SEAMAN (CECIL O.) VS. BALLINSWOOD FARM, INC. , ET AL.
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RENDERED: OCTOBER 3, 2008; 10:00 A.M.
NOT TO BE PUBLISHED
Commonwealth of Kentucky
Court of Appeals
NO. 2006-CA-001242-MR
CECIL O. SEAMAN
v.
APPELLANT
APPEAL FROM BOURBON CIRCUIT COURT
HONORABLE PAUL F. ISAACS, JUDGE
ACTION NO. 04-CI-00363
BALLINSWOOD FARM, INC.;
WILLIAM J. MURPHY; AND
ALLISON MURPHY
APPELLEES
OPINION
REVERSING AND REMANDING
** ** ** ** **
BEFORE: COMBS, CHIEF JUDGE; DIXON AND LAMBERT, JUDGES.
DIXON, JUDGE: Appellant, Cecil O. Seaman, appeals from a judgment of the
Bourbon Circuit Court in favor of Appellees, Ballinswood Farm, Inc., and its
owners, William and Alison Murphy, in this action for conversion and claim for
boarding fees. Because we conclude that the jury instructions were erroneous, we
reverse and remand for a new trial in accordance with this opinion.
In January 2004, Appellant and Appellee, William Murphy, entered
into an oral agreement whereby Appellant would board twenty of his horses at
Appellees’ farm at a reduced per diem rate of $17 for yearlings and $18 for mares1.
Appellant contends that the reduced rate was in consideration for the number of
horses he was boarding. Appellee, on the other hand, maintains that the reduced
rate was in exchange for allowing Appellees to be the exclusive consignor of the
horses at any future sales while the horses remained on the farm. Nevertheless, the
agreement was not reduced to writing.
Throughout the summer and early fall of 2004, Appellant apparently
became concerned about the care of his horses and made several complaints to
Appellees. At the Fasig Tipton sale in October 2004, Appellant expressed his
concerns to William Murphy. Murphy evidently became angry and told Appellant
to remove his horses from the farm. Appellant thereafter contacted Liberty Farms
who agreed to board the horses but could not take them until they had available
stalls in mid-November. In addition, Appellant contacted Warrendale Sales about
consigning the horses in the Keeneland January 2005 sale. The record indicates
that on November 3, 2004, Warrendale Sales electronically registered eleven of
Appellant’s horses for the January sale.
At some point thereafter, Appellees learned that Appellant had
consigned the horses with Warrendale Sales. As a result, they determined that
Appellant’s effort to secure another consignor was a breach of the parties’ oral
1
The standard per diem board rate was $24.
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contract. Appellees then recalculated Appellant’s board bill and assessed a
$37,205 penalty. The penalty was the result of Appellees’ recalculation of all of
Appellant’s board bills at the standard $24 per diem rate, retroactive to February
2004. Appellees declared the right to possession of the horses and denied
Appellant access until his account was paid in full.
Appellant retained attorney William Dykeman who, on November 23,
2004, sent Appellees a letter claiming that their actions constituted conversion and
demanding the immediate release of Appellant’s horses. In the letter, Appellant
offered to pay immediately $22,316.58, which he claimed was the undisputed
amount due for boarding incurred since the last billing period. In addition,
Appellant agreed to permit a lien for any disputed amount to attach to the horses.
However, the letter specifically advised, “any per diem charges accruing after
November 23, 2004, are disputed and will not be paid.” Appellees rejected
Appellant’s offer and continued to condition relinquishment of the horses upon
payment of the full board bill, including the penalty.
In December 2004, Appellant filed a five-count complaint in the
Bourbon Circuit Court against Appellees claiming negligent treatment of the
horses2; fraud and bad faith; conversion; conversion causing damage; and violation
of the Consumer Protection Act, KRS 367.170. In response, Appellees filed a
counterclaim alleging breach of the oral contract and nonpayment of the board bill.
