Title: Lipman v. Petersen

State: kansas

Issuer: Kansas Supreme Court

Document:

223 Kan. 483 (1978)
575 P.2d 19
ARNOLD J. LIPMAN, RICHARD COREY and LLOYD SIGLER, Appellants,
v.
EUGENE E. PETERSEN, PETERSEN TOOL COMPANY, INC., PETERSEN TOOL CO., and L & L VAN LINES, INC., Appellees.
No. 48,468

Supreme Court of Kansas.
Opinion filed February 25, 1978.
John P. Woolf, of Martin, Pringle, Schell & Fair, of Wichita, argued the cause and was on the brief for the appellants.
No appearance by appellees.
The opinion of the court was delivered by
McFARLAND, J.:
This is a civil action brought to recover damages for conversion and breach of a written contract by an unauthorized release and/or wrongful delivery of plaintiffs' (appellants) wrenches which were stored in the warehouse of defendant (appellee) L & L Van Lines.
In December, 1972, plaintiffs purchased 5,000 wrenches from defendants Eugene Petersen and the Petersen Tool Company. The plaintiffs, at the same time, entered into an agreement to warehouse the wrenches with defendant L & L Van Lines (hereafter referred to as L & L). A non-negotiable warehouse receipt was issued for the goods. The receipt limited liability to 30¢ per pound. The employees of L & L did not discuss this provision with the plaintiffs. The receipt also stated that a written order signed by the plaintiffs would be required before any release would be made and that the receipt itself would have to be surrendered when the wrenches were withdrawn. The following month L & L refused to release wrenches because no written order was received. Two written orders were received that month and 384 wrenches were released. The plaintiffs never authorized the release of any more wrenches. Accordingly, 4,616 wrenches remained in the warehouse, with a value of $37,360.
*484 In May, 1973, fire destroyed the warehouse and some of the wrenches were damaged. Employees of L & L loaded all wrenches into one of its trucks for safekeeping. Petersen (the former owner) tried to obtain the wrenches but was refused. Petersen went to see the manager of L & L who was in the hospital for injuries received in the fire. The manager released all wrenches to Petersen without written authorization from plaintiffs. L & L gave no notice to plaintiffs of this action. Later, L & L received a receipt from Petersen. Plaintiffs subsequently learned of the fire and unsuccessfully attempted to recover their wrenches from Petersen. This action resulted. The plaintiffs claim damages in the amount of $34,085, the value of the 4,126 undamaged wrenches.
The plaintiffs sought recovery on alternate theories of breach of contract and conversion. The actual damages sought were the same on both theories. Prior to the trial the administrative judge entered an order requiring the plaintiffs to elect on which theory they desired to proceed. At the bench trial, the trial court upheld the previous order over plaintiffs' objection. Plaintiffs elected to proceed on their conversion theory. Judgment was entered in favor of plaintiffs for $1,237.80 (4,126 wrenches at 30¢ per pound). L & L was given judgment in a like amount on its cross-claim against Petersen. The plaintiffs appeal. Defendants Petersen do not appeal the judgment against them on the cross-petition.
The plaintiffs raise a number of points on appeal. We will first consider the issue as to whether or not L & L's liability was limited by the warehouse receipt as it is dispositive of the case. K.S.A. 84-7-204 provides in part:
The warehouse receipt in question contained the following provision:
The trial court specifically found that the employees of L & L did not discuss the provision of the warehouse receipt with the plaintiffs. The trial court, after making extensive findings of fact, concluded L & L had converted the wrenches but that its liability was limited to 30¢ per pound.
K.S.A. 84-7-204(2) authorizes a warehouseman to limit his liability for loss or damage to goods but prohibits such limitation of liability for conversion to his own use. The issue then becomes whether or not "conversion" and "conversion to his own use" are synonymous terms. Prior to the enactment of the Uniform Commercial Code in Kansas, K.S.A. 82-110 (repealed 1966) provided:
8 Am.Jur.2d, Bailments, § 109, pp. 1007-1008, states:
*486 This is an issue of first impression. A limitation clause was held inapplicable for an unauthorized sale of goods in Page v. Allison, 173 Okla. 205, 47 P.2d 134 (1935), wherein the Oklahoma Supreme Court held:
In the case at hand the warehouseman did not personally profit from his wrong. The risk to the property from fire, water, and negligence can be considered to be foreseeable and ordinary risks of bailment. Misdelivery to a third party is not in the same class of risks as it involves an intentional parting with possession, in violation of the terms of the receipt. We hold that "conversion" and "conversion to his own use" are synonymous terms and, accordingly, the limitation of liability clause is inapplicable. The trial court erred in entering judgment based on the weight of the goods, rather than actual value. The trial court did not determine the actual value of the undamaged wrenches.
In view of this holding, the other points raised on appeal need not be considered.
The judgment of the district court is reversed and the case is remanded with directions to the district court to determine the value of the goods and enter judgment in favor of plaintiffs in accordance with this opinion.