132 F. 92 | U.S. Circuit Court for the District of New Hampshire | 1904
This is an action of trover. The declaration alleges the conversion of spruce, fir, and hemlock timber, and of pulp made therefrom. The defendant has suffered default, and the court has only to assess damages. To ascertain their amount the case has been submitted to a master. His findings concerning the amount of timber cut are not in dispute. By its default, therefore, the defendant has admitted conversion, and liability for the damage caused thereby. By the undisputed findings of the master the amount of timber cut has been ascertained, and it remains only to put the proper value thereon. The rule or measure of damages by which this value should be estimated has received so much discussion in various courts, federal, state, and English, and their decisions differ so greatly, that it is best to recur to general principles before stating the facts of this particular case.
Trespass is an action “sounding in damages,” and the compensation for damage recoverable therein is, as the words imply, to be measured by the plaintiff’s damage or loss arising from the defendant’s trespass or wrongful act set out in the plaintiff’s declaration. This is true alike of all forms of the action of trespass from assault to the latest development of the action of trespass on the case. In theory the statement just made includes all damages recoverable in any action of trespass. In fact, an addition has been made thereto by statute or the practice of some courts. Sometimes the plaintiff may expressly allege and prove as the result of the tort mental suffering or mortification, and may call on a jury to assess compensation therefor, as for damage done to limb or chattel. These cases are within the general statement above made. This right to recover has been enlarged into a right to recover enhanced damages in some cases where the plaintiff’s material harm alleged in the declaration is accompanied by mental suffering or mortification. See Webb’s Pollock on Torts, 219. By further development has arisen the doctrine of damages exemplary or punitive.
Where standing timber on the plaintiff’s land is wrongfully cut, the plaintiff’s choice of remedies is more extensive. (1) He may bring an action of trespass quare clausum, wherein he will recover the damage done to the real estate; that is to say, the diminution in the value of the real estate caused by the cutting. If he alleges, by way of aggravation, a trespass upon his personal property, viz., the logs, after severance from the realty, he may recover for that also, thus joining his two causes of complaint in one action. (2) He may bring trespass de bonis asportatis, wherein he will recover the damage done by carrying off the logs wrongfully cut. (3) He may bring trover, in which case he will recover the value of the personal property— the logs — at the time and place of conversion. As to the three forms of action just mentioned, see Warner v. Abbey, 112 Mass. 355. (4) He may bring replevin. By this action'he will, in some jurisdictions, recover the logs themselves, and in others will recover their value variously estimated. In some jurisdictions the action of replevin sounds altogether in damages, and differs but little from the action of trover. (5) He may physically retake his severed property. By this act he will recover the property itself. Indeed, though he commit a breach of the peace in the recovery, yet he will still recover his property. His civil or criminal liability for his violence will not divest his title. See Pabst Brewing Co. v. Greenberg, 117 Fed. 135, 55 C. C. A. 151. Other forms of action, such as detinue, or a bill in equity, may be employed in some jurisdictions and under some circumstances; and the injured man may sometimes pursue more than one remedy at- once. It is plain that in some instances the damages recovered in an action of trespass quare clausum will be greater than those recovered in
This is an action of trover, the gist of- which is the convérsion by the defendant of goods to which the plaintiff has the right of possession. “The plaintiff is bound to prove a right of possession in himself at the time of the conversion.” U. S. v. Loughrey, 172 U. S. 206, 212, 19 Sup. Ct. 153, 43 L. Ed. 420. Mere refusal to deliver upon the plaintiff’s demand is sufficient evidence of conversion; a fortiori, any positive act of the defendant which substantially deprives the plaintiff of that possession of the goods to which he is entitled. The declaration in this case alleges a conversion of timber and pulp. If, at any time the plaintiff had an unqualified right to possess that timber or pulp, and the defendant refused to deliver the same Upon proper demand, or otherwise deprived the plaintiff of his lawful possession, these facts are sufficient evidence of a conversion. See U. S. v. Loughrey, 172 U. S. 206, 216, 19 Sup. Ct. 153, 43 L. Ed. 420. The plaintiff will recover as damages the value of the property' at the time and place of the conversion. Here the standing timber was the. plaintiff’s. Before severance it was a part of the plaintiff’s real estate. When severed by the plaintiff or defendant or a third person, the logs were chattels of which the plaintiff had the right of possession. Woodenware Co. v. U. S., 106 U. S. 432, 1 Sup. Ct. 398, 27 L. Ed. 230; Northern Pacific R. R. v. Lewis, 162 U. S. 366, 16 Sup. Ct. 831, 40 L. Ed. 1002; Phillips v. Bowers, 7 Gray, 21; Whiting v. Adams, 66 Vt. 679, 30 Atl. 32, 25 L. R. A. 598, 44 Am. St. Rep. 875. By their removal from the’plaintiff’s land the plaintiff’s right of possession was not divested, and the plaintiff here contends that even the conversion of the logs into pulp left the plaintiff with a right of possession to the product manufactured exclusively from its own logs. It is true that many dicta and some decisions may be found to the effect that the one and only conversion is that which occurs when the plaintiff’s right of possession is first set at naught by the defendant; but without discussing these cases in detail, it may be said generally that they are opposed, not only to the weight of authority, but to fundamental principles of law.
