The opinion
CV1-086
IN THE COURT OF APPEALS, THIRD DISTRICT OF TEXAS,
AT AUSTIN
NO. 3-91-086-CV
ROBERT J. PIERSON,
APPELLANT
vs.
GFH FINANCIAL SERVICES CORPORATION AND DREW DARBY,
APPELLEES
FROM THE DISTRICT COURT OF TOM GREEN COUNTY, 51ST JUDICIAL DISTRICT
NO. CV88-1228-A, HONORABLE DICK ALCALA, JUDGE PRESIDING
PER CURIAM
Robert J. Pierson appeals a judgment awarding appellee GFH Financial Services
Corp. $15,000.00 based on Pierson's conversion of irrigation equipment, and denying Pierson any
recovery against appellee Drew Darby. GFH (1) brings three cross-points concerning costs and
attorney's fees, and contending that Pierson brought this appeal for delay. We will overrule all
points and cross-points and affirm the judgment of the trial court.
On November 10, 1978, GFH leased irrigation equipment to Gary and Betty
Condra. On December 26, 1980, that lease was assigned, with GFH's consent, to Clifford and
Joyce Hoelscher. The Hoelschers purchased the real property on which the equipment was
located. This property was foreclosed and sold to Texas Commerce Bank--San Angelo on April
1, 1986. The bank sold the property to Darby on November 14, 1986. A day earlier, Darby and
Pierson had entered into an agreement giving Pierson an option to buy the land, under which
Pierson began farming. Pierson bought the land on May 31, 1988.
During March 1988, GFH learned that the irrigation equipment was no longer on
the real property. After learning of its disposition, an attorney for GFH demanded the return of
the equipment from Mac Massey, of Massey Irrigation, who had purchased it from Pierson.
Massey forwarded the letter to Pierson, who sent GFH a response on March 31, 1988. Pierson
contended that he purchased the equipment from Texas Commerce Bank, and legally sold it. GFH
joined Pierson in the suit on July 17, 1989. (2)
Pierson brings five points of error: (1) the judgment cannot be supported on appeal
because the trial court failed to make findings of fact and conclusions of law; (2) the trial court
erred in granting judgment for damages for conversion against Pierson because GFH made no
demand on him for the return of the equipment and Pierson "otherwise had priority"; (3) the trial
court erred in failing to find that Darby did not convert the property; (4) the statute of limitations
barred this suit; and (5) the trial court erred in granting prejudgment interest beginning on March
10, 1988.
FINDINGS OF FACT AND CONCLUSIONS OF LAW
In point of error one, Pierson contends that he timely requested findings of fact and
conclusions of law, which the trial court failed to make. Tex. R. Civ. P. Ann. 296 (Supp. 1992).
Because the court failed to make findings and conclusions, he argues, there are no findings of fact
to support the judgment against him.
GFH responds: (1) Pierson improperly briefed this point because he cites no
authorities on which he relies, Tex. R. App. P. Ann. 74(a) (Supp. 1992); (2) Pierson made an
untimely request not preserved by Tex. R. Civ. P. Ann. 306c (Supp. 1992); and (3) Pierson failed
to file the reminder required by Tex. R. Civ. P. Ann. 297 (Supp. 1992) when the court failed
timely to file findings and conclusions. With regard to GFH's concern about briefing, because
Pierson cites the rule, we will assume that Pierson intended his authority to be the rule itself and
his argument to be textual.
Because Pierson failed to do more than make an initial request, however, he did
not properly request findings and conclusions. Tex. R. Civ. P. Ann. 297 (Supp. 1992). The
record does not show, and Pierson does not argue on appeal, that he ever filed the "Notice of Past
Due Findings of Fact and Conclusions of Law" that Rule 297 requires. Pierson's failure to file
this reminder waives his right to complain of any error on appeal. Las Vegas Pecan & Cattle
Co., Inc. v. Zavala County, 682 S.W.2d 254, 255 (Tex. 1984). We must, therefore, affirm the
judgment of the trial court on any legal theory that the evidence supports. Lassiter v. Bliss, 559
S.W.2d 353, 358 (Tex. 1977). Without findings or conclusions, we presume the trial court
resolved all questions of fact in support of the judgment. We review the record to determine if
any evidence supports the judgment and concomitant implied findings, considering only the
evidence favorable to the issue and disregarding all evidence or inferences to the contrary.
Goodyear Tire & Rubber Co. v. Jefferson Construction Co., 565 S.W.2d 916, 918 (Tex. 1978).
We overrule point of error one.
STATUTE OF LIMITATIONS
Pierson contends, in point of error four, that limitations barred this suit. A two-year statute of limitations applies to an action for conversion. Tex. Civ. Prac. & Rem. Code Ann.
§ 16.003 (1986). Conversion is an act of dominion and control wrongfully exerted over another's
personal property and inconsistent with that person's right in the property. Waisath v. Lack's
Stores, Inc., 474 S.W.2d 444, 446 (Tex. 1971). An act of conversion does not have to be an
actual manual taking but merely an act that is such active interference with the owner's right of
property or control as to deprive him of its free use and enjoyment. Id. at 447 ; American Surety
Co. v. Hill County, 254 S.W. 241, 245-46 (Tex. Civ. App. 1923), aff'd, 267 S.W. 265 (1924).
