TEMPLETON FEED AND GRAIN v. RALSTON PURINA COMPANY (1967)

This is an appeal by Ralston Purina Company (hereinafter called Ralston) from a money judgment for abuse of process toward Templeton Feed and Grain (hereinafter called Templeton). Templeton sued for abuse of process, for assignment to it by Ralston of a 1962 chattel mortgage and trust deed executed by the Livingstons, and in a third count, for money had and received. The jury returned a judgment of $110,738.56, Ralston's motion for directed verdict and judgment n. o. v. were denied, and the court granted a new trial unless the verdict was reduced to $67,000 plus costs, on the grounds that ‘The jury was mislead [sic] on the question of punative [sic] damages, and, the verdict was excessive in the Court's opinion.’ Plaintiff duly filed its consent to the remission, and judgment was entered in the reduced amount. Ralston has appealed; Templeton has cross-appealed on the issue of punitive damages.¹

The present litigation between plaintiff and defendant stems from an indebtedness owed to defendant from ‘Doc’ Livingston and his wife. The Livingstons were turkey growers and had been purchasers of Ralston products on the ‘feeder finance’ program (Ralston extending credit for feed and supplies) and on the ‘contract grower’ program (Livingstons being paid for labor and the birds belonging to Ralston). The 1962 Livingston operations resulted in a loss and the Livingstons owed Ralston $45,492.60.

On May 22, 1962, the Livingstons had given to Ralston a chattel mortgage, recorded on June 4, 1962, to secure the then anticipated future advance in connection with the 1962 crop. That chattel mortgage mortgaged to Ralston ‘17,000 Broad Breasted Bronze Turkeys,’ ‘and also all future replacements, increase, products, and proceeds thereof, indemnity therefor, things confused therewith, and things of the same kind ofterwards acquired.’ (Emphasis added.) The location of the property mortgaged was stated as being the ‘premises of H. E. Livingston, State of California, County of San Luis Obispo, Town of Santa Margarita.’

On August 21, 1962, the Livingstons had given Ralston a trust deed on two lots in Moorpark, Ventura County. On January 8, 1963, they had given Ralston a first trust deed on 40 acres of property owned by them near Santa Margarita. Both of these subsequent securities were given as security for the payment of the 1962 obligation. The Livingstons had no other assets and were on the point of filing bankruptcy proceedings. In fact, during 1963, all but the 40 acres of the Santa Margarita ranch had been lost by foreclosure, because the failure of the 1962 crop had prevented the making of payments due under other obligations secured by those portions of the ranch.

When, under these circumstances, the Livingstons applied to Ralston for financing for a 1963 crop, Ralston understandingly demurred. After some negotiations, Ralston (obviously in the hope that it could save something out of the situation without risking any more of its own funds) agreed that, if Templeton would finance the 1963 crop, Ralston would agree not to enforce its debt against the turkeys raised that year, but would content itself with a promise to receive one-half of the Livingstons' profit from that crop. Templeton financed the 1063 crop pursuant to that understanding. There is evidence that the financing was on the ‘contract grower’ basis, although Ralston's local manager testified that he had understood the arrangement to have been on the ‘feeder finance’ basis.

The year 1963 was also bad for turkey growers and no profit resulted from the 1963 operation. Early in 1964, the Livingstons again approached Ralston, seeking credit for a 1964 crop. Ralston refused and Livingston told Ralston that he would secure financing from Templeton. Such an arrangement was made and 100,000 turkeys were delivered to the Livingstons for raising on a ranch ar Arroyo Grande. In the late spring of 1964, the Ralston home office began to demand payments on its 1962 account. Among the matters suggested, but never agreed on, was a third deed of trust on the Arroyo Grande property. Finally, in November 1964, Ralston filed an action against the Livingstons, in the nature of a suit for claim and delivery, by virtue of which the sheriff seized the then unsold portion of the 1964 crop, amounting to about 40,000 birds. The suit, and the seizure, were based on the theory that the 1964 birds were covered by the after-acquired clause of the 1962 chattel mortgage above quoted. Templeton immediately protested, claiming (1) that the 1964 birds belonged to it and not to the Livingstons; and (2) that it had extended credit to the Livingstons on the belief that the 1963 promise to withhold collection efforts applied also to the 1964 arrangement between Templeton and the Livingstons.

In order to secure the release of the turkeys, Templeton was compelled to pay to Ralston the Livingston debt, with accrued interest. Templeton's out-of-pocket expenses resulting from these facts amounted to $60,738.56. The $67,000 judgment herein under appeal represents, thus, $6,261.44 in the nature of damages not covered by any direct proof.