But in Pine River Logging Co. v. U. S., 186 U. S. 279, 22 Sup. Ct. 920, 46 L. Ed. 1164, at page 293, 186 U. S., page 926, 22 Sup. Ct., 46 L. Ed. 1164, the Supreme Court, in substantial accord with most other courts, has said:
“Where the trespass is the result of inadvertence or mistake, and the wrong was not intentional, the value of the property when first taken must govern. Or, if the conversion sued for was after value had been added to it by the work of the defendant, he should be credited with this addition. Upon the other hand, if the trespass be willfully committed, the trespasser can obtain no credit for the labor expended upon it, and is liable for its full value when seized.”
As here applicable, the rule thus laid down comes to this: If the defendant’s admitted conversion,was the result of inadvertence or mistake, it is liable only for stumpage, or at most for the value of the logs immediately after their cutting. If the conversion was
To decide the case at bar it is important to know not only the general rule thus declared, but its basis in our system of law. The distinction between the two measures of damages is spoken of in some opinions as one between damages compensatory and damages exemplary. The second measure is sometimes described as if imposed by way of punishment. State v. Shevlin Co., 66 Minn. 217, 68 N. W. 973; Beede v. Lamprey, 64 N. H. 510, 15 Atl. 133, 10 Am. St. Rep. 426. But the analogy is misleading, as appears from this consideration, among others: The second measure of damages is imposed only where the property converted has been enhanced in value. The defendant’s bad faith would be the same had the logs been burned, or converted into pulp, and exemplary damages would be the same in both cases; but in the former case no moré than their value before burning could be recovered in this action. From one point of view, indeed, the higher measure of damages gives no more than compensation. If the wrongdoer’s improvements belong to the original owner, the latter gets no more than compensation when their value is awarded to him. As between the two measures of damages, the choice depends upon the plaintiff’s unqualified ownership of the property as improved by -the defendant’s labor. If this unqualified ownership exists, the higher measure of damages gives no more than compensation for a legal wrong. If the defendant, by his labor, has gained a right of property in the goods he has converted, the damages should be computed by a lower measure.
By what principle does the law give to a defendant a right to the value of the improvements he has made in another’s property which he has converted? Though he trespass innocently, yet he must make good the plaintiff’s loss, but he may be entitled, under some circumstances, to an allowance from the owner by reason of the improvement made. Sedgwick on Damages, 903, 915. This principle of justice, as it is deemed to be, has obvious application where recovery is sought for the wrongful cutting of timber. If the plaintiff is deemed to have the.right immediately to possess the logs through one or more transformations which enhance their value, the ordinary rule of damages in an action of trover will permit the plaintiff to state the defendant’s conversion as of any time the plaintiff is pleased to select, and so the real damage done to the plaintiff may be enhanced many fold by including therein the value added to his property by the defendant’s operations. In some cases this is deemed unjust, not by reason of the form of the plaintiff’s action, but by a rule of substantive law. In some cases the improvement gives to the trespasser a qualified right of property in the goods improved. Here is to be found the basis of the.two measures of damage above stated, and not in the theory of punishment. Not
Unfortunately, the precise measure of the allowance to the defendant for his improvements has been stated by different courts — or by the same court — in many ways. In theory the allowance should equal the cost of the defendant’s improvement, not to exceed the consequent enhancement of value in the property converted. But sometimes the plaintiff has been limited to the recovery of (a) stumpage, or, in the case of coal, of reasonable royalty (Hilton v. Woods, L. R. 4 Eq. 432; Div
From what has been said it follows that, in order to reduce their liability, this defendant must show that its action in converting the plaintiff’s property was in good faith. There has been considerable discussion as to the meaning of the term “good faith” in this connection. The good faith which will prdtect the defendant is not incompatible with some degree of negligence. Almost any trespass upon the rights of another which is not willful arises, in whole or in part, from the defendant’s ignorance of something which he might have discovered had he exercised a certain degree of care. “Trespasses on the land of another, not willful, always imply some degree of negligence.” Franklin Coal Co. v. McMillan, 49 Md. 549, 559, 33 Am. Rep. 280.
