COURT OF APPEALS DECISION DATED AND RELEASED February 14, 1996 |
NOTICE |
A party may file with the
Supreme Court a petition to review an adverse decision by the Court of
Appeals. See § 808.10 and
Rule 809.62, Stats. |
This opinion is subject to
further editing. If published, the
official version will appear in the bound volume of the Official Reports. |
No. 95-0175
STATE
OF WISCONSIN IN COURT OF
APPEALS
DISTRICT II
MILWAUKEE MUTUAL
INSURANCE COMPANY,
Plaintiff-Respondent,
v.
JAMES PFANTZ,
Defendant-Appellant.
APPEAL from a judgment
of the circuit court for Fond du Lac County:
PETER L. GRIMM, Judge. Affirmed.
Before Anderson, P.J.,
Brown and Snyder, JJ.
PER CURIAM. James Pfantz appeals from a judgment
awarding damages to Milwaukee Mutual Insurance Company on its claim that Pfantz
converted peat owned by Milwaukee Mutual which was stored on Pfantz's
property. On appeal, Pfantz argues that
the peat became realty due to the amount of time it remained on his property
and that even if the peat was personalty, Milwaukee Mutual did not have a right
to regain possession of it. Pfantz also
disputes the trial court's calculation of Milwaukee Mutual's damages. We reject Pfantz's contentions and affirm.
The trial court made the
following findings of fact after a trial to the court. Milwaukee Mutual owned real estate in
Brookfield, Wisconsin, and needed to remove substantial amounts of peat from it
to facilitate development. In the
spring of 1989, Milwaukee Mutual entered into a verbal agreement with NBS
Associates, Ltd. (NBS) in which NBS would arrange to store the peat and pay
Milwaukee Mutual as it used the peat from the storage site for its packaging
and sale operation. In April or May
1989, Milwaukee Mutual hired a trucking company to transport the excavated peat
to three different parcels of real estate in Campbellsport, Wisconsin, one of
which belonged to Pfantz.
Before any peat was
deposited on his property, Pfantz met with William Stoffel and Frederick
Beede, two principals of NBS. Pfantz
agreed to lease the gravel pit portion of his property for peat storage. Pfantz and NBS orally agreed that the annual
rent would be $1500 effective April 1989.
Although the term of the lease was not specified, Pfantz testified that
he understood and agreed that the peat would be in his gravel pit for "a couple
of years" before it would be used by NBS.[1] Beede and Stoffel did not disclose to Pfantz
the origin of the peat or the terms of the agreement between NBS and Milwaukee
Mutual.
On or about November 1,
1989, Milwaukee Mutual entered into a written agreement with NBS regarding the
storage and purchase of the peat. The
agreement provided that NBS could purchase peat from Milwaukee Mutual but that
Milwaukee Mutual would retain title and right to the unpurchased peat and could
remove it from storage at any time prior to December 31, 1995. NBS agreed to store the peat until that
date. Lastly, NBS was required to
obtain written leases from the owners of the real estate where it had stored
Milwaukee Mutual's peat.
The court found that
Pfantz never signed a lease with NBS.
The parties also stipulated that there was no evidence that NBS had
removed any peat from Pfantz's gravel pit and that Pfantz had received no
rental payments at any time for the stored peat. However, Pfantz testified and the court found that he never
rescinded the permission he gave to NBS to store peat in his gravel pit.[2] Further, Pfantz never complained to NBS
about the use of his property or the fact that rent had not been paid. Although Pfantz had a chance meeting in 1991
or 1992 with Beede at a gas station and Beede indicated that NBS was hoping to
pay Pfantz rent, there were no other discussions regarding rent due.
Due to financial
difficulties, NBS defaulted on various obligations to Milwaukee Mutual, and in
August 1993, Milwaukee Mutual hired a trucker to remove the peat from Pfantz's
gravel pit. Milwaukee Mutual did not
give Pfantz any advance notice of its intention to recover the peat, and Pfantz
denied the trucker permission to enter his property to take the peat away. The court found that at the time the trucker
arrived, Pfantz had no knowledge of Milwaukee Mutual's claim to the peat. The court found that Pfantz first learned of
the peat storage arrangement between Milwaukee Mutual and NBS on September 16,
1993, when he received a copy of the Milwaukee Mutual/NBS agreement.