Other parties asserting security interests in the horses, specifically Fifth Third
2
The negligence claim was subsequently bifurcated.
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Bank and the United States Department of Agriculture, were brought into the case
as well.
Shortly after filing his complaint, Appellant filed a motion for
possession of the horses, so that they could be registered and sold at the January
Keeneland sale. The trial court granted the motion on the condition that Appellant
post a surety bond in the amount of $128,466.48, in accordance with KRS 376.100.
Appellant was unable to post the bond and the trial court eventually ordered the
horses sold. The horses were sold on June 3, 2005, in a court-approved auction at
Ballinswood Farms. The proceeds were escrowed pending further proceedings.
The case went to trial on March 20, 2006. At the close of Appellant’s
proof, the trial court granted a directed verdict against Appellant on his claims of
fraud and bad faith, unfair, misleading or deceptive practices pursuant to KRS
367.170 et seq., and all claims for punitive or exemplary damages. At the close of
all evidence, the jury rendered a verdict against Appellant on his conversion claims
against Appellees. Further, the jury found in favor of Appellees on their counterclaim for boarding fees, and awarded $90,000. The trial court entered a judgment
accordingly. Appellant filed a motion to alter amend or vacate, which was denied.
This appeal followed.
Appellant first argues that the trial court erred in ruling that attorney
Dykeman’s November 23, 2004, demand letter to Appellees was inadmissible. In
fact, the trial court initially indicated that the legal opinions and conclusions had to
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be redacted before the letter could be deemed admissible. However, ruling on
Appellant’s motion in limine prior to trial, the trial court stated:
The Court has determined, however, that Plaintiffs’
demand letter, in its redacted form, is admissible solely
as impeachment evidence of Mr. William Murphy. If
Plaintiff so decides, during his questioning, to ask Mr.
Murphy if he ever received a demand for return of the
horses and he denied receiving such a demand, Plaintiff
may use the redacted form of the demand letter in order
to impeach him. Outside of this narrow purpose,
Plaintiff’s demand letter, in either form, is inadmissible.
Appellant contends that an essential element of his conversion claim
was that he demanded his property and the demand was refused. Thus, he argues
that in deeming the demand letter inadmissible, the trial court not only denied the
jury the ability to properly review a crucial component of his conversion claim, but
also denied it the opportunity to assess his efforts to settle the manner and mitigate
damages for everyone involved. Appellant believes that Appellees’ rebuff of his
demand letter evidenced the bad faith and intentional acts they committed for the
purpose of collecting a sizable “penalty.”
Clearly, the trial court properly found that the unredacted letter not
only contained Dykeman’s legal advice to Appellant, but also made numerous
legal conclusions as to Appellee’s conduct that were simply inadmissible.
Furthermore, since Dykeman was not a witness at trial, even the unredacted
version constituted hearsay, as it was offered to prove the truth of the matters
asserted therein; i.e., that Appellant made a specific demand for his horses and
Appellees’ refusal to return them constituted conversion. KRS 801(c). Cf. Davis
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v. Fischer Single Family Homes, Ltd., 231 S.W.3d 767, 776 (Ky. App. 2007).
Thus, the trial court did not err in refusing to admit the letter into evidence.
However, even assuming, arguendo, that the unredacted version of the
demand letter was admissible, we are unable to conclude that any error in its
exclusion prejudiced Appellant or affected the outcome of the trial. CR 61.01.
The fact that a demand was made was never disputed by any party. Appellant
himself testified that he made a specific demand on November 23, 2004. Thus, the
error, if any, must be deemed harmless. Id.
Appellant next contends that the trial court erred in ruling that he
could obtain possession of the horses only by posting a surety bond pursuant to
KRS 376.100. Appellant claims that in his motion for possession, he specifically
agreed “not to sell, encumber or transport said horses without an order of [the]
Court and the proposed boarding farm will agree to subordinate any lien to which
it may become entitled.” Appellant argues any agister’s lien on the horses was not
possessory and he was entitled to possession without a bond. We disagree.