From these general principles we pass to the facts of this case, bearing in mind that we have to determine only if the defendant’s conversion, admitted to be tortious, was in such good faith that the defendant should receive some allowance for the improvements it has made in the plaintiff’s logs. Following the order of reference at the defendant’s request the master has properly added findings bearing upon “questions relating to willfulness of the conversion, whether the conversion was made in good faith or bad faith, and whether, under the facts of this case, the plaintiff is entitled to recover more than just compensation.” The evidence upon which the master based his findings is before the court, and his findings are challenged in 114 exceptions filed by the defendant. The weight to be attached to the master’s report and the standing of the exceptions thereto were discussed and determined in the opinion filed in this case December 28, 1903. 132 Fed. 89. Following the rule there laid down, the findings and exceptions have been carefully considered. A brief statement of the facts, as explained by the master’s findings, is as follows:
The plaintiff owned timber land. In 1888 it executed a certain instrument. This purported to lease to one Van Dyke the land here in question for 20 years to cut therefrom 3,000,000 feet a year, or 60,000,000 feet in 20 years, of spruce and cedar, and as much fir as the grantee wished, paying as stumpage $1.25 per thousand feet. (The right given to cut pine may be neglected, as it is not involved in this case.) The title in the logs was expressed to remain in the plaintiff until payment therefor. Certain restrictions were imposed upon the method of cutting. Under this instrument there was some cutting, not here in question. In 1893 Van Dyke executed an assignment of this lease to the Androscoggin Timber Supply Company, hereinafter called the “Supply Company.” This was a corporation organized by five other corporations, which owned all its stock. By the by-laws these corporate shareholders agreed to divide the stumpage acquired by the Supply Company in proportion to their holdings of stock in that company. Soon after the incorporation of the Supply Company one of
About the 1st of January, 1898, the defendant, a large corporation for the manufacture of paper from pulp, bought the mill of the Rumford Company and the logs which the Rumford Company had been cutting for that season upon the plaintiff’s land. It contracted to buy the Rum-ford Company’s timber lands and the four-fifths of the stock of the Supply Company which was owned by or was under contract of delivery to the Rumford Company. The defendant’s intention was manifest to get the right to cut timber both on the land owned by the Rumford Company and upon the plaintiff’s land, the latter by virtue of the ownership which the defendant was to acquire in the stock of the Supply Company. This latter company was assumed to hold the rights of Van Dyke under the original lease given by the plaintiff to him. In May, 1898, the defendant bought the mill of the Sulphite Company and its stock in the Supply Company. In August, 1898, Burbank, manager of the defendant, made arrangements to cut timber on the plaintiff’s land. In September the cutting began.
The defendant’s good faith, which it must prove in order to obtain allowance for its improvements, must be predicated upon some supposed right to cut the timber. The defendant knew that it did not own the land in fee. This the master has found, arid this is proved by the contracts made by the defendant with the loggers. Chisholm, the defendant’s president, had this knowledge. Thomas, who prepared the contracts for cutting, and who was Burbank’s chief subordinate, had this general knowledge, and the master has found that Burbank also had some knowledge. The defendant’s supposed right must, therefore, depend upon two elements: First, upon the Van Dyke lease, and the validity of its transfer to the Supply Company; second, upon the acquirement by the defendant of some rights which had belonged to the Supply Company. If either of these two elements was wanting, the defendant had no right to cut. Unless the defendant believed that both elements existed, it could not believe it had a right to cut.
