Springfield International Restaurant, Inc. v. Sharley

605 P.2d 1188, 44 Or. App. 133, 1980 Ore. App. LEXIS 2189
CourtCourt of Appeals of Oregon
DecidedJanuary 28, 1980
DocketNo. 75-0125, CA 11467
StatusPublished
Cited by3 cases

This text of 605 P.2d 1188 (Springfield International Restaurant, Inc. v. Sharley) is published on Counsel Stack Legal Research, covering Court of Appeals of Oregon primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Springfield International Restaurant, Inc. v. Sharley, 605 P.2d 1188, 44 Or. App. 133, 1980 Ore. App. LEXIS 2189 (Or. Ct. App. 1980).

Opinion

SCHWAB, C. J.

This is primarily an action for conversion by wrongful execution. The trial court, sitting without a jury, awarded plaintiffs nominal damages of $25 and punitive damages of $1500. Plaintiffs appeal, urging their entitlement to far greater damages. 1

The facts involve a series of complex, multi-sided financial transactions that all relate to a restaurant located in a large motel-restaurant complex at an interstate highway interchange in Springfield. Over about a year-and-a-half period several different persons had a variety of interests in the restaurant. The execution alleged to have been wrongful consisted of the seizure of the cash, checks, credit card receipts, food and liquor located at the restaurant. The basic issue is whether these items were the property of plaintiffs, or, instead, the property of the judgment debtor, William Brenner, as claimed by defendants.

Brenner leased the restaurant facilities when the motel-restaurant first opened in early 1973. He began operating the "International Restaurant” therein. A liquor license for the restaurant was taken out under the names of Brenner and his wife.

Larry Sharley is the sole stockholder in M & L Enterprises, Inc. In mid-1973, Brenner agreed to sell the restaurant operation to M & L Enterprises, one of the conditions being that M & L obtain a transfer of the liquor license. Sharley, through M & L Enterprises, then took possession of the restaurant and operated it for several months. When complications arose regarding the liquor license transfer, Brenner cancelled his agreement to sell to M & L, and resumed operation of the restaurant. M & L then sued Brenner and obtained judgment against him for $38,150. The terms of that judgment permitted it to be paid in installments. The first installment was due November 10, 1974.

Bernard Cooke, one of the plaintiffs, worked inter[136]*136mittently for Brenner, on a rather informal basis, as the manager of the International Restaurant — both before and after the months that Sharley had possession of and operated the restaurant.

John Rapolla and Rita Squier worked intermittently at the restaurant during the times Cooke managed it. Seemingly, like everybody involved in this controversy, they were interested in buying the restaurant.

On October 1, 1974, Brenner executed a bill of sale that purported to transfer all the restaurant assets except the inventory to Cooke. Cooke then proceeded to organize Springfield International Restaurant, Inc., in which he was the sole stockholder, and transferred those restaurant assets covered by the bill of sale to the corporation. About the same time, Cooke, as seller, and Rapolla and Squier, as buyers, entered into an agreement whereby Cooke was to sell them all of the outstanding shares in Springfield International Restaurant, Inc. As part of the purchase price, Rapolla and Squier were required to get Sharley to assign to Cooke the judgment that M & L Enterprises had against Brenner.

Sharley, as president of M & L, and the corporate secretary both executed such an assignment on November 7, 1974. It was taken to Cooke, apparently to be reviewed for form, and then placed in escrow with M & Lis attorney pending closing of the sale of the restaurant from Cooke to Rapolla and Squier.

The first installment of the M & L judgment against Brenner was not paid November 10 when due. Sharley, on behalf of M & L, obtained a writ of execution on that judgment. On November 26 the sheriff levied on that execution by going to the restaurant and seizing all of the cash, checks, credit card receipts, food and liquor.

I

In support of their wrongful-execution claim, plaintiffs, Cooke and Springfield International Restaurant, [137]*137Inc., first claim that they need not prove they had legal title to the property seized, but only that they had the right to possession and control. This contention is based on Mustola v. Toddy, 253 Or 658, 662-63, 456 P2d 1004 (1969), in which the court adopted the definition of conversion found in § 222A of the Restatement (Second) of Torts (1965). That section provides in part:

"Conversion is an intentional exercise of dominion or control over a chattel which so seriously interferes with the right of another to control it that the actor may justly be required to pay the other the full value of the chattel.” (Emphasis supplied.)

Regardless of who would have sufficient right of control of a chattel to sue for conversion in other contexts, in the context of conversion by wrongful execution we conclude that legal title is controlling. ORS 23.040(1) permits execution "[a]gainst the property of the judgment debtor.” It would render this statute meaningless if a judgment debtor could transfer to another some right of control over property he had title to and thereby insulate it from execution.

The extreme nature of plaintiffs’ reliance on Restatement (Second) of Torts, § 222A (1965), is illustrated by their argument: "Even if [Springfield International Restaurant, Inc.] is viewed as a bailee holding Mr. Brenner’s goods in a bailor-bailee relationship the corporation still has the right to bring an action [for conversion for] the total value of the goods seized * * Writs of execution are often served on banks. It would be preposterous to conclude that, when a judgment creditor executes on the property of a judgment debtor that is in the possession of a bank, the bank then has a cause of action against the judgment creditor for conversion. See Restatement (Second) of Torts, § 266 (1965).

Plaintiffs seem to claim alternatively that they, not Brenner, had title to the property seized. Plaintiff Cooke also contends that any execution was wrongful because the underlying judgment had been assigned to him. The persons involved structured their various [138]*138transactions in such ways that we cannot say as a matter of law that plaintiffs are entitled to prevail on either theory.

The October 1 bill of sale from Brenner to Cooke covering the restaurant assets states "except that the transfer does not include any inventory.” This document indicates that title to the inventory remained in Brenner. Cooke then formed his wholly-owned corporation, Springfield International, and transferred to it "all personal property, assets, tangible and intangible, except inventory * * *.” Cooke’s agreement to sell the stock in his corporation to Rapolla and Squier included the following: "The Seller represents and warrants that Springfield International Restaurant, Inc. has purchased all of the assets of the [restaurant] except inventory.”

The sale agreement between Cooke and Rapolla/Squier also stated:

"Business of the corporation [i.e., Springfield International Restaurant, Inc.] shall lie conducted by William F. Brenner up to the date of closing in the normal and regular manner and will not enter into any contract except as may be required in the regular course of business without the approval of the Purchasers herein.”

The sale was never closed. If, as contended by plaintiffs, Brenner had no interest in the restaurant after the October 1 bill of sale to Cooke, this provision is inexplicable.

Equally mysterious is the parties’ treatment of the liquor license.

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Bluebook (online)
605 P.2d 1188, 44 Or. App. 133, 1980 Ore. App. LEXIS 2189, Counsel Stack Legal Research, https://law.counselstack.com/opinion/springfield-international-restaurant-inc-v-sharley-orctapp-1980.