Schlieff v. Bistline

• Decision Date: 17 October 1932
• Docket Number: 5890
• Citation: Schlieff v. Bistline, 52 Idaho 353, 15 P.2d 726 (Idaho 1932)
• Parties: HERMAN SCHLIEFF, PAUL M. BRYAN and ROSE G. SCHLIEFF, as Trustees of the CONSUMERS OIL COMPANY, a Defunct Corporation, Appellants, v. PAUL BISTLINE, J. E. TARR, Jr., UTAH OIL REFINING COMPANY, a Corporation, and the BLUE LIGHT GAS AND OIL COMPANY, a Corporation, Respondents
• Court: Idaho Supreme Court

15 P.2d 726

52 Idaho 353

HERMAN SCHLIEFF, PAUL M. BRYAN and ROSE G. SCHLIEFF, as Trustees of the CONSUMERS OIL COMPANY, a Defunct Corporation, Appellants, v. PAUL BISTLINE, J. E. TARR, Jr., UTAH OIL REFINING COMPANY, a Corporation, and the BLUE LIGHT GAS AND OIL COMPANY, a Corporation, Respondents

No. 5890

Supreme Court of Idaho

October 17, 1932

CONVERSION-ACTION-SEVERABLE CONTRACT-JUDGMENT-RELIEF GRANTED.

1. "Conversion" is dealing by person with chattels not belonging to him in manner inconsistent with owner's rights.

2. Assignment of defunct corporation's accounts receivable by corporation, to which they were assigned for collection to its subsidiary corporations for such purpose, held not "conversion."

3. Stockholders of defunct corporation, assigning accounts receivable to another corporation for collection and giving latter cash bond to insure title to corporate assets sold to corporation formed by assignee, could maintain separate actions on each undertaking.

4. Contract to do several things at several times is divisible and action lies for breach of any one of stipulations.

5. Court should have granted parties suing for conversion of accounts receivable other relief to which entitled, where record showed defendant's possession of cash and accounts belonging to plaintiffs, and complaint fully pleaded facts notwithstanding finding that defendant did not convert accounts.

6. Court may grant any relief consistent with case made by complaint and embraced within issues, though not prayed where answer is filed (C. S., sec. 6829).

7. Court should make finding as to correctness of defendant's accounting as respects accounts receivable, assigned to it by defunct corporation for collection and retention of proceeds to guarantee payment of accounts, and enter judgment settling issue, regardless of form of action.

APPEAL from the District Court of the Fifth Judicial District, for Bannock County. Hon. Robert M. Terrell, Judge.

Action for conversion of accounts. Judgment for defendants. Reversed in part and affirmed in part.

Judgment affirmed as to Paul Bistline, J. E. Tarr, Jr. Idaho Oil Company, a corporation, and the Blue Light Gas and Oil Company, a corporation. Judgment reversed as to the Utah Oil Refining Company and remanded, with instructions. No costs awarded on this appeal.

Walter H. Anderson, for Appellants.

Finis Bentley and F. M. Bistline, for Respondents.

LEEPER, J. Lee, C. J., and Budge, Givens and Varian, JJ., concur.

OPINION

LEEPER, J.

On June 29, 1929, Herman Schlieff and Paul Bistline, who were stockholders, directors and officers of the Consumers Oil Company, an Idaho corporation, entered into a written contract with the Utah Oil Refining Company, a Utah corporation, for the sale of all of the assets of the Consumers Company to a new corporation to be formed by the latter for the express purpose of taking over the business. The contract was ratified by the stockholders of the Consumers Company and thereafter carried out, its details being of no concern in this litigation except as hereafter stated. Among the provisions of the contract was one authorizing the Utah Oil Refining Company to retain $ 25,000 of the purchase price for a period of ninety days to insure the payment of all debts of the Consumers Oil Company. Later, on August 6th, 1929, this clause was modified by letter, to the effect that certain accounts due the Consumers Oil Company totaling $ 15,731.01 should be assigned to the Utah Oil Refining Company, to be by it held for ninety days in lieu of the $ 25,000 cash retained, and collected in the due course of business. The pertinent part of the letter is as follows:

"Also we have this day assigned to you the accounts receivable of the Consumers Oil Company as per schedule furnished, amounting approximately to $ 15,731.01. You may collect these accounts and hold the proceeds thereof for ninety (90) days from the first day of July, 1929, as a guaranty that the accounts receivable of the Consumers Oil Company will by that time be paid. At the end of said ninety-day period you are to deliver to us all cash collected on account of said bills receivable and re-assign to us the uncollected accounts, or retain the uncollected accounts and pay to us the face value of the accounts receivable."

