Rensch v. Riddle's Diamonds of Rapid City, Inc.

• Decision Date: 03 September 1986
• Docket Number: No. 15142,15142
• Citation: 393 N.W.2d 269
• Parties: William M. RENSCH, Plaintiff and Appellee, v. RIDDLE'S DIAMONDS OF RAPID CITY, INC., Defendant and Appellant.
• Court: South Dakota Supreme Court

Page 269

393 N.W.2d 269

William M. RENSCH, Plaintiff and Appellee, v. RIDDLE'S DIAMONDS OF RAPID CITY, INC., Defendant and Appellant.

No. 15142.

Supreme Court of South Dakota.

Argued May 19, 1986.

Decided Sept. 3, 1986.

Robert F. LaFleur, LaFleur & LaFleur, Rapid City, for plaintiff and appellee.

Charles B. Kornmann, Richardson, Groseclose, Kornmann & Wyly, Aberdeen, for defendant and appellant.

SABERS, Justice.

Appeal from trial court's finding of conversion, award of damages and prejudgment interest. We affirm in part and reverse in part and remand.

Statement of Facts

On October 28, 1982, appellee William M. Rensch (Rensch), left two diamond rings to be cleaned with appellant Riddle's Keepsake Diamond Center (Riddle's) at the Rushmore Mall in Rapid City, South Dakota. At that time, Riddle's was advertising free ring cleaning to the public. When Rensch returned later that same day to pick up his rings, he learned that Riddle's clerk had mistakenly given them to another customer. The rings were never recovered. In December of 1982, Rensch initiated an action for wrongful conversion against Riddle's.

On November 30, 1983, the trial court awarded Rensch a partial summary judgment on the issue of liability. A court trial on the issue of damages was held on September 24 through 26, 1984. The trial consisted of considerable testimony concerning the value of the two rings from expert witnesses on both sides. The trial court found that the entrustment of the rings by Rensch to Riddle's employee, which was based upon the invitation of "free ring cleaning," constituted a bailment, and that the misdelivery to the other customer constituted a conversion. The trial court further found that the measure of damages was the fair market value of Rensch's rings at the time and place of loss.

The two rings differed in size and value: the large ring was gold and was set with three diamonds, each approximately one carat in weight; the small ring was made of Black Hills gold and was set with a one-half carat weight diamond. Rensch purchased the large ring in 1976 for $2,495 from the catalog of S.A. Peck & Company (S.A. Peck) of Chicago, Illinois. The small ring was given to Rensch by a former spouse. No testimony was offered in regard to its original purchase price.

Although Rensch purchased the large ring from S.A. Peck who does a mail order business in Rapid City, the trial court rejected opinion evidence of the amount for which the ring could have been purchased from S.A. Peck in 1982 and refused to consider catalog prices in determining their fair market value. The basis of the court's decision was that the local price of diamonds in Rapid City was higher than the prices for which diamonds could be purchased from catalog stores such as S.A. Peck, J.C. Penney, and LaBelle's.

The trial court determined that as of October 28, 1982, the market value of the large ring was $15,000, and the market value of the small ring was $2,500. Therefore, the trial court found Riddle's liable to Rensch in the amount of $17,500 for the conversion of his rings, and awarded prejudgment interest at the rate of 18% from October 28, 1982, to the time of entry of judgment plus costs. Riddle's appeals.

Were Issues Preserved for Appeal?

A major thrust of Rensch's brief and argument is that Riddle's failed to preserve the issues for appellate review. We have considered his contentions in light of the settled record and trial transcripts, and conclude that Riddle's sufficiently preserved the issues for review.

1. DID THE TRIAL COURT ERR IN FAILING TO ADOPT THE RESTATEMENT (SECOND) OF TORTS § 222A?, AND, SHOULD RIDDLE'S HAVE BEEN LIABLE ONLY FOR BREACH OF IMPLIED CONTRACT OR LOSING RENSCH'S PROPERTY INSTEAD OF WRONGFUL CONVERSION?

These issues will be considered together.

SDCL 21-3-3 provides in full:

The detriment caused by the wrongful conversion of personal property is presumed to be:

(1) The value of the property at the time of the conversion, with the interest from that time;

(2) Where the action has been prosecuted with reasonable diligence, the highest market value of the property at any time between the conversion and the verdict, without interest, at the option of the injured party;

(3) A fair compensation for the time and money properly expended in pursuit of the property.

Such presumptions cannot be repelled in favor of one whose possession was wrongful from the beginning by his subsequent application of the property to the benefit of the owner, without his consent.

