MacPhail v. Sagner

Proctor, J., delivered the opinion of the Court. On October 27, 1969, in an interim opinion, Judge ³²¹ Solomon Liss expressed the fond hope that this proceeding was then “in its last furlong.” Although that segment of this endurance contest was not the last furlong, this is. On July 19, 1961, the famous Maryland bred stallion Saggy, owned by the late Stanley Sagner (Sagner), 1 was moved from the Country Life Farm of Joseph Pons to Glenangus Farms, Inc. (Glenangus), owned by Larry S. MacPhail (MacPhail), (Glenangus and MacPhail being herein collectively referred to as appellants). The transfer was pursuant to a proposed syndication agreement, negotiations for which had begun a month or two earlier.

Saggy’s value as a studhorse had increased substantially in the summer of 1960 when one of his get, Carry Back, won both the Kentucky Derby and the Preakness. Sagner desired the syndication for tax purposes — MacPhail because it gave standing to his horse farm. The syndicate agreement, after a number of drafts, reached final form in the latter part of August, 1961. Its pertinent provisions were: (1) Purchase price — $160,-000; (2) Shares to be sold — thirty-two at $5,000; (3) Purchase price of each share to be evidenced by a negotiable promissory note payable to Sagner, $1,000 to be paid on or before February 1, 1962, $2,000, on or before February 1, 1963, and $2,000, on or before February 1, 1964; (4) Saggy to be kept at Glenangus during the 1962, 1963 and 1964 breeding seasons under the personal management of MacPhail; (5) MacPhail to manage the syndicate, and (6) Rights of shareholders were detailed and breeding conditions were specified.

Finally it was agreed that “In the event the syndication of the stallion be not completed, for any reason, prior to February 1, 1962, ³²² then the first party (Sagner) shall return to each subscriber the promissory negotiable note executed by said subscriber as aforesaid.” MacPhail joined in the agreement to bind him to carry out his obligations thereunder. In a prior appeal, Sagner v. Glenangus Farms, Inc., 234 Md. 156, 164 , 198 A. 2d 277 (1964), this Court found that “The final draft of the Saggy agreement would seem to have been as much MacPhail’s as Sagner’s.” By September 19, 1961, only five shares had been subscribed. On October 24, 1961, having become disenchanted with MacPhail’s efforts to promote the syndicate, Sagner made an abortive effort to cancel the agreement. One of the subscribers withdrew at that time.

Correspondence between counsel for the parties ensued. On December 4, 1961, Sagner’s attorney wrote MacPhail’s attorney that: “If there is a failure of such sale (i.e. of shares), the contract is void, and we are entitled to return of the horse on February 2, 1962 upon paying to Mr. MacPhail all legitimate expenses to which he has been subjected and for which we would normally be liable. We intend to live up to the literal terms of the language of the agreement with respect to returning to prospective purchasers any notes which are in our possession, if on February 1, 1962, all 32 shares are not sold. In the event that Mr. MacPhail refuses to turn over to us the horse upon payment of his legitimate claims for expenses, we shall hold him strictly accountable for the value of the horse plus all losses of earnings which we have reason to expect for the breeding seasons in which Mr. MacPhail would continue to deprive us of our rights of ownership.” No additional snares were sold.

On January 27, 1962, MacPhail filed declaratory judgment proceedings against Sagner and refused to return Saggy. That proceeding was decided in favor of MacPhail on May 22, 1963. That judgment was reversed by this Court on March 11, 1964. ³²³ A motion to modify the opinion or for a rehearing was denied on April 16, 1964. Thereafter MacPhail persisted in his refusal to return Saggy, for the first time claiming an agistor’s lien.

On June 2, 1964, this replevin proceeding was instituted by Sagner against MacPhail and Glenangus. A replevin bond was filed by Sagner and Saggy was finally returned to the Country Life Farm on June 3, 1964. MacPhail filed pleas and a counterclaim, alleging that Sagner’s “wrongful action and conduct” had caused “this Defendant to suffer great loss and damage.” Glenangus filed pleas and three counterclaims. The first was based on an alleged agreement by Sagner to pay for board and other expenses at the rate of $300 per month from July 19, 1961, to June 3, 1964, or a total of $9,562.15.

The second alleged an understanding between it and Sagner under which he was to pay the reasonable cost of board and other expenses which was $300 per month for the period from July 19, 1961, to June 3, 1964. The third was for damages attributable to Sagner’s alleged delay in the preparation of the Syndication Agreement and his alleged premature attempts to cancel the agreement. Glenangus filed a motion for summary judgment on the issue that it was entitled to reimbursement for board and other expenses for the period from July 19, 1961, to April 16, 1964 (first and second counterclaims). On June 13, 1969, Judge David Ross entered judgment on that motion on the issue of liability alone in favor of Glenangus, for the reasonable cost of board, keep and maintenance of Saggy for the period September 1, 1961, through January 31, 1962, and in favor of Sagner on the claim for such costs for all periods subsequent to January 31, 1962.