Pursuant to this letter the $ 25,000 was paid to the vendors, and the accounts were assigned to the Utah Company. Thereafter the Consumers Gasoline and Oil Corporation was organized by the Utah Company in accord with the terms of the contract, all of its stock being owned by the Utah Company except qualifying shares, and the business and assets of the original Consumers Company were transferred to it. The Utah Company also organized two other corporations, the Idaho Oil Company in Utah and the Blue Light Gas & Oil Company in Idaho, each of which took over a portion of the business from the Consumers Gasoline and Oil Company, which was ultimately permitted to lapse. The Utah Company assigned the accounts aforesaid, first to the Consumers Gas and Oil Company and then to the Idaho Oil Company and the Blue Light Gas & Oil Company for collection. There is no evidence in the record that these various transfers were made and accepted except in furtherance of the purpose for which the accounts were first assigned, i. e., collection. After they came into the control of the three last-named corporations, the corporations proceeded to collect them and, so far as the record shows, each corporation proceeded diligently and faithfully to collect the quota assigned to it during the ninety-day period. At the expiration of the ninety-day trust period, to wit, October 1, 1929, the Blue Light Company and the Idaho Company transmitted back to the Utah Oil Refining Company all moneys collected and all accounts remaining uncollected, and the latter thereupon made a full and complete accounting to Schlieff and Bistline, reassigned the uncollected accounts and tendered a check for the moneys collected, less certain offsets which they claimed to be entitled to under the original contract. As shown by this accounting, the total amount collected was $ 7,694.57, after reconciling a certain Fife account, and the total deductions amounted to $ 2,334.90, leaving a cash balance due Schlieff and Bistline of $ 5,359.67. Schlieff refused to accept the tender or the reassignment in which refusal Bistline refused to join.

Upon these facts Schlieff predicates a charge of conversion, claiming, as we understand his position, that the assignment of the accounts by the Utah Company to the Idaho Company and the Blue Light Company for collection, was unlawful and in and of itself constituted a conversion on the part of each of them, and for which each of them is jointly and severally responsible to the face value of the accounts which ever came into the hands of each. Plaintiffs sued as the statutory trustees of the Consumers Oil Company, joining Bistline and Tarr as parties defendant because they refused to join in the suit. The court found that there was no conversion by the defendants or any of them and entered judgment of dismissal. According to our view this is the only essential point in the case.

Conceding the contention of appellants that an account is property which is subject to conversion, the present record is inadequate upon which to base an action of trover. Not every asportation of the property of another will authorize recovery as for an unlawful conversion. Conversion is defined thus:

"Conversion is any distinct act of dominion wrongfully exerted over another's personal property in denial 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. The act must be essentially tortious, but it is not essential to conversion sufficient to support the action of trover that the defendant should have complete manucaption of the property, or that he apply the property to his own use, if he has exercised dominion over it, in exclusion of, in defiance of, or inconsistent with the owner's right." (26 R. C. L. 1098, sec. 3.)

In other words, conversion is a dealing by a person with chattels not belonging to him, in a manner inconsistent with the rights of the owner. The supreme court of Oregon has carefully defined the rule in Lee Tung v. Burkhart, 59 Ore. 194, 116 P. 1066, as follows:

"'A conversion, in the sense of the law of trover, consists either in the appropriation of the thing to the party's own use and beneficial enjoyment, or in its destruction, or in exercising dominion over it, in exclusion or in defiance of the plaintiff's right, or in withholding the possession from the plaintiff, under a claim of title, inconsistent with his own.'"

This case has been approved and followed in Hart v. Oregon Laundry Co., 91 Ore. 324, 178 P. 932; Hess v. Starwich, 149 Wash. 679, 272 P. 75; Preble v. Hanna, 117 Ore. 306, 244 P. 75; McJunkin v. Hancock, 71 Okla. 257, 176 P. 740.

In this case the accounts in question were delivered to the Utah Oil Refining Company under the terms of the amendatory letter of August 6th, the accounts and the proceeds thereof to be held for a period of ninety days as security to insure compliance with the Bulk Sales Law by the vendors. The Utah Company was specifically charged with the collection of them during the ninety-day period. The Idaho Oil Company and the Blue Light Company were subsidiaries of the Utah Company substantially all of the stock of each being owned by the latter. They were formed to take over the business formerly conducted by the Consumers Oil Company, and the accounts...