Court Opinion

ID: 9791292
Source: CourtListenerOpinion
Date Created: 2023-08-31 02:08:32.255882+00
Date Added: 2024-06-11T07:37:35.237556
License: Public Domain

SWANSTROM, Judge,
dissenting.
I dissent because I believe the judgment is legally sound and should be affirmed.
The district court found that the boat owner had paid all moorage fees due the bailee to September 1, 1975. About that time the owner learned that certain boat equipment was missing from storage. Apparently, employees of Kaniksu Resort had used the equipment without the owner’s knowledge or permission. The owner and the bailee agreed, orally, that “no more storage charges would be made for the houseboat until the equipment was replaced or returned” by the bailee. Although the parties placed no time limit on performance, the district court later found that one year “would certainly be an adequate and reasonable time” for the bailee to return or replace the equipment. The bailee never replaced or returned the equipment its employees had borrowed. Therefore, as the district court found, the agreement was “in a state of breach” after one year.
Moreover, the breach of the agreement by the bailee was material. As the court later found, the missing equipment was worth $800, four times the annual moorage fees. When the breach occurred, around September 1,1976, the owner owed nothing for storage charges and, obviously, the bailee had no lien to foreclose.
Clearly, the oral agreement altered the lien rights of the bailee marina. Under I.C. § 45-805 a caretaker of property “has a special lien ... for the compensation, if any, which is due him from the owner, for such [safekeeping] service.” (Emphasis added.) Significantly, for more than three years after the oral agreement was made, the bailee gave no notice to the boat owner that any moorage fees were payable. The district court noted that billing of the boat owner was renewed only after new managers — who had no knowledge of the oral agreement — took over management of the marina.
The lead opinion does not say when the compensation became due from the boat owner to the marina. I suggest that following the bailee’s breach of the oral agreement and up until the time the bailee “sold” the boat for storage fees, there was never a time when the bailee could have demanded payment from the boat owner without first correcting its breach of the agreement. See Nelson v. Hazel, 89 Idaho 480, 406 P.2d 138 (1965).
Even assuming that the bailee had a lien for caretaker services after September 1, 1976, the lien was eliminated by an offset. The majority refuses to follow the holding of our Supreme Court in Dawson v. Eldredge, 89 Idaho 402, 405 P.2d 754 (1965). According to the lead opinion, Dawson should no longer be considered authority for the proposition that a complete offset eliminates a lien because Dawson relied upon a now repealed statute, former I.C. § 5-615. However, the same principle of this statute is now embodied in the language of I.R.C.P. 54(b). This rule says in part:
If any parties to an action are entitled to judgments against each other such as on a claim and counterclaim, or upon cross-claims, such judgments shall be offset against each other and a single judgment for the difference between the entitlements shall be entered in favor of the party entitled to the larger judgment.
Here, after both sides had an opportunity to fully present their evidence, a judicial determination was made that the earned moorage fees of the bailee ($716.68) were less than the amount the bailee owed to the boat owner ($800) for equipment the bailee *998had lost or appropriated. Applying Dawson to the facts as they existed when the bailee sold the boat to satisfy its lien, the bailee’s moorage fees were completely set off and its lien was eliminated. The Rule 54(b) language quoted above supports this result.
The lead opinion chooses to abandon Dawson in favor of § 79 of the RESTATEMENT OF SECURITY (1941). In doing so, the majority will give this Court the distinction of being the only appellate court in the country to have relied upon § 79 in the past forty-nine years. I am not persuaded that we should narrowly focus upon two words in one unrecognized section of the RESTATEMENT to change the outcome of this case.
The majority does not like the bailee’s unjustified sale of the bailor’s property under I.C. § 45-805 being treated as a “conversion.” Thus, the majority degrades this approach by characterizing it as the “retroactive tort” theory. Of course, the lead opinion ignores the fact that the sale was preceded by the bailee’s conversion of the .owner’s equipment and by the bailee’s breach of an oral agreement to return or replace the equipment within a reasonable time. Ignored also is the fact that the district judge — not the parties — “retroactively” determined that the owner should pay additional storage charges even though the bailee never performed its agreement to return or replace the equipment. I am satisfied that the district judge did this only to achieve an overall equitable result.1
The majority takes the position that once the foreclosure sale has occurred it is too late to rectify the injustice of taking a person’s property for a debt the amount of which is less than the bailee’s related debt to the owner. It is one thing to say that contemporaneous adjudication of the owner’s related offset is preferred. It is quite another thing to announce that without pri- or adjudication of the offset no self-help sale made under I.C. § 45-805 can ever be set aside. If, instead of a self-help lien foreclosure, this had been a default judgment obtained by the bailee for $1,016.68, the owner could have filed a motion or an independent action to have the default set aside. I.R.C.P. 60(b). Essentially, that is what occurred here.