Use of property by a person lawfully in possession becomes conversion if the use so departs from
the conditions under which he received the property as to amount to an assertion of right
inconsistent with that of the owner. Snyder v. St. Paul Mercury Indem. Co., 191 S.W.2d 107,
110 (Tex. Civ. App. 1945, writ ref'd w.o.m.). Although real property cannot be converted, when
a fixture is severed and removed, it is re-impressed with its character as personalty and can be the
subject of an action for conversion. Lane v. Davis, 337 S.W.2d 292 (Tex. Civ. App. 1960, no
writ).
In general, the period of limitations begins to run at the time of the conversion, the
unlawful taking. Republic Supply Co. v. French Oil Co., 392 S.W.2d 462, 464-65 (Tex. Civ.
App. 1965, no writ). When the original possession of property is not wrongful, however, the
limitations period does not begin to run until the return of the property has been demanded and
refused or until the person in possession has unequivocally exercised over the property acts of
dominion inconsistent with the claims of the owner or the person entitled to possession. Taylor
v. Walston & Co., Inc., 502 S.W.2d 613, 615-16 (Tex. Civ. App. 1973, writ ref'd n.r.e.); see
also Rorie v. Dempsey-Tegeler & Co., Inc. 515 S.W.2d 332, 333 (Tex. Civ. App. 1974, no writ).
Generally, the statute begins to run when notice of the adverse claim is made apparent to the
owner. Federal Electric Co. v. Johnson, 187 S.W.2d 410, 411 (Tex. Civ. App. 1945, writ
dism'd w.o.j.). If the convertor took possession in subordination to the owner's title, the statute
does not begin to run as long as the relationship of the parties continues or, if the contractual
relation was repudiated, until the notice of the repudiation is conveyed to the owner, either
directly or by adverse acts or claim of ownership so notorious that the owner may be presumed
to have known thereof. Id. ; Williams v. Davenport, 212 S.W. 675, 676 (Tex. Civ. App. 1919,
no writ) (where plaintiff loaned sawmill machinery to defendant, limitations did not begin to run
until defendant repudiated plaintiff's title and notice of the repudiation was brought home to
plaintiff, and the mere fact that defendant gave a chattel mortgage on all of his sawmill machinery,
which included that property loaned by plaintiff, was not notice to plaintiff even though the
mortgage was filed of record, for plaintiff was not bound to make periodic searches of the records
to discover whether defendant had repudiated).
Because we have no findings of fact, we presume disputed facts were found in
support of the judgment. The trial court determined that limitations did not bar the suit.
Therefore, the court impliedly found that the cause of action accrued within two years of filing
suit. There are several possible acts that might be considered conversions. Pierson argues that
the foreclosure was the act of conversion. However, it is logical that, as long as the irrigation
system remained on the property, no significant interference with GFH's rights occurred because
as long as it knew the location of the property, it could remove and reclaim the system, if it were
to decide that there was no possibility of payment. Therefore, it is logical that the act of removing
the system is what gave GFH a cause of action for conversion. (3) Because a finding that the
removal of the system from the real property was the act that caused the cause of action for
conversion to accrue would support the judgment, and there is evidence to support that finding,
we assume such a finding was made. We overrule point of error four.
DEMAND
In point of error two, Pierson contends that judgment for GFH is improper because
no demand for the return of the equipment was made and he "otherwise had priority." GFH
responds that the issue of a demand on Pierson was not raised in the record. GFH is correct.
However, Pierson did plead that he was a purchaser for value under the Uniform Commercial
Code (UCC) and there were no proper financing statements filed, from which he derives the
argument that as a person who came into lawful possession of the property he was entitled to a
demand on him and an opportunity to refuse to return the property before he could commit an act
of conversion. McVea v. Verkins, 587 S.W.2d 526, 531 (Tex. Civ. App. 1979, no writ).
Pierson contends that he gained lawful possession of the property because the
"lease" actually was a sale with GFH retaining a security interest. Tex. Bus. & Com. Code Ann.
§ 9.102 (b) (Tex. UCC)(1991). Because no proper filing of a financing statement was in place and
the security interest was unperfected, he acquired an interest superior to GFH by his purchase
from the party who foreclosed the real property. GFH contends that the lease was a true lease
and that Pierson is not entitled to rely on Article 9 perfection concepts. (4)
Whether a transaction creates a lease or security interest is determined by the facts
of each case. If a lease provides an option to purchase for no additional consideration or nominal
additional consideration, a security interest has been created. Horton v. Dental Capitol Leasing
Corp., 649 S.W.2d 655, 657 (Tex. App. 1983, no writ); Davis Bros. v. Misco Leasing, Inc., 508
S.W.2d 908, 912-13 (Tex. Civ. App. 1974, no writ). If the consideration is more than nominal,
other factors are considered. Davis , 508 S.W.2d at 912-13 . This lease provided an option to
purchase at the fair market value at the end of the lease, with an elaborate provision for
determining fair market value. Therefore, it is not automatically categorized as a lease.
