Watkins v. Layton

• Decision Date: 12 April 1958
• Docket Number: No. 40851,40851
• Citation: 182 Kan. 702,324 P.2d 130
• Parties: Frank WATKINS and Thelma Watkins, Appellants, v. Earl LAYTON, Audrey Layton and Johnnie Masterson, d/b/a Bud's Lounge, Appellees.
• Court: Kansas Supreme Court

Page 130

324 P.2d 130

182 Kan. 702

Frank WATKINS and Thelma Watkins, Appellants, v. Earl LAYTON, Audrey Layton and Johnnie Masterson, d/b/a Bud's Lounge, Appellees.

No. 40851.

Supreme Court of Kansas.

April 12, 1958.

Syllabus by the Court

1. Where the mortgagee of chattels seizes and sells the mortgaged property and fails to account for the excess to the mortgagor pursuant to G.A.1949, 58-311, and the trial court, after hearing, enters judgment against the mortgagee for both actual and punitive damages on the cross petition of the mortgagor to the mortgagee's replevin action claiming damages for conversion by the mortgagee, it is held: The judgment must be affirmed since the mortgagee has failed to establish affirmatively that error was committed.

2. On appeal to this court error is never presumed and it is incumbent upon the party complaining to establish affirmatively that error was committed.

3. A judgment for one of the parties in litigation indicates a general finding in favor of that party. It is settled that a general finding made by a trial court determines every controverted question of fact in support of which evidence has been introduced. Further, a general finding by the trial court raises a presumption that it found all facts necessary to sustain and support the judgment.

4. If a mortgagee disposes of personal property in denial of the title or interest of the mortgagor, he is liable for conversion, or if he fails to account for surplus money arising in the sale, he is liable for conversion, and where the requisite mental attitude or state of mind coexists with the conversion it is proper to allow punitive damages in addition to actual damages.

5. The law does not require a specific finding of an intentional and ruthless desire to injure in order to sustain an award of punitive damages. The burden of proof is sustained, once the injured party shows such gross neglect of duty by the wrongdoer as to evince a reckless indifference of the rights of others.

Julian E. Ralston and John E. Hurely, Wichita, were on the briefs for appellants.

A. W. Hershberger, J. B. Patterson, Richard Jones, Wm. P. Thompson, H. E. Jones, Jerome E. Jones and William E. Palmer, Wichita, were on the briefs for appellees.

SCHROEDER, Justice.

This is a replevin action purportedly commenced when the appellants filed a replevin affidavit following which the personal property under chattel mortgage was seized and sold. The appellees, by cross petition, claimed actual damages and punitive damages for conversion of the property. Judgment for appellees in the lower court, in addition to actual damages, included $300 as punitive damages.

The only question presented is whether the trial court erred in allowing punitive damages.

The appellants were the owners of a purchase money chattel mortgage in the amount of $2,500. They had originally sold the property, consisting of tavern fixtures and equipment, to the appellees for a total price of $5,500. The appellees paid $3,000 in cash and had made payments of $1,200 on the note leaving a balance of only $1,300.

On June 7, 1956, appellees being in default on the monthly installment payments, the appellants filed an affidavit in replevin in the Office of the Clerk of the District Court of Sedgwick County. No petition was filed but the Sheriff, acting under the order of the Clerk of the District Court, took possession of the property and delivered it to the appellants on June 8, 1956. The appellants promptly sold the property sometime between June 8 and June 10, 1956. It was sold for $2,000 which was $700 in excess of appellees' indebtedness. No notice, statutory or otherwise, was given to appellees of the repossession or of the sale of this property, and at no time was payment or tender of payment of the excess, in the sum of $700, ever made to the appellees by the appellants.

The first attempt to obtain service on appellees was made on July 12, 1956, by publication. On motion of the appellees this service was quashed by the court on September 4, 1956, for the reason that no petition was filed at the time of its issuance. The petition was filed on July 23, 1956, and the first attempt to secure service on appellees after the filing of the petition was made on September 15, 1956. The appellees filed a cross petition praying for the difference between $5,500.00, the price they had agreed to pay appellants for the property, and $1,300.00, the amount they owed when the property was seized and sold. The appellees also prayed for $5,000 as punitive damages.

After hearing, the trial court entered judgment for the appellees in the sum of $700, actual damages, and also gave the appellees judgment for $300 as punitive damages. The appellants admit their liability for the sum of $700, actual damages, but appeal as to the punitive damages.

