Court Opinion

ID: 9537527
Source: CourtListenerOpinion
Date Created: 2023-08-07 07:19:39.279979+00
Date Added: 2024-06-11T14:56:45.903237
License: Public Domain

BISTLINE, Justice,
dissenting.
There is no question but that the original arrangement for the feeding of the Torix cattle by Allred was a bailment, and no issue was raised as to whether Allred was negligent in caring for those cattle. The issues in this case, of which I feel Allred’s treatment of the payments for those cattle to be dispositive, evolved from the sale of the Torix cattle by Allred. In my view, both the trial court and this Court err in their analysis of Allred’s actions in receiving payment in his own name and depositing that payment in the account of Burley Butte. The trial court apparently adopted the Allred characterization that he was merely trying to expedite turning the drafts into money, apparently on the basis that he found Allred to be acting in good faith. The court did not find or conclude from the evidence that Allred was in any way attempting to defraud or cheat Torix. With that I readily agree, but that does not preclude the application of well established principles of law.
First it is necessary to examine the relationship between Torix and Allred with regard to the disposition of the cattle. The trial court held that Allred was merely an accommodation bailee in selling the Torix cattle, and this Court does not discuss that holding. As one text states:
“[A] business institution which, within the scope of its business, makes a practice of acting gratuitously as bailee for its customers and holds itself out as possessing peculiar facilities for such services is, with respect to property left with it accordingly, more than a mere accommodation bailee, and should be held to the responsibilities of a bailee for hire, inasmuch as such services attract patronage.” 8 Am.Jur.2d Bailments § 13 (1963).
Allred’s marketing service to his customers, though he made no specific charge therefor, was a part of his business; as such, it was not a gratuitous accommodation. Moreover, as the testimony of Allred establishes, he used his position as marketeer of the Torix cattle as a vantage point for the collection of his bill against Torix. Torix testified that on one earlier occasion when Allred sold Torix cattle and appropriated the proceeds, Torix admonished Allred against such practice.
It is not necessary to decide whether the legal status of Allred was that of an agent authorized to sell, or a bailee with power to dispose of the bailed goods. Where goods are consigned by one to another with the understanding that the consignee shall ei*912ther sell the goods and remit the price or return the goods, the bailee in such a case is an agent of the bailor. 8 Am.Jur.2d Bailments § 34 (1963). See Globe Securities Co. v. Gardner Motor Co., Inc., 337 Mo. 177, 85 S.W.2d 561 (1935); Anno., 175 A.L.R. 1366 at 1387 (1948). Whether as agent or bailee, Allred’s duty to Torix in making the sale was that of ordinary and reasonable care. See, e. g., Restatement (Second) of Agency § 379 (1958) (agency); 8 Am.Jur.2d Bailments § 198 (1963) (bailments). Accordingly there is merit in the Torix contention that Allred acted improperly in releasing the cattle in return for a promise of drafts. That issue, however, is of secondary importance to the issue presented by Allred’s exercise of an owner’s dominion over the drafts.
Torix contends that Allred acted improperly in receiving payment for the Torix cattle by drafts payable to Burley Butte and by depositing those drafts in Allred’s own Burley Butte bank account. Unless the parties have agreed otherwise, an agent holding things on behalf of his principal has the duty not to deal with them so that they will appear to be his own or to mingle them with his own things. Restatement (Second) of Agency § 398 (1958). Ordinarily, without authorization to the contrary, this means that an agent who receives money on account of the principal may not properly place it to his own credit in a bank or so mingle it with his own money that there could be difficulty in tracing it. Id. at Comment b. The same principles hold for bailees. 8 C.J.S. Bailments § 31 (1962). It is well established, for instance, that attorneys and brokers must assiduously guard against the appropriation or commingling of a client’s funds. Allred, as with any other agent, should be held accountable for a breach of a fiduciary’s obligations.
I am unable to bring myself to the Court’s conclusion that Allred’s receiving and depositing the drafts to his own Burley Butte account did not amount to a conversion. As the Court’s opinion concedes, Allred did this in an effort to ensure that he, not Torix, would be the one receiving payment for the cattle, which he would then appropriate while giving credit on Torix’s account. Allred’s testimony shows that he had no intention of handing any money whatever over to Torix until the feed bill was fully paid by those monies.