The trial court
addressed Pfantz's contention that Milwaukee Mutual had abandoned the
peat. The court found that Pfantz had
not made any claim to NBS for the peat and had taken no legal action regarding
the nonpayment of rent or the presence of the peat in the gravel pit until
Milwaukee Mutual began retrieving it.
The court also found that neither NBS nor Milwaukee Mutual acted in a
manner which could be construed as a surrender or abandonment of Milwaukee
Mutual's legal rights to the peat. The
court found that Milwaukee Mutual believed it had a binding lease with Pfantz
(even though Pfantz never signed it) and had never received any notice of
default or nonpayment of rent from Pfantz.
In light of this belief, Milwaukee Mutual had no reason to take any
overt action regarding the peat. The
trial court found that Pfantz first exercised dominion and control over the
peat when he refused Milwaukee Mutual's requests for access to his property to
remove the peat.
The trial court also
addressed Pfantz's contention that the peat had become part of his real
estate. The court found that the peat
was deposited in an unused gravel pit on Pfantz's property. Pfantz exercised no management over the peat
and he did not plant any seeds or trees in the peat, although trees and
shrubbery subsequently rooted there.
The court found that the peat could be easily removed from the gravel
pit. There was no evidence that the
trees, grasses or shrubs growing out of the peat had affixed themselves to
anything other than the peat. Finally,
Pfantz testified that it would not be difficult to remove the peat from the
gravel pit.
The trial court then
made the following conclusions of law.
First, the peat was personal, not real, property because it was still
capable of being removed and was subject to a lease. The court concluded that the growth of trees and shrubbery on the
peat did not render it real property.
Citing Eden Stone Co. v. Oakfield Stone Co., 166 Wis.2d
105, 479 N.W.2d 557 (Ct. App. 1991), the court concluded that removing the peat
from its original site for storage elsewhere severed the peat from Milwaukee
Mutual's real estate, rendering it personal property. The court also concluded that neither NBS nor Milwaukee Mutual
had abandoned the peat and Milwaukee Mutual had legal right and title to the
peat in Pfantz's gravel pit until the peat was sold to NBS. Pursuant to its agreement with NBS,
Milwaukee Mutual was entitled to immediate possession of the peat at all times,
and Pfantz converted the peat when he exercised wrongful and unauthorized
dominion and control by refusing Milwaukee Mutual's requests to remove it.
Turning to damages, the
trial court cited the general rule that in an action for conversion, the
wronged party may recover the value of the property at the time of the
conversion. Milwaukee Mutual submitted
evidence that the peat had a market value of $5 per cubic yard. This figure was arrived at by reference to
the agreement between NBS and Milwaukee Mutual which set the amount NBS had to
pay Milwaukee Mutual for any peat removed from Pfantz's property. The court deemed the agreement prima facie evidence
of the peat's value as of the date Pfantz converted it, notwithstanding when
Pfantz received notice of Milwaukee Mutual's legal claim to the peat. The court found that the arm's-length
transaction between Milwaukee Mutual and NBS was a credible basis for
establishing the value of the peat in Pfantz's pit.
The parties had earlier
stipulated that as of July 21, 1992, 10,920 cubic yards of peat remained in
Pfantz's gravel pit. Based upon the
quantity of peat in the gravel pit at the $5 per cubic yard price, the court
determined that the damages were $54,600.
However, because Milwaukee Mutual had agreed to reduce this amount by
$9000 in unpaid rent, the court reduced the damages to $45,600.
On appeal, Pfantz argues
that the peat was real property and that its severance from Milwaukee Mutual's
real estate prior to deposit on his property did not permanently change its
character to personal property.
