Case Title: McQuillan v. Mercedes-Benz Credit Corp.

Citation: 

Docket Number: 

State: arkansas

Court: Arkansas Supreme Court

Date: 1998-01-29T00:00:00Z

Document:
Gary D. McQUILLAN and America's Truckaway
Systems, Inc. v. MERCEDES-BENZ CREDIT
CORPORATION

97-209                                             ___ S.W.2d ___

                    Supreme Court of Arkansas
               Opinion delivered January 29, 1998


1.   Conversion -- term defined. -- Conversion is a common-law tort
     action for the wrongful possession or disposition of another's
     property.

2.   Conversion -- proof needed to establish liability for. -- To establish
     liability for the tort of conversion, a plaintiff must prove
     that the defendant wrongfully committed a distinct act of
     dominion over the property of another, which is a denial of or
     is inconsistent with the owners' rights; where the defendant
     exercises control over the goods in exclusion or defiance of
     the owner's rights, it is a conversion, whether it is for
     defendant's own use or another's use.

3.   Conversion -- requisite intent. -- Conscious wrongdoing is not the
     requisite intent for conversion; rather what is required is
     that there be intent to exercise control or dominion over the
     goods. 

4.   Conversion -- unqualified refusal to surrender -- insistence upon charges.
     -- An unqualified refusal to surrender, stating no reason, or
     one stating the wrong reason, is a conversion, even where
     there are unstated justifications; a party's insistence upon
     charges or other conditions of delivery that he has no right
     to impose is conversion.

5.   Trial -- bench trial -- standard of review. -- In bench trials, the
     standard of review on appeal is whether the trial judge's
     findings were clearly erroneous or clearly against the
     preponderance of the evidence; the appellate court views the
     evidence in a light most favorable to the appellee, resolving
     all inferences in favor of the appellee; disputed facts and
     determinations of the credibility of witnesses are within the
     province of the factfinder.

6.   Conversion -- trial court's findings that conversion had occurred not
     clearly erroneous. -- Where the evidence showed and the trial
     court found that appellants had not established that they had
     acquired a valid carrier's lien because they had refused to
     surrender possession of two trucks to appellee, had placed the
     trucks in "secret storage," and had insisted upon payment of
     charges over and above those to which they would have been
     entitled, and where the testimony of appellant showed that he
     had instructed his contracted driver not to release appellee's
     two trucks until he had received payment for all of the
     invoices and that he had never extended an offer to return the
     trucks in exchange for transportation and storage fees, the
     supreme court could not say that the trial court's findings on
     the conversion issue were clearly erroneous.

7.   Conversion -- measure of damages -- circumstances may require different
     standard. -- Ordinarily, the proper measure of damages for
     conversion of property is the market value of the property at
     the time and place of its conversion; the market value of the
     property is not, however, the only measure of the damages
     recoverable in an action for conversion; the circumstances of
     the case may require a different standard, including a measure
     of the expenses incurred as a result of the conversion.

8.   Conversion -- mitigation of damages -- evidence of return of property. --
     The fact that converted items were eventually returned to the
     owners does not necessarily bar recovery of damages for their
     conversion, but may mitigate the damages; generally, the law
     permits evidence of the return of the property to its owner in
     mitigation of damages only when certain circumstances are
     present: (1) the owner must have accepted the return of the
     goods; (2) the original conversion occurred by mistake; and
     (3) the return of the goods occurred promptly after the
     discovery of the mistake and before the commencement of the
     action for conversion.

9.   Damages -- compensatory damages for costs incurred in recovery of converted
     property -- trial court did not err in awarding. -- Where appellee
     eventually received possession of the converted property, and
     the trial court then awarded damages to appellee in the exact
     amount of the costs that a witness stated were expended by
     appellee in its attempts to recover possession of the two
     trucks, the supreme court could not say that the trial court
     erred in awarding such compensatory damages; the supreme court
     has acknowledged the permissibility of awarding damages in an
     action for conversion based upon the expenses incurred as a
     result of the conversion. 

10.  Damages -- award for legal fees incurred in recovery of converted property
     -- trail court did not err in awarding. -- Where the action was one
     for replevin and, alternatively, for conversion of two trucks,
     the legal fees incurred by appellee in its attempts to recover
     possession of the converted property were proper as damages
     under the circumstances of the case; the award of such damages
     is supported by Ark. Code Ann.  18-60-820(a)(1987), which
     provides that "[i]n an action to recover the possession of
     personal property, judgment for the plaintiff may be for the
     delivery of the property, ... and damages for the detention";
     the supreme court affirmed that portion of the damages awarded
     to appellee.   

11.  Damages -- separate award for attorney's fees for expenses incurred in
     prosecution of suit reversed -- no statutory provision for attorney's fees
     in tort actions. -- The supreme court reversed the trial court's
     separate award of attorney's fees where it was apparent that
     the amount was awarded for the expenses incurred in the
     prosecution of appellee's suit; the general rule in Arkansas
     is that attorney's fees incurred in the pursuit of civil
     actions are not awarded unless expressly provided for by
     statute or rule; Ark. Code Ann.  16-22-308 (Repl. 1994),
     which provides for attorney's fees in specific civil actions,
     does not allow attorney's fees in tort actions.