Sagner filed motions for summary judgments (1) on the replevin suit for the stallion Saggy and for damages caused by his detention; and (2) on MacPhail’s counterclaim and the third counterclaim of Glenangus. On July 10, 1969, Judge David Ross entered judgment on the motion in favor of Sagner “with respect to the replevin ac ³²⁴ tion as to liability only, leaving for determination by the jury the amount of damages, if any.” On February 20, 1970, Judge Solomon Liss dismissed the counterclaim of MacPhail and the third counterclaim of Glenangus “with prejudice”. By that order Judge Liss also ruled, “That the Plaintiffs are entitled, subject to proof, to the reasonable value of the stud fees lost by the Plaintiffs by reason of the detention of Saggy from February 1, 1962, including any stud fees received by MacPhail and Glenangus Farms while the horse was in their possession against which fees must be charged a reasonable management fee, as determined by the custom of the trade, but not the cost of board and maintenance incurred by MacPhail and Glenangus, together with other damages properly recoverable in a replevin action, including the costs of this suit.” Appellants moved for summary judgment in their favor on Sagner’s claim for damages, apart from costs, bond and punitive damages in favor of Sagner, for one cent nominal damages. The basis for this motion was the contention that Saggy was in fact owned by a partnership.

On June 1, 1970, this motion was denied by Judge Shirley B. Jones. The case was tried on the question of damages before a jury, Judge Jones presiding, between June 11 and 18, 1970. The jury returned a verdict in favor of Sagner in the amount of $131,000. On May 10, 1971, Judge Jones entered judgment absolute in favor of Sagner in the amount of $165,508.02, setting forth in a memorandum opinion the basis for such judgment.

Appellants allege that the trial court erred in certain determinations hereafter discussed. I. Measure of Damages — Based on Saggy’s Return on February 1, 1962. Appellants contend that the measure of damages de ³²⁵ lineated in the order of Judge Liss of February 20, 1970, and incorporated, in substance, in Judge Jones’ charge to the jury was erroneous. They further contend that Sagner’s damages should have been measured according to the rules of restitution.

These contentions are, at least in part, based upon the subsidiary assertion that in replevin actions the right to possession and entitlement to damages are distinct remedies. As authority for this proposition appellants cite Koch, et al. v. Mack International Motor Truck Corp., 201 Md. 562, 572 , 95 A. 2d 105, 110 (1953) and Burnett v. Bealmear, 79 Md. 36, 40 , 28 A. 898, 899 (1894). It is to be noted that in each of these cases the property sought to be replevied had already been returned to the party entitled to possession. In Burnett v. Bealmear, supra, this Court said: “As the property had been delivered to the plaintiff, it would have been an error to give him a verdict for its appraised value, * * *.

The proper verdict for the plaintiff, when he is entitled to it, is merely for damages for the detention of the goods. This may be seen by examining the approved precedents. 1 Evans’ Harris 508. It is said in Hoskins v. Robins, 2 Wms. Saund. 320, note 1: ‘The plaintiff obtained a verdict, and he is only entitled to damages for the wrongful taking and costs, but not to the value of the goods taken, as he is in trespass, for they were delivered to him when replevied.’ ” To the same effect is Koch et al. v. Mack International Motor Truck Corp., supra.

Maryland Rule BQ44 a provides that “When filed with the bond, the declaration shall allege that the defendant unjustly detains the property, and shall claim the return of said property plus damages for its detention.” The only reasonable inference to be drawn from these decisions and from the Maryland Rule is that the plaintiff ³²⁶ in a replevin action is entitled to damages for the detention of the goods for which replevin is sought. This rule is supported by other authorities. 46 Am. Jur. Replevin, sec. 142: “The rule is well settled that where property has a value on account of the use to which it may be put, as distinguished from its value for sale or consumption, the successful party is entitled to recover as damages for its detention the value of such use during the time that the property was wrongfully detained.

Thus, where the property detained consists of horses, tools, implements of trade etc., the general rule is that the party deprived of possession is entitled to the reasonable, value of the use during the period of wrongful detention.” [See also — 79 A.L.R.2d 733 ; Drinkhouse v. VanNess, 260 P. 869 (Cal., 1927), which involved replevin of a stud horse.] The theory that Sagner is entitled merely to restitution and not to damages for detention is based upon the faulty premise that appellants retained possession first as stakeholders and, after February 1, 1962, under a judgment or decree of court. Appellants asserted that restitution was the correct measure of damages in one of the preliminary arguments before Judge Liss, who ruled against them. However, they did not request that Judge Jones charge the jury on this theory. The contention that they were stakeholders from February 1, 1962, until May 22, 1963, was made for the first time in their brief in this case.

They were not stakeholders. At most they were bailees, and the bailment was terminated on February 1, 1962. Sagner v. Glenangus Farms, Inc., supra. Although, in their bill for declaratory judgment, they requested a temporary order enjoining Sagner from removing the horse, this relief was never pursued and no such order was ever signed.

