David Ebbinghouse, Appellant-Plaintiff v. Chris Rall, Appellee-Defendant (2025)

MEMORANDUM DECISION

Case Summary

[1] Pursuant to an oral agreement, artist David Ebbinghouse consigned handmade jewelry at a store owned by Chris Rall. Ebbinghouse filed a small claims complaint against Rall, seeking to recover damages in the amount of $1,693.10 after Rall did not pay Ebbinghouse for jewelry that Ebbinghouse claimed was missing. Ebbinghouse appeals the trial court's denial of his claim, raising seven issues that we consolidate as: Was the trial court's decision, finding that Ebbinghouse failed to establish that he delivered the jewelry in question to Rall's store, contrary to law?

[2] We affirm.

Facts & Procedural History

[3] Ebbinghouse is a Bloomington resident and artist, who over the years has placed artwork and jewelry on display and for sale at various locations such as boutiques, restaurants, and museum gift stores. Pursuant to a written contract, Ebbinghouse exhibited artwork and jewelry at Rall's Bloomington gift shop and gallery for the month of December 2022. Ebbinghouse's items were placed in a gallery space in the rear of the store, and they agreed to split any proceeds, with Ebbinghouse receiving sixty percent and Rall receiving forty. During December, Ebbinghouse would “come into the gallery every day and basically function as a clerk and sell [his] items.” Transcript at 10.

[4] Sometime during December, Ebbinghouse began to compile an inventory list of items he had on display there. The jewelry pieces were housed in drawered display cases, provided by Ebbinghouse, and the unlocked drawers contained trays on which the jewelry was displayed. Ebbinghouse created the inventory by taking out items individually and writing down an item number or description and the SKU number found on the tag. Ebbinghouse later “translated [his] handwritten notes” into an inventory list on the computer. Id. at 20, 21. As to the number of items on consignment, Ebbinghouse estimated “it was about 1500 items if you fill all the slots” at an average retail price of $50 each. Id. at 12. He created the inventory over the course of days, and he thereafter would update it by handwritten note when he brought in new items after others were sold. Ebbinghouse's inventory list was at no point shared with Rall.

[5] Pleased with December's exhibition, Ebbinghouse decided to “work out a consignment deal” with Rall to keep items of handmade jewelry in the store. Id. at 10. At or near the end of December, Ebbinghouse and Rall orally agreed that, beginning in January, Ebbinghouse would consign his jewelry at the store at a 60/40 split of proceeds and that Ebbinghouse's items would get moved from a rear gallery to the front room, which was “the gift store” and thus saw more customers. Id. at 10, 11. In early January, Rall issued a check to Ebbinghouse for $1,445.04. It is undisputed that this represented payment in full for December sales.

[6] The jewelry, now in the front room, remained displayed in Ebbinghouse's unlocked display cases. Ebbinghouse educated store employees about his jewelry and how to best sell it, and he no longer came into the store daily. Ebbinghouse asked the store manager about security and was advised that the store did not have a problem with shoplifting and had a video camera security system. At the point of sale, the store's cashier would input the price and the SKU, unless that was missing, and sometimes a short description of the item. Ebbinghouse's jewelry continued to be sold at Rall's store until early May, when Ebbinghouse removed his items from the store at Rall's request.

[7] Near the end of April, Rall provided Ebbinghouse with a printout of sold items, listing the date and time of sale, the price, an item number or description, and the SKU if available. The printout showed Ebbinghouse's share of total sales from January 1 to April 30 to be $1,577.70. Exhibits Vol. at 3-4. On May 8, Rall gave Ebbinghouse a check in the amount of $1,804.80, with the difference representing another $227.10 in sales through May 8.

[8] After Ebbinghouse removed the unsold jewelry from the store, he manually compared those items against his forty-plus page typed inventory and the printout from Rall of items sold. He cross-checked the lists several times and determined that $1,745.82 worth of inventory was missing. On August 25, 2023, Ebbinghouse emailed Rall with a list of alleged missing items totaling $1,720.10.

[9] In September 2023, Ebbinghouse filed a pro se small claims action against Rall, seeking $1,693.10 for lost, stolen, or unaccounted-for consigned jewelry. The trial court held a bench trial on May 2, 2024, at which Ebbinghouse and Rall appeared, each with counsel.