12.  Damages -- award affirmed as modified. -- Where the trial court
     awarded damages to appellee separately as attorney's fees for
     action taken in pursuit of the civil claims rather than as
     part of the costs incurred by appellee in the recovery of the
     converted trucks, the trial court erred because attorney's
     fees incurred generally in the prosecution of replevin and
     conversion actions are not expressly provided for by statute;
     accordingly, the supreme court affirmed the trial court's
     award of damages but modified the judgment to reflect that
     appellants are not required to pay the portion of attorney's
     fees resulting from the prosecution of the litigation.


     Appeal from Carroll Circuit Court, Western District; David S.
Clinger, Judge; affirmed as modified.
     Zurborg & Spaulding, P.A., by: Brian L. Spaulding, for
appellants.
     Burke & Eldridge, P.A., by: John R. Eldridge, III, for
appellee.

     Donald L. Corbin, Justice.
     Appellants Gary D. McQuillan and America's Truckaway Systems,
Inc., (ATS) appeal the judgment of the Carroll County Circuit
Court, Western District, awarding damages in the amount of
$17,509.52 and $1,000.00 in attorney's fees to Appellee Mercedes-
Benz Credit Corporation (MBCC) for its claims of replevin and
conversion against Appellants.  On appeal, Appellants assert that
the trial court erred in finding that a conversion had occurred and
in calculating the damages and fees awarded to MBCC.  This case is
certified to us from the court of appeals, as the issues present
questions involving the law of torts; hence, our jurisdiction is
pursuant to Ark. Sup. Ct. R. 1-2(d).  We affirm.
     The matter was tried before the court in a bench trial.  The
judgment reflects that the trial court made the following findings
of fact.  MBCC had a perfected security interest in two 1991
Freightliner trucks arising from a retail installment contract in
which MBCC had financed the purchase of the trucks by Penguin Truck
Leasing, Inc., from New Dallas Freightliner.  The parties
stipulated as to the existence of MBCC's perfected security
interest.  Penguin subsequently defaulted on its payments under the
agreement.  
     In late 1993, ATS hauled seventeen trucks for St. Lawrence
Freightway from Dallas, Texas, to various locations.  Two of those
seventeen trucks were the same trucks in which MBCC had a perfected
security interest.  ATS issued three invoices, one dated
November 22, 1993, and two dated December 9, 1993, to St. Lawrence
Freightway for transporting fourteen of the seventeen vehicles,
including the two MBCC trucks.  Those two trucks were transported
by ATS under separate invoice dated December 9, 1993, from Dallas
to McKee's Rock, Pennsylvania.  All three of the invoices issued
from ATS to St. Lawrence Freightway were unpaid.  The record
reflects that the first invoice, number 3296, was for transporting
six trucks, with a total amount of $4,123.50 payable to ATS.  The
second invoice, number 3305, was also for transporting six trucks,
with a total amount of $3,712.94 payable to ATS.  The third
invoice, number 3310, was for transporting the two MBCC trucks,
with an amount of $1,682.80 payable to ATS.  
     The court found further that when the two MBCC trucks were
delivered at McKee's Rock, on December 7, 1993, the driver demanded
payment for all three invoices issued by ATS, but did not receive
any payment.  ATS then stored the two MBCC trucks at Cerni Truck
Center in Hubbard, Ohio.  No later than May 27, 1994, and
subsequent to Penguin's default under the installment agreement
with MBCC, McQuillan, individually and as president of ATS,
received notice that MBCC had a perfected security interest in the
two trucks.  On or about June 15, 1994, McQuillan was served with
process issued out of Cass County, Missouri, in an action commenced
by MBCC for possession of the two trucks that were being stored,
unbeknownst to MBCC, at Cerni Truck Center in Ohio.  McQuillan
hired an attorney to defend against the action filed in Missouri,
who made an offer to MBCC in which Appellants would return the two
trucks if MBCC would pay all of the unpaid invoices, together with
the unpaid storage charges for the trucks.  In other words,
Appellants were attempting to secure payment from MBCC for the
entire debt owed by St. Lawrence Freightway to ATS for transporting
the fourteen trucks, notwithstanding the fact that MBCC only had an
interest in two of those trucks.  
     MBCC filed the instant action for replevin in Carroll County
on July 14, 1994.  Alternatively, MBCC prayed for relief under a
theory of conversion.  Through his attorney in the Arkansas action,
McQuillan offered to return the two trucks to MBCC for the sum of
$8,000.00, if MBCC agreed to pay the storage charges.  The invoice
pertaining to the two MBCC trucks was for the sum of $1,682.80. 
MBCC discovered the location of the two trucks in October 1994, and
obtained possession of them on October 6, 1994, after paying Cerni
Truck Center the sum of $4,000.00 in storage fees.  In addition to
the storage fees, MBCC also paid $400.00 for the transportation of
the two trucks and expended $13,109.52 in legal fees in its
attempts to recover the trucks through the legal processes of
various states.  
     The trial court specifically rejected Appellants' claim that
ATS had a carrier's lien on the two trucks.  Instead, the court
found that Appellants' actions in refusing to surrender possession
of the two trucks to MBCC, in placing them in "secret storage," and
insisting upon payment of charges over and above those to which
they would have been entitled under a properly established
carrier's lien, constituted the tort of conversion.
                        I.  Conversion  
     For their first point for reversal, Appellants argue that the
trial court erred in finding that a conversion had occurred, as
they contend that they had a valid carrier's lien on the two trucks
that was superior to MBCC's perfected security interest.  We
disagree. 
     Conversion is a common-law tort action for the wrongful
possession or disposition of another's property.  France v. Nelson,
292 Ark. 219,