Pfantz's argument is inappropriately divorced from the facts of this
case. While we agree that peat "in
its original bed" is part of the realty, see Eden Stone,
166 Wis.2d at 118, 479 N.W.2d at 563 (quoted source omitted), the facts of this
case are that the peat was removed from its original bed (property owned by
Milwaukee Mutual which was being prepared for development) and deposited on
Pfantz's property. Having been severed
or removed from its "original bed," the peat became personal property
and subject to an action in conversion.
See id. at 118 n.10, 479 N.W.2d at 563. We conclude that the fact that Pfantz
himself did not sever and remove the peat from Milwaukee Mutual's property is
of no consequence for the conclusion that the peat is personalty, not
realty. We also disagree that the
passage of time changed the character of the peat from personalty back to
realty. Pfantz cites no legal authority
for the proposition that the peat, by virtue of its presence on his property
for several years, became realty.
Pfantz attempts to
distinguish Eden Stone by arguing that the peat in this case was
not wrongfully severed, whereas the boulders in Eden Stone
were. We reject this distinction. In a footnote in Eden Stone,
the court cited with approval Palumbo v. Harry M. Quinn, Inc., 55
N.E.2d 825 (Ill. App. Ct. 1944). The
facts of Palumbo are quite similar to the facts of the instant
case. Palumbo received the right to
remove topsoil from a former owner. He
stripped the topsoil from the property and stored it there. When he attempted to remove the stored
topsoil, the subsequent property owner laid claim to it. Because the topsoil had been removed, the
court concluded that it was personalty and subject to conversion. See Palumbo, 55 N.E.2d
at 828. The Eden Stone
court observed that "the same is true in [Eden Stone]: the disputed holey boulders have been
quarried or severed; thus, they are legally capable of being
converted." Eden Stone,
166 Wis.2d at 118 n.10, 479 N.W.2d at 563.
Pfantz argues that the
peat was abandoned by NBS. In support
of this, he points to trial testimony of Beede in which Beede retracts an
earlier deposition statement that the peat was abandoned. Pfantz's citation to the record on appeal
does not support his contention that the property was abandoned. At trial, Beede testified that the peat was
not abandoned, although NBS did not have cause to use any of it. Pfantz's contention that NBS's inaction with
regard to the peat constituted an abandonment is contrary to the trial court's
finding of fact, which is not clearly erroneous. See § 805.17(2), Stats.[3]
Pfantz next argues that
if the peat was personal property, Milwaukee Mutual did not have the right to
immediate possession. The trial court
concluded otherwise, and we agree.
"Conversion is the wrongful or unauthorized exercise of dominion or
control over a chattel." Farm
Credit Bank of St. Paul v. F&A Dairy, 165 Wis.2d 360, 371, 477
N.W.2d 357, 361 (Ct. App. 1991). The
party alleging conversion must prove that it was in possession of or entitled
to immediate possession of the chattel that was converted. Id. Pfantz argues that it is not clear when he should have realized
that Milwaukee Mutual was the original owner of the peat. However, the trial court found that Pfantz
received notice from Milwaukee Mutual's counsel as of September 16, 1993, that
Milwaukee Mutual claimed the peat. This
finding is not clearly erroneous. See
§ 805.17(2), Stats.
Pfantz challenges
Milwaukee Mutual's right to immediate possession by claiming that under
§ 704.05(5), Stats., he had
a landlord's lien on the personal property left by a tenant. However, as the trial court found, Pfantz
did not take any steps to enforce his claimed lien on the peat.[4] Moreover, the statute applies when "a
tenant removes from the premises and leaves personal property ...." Section 704.05(5)(a). Here, the peat was not left on the property
by a removed tenant. Rather, Milwaukee
Mutual had arranged with NBS to store the peat. Although the alleged written lease agreement between Pfantz and
NBS was invalid, Milwaukee Mutual had a right to rely upon that agreement in
attempting to demonstrate that it retained legal title to the peat stored on
Pfantz's property.