As to the first element: The Van Dyke lease was valid. Van Dyke had assigned it and his rights arising thereunder to the Supply Company. The plaintiff has from time to time denied the validity of this
(a) The master has found that before the defendant’s first entry “questions about the transfer of the stock (i. e., the Rumford holdings) were in actual controversy.” This must be taken to mean that even then there was doubt if the defendant would get the Supply Company stock from the Rumford Company, and so there must have been doubt if the defendant would get any right from the Rumford Company to cut timber on the plaintiff’s land. The master has found, in substance, that Burbank at this time had little or no knowledge of “the controversy relating to the transfer of stock.” He did know, however, that the stock in the Supply Company had not been turned over to the defendant. The report makes little mention of the knowledge of the controversy possessed at this time by other officers and agents of the defendant, but Chisholm, the defendant’s president, must have had full knowledge of every controversy which related to the contract with the Rumford Company. The master finds that the contracts to cut were made “in the absence of Mr. Chisholm, and perhaps without his knowledge.” How far a corporation can be said to be acting iñ good faith where it shows affirmatively that its agent X. did act in good faith because he was ignorant of conditions known to its agent Y., who was ignorant of the act done, need not here be discussed. We are not here dealing with an attempt to estop or otherwise to bind a corporation by showing its bad faith, but with a case in which the corporation must prove its good faith. At the time that cutting was begun, the master has found that Burbank had “very little actual information as to the condition of the title, and that he was without any definite idea as to the real rights of the parties concerned. Culpability, therefore, in respect to the original entry, so far as it exists, rests in the fact that he acted in an important matter, upon the assumption hereafter referred to, without reasonable care and investigation.” “In fact, no investigation was made for the purpose of ascertaining the relative rights of the various parties. Still I do not think there was a conscious intent upon the part of Mr. Burbank, at the time of the original entry, and at the time the severance of the timber began, to invade or injure the property of this particular plaintiff.” The defendant’s right under the Rumford contract was involved in a controversy which was known to defendant’s president. Affirmative proof or finding of the defendant’s good faith is thus lacking. The cutting began about September 1, 1898, and ended about February 1, 1899, the logs being piled on the
As applied to the various periods of time here in controversy, the master’s findings may be still further summarized. In September, when the cutting began, the defendant was acting in professed reliance upon its own rights under its contract with the Rumford Company, though a controversy over that contract then existed. In November or December, when the cutting was at its height, the defendant increasingly supposed that the contract above mentioned would fail, and at last repudiated it altogether. It thus came to know, so far as the Rumford contract was concerned, that it was without right, legal or equitable, to cut the timber. Thus we have indifference in September, bad faith in November and December, and manifest bad faith in February. This does not amount to affirmative proof by the defendant of good faith sufficient to warrant an allowance to it for its improvements.
The defendant has urged that the question of its good faith in relying upon the Rumford contract must be determined as of the date when the cutting began. To hold this would be to overlook the principle upon which is based the allowance to a defendant for improvements made in good faith. Speaking generally, a trespasser who begins his trespass in good faith cannot show this fact in support of an allowance for improvements made after bad faith has supervened. That A. cuts down one tree on B.’s premises, believing he has a good right to do so, will not ordinarily affect the amount he must pay for cutting down other trees after he has found out that he is without right. .Trotter v.
(b) There is left the consideration of the purchase of the Sulphite Company by the defendant. While he fenced a good deal in his testimony, the defendant’s president, Chisholm, seems to have reached the conclusion that the defendant’s case must stand or fall upon this consideration alone. By the Sulphite purchase, the defendant became the owner of one-fifth of the stock of the Supply Company. To convert this ownership of stock into a complete right to cut timber required certain formalities fixed by the Supply Company’s by-laws. No attempt was made to comply with these, and. the purchase thus left the defendant without complete right to cut. The defendant has no defense available at law. But the potential right it acquired by the purchase may bear upon its good faith. It must be borne in mind that the Sulphite Company, by ownership of one-fifth of the Supply Company’s stock, by the Supply Company’s by-laws, and by the nature and purpose of the Supply Company’s organization, was entitled to one-fifth of the stumpage conveyed by the Van Dyke lease, say 12,000,000 feet — very nearly the amount which the defendant converted. This incomplete right to stumpage had passed to the defendant. Had the defendant taken the proper formal steps, it could have transmuted this inchoate right into a complete legal right to cut the timber upon the payment of a sum which, taken in connection with the cuttings of its fellow stockholders, would have come to about $1.25 a thousand net. In fact it cut without taking these formal steps, and with some reliance upon the Rumford contract, not very ingenuous, which has now failed it. But beneath the Rumford transaction were the actual rights acquired by the Sulphite purchase, always known to the defendant’s officers. The question of good faith is often one of degree, particularly in transactions as complicated as were these. The defendant’s conduct was not always ingenuous. At times it pretended one thing, when it knew the opposite
Having thus found that the defendant believed it had acquired^ the right of the Supply Company to cut timber to an amount substantially equal to that converted, the court must last determine if the defendant’s failure to observe the terms of the Van Dyke lease shall deprive it of an allowance for its improvements. This was hardly contended by the plaintiff. So far as the question of good faith is concerned, we are now to assume that the defendant stands in the shoes of Van Dyke or of the Supply Company, his assignee; and neither Van Dyke nor the Supply Company would have been liable for the pulp value of logs which they had removed before payment of stumpage, or which they had cut, though the same were not covered by the lease. So far as improper cutting is concerned, the terms of the defendant’s contracts with the loggers show that the defendant’s fault, at the worst, was a failure by want of sufficient inspection to secure the observation of the terms of the lease. As logs so cut would not be cut under the lease, the lessee could not escape by paying stumpage at $1.25, but such a breach of the terms of the lease would not necessarily or ordinarily imply bad faith.
Judgment for $49,102.94 and interest.