KRS 376.400 provides:
Any owner or keeper of a livery stable, and a person
feeding or grazing cattle for compensation, shall have a
lien for one (1) year upon the cattle placed in the stable
or put out to be fed or grazed by the owner, for his
reasonable charges for keeping, caring for, feeding, and
grazing the cattle. The lien shall attach whether the cattle
are merely temporarily lodged, fed, grazed, and cared for,
or are placed at the stable or other place or pasture for
regular board. The lien shall take priority over a lien
created pursuant to KRS 376.420(1).
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In addition, KRS 376.410 provides:
Any person in whose favor a lien provided for in KRS
376.400 exists may, before the District Court of the
county where the cattle were fed or grazed, by himself or
agent, make affidavit of the amount due him and in
arrears for keeping and caring for the cattle, and
describing as nearly as possible the cattle so kept by him.
The court shall then issue a warrant, directed to the
sheriff or any constable or town marshal of the county,
authorizing him to levy upon and seize the cattle for the
amount due, with interest and costs. If the cattle are
removed with the consent and from the custody of the
livery stable keeper or the person feeding or grazing
them, the lien shall not continue longer than one (1) year
from and after the removal, nor shall the lien in case of
such removal be valid against a bona fide purchaser
without notice at any time after the removal. The warrant
may be issued to a county other than that in which the
cattle were fed or grazed, and the lien may also be
enforced by action as in the case of other liens.
Appellant argues, without citation to any authority, that when he sent
the November 2004 letter demanding possession of his horses and offering a lien
on any disputed board amount, Appellees’ right to an agister’s lien terminated by
operation of law because the horses were no longer “put out to be fed or grazed by
the owner,” but were being held unlawfully by Appellees. To follow Appellant’s
logic, however, would render KRS 376.400 meaningless as an agister’s lien which
would be defeated by any simple demand for possession of the property at issue.
We do not believe this was the intent of the legislature.
Appellees had a valid agister’s lien pursuant to KRS 376.400 for
unpaid board, although the amount owed was certainly in dispute. The lien was
properly perfected and was enforced by the issuance of a warrant by the Bourbon
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District Court on January 14, 2005. KRS 376.410. The statutory procedure
required of a horse owner upon the issuance of the warrant to enforce an agister’s
lien is set forth in KRS 376.100:
The owner or claimant of property against which a lien
has been asserted, or any other person contracting with
the owner or claimant of such property for the furnishing
of any improvements or services for which a lien is
created by this chapter, may, at any time before a
judgment is rendered enforcing the lien, execute before
the county clerk in which the lien was filed a bond for
double the amount of the lien claimed with good sureties
to be approved by the clerk, conditioned upon the
obligors satisfying any judgment that may be rendered in
favor of the person asserting the lien. The bond shall be
preserved by the clerk, and upon its execution the lien
upon the property shall be discharged. The person
asserting the lien may make the obligors in the bond
parties to any action to enforce his claim, and any
judgment recovered may be against all or any of the
obligors on the bond.
The record indicates that although Appellees were asserting a lien in
the amount of $113,857 (as of the time of the February motion for possession),
they agreed to a bond amount computed on the discounted per diem rate and
without any penalty. Thus, the amount owed by Appellant under Appellee’s
agreed rate was $64,233.24. As such, the trial court set the bond at $128,466.48.
We cannot conclude that the trial court erred in requiring Appellant to comply with
a statutorily-mandated procedure to acquire possession of the horses.