Attached to the petition of the appellants was a copy of the chattel mortgage which was executed by the appellees. The only paragraph material to this appeal reads:

'Provided, that if the undersigned shall pay the said debt, then this mortgage shall be void. And it is hereby agreed that if default be made in the payment of said debt, or any part thereof, or if any attempt be made to dispose of or remove said property from Sedgwick County, Kansas, or if at any time the payees of said note shall deem the debt unsafe or insecure, they are hereby authorized to enter upon the premises where said property may be, and remove or sell the same, at public or private sale, with or without notice, and out of the proceeds retain the amount owing on said debt, with expenses, attending the same, rendering to the undersigned the surplus after the whole of said debt shall have been paid with charges of aforesaid.' (Emphasis added.)

The appellants assert that even though the writ upon which the Sheriff acted in seizing the property turned out to be void, by reason of their failure to file a petition when the replevin affidavit was filed on June 7, 1956, the appellees must show they are the owners of the property and entitled to possession, and that the replevin action was fraudulent, malicious and brought with collusion and gross negligence. The appellants argue that pursuant to the provisions of the chattel mortgage they had the right to take possession without filing a legal action, but in the interest of peaceful relations they pursued the legal route to do what they had a right to do under the terms of the contract without any legal assistance.

Appellants argue that where they had a right to repossess property, peacefully, without any process whatever, the Sheriff, acting under a void writ of seizure on the buyers' default, acts as the sellers' agent and the property may be deemed peaceably retaken. Citing: Grossman v. Weiss, 129 Misc. 234, 221 N.Y.S. 266; Mendelson v. Irving, 155 App.Div. 114, 139 N.Y.S. 1065; and Ellis v. Smithers, 206 Ark. 247, 174 S.W.2d 568.

In Duff & Repp Furniture Co. v. Read, 74 Kan. 730, 88 P. 263, this court held that an officer who lievied execution on a void judgment became the agent of the party causing the execution to be issued.

The appellees, however, concede that the appellants had the right of possession under both the mortgage and the law. The appellees assert the basis of their action is not how the appellants gained possession of the property, but what they did with it after they gained possession. First, appellees contend that appellants did not give notice pursuant to the provisions of G.S.1949, 58-309. Second, they contend that the appellants did not comply with the provisions of G.A.1949, 58-311, which provide:

'If, after satisfying the mortgage and costs of sale there be any surplus remaining, the same shall be paid to any subsequent mortgagee entitled thereto, or to the mortgagor or his assigns.'

Under appellees' first contention it must be conceded that notice to the appellees prior to sale of the mortgaged property was unnecessary by the terms of the chattel mortgage, and the appellants had the right thereunder to convey the entire interest of the appellees in the mortgaged property. Harris v. Lynn, 25 Kan. 281. Further, the parties had a right to agree upon the method for disposal of the mortgaged property notwithstanding the provisions of the statute requiring public notice of sale in case of nonpayment of the mortgage debt. Denny v. Van Dusen, 27 Kan. 437; and Reynolds v. Thomas, 28 Kan. 810. We therefore think appellees' first contention is without merit, and in view of the disposition made under appellees' second contention think it unnecessary to pursue this point further. See Graves v. Negy, 114 Kan. 373, 219 P. 286.

The title and rights of parties to personal property covered by a chattel mortgage relative to the provisions of Article 3, Chapter 58, G.S.1949, identical to the provisions of G.S.1901, are discussed and clarified in Foy v. Board of Com'rs of Comanche County, 69 Kan. 206, 76 P. 859, and reference is made thereto.

The earliest Kansas cases indicate that damages, sometimes called exemplary, vindictive or punitive, are permitted whenever the elements of fraud, malice, gross negligence, or oppression mingle in the controversy. Malone v. Murphy, 2 Kan. 250; Wiley v. Keokuk, 6 Kan. 94; and Cady v. Case, 45 Kan. 733, 26 P. 448. Such damages are allowed not because of any special merit in the injured party's case, but are imposed by way of punishing the wrongdoer for malicious, vindictive or a willful and wanton invasion of the injured party's rights, the purpose being to restrain and deter others from the commission of like wrongs. Stalker v. Drake, 91 Kan. 142, 136 P. 912; see, also, Townsend v. Seefeld, 102 Kan. 302, 169 P. 1157; and 15 Am.Jur., Damages, § 266, p. 700. The reasons for the rule are fully discussed in Wiley v. Keokuk, supra.

More recent decisions have followed the early lead in permitting exemplary damages. Roseberry v. Scott, 120 Kan. 576, 244 P. 1063; Motor Equipment...