Thus between February 1, 1962, and May 22, 1963, the date on which Judge James ³²⁷ Cullen signed the decree in the declaratory judgment case, no judgment, decree or order of any kind had been issued in the declaratory judgment proceedings, let alone a judgment, decree or order which required or authorized appellants to retain possession of Saggy. By Judge Cullen’s decree neither appellant was required or specifically authorized to retain possession of the stallion. That decree merely held that the syndication agreement was a valid and subsisting agreement between the parties; that the clause, which this Court on appeal held gave Sagner the right to cancel such agreement, did not mean that all thirty-two shares had to be subscribed for and purchased by persons other than Sagner prior to February 1, 1962; and that all other terms and provisions of such agreement were valid and binding upon the parties. In the cases cited by appellants to support their contention that Sagner’s recovery of damages should be limited by the rules of restitution, the act of the person asked to respond in damages dated from and was based upon a judgment by a court of competent jurisdiction.

For example, in Johnson v. Robertson, 34 Md. 165, 172-3 (1871), it was noted that whatever had been done by the defendant had been done “under and in strict execution of the decree appealed from”, which was a decree of sale in a mortgage foreclosure proceeding. Likewise, in Redwood Hotel, Inc. v. Korbien, 197 Md. 514 , 80 A. 2d 28 (1951), restitution was requested by petition filed in the equity case in which the petitioner had surrendered a hotel pursuant to a permanent injunction, which was later vacated. Finally, the distinction between a tort action for damages and a quasi-contractual action for restitution is stated by Prosser, Law of Torts, sec. 94, pp. 644-5 (3rd ed. 1964), to be as follows: “The ordinary delictual action for a tort usually is not concerned with restitution, since it seeks to compensate the injured person for his loss, irrespective of the receipt of anything ³²⁸ by the defendant. Even those tort actions which demand the return of specific property, such as replevin or ejectment, are in theory, at least, seeking to restore the plaintiff to his prior position, although they may often have the incidental effect of giving him the benefit of the increased value of the property.

Restitution in quasi-contract, on the other hand, looks to what the defendant has received which in good conscience should belong to the plaintiff; and this may be either more or less than the amount of the plaintiff’s actual loss.” (Emphasis supplied). The trial court applied the correct measure of damages; retention of possession of Saggy by Appellants on and after February 1, 1962, was illegal and was not made lawful by Judge Cullen’s decree. By electing to retain possession of the stallion after the date of such decree they gambled that Judge Cullen’s decision was correct, and, with the reversal by this Court, they lost their bet.

II

Mitigation of Damages — Properly Limited to Events After February 1, 1962. Appellants contend that the trial judge erred in limiting (by paragraph III of the Pre-Trial Order of June 9, 1970) their right to introduce evidence in mitigation of Sagner’s damages to his actions or inaction after February 1, 1962. The rights and duties of the parties prior to that date were resolved by this Court in Sagner v. Glenangus Farms, Inc., supra. Appellees there contended that Sagner was estopped from asserting his right, if any, to cancel the syndication agreement by virtue of his actions and inaction prior to February 1, 1962.

We did not agree. In addition, the rule adopted by Judge Jones is supported by 79 A.L.R.2d 725 , (1961) “Livestock — Loss or Injury — Damages” § 14, “Duty to reduce damages” (an authority relied on by appellants in their brief): “The general rule that one who is injured by the wrongful act of another is bound to exercise ³²⁹ reasonable care to avoid loss or to minimize the resulting damage, and, to the extent that his damages are the result of his active enhancement thereof, or are due to his failure to exercise such care, he cannot recover, has been applied in cases involving actions for the loss, injury or destruction of livestock.” (Emphasis supplied). The “wrongful act of another” — the refusal by appellants to return Saggy to Sagner — did not occur until February 1, 1962. In arguing this point they also rely on Hoff v. Lester, 25 Wash. 2d 86 , 168 P. 2d 409 (1946), a replevin action in which defendant was permitted to mitigate plaintiff’s damages by evidence that he failed to avail himself of his right to obtain possession of his property by filing a bond.

Under Judge Jones’ ruling such proof could have been offered in this case. Under her charge — which included a correct statement of the law on mitigation — this point could have been argued. We find no error in the trial court’s rulings on this question.

III

Sagner Not Estopped From Claiming That Saggy’s Reasonable Foal Fee At Any Time After February 1, 1962, Could Have Been Other Than $2,-500. The Pre-Trial Order of June 9, 1970, signed by Judge Jones provided: “I. The Plaintiffs may introduce evidence to the jury subject to the usual rules of relevancy and materiality of the following items of damage: 1. The stud fees lost, if any, by the Saggy Farms Partnership from and after February 1, 1962, as a result of the detention of Saggy by Defendant. (a) In this connection Plaintiff is not es-topped to claim that Saggy’s reasonable stud ³³⁰ fee at any time after February 1, 1962 would have been other than $2,500.00. * * * “III.

Defendants may