Scott v. Hurd-Corrigan Moving & Storage Co., Inc.

• Decision Date: 03 February 1981
• Docket Number: HURD-CORRIGAN,Docket No. 78-3313
• Citation: 302 N.W.2d 867,103 Mich.App. 322
• Parties: , 30 UCC Rep.Serv. 1649 Robert A. SCOTT, Plaintiff-Appellant, v.MOVING & STORAGE CO., INC., Defendant-Appellee.
• Court: Court of Appeal of Michigan — District of US

Page 867

302 N.W.2d 867

103 Mich.App. 322, 30 UCC Rep.Serv. 1649

Robert A. SCOTT, Plaintiff-Appellant, v. HURD-CORRIGAN MOVING & STORAGE CO., INC., Defendant-Appellee.

Docket No. 78-3313.

Court of Appeals of Michigan.

Feb. 3, 1981.

Released for Publication March 23, 1981.

Rehearing Denied March 30, 1981.

Michael J. Craw, Ann Arbor, for plaintiff-appellant.

James C. Klemanski, Ilene S. Gordon, Southfield, for defendant-appellee.

Before MacKENZIE, P. J., and BASHARA and RILEY, JJ.

MacKENZIE, Presiding Judge.

Plaintiff instituted this action against the defendant for the alleged unlawful enforcement of a warehouse lien. After a nine-day jury trial, judgment was rendered in the defendant's favor except for a reallocation of auction sale costs incurred by the defendant. Plaintiff appeals as of right.

Plaintiff Robert Scott filed an amended complaint on February 27, 1978, containing the following four counts:

I. Defendant breached a bailment contract of household goods approximating $50,000 in value;

II. The sale of plaintiff's goods was a breach of Uniform Commercial Code (U.C.C.) § 7-210(2), M.C.L. § 440.7210(2); M.S.A. § 19.7210(2), the operable statute;

III. Defendant's wilful breach of the bailment contract amounted to conversion under U.C.C. § 7-210(9), M.C.L. § 440.7210(9); M.S.A. § 19.7210(9), which entitled plaintiff to exemplary damages in the amount of $150,000 plus costs, interest, and actual attorney fees;

IV. Defendant's wilful, wanton, and reckless auctioning of household items entitled plaintiff to $10,000, plus costs, interest, and actual attorney fees, for mental anguish.

During the period of 1969 to August, 1975, plaintiff was an employee of the Ypsilanti division of Chumbley Chevrolet, Inc., an automobile dealership doing business in Ypsilanti and Ann Arbor. While he maintained his residence in Lansing, plaintiff stayed in an apartment in Ypsilanti during the week.

In early 1975, plaintiff became aware that the Chumbley dealership would be sold in the spring of that year. In February, 1975, plaintiff contacted the defendant, Hurd-Corrigan Moving & Storage Co. Inc., a commercial warehouse dealer, regarding storage of items kept in his Ypsilanti apartment. On June 5, 1975, the plaintiff and the defendant entered into a bailment agreement for the storage of household goods and other personal property.

The plaintiff claimed that defendant's employee told him that no charges would have to be paid until the goods were removed from storage and that there would be no monthly storage charges. He stated that he never received any monthly statement of charges from defendant.

Plaintiff supplied the defendant with only one mailing address which was placed on defendant's ledger card as follows:

Scott, Robert

c/o Chumbley Chevrolet, Inc.

1180 East Michigan Avenue

Ypsilanti, Michigan

The Cumbley dealership was sold to Finley Webb on August 12, 1975, but Chumbley had a post office box until December, 1975. For one year after that time, Chumbley Chevrolet left a downtown Detroit forwarding address. After the goods were placed in storage, the plaintiff moved back to his home in Lansing.

Plaintiff testified that the next communication between himself and Hurd-Corrigan occurred in early 1977 when he called the defendant to obtain his goods out of storage. Plaintiff was told that the goods had been sold.

Employees of the defendant warehouse testified that storage charges were payable monthly and that a warehouse receipt, inventory sheet, invoice, and insurance policy were prepared by the defendant after the goods were placed in storage. Further testimony revealed that these items were mailed to the plaintiff in June, 1975, to the address on the ledger card. Since this original packet of materials was never returned to defendant, it was assumed to have been delivered.

Paragraph ten of the warehouse receipt stated that payments were due one month from receipt of the document and each succeeding month in advance. Monthly statements of storage and insurance charges (amounting to $44) were sent to the address on the ledger card from June through December, 1975. Beginning in September, 1975, the unopened monthly statements were returned; accordingly, defendant stopped sending monthly statements after December, 1975.

