession of the property is taken."

Thus, it is convincingly clear that the case was tried on the theory that a rice allotment is a species of personal property, goods or chattels which one may appropriate, exercise dominion over, or transfer to another. The court properly instructed the jury "that at the date and times involved in this lawsuit, * * * under the provisions of the Secretary of Agriculture's regulations private individuals were not permitted to transfer rice allotments and that any agreement between private parties attempting to transfer a rice allotment or to make a rice allotment the subject of a bargain or contract would be in violation of federal regulations, and contrary to the federal statute under which the regulations are promulgated." Nevertheless the court submitted the conversion concept and permitted the jury to find that the allotment had been appropriated or transferred.

It is our view that a rice allotment runs with the land, is a part of it, and cannot effectively be transferred by one person to another, nor can it be transferred to other land except by complying with the procedural requirements of the regulations, which was not done in this case.

The provisions of the Agricultural Adjustment Act relating to "Marketing Quotas — Rice," 7 U.S.C. §§ 1351 through 1356, reveal with certainty that acreage allotments for rice shall be apportioned to farms. This is also implicit in 7 U.S.C. §§ 1362 and 1363 which relate to publication and review of quotas.

Likewise, the regulations provide that crop allotments are made to the land and not to the individual farmer. Certain states are designated as "producer states" and others as "farm states." Arkansas is classified as a "farm state." 7 C.F.R. § 730.1511(m). This means that "farm rice allotments are determined on the basis of past production of rice on the farm and the rice allotments previously established for the farm in lieu of past production of rice by the producer and the allotments previously established for the producer." Moreover, 7 C.F.R. § 719.2(a) defines "allotment" as "acreage allocated to a farm for a year for cotton, peanuts, rice, tobacco, or wheat, pursuant to the Agricultural Adjustment Act of 1938, as amended." (Emphasis added). In...