Finally, Pfantz disputes
the trial court's calculation of damages using the $5 per cubic yard
figure. The trial court awarded damages
based upon the contract price of $5 per cubic yard which NBS agreed to pay
Milwaukee Mutual for any peat it used.
The general rule is that the wronged party in an action for conversion
may recover as damages "the value of the property at the time of the conversion
plus interest to the date of trial."
Production Credit Ass'n of Madison v. Nowatzski, 90 Wis.2d
344, 354, 280 N.W.2d 118, 123 (1979).
The court found that the $5 per cubic yard provision of the
Milwaukee/NBS Mutual agreement was evidence of the value of the property as of
the date Pfantz converted it (September 1993) because that value governed
through December 31, 1995, the date by which Milwaukee Mutual could remove the
peat from storage. The court further
found that the Milwaukee/NBS Mutual transaction occurred at arm's length and
that the transaction was a credible basis for valuing the peat.
An arm's-length
transaction can be used to establish a value for property. See Steenberg v. Town of
Oakfield, 167 Wis.2d 566, 573, 482 N.W.2d 326, 328 (1992) (arm's-length
transaction can be proof of value of property.) Pfantz does not point to other evidence of the peat's value, and
we cannot conclude that the trial court's use of the $5 per cubic yard value was
either clearly erroneous or an application of an inappropriate legal
standard.
Pfantz argues that under
Traeger v. Sperberg, 256 Wis. 330, 41 N.W.2d 214 (1950), damages
should not have been awarded because he did not interfere with Milwaukee
Mutual's ability to sell the peat to NBS because NBS had gone out of
business. We do not read Traeger
so broadly. Rather, Traeger
states the general rule that damages in conversion are the value of the
property at the time the conversion occurs.
See id. at 333, 41 N.W.2d at 216. The Traeger court went on to
state that "it is universally recognized that the purpose of this rule is
to compensate the plaintiff for the loss sustained because his property was
taken." Id. The court then explained the measure of
damages when a party's contract to sell the converted chattel is interfered
with as "the amount he [or she] would have received under the
agreement." Id. The supreme court upheld the trial court's
use of the contract price as the measure of damages. Id. at 333-34, 41 N.W.2d at 216.
We construe this
statement as a recognition of one method of calculating damages in
conversion. The statement actually
supports the trial court's determination in this case that the arm's-length
transaction between Milwaukee Mutual and NBS was evidence of the value of the
peat.[5]
By the Court.—Judgment
affirmed.
This opinion will not be
published. See Rule 809.23(1)(b)5, Stats.
[1] NBS had peat stored closer to its manufacturing site and intended to deplete that peat before drawing upon the peat stored on Pfantz's property.
[2] Pfantz was aware that peat was being delivered to his property because he observed numerous trucks delivering peat to the gravel pit over approximately fifteen work days.
[3] In order for there to be an abandonment of property, there must be a relinquishment coupled with an intent to part with it permanently. See Burkman v. City of New Lisbon, 246 Wis. 547, 555-56, 18 N.W.2d 4, 8 (1945) (quoted source omitted).
[4] Pfantz argues that complying with the § 704.05(5), Stats., notice requirements for storage of a tenant's property would have been fruitless because NBS had ceased operating. Therefore, Pfantz argues that there was no tenant to whom notice could be sent. This is not the standard for giving notice under § 704.05(5). While that section of the statute grants a landlord a lien on the personalty of a tenant "for the actual and reasonable cost of removal and storage or, if stored by the landlord, for the actual and reasonable value of storage," § 704.05(5)(a)1, a landlord must give notice of the property's storage to the tenant's "last-known address ...." Id. Pfantz could have given the required notice.
[5] To the extent this court has not addressed a specific argument made on appeal, the argument can be deemed rejected. See State v. Waste Management of Wis., Inc., 81 Wis.2d 555, 564, 261 N.W.2d 147, 151 (1977), cert. denied, 439 U.S. 865 (1978) (appellate court is not required to address each and every argument made on appeal).