A memo dated February 24, 1976, was mailed to the plaintiff addressed to: Robert Scott, c/o Chumbley Chevrolet, 1180 West Michigan, Ypsilanti, Michigan, informing him that his account had been delinquent since June 5, 1975. The memo stated that, if plaintiff did not reply within ten days, legal procedures would commence. A statement of charges that had accrued to that date was included with the memo. This communication was never returned to defendant, and plaintiff never responded to it.

A registered letter was then mailed to plaintiff on March 30, 1976. It was addressed to: Robert Scott, 1180 West Michigan Avenue, Ypsilanti, Michigan, rather than in care of Chumbley Chevrolet on East Michigan Avenue. Lillian Burbank, office manager of Hurd-Corrigan, testified that the reference to Chumbley Chevrolet was deliberately not included but that the substitution of "west" for "east" was a typographical error. This letter was returned, unopened, to the defendant.

Mary Ann Stokes, an employee of the Ypsilanti post office, testified that an attempt was made to deliver the registered letter at the East Michigan address since there was no such address on West Michigan. A messenger from Finley Webb, Chumbley's successor, notified the post office on April 8, 1976, that the plaintiff was unknown to them, and this was noted on the envelope. Stokes testified that Chumbley Chevrolet had a forwarding address on file; had the letter been addressed to Robert Scott, c/o Chumbley Chevrolet, it would have been forwarded.

All of the plaintiff's items were sold at public auction, with gross receipts totalling $6,438. When Robert Scott called Hurd-Corrigan in early 1977 to obtain his bailed goods, he was offered $923, the amount of the auction sale in excess of the charges and expenses. Scott refused the money, told the manager of Hurd-Corrigan that the goods were valued in excess of $50,000, and commenced action.

Upon motion by the defendant, the trial court struck Count IV of the complaint, for mental anguish, due to the overlap between this count and the request for exemplary damages under Count III. Plaintiff moved for a directed verdict on the issue of liability, but his motion was denied. The jury awarded plaintiff $2,860, representing damages for defendant's breach of the contract for failing to sell the goods in conformity with commercially reasonable practices less defendant's costs in the preparation, moving, storage, and sale of the goods. No exemplary damages were awarded. The court amended the verdict by ordering defendant to pay costs to plaintiff. Plaintiff appeals as of right, raising the following issues.

I

Plaintiff first contends that the trial court erred in instructing the jury that U.C.C. § 7-210(1) applied to the suit rather than U.C.C. § 7-210(2). We agree.

A warehouseman has a lien against a bailor on goods covered by a warehouse receipt for charges, such as storage, transportation, insurance, labor, and any legally valid sale of such goods. U.C.C. § 7-209, M.C.L. § 440.7209; M.S.A. § 19.7209. In order to enforce the lien, the U.C.C. sets forth two separate procedures. The first, embodied in U.C.C. § 7-210(1), applies to goods stored by a merchant in the course of his business. A merchant is defined in the following manner:

"a person who deals in goods of the kind or otherwise by his occupation holds himself out as having knowledge or skill peculiar to the practices or goods involved in the transaction or to whom such knowledge or skill may be attributed by his employment of an agent or broker or other intermediary who by his occupation holds himself out as having such knowledge or skill." M.C.L. § 440.2104(1); M.S.A. § 19.2104(1).

The requirements under U.C.C. § 7-210(1) are relatively flexible since they are based on the overriding standard that the enforcement be "commercially reasonable". Subsection (1) reads as follows:

"Except as provided in subsection (2), a warehouseman's lien may be enforced by public or private sale of goods in bloc or in parcels, at any time or place and on any terms which are commercially reasonable, after notifying all persons known to claim an interest in the goods. Such notification must include a statement of the amount due, the nature of the proposed sale and the time and place of any public sale. The fact that a better price could have been obtained by a sale at a different time or in a different method from that selected by the warehouseman is not of itself sufficient to establish that the sale was not made in a commercially reasonable manner. If the warehouseman either sells the goods in the usual manner in any recognized market therefor, or if he sells at the price current in such market at the time of his sale, or if he has otherwise sold in conformity with commercially reasonable practices among dealers in the type of goods sold, he has sold in a commercially reasonable manner. A sale of more goods than apparently necessary to be offered to insure satisfaction of the obligation is not commercially reasonable except in cases covered by the preceding sentence."

The second enforcement procedure is set forth in U.C.C. § 7-210(2), which pertains to goods other than goods stored by a merchant in the course of his business. The requirements are very strict and the language of this subsection is expressed in mandatory terminology. Subsection (2) provides that:

"A warehouseman's lien on goods other than goods stored by a merchant in the course of his business may be enforced only as follows:

"(a) All persons known to claim an interest in the goods must be notified.

"(b) The notification must be delivered in person or sent by registered...