Opinion ID: 2468655
Heading Depth: 1
Heading Rank: 1

Heading: The Directed Verdict on Compensatory Damages

Text: Before dealing with the merits of Point I, we must dispense with a contention by Gibson that Ms. McKenzie has failed to assign error to the directed verdict on the issue of conversion. The problem exists, we believe, because it is not at all clear whether the trial court in the end was ruling that the plaintiff had failed to prove conversion or, having proved conversion, failed to prove that she was legally damaged as a result. At the close of the plaintiff's case the trial court properly denied a motion for a directed verdict on the issue of conversion and at the close of the defendant's case the motion was renewed. During a lengthy discussion the trial court clearly recognized that a factual issue existed as to conversion. He ruled unequivocally on the matter of punitive damages, but never clearly on conversion, and we resolve that doubt in favor of the party against whom the verdict was directed. There is no indication the appellee has been misled by the appellant's points of error and we are unwilling to rule on an ambiguous record that Ms. McKenzie has abandoned the issue of conversion, which would render the appeal meaningless. The motion for a directed verdict was grounded on an absence of proof that Gibson converted Ms. McKenzie's funds to its own use. It is not essential to conversion that it be for the use of the alleged converter. Conversion is any distinct act of dominion wrongfully exerted over property in denial of, or inconsistent with, the owner's right. First National Bank of Brinkley v. Frey, 282 Ark. 339, 668 S.W.2d 533 (1984); Thomas v. Westbrook, 206 Ark. 841, 177 S.W.2d 931 (1949). The conversion need not be a manual taking or for the defendant's use: if the defendant exercises control over the goods in exclusion, or defiance, of the plaintiff's right, it is a conversion, whether it is for his own use or another's use. (Our italics). Big A Warehouse Distributors, Inc. v. Rye Auto Supply, Inc., 19 Ark.App. 286, 719 S.W.2d 716 (1986). Perhaps the most common way in which conversion is committed is by an unauthorized transfer or disposal of possession of the goods to one who is not entitled to them. Prosser and Keeton on the Law of Torts, 5th Edition § 15 p. 92. Gibson Ford maintains that because the $500 check was applied to the reduction of an indebtedness for which Ms. McKenzie was liable, she sustained no damage as a matter of law. We reject the proposition. Certainly, as the trial court observed, there was a factual dispute as to whether Gibson returned Ms. McKenzie's check to her or delivered it to Ford Motor Credit and that issue was for the jury to settle. We need not decide whether Ms. McKenzie's liability to Ford Motor Credit Company was as a borrower or a guarantor, as in either event, Gibson had no right to deliver her check to Ford Credit in direct violation of the understanding that the check would be returned to her. Gibson has produced no authority supporting the premise that a tortfeasor can escape liability as a converter because the proceeds of his conversion are disposed of in a manner that may ultimately benefit the owner. We believe the weight of authority is to the contrary and is in accord with our holding in Roach v. Rector, 93 Ark. 521, 123 S.W. 399 (1909). There, Roach, a creditor of Rector, converted goods belonging to Rector, sold them and applied the proceeds to Rector's indebtedness. On appeal we affirmed a judgment for Rector for conversion, holding that the creditor's action was impermissible, her recourse being by legal process rather than the commission of a tort. The exclusive right of an owner of property to decide how he will allocate his funds among obligees was expressed cogently in the early case of Northrup v. McGill, 27 Mich. 234 (1873), cited by Roach v. Rector, supra , and more recently by a California appellate court, Dakota Gardens Apt. Investors v. Pudwill, 142 Cal. Reptr. 126, 75 Cal.App.3d 346 (1977): In general, when there is no fraud, and when the law does not forbid, a man may dispose of his own property according to his own ideas of propriety. If he is indebted by note to different parties, he may apply his property to the payment of one, and refuse to apply it to the payment of another, and he may lawfully discriminate in this way, though in doing so he ignores the stronger moral claim resting upon him. This results from the supreme dominion which is involved in the absolute ownership of property. Nor do we regard Roach v. Rector and the case at bar as distinguishable because Roach was a creditor, whereas Gibson was not. If a creditor cannot escape liability for conversion by applying the proceeds to reduce the indebtedness of the owner, we can see no rational reason why Gibson is entitled to greater deference under the law than a creditor. For that matter, Gibson was not disinterested in the indebtedness to Ford Motor Credit involving Ms. McKenzie's son, as Ford Motor Credit had the right of recourse against Gibson in the event of default.