[10] In testifying about the items on consignment, Ebbinghouse estimated, “[I]t was about fifteen hundred items if you fill all of the slots. And so, at fifty dollars retail average then that's about seven hundred and fifty thousand dollars worth of inventory at retail.”¹ Transcript at 12. The court admitted into evidence, as Exhibit 3, Ebbinghouse's typed inventory that listed over 1900 items, many of which were circled, checked, underlined, or highlighted. It also admitted Ebbinghouse's Exhibit 4, a typed list of what he determined to be missing items totaling $1,745.82. In an effort to better understand Exhibit 3, the trial court inquired whether the underlining and circling had any particular significance, and Ebbinghouse confirmed they did not and were his personal markings as he went through and compared jewelry in hand to his inventory. Ebbinghouse acknowledged that there was no specific agreement with Rall as to who was responsible for the jewelry while it was at the store but expressed his belief that the store was responsible for the consigned jewelry. Ebbinghouse testified that, after the $227.10 credit to Rall, he was seeking $1,518.72 in damages. Id. at 23.

[11] Rall testified that he was not provided, nor did ever he ask for, an inventory of consigned items, and he stated that he and Ebbinghouse had no discussions regarding who would be responsible in the event of loss of jewelry while at the store. Rall offered and the trial court admitted Exhibit C, a spreadsheet Rall created using information gathered at the point-of-sale.² Rall testified that what Ebbinghouse had identified as missing in his August 25 email to Rall was not the same as Ebbinghouse's Exhibit 4's list of missing items, as nine items appeared on Exhibit 4 that were not on the emailed list. Rall also testified that several items appeared on Exhibit 4 as being missing but according to Rall's Exhibit C, had been sold in May and Rall had paid Ebbinghouse for those items.

[12] Ebbinghouse argued that the parties’ oral agreement was a bailment and that Rall, as the entity holding the property, was required to exercise reasonable care “proportionate to the value of the items [ ] under consignment” and here, “approximately three quarters of a million dollars in retail value was placed in [Rall's store]”³ and Rall failed to exercise reasonable care in protecting it. Id. at 49. Rall agreed there was a bailment for mutual benefit but maintained there was no allegation or evidence of negligence in the care of the goods and, further, Rall never knew or agreed to what items were being consigned. Id. at 50.

[13] In denying Ebbinghouse's claim, the trial court sua sponte entered findings and conclusions. The court observed that Exhibit 1 (Rall's three-page printout of sales) and Exhibit 3 (Ebbinghouse's forty-plus page inventory) included SKU numbers and item descriptions that were “difficult for anyone but Plaintiff to discern” and that Exhibit 3 was “hand annotated with many entries underlined, circled, and other numbers written in” such that the court “could not be able to cross check a tray of jewelry against Plaintiff's [inventory] list.” Appendix at 8. The court also found:

19. Neither Defendant nor his staff ever saw Plaintiff's [inventory] list.

* * *

28. In late August 2023, Plaintiff [ ] emailed Defendant that he believed there were missing items [ ] valued at $1,720.10.

29. Plaintiff's Exhibit 4 summarizes what he believes were the missing items, totaling $1,745.82 in value.

30. The Court [is] not sure why there is a discrepancy between the amounts.

* * *

32. Plaintiff and Defendant had a mutual benefit bailment.. . .

* * *

34. Both parties share some fault in this case.

35. Plaintiff failed to provide clear inventory records to Defendant at delivery of items. This makes it difficult to track what items were delivered to Defendant.

36. Defendant failed to exercise ordinary care as a bailee. As bailee, the Defendant has a responsibility to implement adequate security measures to prevent or at least detect theft of retail items, so that any losses could be reported.

* * *

39. The Court finds for the Defendant as Plaintiff did not meet his burden of proof that the alleged missing items had been delivered to Defendant's care.

Appendix at 8-10 (emphases added). Ebbinghouse filed a motion to correct error, which the court denied. Ebbinghouse now appeals.

Discussion & Decision

[14] Small claims actions involve informal trials with the sole objective of dispensing speedy justice between the parties according to the rules of substantive law. Nick's Packing Servs., Inc. v. Chaney, 181 N.E.3d 1025, 1028 (Ind. Ct. App. 2021); Ind. Small Claims Rule 8(A). Ebbinghouse had the burden of proof on his small claims action and now appeals a negative judgment. On appeal, we will not reverse a negative judgment unless it is contrary to law. Imperial Ins. Restoration & Remodeling, Inc. v. Costello, 965 N.E.2d 723, 727 (Ind. Ct. App. 2012). To determine whether a judgment is contrary to law, we consider the evidence in the light most favorable to the appellee, together with all the reasonable inferences to be drawn therefrom. LTL Truck Service, LLC v. Safeguard, Inc., 817 N.E.2d 664, 667 (Ind. Ct. App. 2004).

[15] We also observe that Rall has not filed an appellee's brief. “Where an appellee fails to file a brief, we do not undertake to develop arguments on that party's behalf; rather, we may reverse upon a prima facie showing of reversible error by the appellant.” Ayers v. Stowers, 200 N.E.3d 480, 483 (Ind. Ct. App. 2022). Prima facie error in this context is defined as “at first sight, on first appearance, or on the face of it.” Id.