The seizure made at Ralston's direction, and the pressure thereby put on Templeton to pay to Ralston the Livingston debt, properly can be justified only on the theory that it was a valid enforcement of the 1962 chattel mortgage. However, Ralston contended at the trial that Templeton had suffered no damages because Ralston could have seized the birds lawfully by an attachment levied in a breach of contract suit against the Livingstons to collect the 1962 debt. The trial court instructed the jury that

‘It is no defense to an action for damages based on the defendant's wrongful act, that the result sought by said action could have been obtained in some other non-wrongful manner.’ (Emphasis added.)

While we are not prepared to agree that this instruction is correct as an abstract statement of the law, it was harmless in the present action since, as we shall show below, the only alternative on which Ralston relied—attachment—was also unlawful. It follows that the jury could not have been misled by the instruction given.²

For reasons set out below, we conclude:

(1) That the seizure was not a valid enforcement of the 1962 chattel mortgage (a) because the evidence supports the jury's implied finding that the birds belonged to Templeton and not to the Livingstons; and (b) because the 1962 chattel mortgage did not cover the birds seized, even had they belonged to the Livingstons; and

(2) That Ralston could not have made a valid attachment collateral to a suit against the Livingstons for money due (even had they brought such as action) (a) because, again the evidence supports a finding that the birds seized did not belong to the Livingstons; and (b) because such an action and attachment thereon were, in any event, barred by section 726 of the Code of Civil Procedure.

Since we also conclude that the jury could properly find that Ralston and its attorneys were aware of the invalidity of the action taken by them, it follows that Templeton was entitled to recover its proven out-of-pocket losses and costs traceable to the illegal seizure—which, on this record, amounted to $60,738.56. However, we also conclude that errors with reference to the assessment of damages in excess of that figure require us to exercise our powers under Rule 24(b) of the California Rules of Court and enter a conditional order for a new trial limited to the issue of damages.

I

There was conflicting evidence on the question of the actual ownership of the birds herein involved. Templeton's evidence was to the effect that they were placed with the Livingstons under a ‘contract grower’ arrangement, title remaining in Templeton, and there is evidence that that was the ultimate form of the 1963 financing arrangement. However, the record also showns an executed chattel mortgage from the Livingstons to Templeton—a document consistent with a ‘feeder-finance’ arrangement. It was for the jury to determine which arrangement actually existed. Ralston cannot now contend that the implied finding against it was without evidentiary support.

The present action, however, is not for the tort of conversion committed by the seizure, but for damages allegedly consequential to that seizure. This means that plaintiff must prove more than the mere unlawful seizure of its property. The essential elements of abuse of process are an ulterior purpose and a wilful act in the use of legal process not proper in the regular conduct of the proceedings. (Prosser on Torts (2d ed. 1955) Abuse of Process, § 100, p. 669.) The ulterior motive may be inferred from the wilful act. (Pimentel v. Houk (1951) 101 Cal.App.2d 884, 886, 226 P.2d 739.) And it has been said that a creditor abused process in causing an execution sale of a debtor's interest when he knew that the debtor no longer had an interest in the property (Peterson v. Wilson (1948) 88 Cal.App.2d 617, 199 P.2d 757, 6 A.L.R.2d 258).

The real issues in the case at Bench, insofar as the matter of liability is concerned, were: (1) Did Ralston know that the birds belonged to Templeton or, alternatively, did it act in reckless disregard of the possibility of such ownership; and (2) did Ralston utilize, in its attempt to collect the Livingston debt, procedures which it knew were legally improper and were not available to it? As we have indicated, we conclude that the record supports the jury's implied findings against Ralston on both issues.

II

The evidence clearly shows that the decision to proceed against the birds in the manner chosen was made by the head office of Ralston after consultation with its California counsel. Clearly, everyone concerned in that decision was fully aware of the fact that Templeton had some interest in the birds and that it claimed an interest superior to any possible interest of Ralston. It is also clear that no one ever consulted with Ralston's local manager, who was the person most likely to have given them the truth, nor did anyone inquire of Templeton as to the extent of its claims. Until the last moment, even the Livingstons and their counsel were led to believe that Ralston was looking to the Livingston real property as the primary source of recovery, although some mention of the 1962 chattel mortgage had been made to the Livingstons' attorney.