Appellant next argues that the trial court erred in denying his motions
for partial summary judgment and directed verdict on the issue of conversion. He
contends that when Appellees ordered him to remove his horses from the farm,
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they materially breached the oral contract and Appellant was thereafter legally
entitled to rescind the contract and make other arrangements for his horses. Thus,
it is Appellant’s position that Appellees’ refusal to relinquish possession of the
horses unless he paid a penalty was a wrongful exercise of dominion and control
over his property and amounted to conversion as a matter of law. State Auto
Mutual Insurance Company v. Chrysler Credit Corporation, 792 S.W.2d 626 (Ky.
App. 1990).
With regard to the denial of partial summary judgment, we agree with
the reasoning of the trial court:
Plaintiff contends, in his introduction, that “a contract
was never formed which permits Defendants to consign
his horses in exchange for a reduced per diem boarding
charge.” Yet, Plaintiff, in the very next sentence,
supports and argues the complete opposite of the
preceding statement. The Court has to start from the
point that the parties agree that there was actually an
agreement as well as the terms under which the
agreement was formed in order for the Court to give a
legal opinion as to the validity and rights that follow.
Any attempt to do otherwise is an advisory opinion,
which is improper. “Courts of Kentucky do not render
advisory opinions.” [Livingston County Farm Supply,
Inc. v. Spencer, 593 S.W.2d 76 (Ky. 1979)].
Furthermore, Plaintiff’s arguments in support of
his motion are simply not grounds for granting summary
judgment. As previously noted, summary judgment is
only proper when there are no material facts in dispute
and the moving party is entitled to judgment as a matter
of law. [Steelvest v. Scansteel Service Center, Inc., 807
S.W.2d 476 (Ky. 1991)].
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Furthermore, inasmuch as Appellant believes that there are no
disputed facts and Appellee’s refusal of his demand for possession of his horses
constituted conversion, the jury was entitled to believe otherwise. Appellees
claimed that at the time of demand, Appellant owed substantially more than he
offered to pay in the demand letter. Alison Murphy testified that since January
2004, Appellant had never paid a board bill in full. Appellant disputes such claim
and introduced evidence that all parties understood he would not pay his bill in full
until after the fall 2004 sale. Nonetheless, there was undeniably a disagreement as
to how much Appellant owed Appellees, and whether Appellees possession of the
horses constituted conversion. As such, Appellant was not entitled to a directed
verdict.
Appellant’s next claim of error concerns the trial court’s refusal to
permit him to testify at trial as to the market value of the horses. Relying on prerule case law, Appellant argues that he did not intend to testify as an expert, but
rather as a lay witness testifying about the value of his personal property. See
Robert Lawson, The Kentucky Evidence Law Handbook, § 6.10[6] (4th ed. 2003).
Appellees respond that this issue is moot since the jury found against Appellant on
his conversion claim, thus eliminating the issue of damages. However, as will be
discussed herein, because we find that the conversion instruction was erroneous,
the issue may again present itself on remand.
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We are of the opinion that the trial court thoroughly discussed this
issue in ruling on Appellee’s motion in limine and we adopt the language of its
order herein:
KRE 701 does not make any distinctions concerning real
or personal property as a basis for opinion testimony by a
lay witness, but established [sic] two (2) requirements:
“(a) Rationally based on the perception of the witness;
and (b) Helpful to a clear understanding of the witness’
testimony or the determination of a fact in issue.” It is
the Court’s understanding that Mr. Seaman’s testimony
concerning the value of the horses in question is based
upon an appraisal made several years ago sometime in
the past by an appraiser and then adding the costs of a
stallion season in which the mare was in foal to that value
or, if it was a foal, it would be based on the average sale
price of the same stallion in a sale for the year in
question. As a basis for his testimony, neither of those
factors come within the requirements that the opinion
must be rationally based on the perception of the witness.
This is merely an attempt to use Mr. Seaman as a way to
get the prior appraisal before the jury with Mr. Seaman’s
speculation as to how the horses would be currently
valued based on factors that this Court does not find
credible. There is simply no rational basis for assuming a
mare’s value increases by the amount of stud fee paid.