It is obvious that our statute does more to specify damages than it does to define conversion. Under the Restatement (Second) of Torts § 222A, conversion is an intentional exercise of dominion or control over a chattel, which so seriously interferes with the right of another to control it that the actor may justly be required to pay the other the full value of the chattel. Similarly, in Scherf v. Myers, 258 N.W.2d 831 (S.D.1977), we wrote: "Conversion is the act of exercising control or dominion over personal property in a manner that repudiates the owner's right in the property or in a manner that is inconsistent with such right." Id. at 834.

Riddle's emphasizes the fact that they inadvertently misdelivered the rings, that there was no intention to deprive Rensch of his property, and that the error was made in good faith. However, the weight of authorities provide that these factors are of little consequence in relation to liability for conversion.

In Poggi v. Scott, 167 Cal. 372, 139 P. 815 (1914), plaintiff sought to recover the sum of $2,000 in damages for defendant's unlawful conversion of some 200 barrels of plaintiff's wine. Id. 167 Cal. at 372, 139 P. at 815. In finding for the plaintiff, the court stated:

The foundation for the action of conversion rests neither in the knowledge nor the intent of the defendant. It rests upon the unwarranted interference by defendant with the dominion over the property of the plaintiff from which injury to the latter results. Therefore, neither good nor bad faith, neither care nor negligence, neither knowledge nor ignorance, are of the gist of the action.

Id. 167 Cal. at 375, 139 P. at 816. Similarly, in Newhart v. Pierce, 254 Cal.App.2d 783, 793, 62 Cal.Rptr. 553, 561 (1967), the court stated, "A taking clouded by mistake is no less a wrongful taking. The wrongful exercise of dominion over another's personal property is the gist of the action."

In Bader v. Cerri, 96 Nev. 352, 609 P.2d 314 (1980), the court affirmed an award of $18,270 for the conversion of cattle and stated:

A conversion occurs whenever there is a serious interference to a party's rights in his property. The act constituting 'conversion' must be an intentional act, but it does not require wrongful intent and is not excused by care, good faith, or lack of knowledge.

Id. at 317, n. 1.

Therefore, the motive which prompted Riddle's to dispose of Rensch's property is immaterial, Mapledge Corporation v. Coker, 167 Neb. 420, 93 N.W.2d 369, 373 (1959), and provides no defense, Fulks v. Fulks, 95 Ohio App. 515, 121 N.E.2d 180, 182 (1953). Intent or purpose to do a wrong is not a necessary element of proof to establish conversion. Id. "The intention required is simply an intent to use or dispose of the goods, and the knowledge or ignorance of the actor as to their ownership has no influence in deciding the question of conversion." Watkins v. Layton, 182 Kan. 702, 324 P.2d 130, 134 (1958). See also : Allred v. Hinkley, 8 Utah 2d 73, 328 P.2d 726, 728 (1958); 18 Am.Jur.2d Conversion § 3 (1985).

Although Riddle's good faith, motivation, or inadvertence in misdelivering the rings to another customer does not affect their liability for conversion, these factors may have some effect on the assessment of damages under the Restatement (Second) of Torts § 222A. Riddle's advances the following factors to avoid paying full value for the rings:

(1) the extent and duration of Riddle's exercise of dominion or control;

(2) Riddle's intent to assert a right in fact inconsistent with Rensch's right of control;

(3) Riddle's good faith;

(4) the extent and duration of the resulting interference with Rensch's right of control;

(5) the harm done to the rings; and (6) the inconvenience and expense caused to Rensch;

Id. at § 222A(2); 18 Am.Jur.2d § 113, and urges this court to consider the following mitigating facts:

--The rings were mistakenly given to another patron who absconded with them;

--Riddle's clerk had no intention to deprive Rensch of his property;

--The clerk did not act out of malice or ill will;

--The inconvenience and expense caused to Rensch has been exaggerated in light of the fact that Riddle's immediately offered to replace the two rings with merchandise of equal or better value;

--Rensch has refused to consider offers of replacement.

Based on the foregoing, Riddle's contends that it would be unjust for them to be required to pay the full, fair market value of the rings under § 222A. We are not persuaded by this argument.

A bailment is generally defined as "the delivery of a thing to another for a special object or purpose, on a contract, express or implied, to conform to the objects or purposes of the delivery which may be as various as the transactions of men." Windeler v. Scheers Jewelers, 8 Cal.App.3d 844, 88 Cal.Rptr. 39, 43 (1970) (citations omitted). A "bailment" imports that the delivery of personal property in trust to another shall be faithfully executed, and the property returned or duly accounted for when the special purpose is accomplished, or kept until the bailor reclaims it. Johnson v. Hanna, 78 S.D. 324, 332-333, 101 N.W.2d 830, 835 (1960).

In discussing the bailment contract, 8 Am.Jur.2d Bailments § 54 (1980) provides:

A bailment relation is a contractual arrangement, and may result either from an express contract or from a contract implied in fact or in law. The bailment contract is governed by the same rule of law that govern...