Ralston asserts that advice of counsel was a defense. Whether or not advice of counsel is a defense in California in an action for abuse of process is not determined. Some jurisdictions have taken the view that advice of counsel is not a defense in such an action although it may operate to mitigate damages. (See 1 Am.Jur.2d, Abuse of Process, § 23, p. 269, and the cases there cited.) In a California case involving an action for malicious prosecution it was held that advice of counsel was a valid defense but that the advice could be so used only if there had been a full and fair disclosure of all the facts to the attorney. (Moore v. Durrer (1932) 127 Cal.App. 759, 16 P.2d 676.) Assuming, without deciding, that the same rule apply to actions for abuse of process, the record in the case at Bench does not sustain the claimed defense. We are not told haw much Ralston's counsel was told about the various dealings between the parties, but the inference is clear that counsel were not told of the conversations had by Ralston's local agent with Templeton and with the attorney for the Livingstons. We are told that the Ralston attorney made an investigation on their own. As we have said, it is undisputed that whatever investigation was made by them did not include any contact whatsoever with Ralston's local agent, who had been dealing with both the Livingstons and with Templeton and whose knowledge (imputable to Ralston) was clearly such as to charge Ralston with knowledge of Templeton's claim of title to the turkeys. In any event, even a cursory investigation would have disclosed the non-applicability of the chattel mortgage to turkeys ar Arroyo Grande, a fact apparent from the face of the instrument, and would also have disclosed the existence of the trust deed security for the 1962 debt which brought section 726 of the Code of Civil Procedure into play.

The record adequately supports the finding that both the Ralston home office and its California counsel proceeded with at least reckless and conscious disregard of Templeton's rights.

III

Ralston urges that the 1962 chattel mortgage attached to the 1964 turkeys. The 1962 chattel mortgage to Ralston specifically refers to turkeys in the ‘Town of Santa Margarita,’ and at the time of the issuing the 1962 chattel mortgage Ralston knew that the Livingstons had two additional turkey ranches, including one at Arroyo Grande. As such, Ralston's argument that the Arroyo Grande turkeys were simply a replacement for the Santa Margarita turkeys or a mere removal of operations to Arroyo Grande must fail. By the very terms of the instrument, the 1962 chattel mortgage did not refer to the Arroyo Grande turkeys.³

Civil Code section 2977,⁴ which sets cut the requirements of a chattel mortgage asserted as a lien on after-acquired property, states that the description is sufficient if certain factors exist, including the setting out of ‘the place where the same will be ordinarily located which owned by the mortgagor, * * *’ The cases dealing with chattel mortgages of existing and of after-acquired property also have considered description of location as one of the factors significant in determining the validity of a chattel mortgage. (See Merced Productions Credit Assn. v. Bayer (1963) 222 Cal.App.2d 793, 35 Cal.Rptr. 511; Witt v. Milton (1957) 147 Cal.App.2d 554, 305 P.2d 944; Bank of California v. McCoy (1937) 23 Cal.App.2d 192, 72 P.2d 923.) We agree with the trial court that the mortgage was applicable to Santa Margarita turkeys only. And as such plaintiff's instruction number 5 (instruction the jury that the 1962 chattel mortgage did not cover the Arroyo Grande turkeys) was not erroneous.

IV

We have adverted above to Ralston's contention that Templeton suffered no damage from the seizure of the birds because Ralston could have achieved the same result by suing the Livingstons for money due and levying an attachment in that action. Apart from the matter of ownership, above discussed, the attachment remedy was not available to Ralston even had the birds belonged to the Livingstons. The Livingston debt was still secured by the trust deeds above mentioned and it is not contended that that security was valueless. Under these circumstances, section 726 of the Code of Civil Procedure barred any action to collect the debt until after proceedings to foreclose on the security. Ralston has supplied us with no relevant authority for its proposition that Templeton may not invoke section 726.

V

Ralston objects to instruction number 17, which reads:

‘Where a creditor causes the seizure of property of a person other than his debtor, knowing that the property seized does not belong to his debtor, the creditor is liable to the owner of the property for an abuse of process.’

The jury was also instructed that it was for them to determine the question of ownership of the turkeys and whether or not Ralston believed the turkeys to belong to the Livingstons. In the context of this case, the instructions, as a whole, were, thus, correct; we need not determine whether, in some other case, involving other facts, the broad generality of instruction number 17 would require qualification.

VI

Ralston claims that, if Templeton relied on its assumpsit count, it thereby waived the claim for abuse of process. The contention is without merit; the mere addition of a common count does not constitute a waiver of the other counts of the complaint. The jury was properly instructed on the issues going to liability; it decided those issues against Ralston on evidence adequate to support its findings; the trial court, on the new trial motion, approved that determination; Ralston can ask no more.