The Court will note that, at this point, it is not even aware
of whether the figure used is the actual price paid for the
stud season, the advertised price for the stud season, or
the average price paid by everyone who bred to that
stallion that year. This does not appear to be the
appropriate case for a lay witness to give an opinion as to
the ultimate issue to be decided by the jury, that is, the
value of the horses in question. Of course, Plaintiff may
testify as to how much he paid for the horses when he
purchased them and any success that may have had as a
brood mare since he purchased the horses or any other
facts of which he has direct knowledge. Plaintiff is
prohibited from giving any opinion testimony as to the
current market value of these horses.
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We have no doubt based on Appellant’s knowledge and experience in the horse
industry, that he is well-educated on the value of horses. However, it is apparent
from the trial court’s order, that the concern was not Appellant testifying, but
rather the basis and foundation of his testimony. As the trial court determined,
Appellant’s attempt to bring “current” an obsolete appraisal with speculative
assumptions does not meet the test for admissibility under KRE 701.
Finally, Appellant argues that the jury instructions were contrary to
law, improper and confusing. First, Appellant contends that the instructions
erroneously stated that Appellees committed conversion only if they “intentionally
obtained the horses by wrongful act.” However, Appellant complains that this case
involved Appellees wrongful “retention” of the horses and use of the word
“obtained” was confusing and misleading. We disagree. It was undisputed by all
parties that Appellees legally gained possession of the horses as a result of the
parties’ oral boarding contract.
However, we are compelled to agree with Appellant that the
conversion instructions, as a whole, was erroneous. Instruction No. 23
(Conversion) provided:
You will find that Defendant Ballinswood Farm,
Inc. committed conversion if you find from the evidence
that (1) Cecil Seaman had ownership of and right to
possess the horses boarded at Ballinswood Farm; (2)
Ballinswood Farm, Inc. intentionally obtained the horses
by a wrongful act or disposition; and (3) Cecil Seaman``
suffered damages.
3
Instruction Nos. 3 and 4 were identical with respect to Alison Murphy and William Murphy.
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However, if in retaining the horses Ballinswood
Farm, Inc. retained the horses under an assertion of a
right to a lien for payment lien [sic], or acted pursuant to
authority of law, legal process or court order, you will
find that it did not commit conversion.
You are further instructed that pursuant to
Kentucky law Ballinswood Farm had a lien on the horses
boarded at Ballinswood Farm for all unpaid reasonable
charges for keeping, caring, feeding, and grazing of the
horses, and that Ballinswood Farm had a right to possess
the horses it had a lien on.
We disagree with Appellant that his November offer of payment prohibited
Appellees from obtaining a lien on the horses. However, it is clear that the amount
owed was in dispute, and that Appellees conditioned relinquishment of the horses
upon payment in full, including the assessed penalty. Further, Appellees did not
file an agister’s lien until January 2005, after the litigation herein commenced.
Nevertheless, by instructing the jury that Appellees had a valid lien
and had the right to possess the horses upon which they had a lien, the trial court
wholly nullified the instruction. As written, the plain language of the instruction
precluded the jury from finding that Appellees committed conversion. As there is
no way to discern what a jury might have decided if properly instructed, the case
must be reversed.
Finally, we find no merit in Appellant’s last claim that the trial court
erred in failing to instruct the jury on breach of contract. No cause of action for
breach of contract was asserted in Appellant’s complaint.
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The judgment of the Bourbon Circuit Court is reversed and this matter
is remanded for further proceedings consistent with this opinion.
LAMBERT, JUDGE, CONCURS.
COMBS, CHIEF JUDGE, DISSENTING BY SEPARATE OPINION:
I cannot agree that the jury instruction was erroneous. Accordingly, I would
affirm.
BRIEF FOR APPELLANT:
BRIEF FOR APPELLEES:
William A. Dykeman
Winchester, Kentucky
Frank T. Becker
Alex L. Scutchfield
Lexington, Kentucky
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