[16] Consistent with the parties’ expressed agreement at trial that their relationship constituted a bailment, the trial court determined that the parties “had a mutual benefit bailment.” Appendix at 9. Under Indiana law, a bailment arises when (1) personal property belonging to a bailor is delivered into the exclusive possession of the bailee, and (2) the property is accepted by the bailee. Nick's Packing, 181 N.E.3d at 1028 (emphases added). For delivery to occur, there must be a full transfer of the property, either actually or constructively, to the sole custody of the bailee and others. Id. In the case of a mutual benefit bailment, as the court found existed here, the bailee must exercise a duty of ordinary care. Id. A showing by the bailor that the items were in good condition and were either returned in a damaged condition or not returned at all creates an inference that the bailee has failed to exercise the appropriate degree of care. Id. at 1029-29. The burden then shifts to the bailee to demonstrate that the loss, damage, or theft was not his fault. Id. at 1029.

[17] A prerequisite to any recovery by Ebbinghouse on the theory that consigned goods were lost, missing, or stolen is Ebbinghouse's delivery of those goods to Rall's exclusive possession. See id. at 1028. Here, the trial court concluded that Ebbinghouse failed to establish that delivery, and, on the record before us, we cannot say the court's determination in that regard was contrary to law. In reaching that conclusion, we make several observations. Ebbinghouse began his inventory of goods (Exhibit 3) sometime during the December exhibit, after the items had been placed at the store but before being transferred to the front room in January. That inventory, containing between 1500 to 1900 items, was prepared by hand and then typed by Ebbinghouse into his computer. It was continuously updated, with handwritten additions and deletions as items were sold and replaced. The trial court expressed an inability to understand what was missing due to so many markups on Exhibits 1 and 3 as well as different descriptions and manner of identification of items. And notably, Rall never received the inventory list and was unaware what items were at the store.

[18] Ebbinghouse explained that he determined what items were missing by manually reconciling the unsold items against the lengthy and modified inventory list and against a list he had received from Rall of at least some – but apparently not all – sold items. Rall testified that sometimes the tag was missing from the item when a customer purchased it, such that there was no SKU number, in which case the cashier would charge a price based on something similar.

[19] Rall also testified that some of the items identified by Ebbinghouse in Exhibit 4 as missing had, in fact, been sold. And Rall maintained that the list of missing items that Ebbinghouse emailed to him in August, prior to trial, was not the same as reflected in Exhibit 4. We further note that, at trial, Ebbinghouse overvalued the goods as being worth $750,000, and he asserted several differing total amounts of jewelry as missing – one value in his small claims notice, another in the August email correspondence, and another in Exhibit 4. The trial court's order reflected that it was “not sure” why there existed a discrepancy in amounts. Appendix at 9.

[20] Ebbinghouse argues that Exhibit 3 along with his testimony was “sufficient to prove that the specific items were delivered” to Rall on consignment such that the trial court's decision was in error. Appellant's Brief at 27. We disagree. This argument overlooks that it is the trial court's prerogative, not ours, to judge witness credibility and weigh the evidence. To the extent that Ebbinghouse argues that Rall offered no contrary evidence, i.e., that the jewelry had not, in fact, been delivered, Ebbinghouse has pointed us to no authority that it was Rall's burden to show that the claimed missing items were not delivered to his store. Given the somewhat loose oral agreement, the manner of recordkeeping, the creation of the inventory during December after the pieces had been at the store, the lack of information shared between the parties, as well as difficult-to-read and extensive lists,⁴ we cannot say that Ebbinghouse has made a prima facie showing that the trial court's determination – that Ebbinghouse failed to establish that the jewelry pieces at issue had been delivered to Rall's care – was contrary to law.⁵

[21] Judgment affirmed.

FOOTNOTES

1.   We note that 1500 items multiplied by an average price of $50 each would be $75,000, not $750,000.

2.   Rall acknowledged that he had not provided the spreadsheet to Ebbinghouse and that it contained items sold in May that that were not included in the printout he gave to Ebbinghouse in April.

3.   Ebbinghouse acknowledges on appeal that the retail value placed on consignment was approximately $86,400. Appellant's Brief at 14.

4.   Ebbinghouse filed an Addendum with this court that included a color and highlighted version of Exhibit 3, in an effort to clarify or identify what items Ebbinghouse determined were missing. However, as that and other modified exhibits in the Addendum were not before the trial court, we do not consider them on appeal.

5.   We recognize that the trial court found that Rall failed to exercise reasonable care. However, as Ebbinghouse failed to show delivery of the goods, the burden never shifted to Rall to show that he was not at fault.

Altice, Chief Judge.

Judges Brown and Tavitas concur. Brown, J. and Tavitas, J., concur.