VII

We turn, then, to consider the respective contentions as to the measure of damages.

The jury was instructed, in effect, that it might award Templeton damages for mental suffering. Although requested, it was not instructed that it might award punitive damages. Under these circumstances, on a record showing compensable damages in the amount of $60,738.56, the verdict as returned must be regarded as an attempt to award $50,000 at least in part for mental suffering—that being one matter submitted to the jury.

But plaintiff is a corporation. As such, it cannot suffer mentally. The evidence as to ‘mental suffering’ went only to the effect of Ralston's conduct on Mr. Jermin who, with his wife, were the sole owners of the plaintiff corporation. But that suffering is not a damage to plaintiff. It follows that, on this record and under the instructions as given, an award for ‘mental suffering’ may not stand, even in the reduced amount granted by the trial court.

On its cross-appeal, Templeton argues that it was entitled to instructions, and to an award, on the theory of punitive damages. As we have pointed out above, we regard the record as showing facts sufficient to call for the submission of the punitive damage issue to the jury. The refusal to do so was error. However, when the trial court made its conditional order for a new trial, Templeton had a choice either to accept a judgment for $67,000 or to retry the case as a whole, with the hope that, on such a new trial, it could secure the award of punitive damages that it now seeks from us. It elected to take the bird in the hand; if we were prepared to allow it to retain that benefit we would regard it as barred from chasing a second bird in the appellate bush.

But, as we have indicated, we cannot, over Ralston's objection, allow Templeton to retain the full $67,000. If we are to take from it the $6,261.44 which is in excess of its proven compensatory damage, we cannot continue to hold Templeton to its election.

We conclude that, in the light of all the proceedings in the trial court and of our discussion in this opinion, we have a proper case for the exercise of our power under Rule 24(b) of the California Rules of Court.⁵ Plaintiff has a valid and proper judgment to the extent of $60,738.56; there is no need to relitigate the issue of liability nor of the compensable damages. But neither party has had a proper trial on the question of awarding damages in excess of the $60,738.56 figure; a new trial, limited to that question is proper. But plaintiff has once expressed its willingness to accept a total recovery of $67,000 plus costs. If defendant agrees, we see no reason why that election should not still stand.

Accordingly, the judgment is reversed and the case is remanded for a new trial, limited to the question of the right of plaintiff to an award of damages over and beyond the sum of $60,738.56 plus costs and interest as provided by law; provided that, if defendant shall, within 30 days from the date of the filing of this opinion, file with the clerk of this court two written documents evidencing its consent to a judgment against it in the amount of $67,000 plus costs and interest as provided by law, the judgment appealed from will stand affirmed. Plaintiff shall recover its costs in this court on both appeals.

FOOTNOTES

1.  The appeal and the cross-appeal were docketed in this court under separate numbers. We have consolidated the two appeals and deal with both in this single opinion.Although Templeton complains in its briefs that the judgment did not direct Ralston to assign to it the 1962 chattel mortgage and trust deed executed by the Livingstons, its notice of appeal did not present that issue. We express no opinion thereon.

2.  Ralston also contends that it was error to use the definite article ‘the,’ since that indicated that the court was of the opinion that Ralston's act was wrongful as a matter of law. The jury was fully instructed on the issues of Ralston's knowledge and intent. The incautious use of the word ‘the’ could not have confused them.

3.  We do not mean to infer that we agree that the reference in the printed form of chattel mortgage to ‘replacements' and to ‘things of the same kind afterwards acquired’ were sufficient to cover a crop of birds raised from a totally new crop of young, in a different season and after all of the original crop had been sold. That possible defect in the 1964 action has not been argued; we mention it only so that our silence may not be construed as a sub silento ruling on a point not herein involved.

4.  Section 2977 of the Civil Code was repealed by the Commercial Code and replaced by various provisions in that statute. The repeal was effective on January 1, 1965 long after the events herein involved. We intend no expression of opinion as to the effect of the present statutory provisions on a chattel mortgage such as is herein involved.

5.  Rule 24(b) reads as follows: ‘If the reviewing court orders that a judgment be reversed and a new trial granted or that, in the alternative, the judgment be affirmed on condition that the party in whose favor judgment has been rendered consent to a remission of a portion thereof, or on condition that the party against whom the judgment has been rendered consent to an addition thereto, then, unless otherwise ordered, the judgment of reversal and granting of a new trial shall become final unless within 30 days after the filing of the decision two copies of a written consent by such party to the remission or addition shall be filed in the reviewing court.’

KINGSLEY, Associate Justice.

FILES, P. J., and JEFFERSON, J., concur.