The case of Gunnell v. Largilliere Co., 46 Idaho 551, 269 P. 412 (1928), is instructive. There, the holder of a chattel mortgage foreclosed by notice and sale of the property. As it was shown later, the secured note had been extended by renewal and the debt was not due when the foreclosure action was taken. Some of the mortgaged chattels had been sold when the mortgagor succeeded in stopping further proceedings. Some chattels were not returned to him. He brought a claim and delivery action against the mortgagee. He recovered a verdict for the return of the chattels or their value, compensatory damages and punitive damages.
The Supreme Court upheld all but the punitive damages. The Court said:
Where a chattel mortgage is foreclosed by notice and sale, when no legal right to do so existed because the debt was not due, a cause of action in conversion arises____ The measure of damages in such case is the value of the property at *999the time of the conversion, plus special damages caused by the taking, if specially pleaded, and interest____ The measure of damages for detention of the property is the value of its use up to the time defendant became entitled to its possession____ [Citations omitted.]
46 Idaho at 559, 269 P. at 415. The Court went on to say:
The defendant, in attempting to foreclose its mortgage, under its construction of the terms of the contract, failed to bring itself within the rules governing such procedure, and prematurely brought its foreclosure proceeding. The evidence does not show that its action was Wanton, malicious or gross and outrageous, nor do the facts imply that it acted from motives of malice or oppression. The record shows that appellant was attempting to apply a remedy it deemed itself entitled to, and fails to show wilful fraud, malice or gross negligence.
46 Idaho at 560, 269 P. at 415. Thus, in Gunnell the Supreme Court upheld the owner’s right to recover the value of his property if it could not be returned to him. Here, the bailee has not shown or even contended that the district court had the option to order the houseboat to be returned to its owner. Neither has the bailee provided us with a complete transcript of the trial and other proceedings below. Yet, in spite of these facts, the majority takes issue with “forcing” the bailee to pay the owner the fair market value of the boat as of the time of sale.
While my opinion does not reach the question of whether I.C. § 45-805 is constitutional, I will note the lack of adequate notice here. As the majority observed, the statute “simply requires that a notice of sale be published in a newspaper in the county where the property is located.” The notice appeared one time in a weekly newspaper. The published notice did not clearly state where the sale was to take place. It did not name the owner of the boat to be sold. The bailee knew the owner had a Spokane, Washington address. Yet the bailee did not even mail a copy of the notice to that address, although, as the majority recognizes, the bailee knew that one letter it had sent to a representative of the owner was delivered. Because the owner’s name was not given in the published notice it would be highly unlikely that anyone seeing the notice would contact the owner about the sale. Certainly, there is no reason to believe that the out-of-state owner would see the notice. As a result, the owner had no opportunity to have a representative appear at the sale. It is hardly surprising that the only persons to attend the sale were Mr. and Mrs. Gatlin, who were the owners of the Kaniksu Resort, and their attorney. Of course, the only bid received was from Mr. Gatlin in the amount of his claim.
The district court recognized that while the owner was not without fault in protecting his rights, the owner was not deprived of a remedy. The court’s decision was based on sound legal precedent and reached an equitable result. I would affirm.

. The bailee’s published notice of sale stated $1,016.68 was due for storage charges. At trial, it was shown that this amount included $150 for a Crestliner boat which had been kept at the marina until Comstock removed it sometime in 1975. All storage charges on this boat were paid by Comstock four years before the sale. The bailee’s claim also included $200 for moor-age of the houseboat to September 1, 1975. Comstock had paid this fee also four years before the sale. Thus, the district judge disallowed $350 of the bailee’s claim. (Not only was the bailee’s claim excessive, but even if Com-stock had owed storage on the Crestliner boat, the bailee would have had no right to assert a lien against the houseboat for the separate storage charges on the Crestliner.)
Of the $1,016.68 claimed by the bailee, the district judge found only $666.68 to be valid. By prorating the $200 annual storage fee, he allowed another $50 for the three months in 1979 preceding the sale. Thus, the judge found that at the time of sale the bailee was entitled to a total of $716.68. The majority fails to note that even this figure includes $200 for the period from September 1, 1975 to September 1, 1976, the year the majority says the charges were to be "suspended" unless the owner’s missing equipment was returned.