Once again, given the lack of findings and conclusions, we imply findings that
support the judgment. A finding that this agreement was a lease, and not a security agreement,
would support the judgment. There is evidence in the record, such as the lease itself and
testimony about the parties' intent, that supports such a finding. We therefore imply the finding
that the agreement was a lease, that no UCC filing was necessary, and that no demand on Pierson
was necessary. We overrule point of error two.
CONVERSION BY DARBY
Pierson contends that the trial court erred in failing to find that Darby converted
the system. GFH responds that no evidence was offered at trial that Darby had ever represented
to Pierson that he had title to the system to convey or otherwise acted in a way inconsistent with
GFH's ownership. In fact, Pierson operated the farm under an "Option to Buy" agreement, and
actually sold the irrigation system even before acquiring title to the land from Darby. Again, we
have no findings and conclusions. There is evidence in the record to support a finding that Darby
did not convert the equipment because he never took any action that would have interfered with
GFH's rights in the equipment; that is, he testified his intent was to transfer whatever he owned,
which he did not understand necessarily to include GFH's irrigation system. We overrule point
of error three.
PRE-JUDGMENT INTEREST
Pierson contends, in point of error five, that the trial court erred in not awarding
pre-judgment interest from January 14, 1990, 180 days after suit was filed, because pre-judgment
interest runs from the date the defendant receives written notice of a claim or the day the suit is
filed, and his notice was the filing of the lawsuit. Tex. Rev. Civ. Stat. Ann. art. 5069-1.05, §
6(a) (1990). Pierson never raised this issue at the trial court and therefore waived any complaint.
Tex. R. App. P. Ann. 52(a)(Pamph. 1992); Texas American Corp. v. Woodbridge Joint Venture,
809 S.W.2d 299, 305 (Tex. App. 1991, no writ); Brown v. State ex. rel. Jarvis, 808 S.W.2d 628,
633 (Tex. App. 1991, writ denied). We overrule point of error five.
CROSS-POINTS
In cross-point of error one, GFH contends that the trial court erred in not awarding
costs and expenses. Pierson points out that the "costs" to which GFH refers are not taxable court
costs, but the costs and expenses incurred in recovering the equipment; i.e., merely costs of
litigation for which plaintiff was responsible. GFH does not contend that the expenses to which
it refers are taxable court costs, rather GFH asserts that it is entitled to expenses and attorney's
fees on equitable grounds. Similarly, in cross-point two, GFH argues that it was entitled to
attorney's fees.
In general, attorney's fees and other litigation expenses incurred by a plaintiff in
maintaining an action for conversion are not recoverable. Donnelly v. Young, 471 S.W.2d 888,
891 (Tex. Civ. App. 1971, writ ref'd n.r.e.). We do not find that any of the equitable reasons
GFH advances allowing recovery of attorney's fees persuasive. The common fund doctrine
applies to awarding a plaintiff attorney's fees when that plaintiff's recovery also results in a
recovery for other plaintiffs. See Knebel v. Capital Nat'l Bank, 518 S.W.2d 795 (Tex. 1974).
Appellant's theory that a "wrongful act" occurred and therefore he should recover attorney's fees
proves too much. The act of conversion is the wrongful act. If this were the type of wrongful
act intended by this principle, then attorney's fees would generally be recoverable in conversion
cases, which they are not. Donnelly, 471 S.W.2d at 891 . We overrule cross-points one and two.
In cross-point of error three, GFH contends that Pierson's appeal was taken for
delay and without sufficient cause and GFH should receive damages. Tex. R. App. P. Ann. 84
(Supp. 1992). After reviewing the record, we cannot conclude that there was insufficient cause
for appeal and that the appeal was taken solely for delay. See Gaines v. Frawley, 739 S.W.2d
950, 956-57 (Tex. App. 1987, no writ). We overrule the cross-point.
Having overruled all points and cross-points, we affirm the judgment of the trial
court.
[Before Justices Powers, Jones and Kidd]
Affirmed
Filed: April 1, 1992
[Publish]
1. 1 Appellee Drew Darby filed a brief adopting GFH's brief.
2. 2 GFH originally sued Texas Commerce Bank and Sunwest Development Corporation and
then added Pierson. GFH moved for, and was granted, a non-suit with respect to Texas
Commerce Bank prior to final judgment. The final judgment provided that GFH take nothing
against Sunwest.
3. 3 There is evidence in the record to support treating the irrigation system as a fixture, i.e.,
it was referred to in the deed from Darby to Pierson as a fixture; GFH apparently attempted to
treat it as a fixture and file a financing statement as a fixture filing in the real property records.
Conversion of a fixture occurs on severance. See Lane v. Davis, 337 S.W.2d at 292 .
4. 4 A third party's knowledge of the true owner of leased goods is a widely acknowledged
problem. The issue whether to include a filing requirement in the proposed UCC article 2A on
leases "was central to its development and has been an area of great controversy." Daryl B.
Robertson, Report on UCC Article 2A, 43 Baylor L. Rev. 235 , 270 (1991).