Bush v. Hayes

[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] Plaintiff brought this action to recover for beans alleged to have been converted by defendants. The Michigbean Growers Exchange, a Michigan corporation, was originally a party defendant, but as to it plaintiff dismissed his suit. On November 16, 1936, plaintiff had a Mr. Herman deliver 68 1/2 bags of beans belonging to plaintiff to the Michigbean Growers Exchange. Ward Baird, an employee of the Growers Exchange unloaded this first load of beans, processed them, and stacked them apart from beans belonging to others. On November 23d plaintiff made a further delivery to the corporation of 44 bags of beans, and on that date he saw his first load of beans in sacks belonging to the Growers Exchange but the tag on each sack bore plaintiff's name. From this lot plaintiff took 10 sacks of beans and five bags of culls. About February 11th, plaintiff returned to the elevator where he found Mr. Mills and Mr. Hayes in charge, conversed with them separately, and asked them for a warehouse receipt but received none. Plaintiff then looked around but failed to find his beans. The following day plaintiff returned and again conversed about the transaction but received no satisfaction. Three or four days later he made a demand on Mr. Hayes for his beans but failed in his attempt to get them, nor did he obtain a warehouse receipt. At the time of plaintiff's demand, Hayes said that the beans were gone, that they were moved a few days before, about February 11th. Ward Baird testified that under instructions from Mr. Mills he helped load the beans on the truck which moved them. He heard Mr. Mills tell the truck driver to take the beans to the west town elevator, owned by the corporation and also located in Owosso. Mr. Hayes was present at the time these beans were moved.

After receipt of the above testimony offered by the plaintiff, and apparently at the conclusion of his case, on motion by defendants, the trial court instructed the jury that the beans were not delivered to the defendants but to the Growers Exchange, that there was no evidence at all that these defendants converted the beans to their own use, that under the testimony the last known of the beans they were in the possession of the corporation to which plaintiff had delivered them, and the court directed the jury to render a verdict in favor of defendants. Plaintiff moved for a new trial. In his opinion denying the motion, the trial court stated that there was no evidence that these defendants participated in any wrong at all. From a judgment for defendants, plaintiff appeals.

The trial judge erred in instructing the jury that to hold the defendants liable there must be evidence showing that they converted the beans to their own use. If there has been a conversion in which they participated they are liable. It is of no consequence whether they acted for the corporation or acted for themselves if they were active participants in converting beans which belonged to plaintiff. They are liable for the torts which they commit, be it for themselves or for another. In Knowles v. Smith, 190 Mich. 409,418, we said:

"That an agent, as well as his principal, may be held liable for conversion in an action in trover, is settled in this State."

In Hempfling v. Burr, 59 Mich. 294, the plaintiff turned over stock as a pledge for a note. Shortly before the maturity of the note, plaintiff inquired of the defendant whether he should pay it or let it run until plaintiff's return from a contemplated absence. Defendant told him to let it run. The stock was turned over to another and plaintiff sought relief. In response to defendant's claim that he acted in his official capacity as an officer of the bank and hence was not personally liable, the court said:

"In such a case it is quite likely that Burr's conduct may have been official, but we are not aware of any principle which will exempt a person from personal responsibility for fraud committed in a double capacity. It is no part of official duty to commit fraud, and there are probably cases where a corporation may not be liable for the frauds of its officers. In the present case there is no attempt to charge either corporation as such. To set up official responsibility as the only one existing is equivalent to claiming that the bank is liable for the cashier's fraud, and the cashier himself not liable. This is a very singular result, and one which is too unreasonable to bear consideration. A party defrauded may have more than one wrongdoer, actual or constructive, to look to for redress, but the active wrongdoer is always responsible for his own frauds."

In Reliable Woodworking Co. v. Lindeman,105 N. J. Law, 121 (143 A. 333), the court said:

"The mere fact that the defendant was the president of the vendor corporation is immaterial if the taking, which he directed, was wrongful, because the rule is that a person who, acting as president of a corporation, converts property to the use of the corporation, cannot escape liability for the tort on the theory that he was acting merely as agent, (citing case) nor can he escape liability on the theory that he did not personally actually take possession of the property, but merely directed an employee of the corporation, who was with him, to take the property away."

See, also, 3 Fletcher Cyclopedia Corporations (Perm. Ed.), p. 563, § 1140; 7 R. C. L. p. 510; and Debobes v.Butterly, 210 App. Div. 50 (205 N. Y. Supp. 104).

Plaintiff testified that he made a demand for the redelivery of his beans on defendant Hayes. Notwithstanding this demand plaintiff's beans were not returned to him by Mr. Hayes. InGuarantee Bond Mortgage Co. v. Hilding,246 Mich. 334, we said:

"From an examination of the cases, we are satisfied that the better rule is that while a manual possession of the property is not necessary to constitute a conversion, something more than the use of words is necessary. The words used may be evidence of a conversion, but are not conversion perse. This court has, in common with courts generally, held that refusal to deliver possession pursuant to a lawful demand is not conversion, but only evidence of a conversion."

In 2 Cooley on Torts (Fourth Ed.), p. 519, § 335, we find:

"The refusal to surrender possession in response to a demand is not of itself a conversion; it is only evidence of a conversion, and like other inconclusive acts is open to explanation."

There is no testimony in this record explaining or excusing Mr. Hayes' failure or refusal to redeliver the beans to plaintiff. There was sufficient evidence to take the case to the jury as to defendant Hayes. It was error on the part of the trial court to direct a verdict in favor of this defendant.

As to the defendant Mills, there is no testimony in this record tending to show or from which the inference may be drawn that plaintiff demanded of him a return or redelivery of the beans. There was no relationship between Hayes and Mills that would make the demand on Hayes for delivery applicable to or binding upon Mills. Since it conclusively appears from this record that in the first instance the Michigbean Growers Exchange became lawfully possessed of these beans, plaintiff could not under the circumstances of this case, maintain an action for conversion until he first made demand for the return of his property. Because, as to defendant Mills, plaintiff offered no testimony of a demand for redelivery of the beans, and there being no other evidence of conversion by this defendant, the court was justified in directing a verdict in favor of Mr. Mills. This is true notwithstanding it might be found from the record that plaintiff did demand of Mills a warehouse receipt, because a demand for a warehouse receipt was not a demand for the return of plaintiff's property. Instead, it was only a demand for evidence of the bailment which had been lawfully created. If of any probative force at all, plaintiff's demand for a warehouse receipt was evidence of an intent to continue possession of the beans with the Michigbean Growers Exchange.

The judgment entered in favor of defendant Hayes and against plaintiff will be reversed and the case remanded for a new trial as to this defendant; but the judgment entered in favor of defendant Mills must be affirmed. In this court plaintiff has asked to amend his declaration so as to include a charge that he has been deprived of his beans by reason of fraud perpetrated upon him by these defendants. In the record before us there is no proof tending to sustain such a charge. We therefore do not pass upon plaintiff's motion to amend in this court; but our disposition of the case is without prejudice to plaintiff's right to apply to the circuit court for leave to amend his declaration, should he elect so to do.

On this appeal plaintiff will have taxable costs against defendant Hayes, and defendant Mills will have taxable costs against plaintiff.

WIEST, C.J., and BUSHNELL, SHARPE, POTTER, CHANDLER, and McALLISTER, JJ., concurred. BUTZEL, J., did not sit.