“Q Yes, did you ever intend to apply the proceeds from the sale of Torix’ cattle to your own benefit?
“A No, we intended to apply it to his account, to his feed bill, which we did.
“Q Is it a custom and practice in your feed lot, that methods of payment are frequently paid to you with just the feed lot’s name on them?
“A Yes, in some instances.
“Q Is it very common?
“A Yes.
“Q And in fact the receipt of the money, had the draft that you accepted been honored, in your own name, was in fact a benefit to you, was it not, because it paid or would have given you the funds to pay yourself, your feed bill?
“A It would apply to pay Mr. Torix’ feed bill, yes.
“Q And so to that extent, when you said you had no intent to apply the proceeds to your own benefit, you mean to say you did not intend to apply the proceeds to your own benefit except to the extent of the money that you had coming from Mr. Torix?
“A Yes, we would have only applied—
“Q But to that extent it was certainly for your benefit rather than anyone else’s to get it into your bank account?
“A It was to our benefit as well as to Mr. Torix’, yes.”
As has been pointed out, neither an agent nor a bailee has any right to take funds belonging to the principal. An agent who *913has received money for his principal has a duty to deliver that money to the principal. See Restatement (Second) of Agency § 427 (1958). Allred commandeered the drafts from Minch’s for his own benefit. Had the drafts not been dishonored, Allred admittedly was not about to turn the Minch payment over to Torix until such point as there was an excess over and above the feed bill. In effect, Allred was channeling those drafts to his own account and thereby unauthorizedly taking payment of Torix’s feed bill. Only when the drafts were dishonored did he characterize his conduct in accepting the drafts as a mere expedient for the benefit of Torix. The legal effect of Allred’s conduct cannot be so easily avoided. An agent may not take payment due his principal in his own name for application on a debt owed him by the principal and subsequently, after it has been dishonored, successfully maintain that the payment really at all times belonged to the principal.1
Although Allred may be correct in his assertion that the loss here suffered was occasioned by Minch’s insolvency, and not by the manner in which the drafts were handled, it does not necessarily follow that he wholly escapes responsibility if his actions were such as to give rise to a conversion.2
Clearly Allred appropriated the drafts to himself as payment on Torix’s feed bill. Such an appropriation was an unauthorized dominion over drafts belonging to Torix, and as such was an act of conversion. In essence, Allred effected a unilateral novation, totally unauthorized by Torix. At that point in time he must be held to have assumed the risk of any loss that might result from nonpayment of Minch’s drafts. That Allred so understood the consequences of his own conduct is conclusively demonstrated by his unsuccessfully explained filing of a creditor’s claim in Minch’s bankruptcy. It has often and wisely been said that a man’s conduct speaks more forcefully than his words.
Allred voluntarily and unilaterally chose to accept and look to those Minch drafts as payment of the Torix feed bill. It was in that posture that he surrendered custody of the cattle — thereby also choosing to surrender his own claim of an agister’s lien thereon. At worst the dishonored drafts, to the extent of the Torix feed bill, should be an Allred loss. At best Torix should recover across the board the amount of the dishonored drafts, less any amount owed Allred for caring for the cattle and supplying feed.
I respectfully dissent.

. Following the Minch transaction, Allred sold another load of cattle for Torix to John Clay & Co. for $20,631.83. The payment for this was also made out to Burley Butte and was also appropriated by Burley Butte, credit being applied to the feed bill. Again Torix never saw any money from this sale.

. In Bank of British North America v. Cooper, 137 U.S. 473, 11 S.Ct. 160, 34 L.Ed. 759 (1890), the defendant-agent alleged that even had he followed his principal’s instructions, the same losses to the principal would have occurred. It being uncertain whether this was so, the Court refused to allow the wrongdoer to escape liability on the possibility that the same loss might have occurred anyway:
“In view of the manifold contingencies of business transactions, and the wide range of possibilities that attend any act of a commercial nature, few things could be more unfortunate than to incorporate into established law the right of an agent to disobey specific instructions, and to make a guess as to results an excuse for relief from accruing loss.” Id. at 479, 11 S.Ct. at 162.