
    FELDER et al. v. REETH.
    Circuit Court of Appeals, Ninth Circuit.
    September 16, 1929.
    No. 5718.
    
      Geo. W. Albrecht and Chas. E. Taylor, both of Fairbanks, Alaska, for appellants.
    Lotus K. Pratt, of Fairbanks, Alaska, for appellee.
    Before RUDKIN, DIETRICH, and WILBUR, Circuit Judges.
   WILBUR, Circuit Judge.

Appellants brought an action in the District Court for the territory of Alaska to recover $5,402.65 for goods, wares, and merchandise sold to the appellee and for appellee’s cheeks cashed by appellant. The appellee admitted the obligations sued upon, and by second amended answer and counterclaim alleged that he was engaged in placer mining upon 1,200 acres of placer mining ground, and that to carry on said mining operations he purchased a certain hydraulic mining plant • in San Francisco, and transported the same to a point 40 miles below his placer mining camp, for the reason that because of low-water in the stream he could not transport the machinery to the mining camp; that it remained at that point during the seasons of 1919, 1920, and 1921 by reason of low water in the river; that the freight charge for transportation of this plant from San Francisco was $1,045; that during the summer of 1921 the appellants -wrongfully took possession of the hydraulic plant, transported the same down the river to Bethel, and converted same to their own use and sold a part thereof. It is further alleged:

“That under the conditions then existing at said Golden Gate Falls and ‘Supply Camp’ the said mining machinery and equipment was reasonably worth to defendant and were of the value to him of $10,000.00.”
“That defendant elects to waive the tort-involved in the said unlawful taking and conversion of said property and to rely upon an implied contract upon the part of the plaintiffs, created by the law, to pay him the said sum of $10,000.00 for said machinery and equipment, the same being the reasonable value therefor by the time it reached the ‘Supply Camp*; that the said plaintiffs, by reason of the premises, impliedly agreed, and in law did agree, to pay him the said sum of $10,000.00 for the said machinery and equipment.”

Under the Alaska Code, a counterclaim to an action arising out of contract must be either one arising out of the transaction sued upon by the plaintiff, or, “In an action arising on contract, any other cause of action arising also on contract, and existing at the commencement of the action.” Comp. Laws Alaska 1913, § 896.

The purpose of the form of pleading adopted by the appellee waiving, or attempting to waive, the tort, and suing upon the implied obligation of the appellant, was to bring his counterclaim within the purview of the statute, authorizing the setting up of a counterclaim.

The Code provisions of Alaska on the subject of counterclaim were borrowed from the Code of Oregon, under which it has been held by the Supreme Court of Oregon that in eases of conversion tort could be waived and the counterclaim could then be set up in an action upon, contract. Miller v. Hirschberg, 27 Or. 522, 40 P. 506; Casner v. Hoskins, 64 Or. 254, 128 P. 841, 130 P. 55; see also Cooley on Torts, §§ 160-166; Farmers’ & Merchants’ Nat. Bank v. Huckaby, 89 Okl. 244, 215 P. 429; Chamberlain v. Townsend, 72 Or. 207, 142 P. 782, 143 P. 924; Fanson v. Linsley, 20 Kan. 235; 2 R. C. L. 760, § 19.

The appellant demurred to the counterclaim on the ground that the court had no jurisdiction of the subject-matter set up in the amended answer and counterclaim, and the counterclaim did not state facts sufficient to constitute a defense to the plaintiff’s complaint. The demurrer was overruled, and appellants replied, denying that the sum of $10,000 was or is a reasonable and fair value of the hydraulic mining equipment, or that it was worth more than $550. Appellants admitted taking the property, and alleged that it was taken to avoid a- total loss thereof by flood waters of the Riglugalie river, on whose banks it had been placed. Appellants alleged that the property was in an abandoned condition until the fall of 1921; that they took possession ' of the property, and transported it to Bethel, and notified the defendant; that appellee ignored the entire matter; that they retained possession of the hydraulic plant until 1923, when for the first time they had an opportunity to dispose of the same; and that they sold it for the sum of $550, and that that sum was all the property was worth in Kuskokwin Precinct.

The case was tried at Bethel, and by stipulation neither of the attorneys appeared at the trial. The parties themselves presented such witnesses as they desired to offer, and the witnesses were examined by the judge. Thereupon the case was transferred to Fairbanks, and counsel argued the case before the judge, who, by reason of written stipulation waiving the jury, determined the facts. The court found that the appellee was indebted to the appellant in the sum of $8,690.21, and that the appellants were indebted to the appellees in the sum of $8,000, with 8 per cent, interest from September 1, 1921, aggregating $12,-480, and rendered judgment in favor of appellees for the difference, $3,789.79. With reference to the value of the hydraulic plant, the court found:

“That under the circumstances and conditions as they-existed at that time and by reason of the fact that there was no market value for said machinery at that time and place, and by reason of the use that the defendant could have put it to, the said machinery was worth to him the sum of $8,000 and he is entitled to counterclaim that amount with interest thereon at eight per cent, per annum from September 1, 1921, aggregating $12,480 as against the debt owing by him to the plaintiffs.”
“That the action of the plaintiffs in taking the said machinery and disposing of it was without the knowledge or consent of the defendant, was unlawful, unjustifiable and oppressive and resulted in compelling the defendant to abandon his mining enterprise at Golden Gate Falls.”

Before the findings were signed, appellant proposed amendments to the defendant’s proposed findings of fact and conclusions of law to the effect that appellees were indebted to appellants in the sum of $550 on account of the hydraulic plant, and that that amount had already been credited in their accounts.

There seems to be no doubt that appellees can assert their claim against the appellants in this action by a counterclaim in the event and because of the fact that they waived the tortious conversion and counted in assumpsit as for goods sold and delivered. Casner v. Hoskins, 64 Or. 254, 128 P. 841, 130 P. 55, supra, and eases cited supra.

The most serious question in this ease is the measure of damages for breach of the implied contract sued upon. At common law, under the older rule, the result of waiving the tort in a ease of conversion and sale was a right to recover the amount received upon the sale, as for money had and received, but later eases hold that the action can be maintained as for goods sold and delivered without awaiting sale, or .even after sale, and the measure of recovery is the market value of the property. Terry v. Munger, 121 N. Y. 161, 24 N. E. 272, 8 L. R. A. 216, 18 Am. St. Rep. 803, and authorities cited therein. See, also, numerous authorities cited in Pomeroy on Remedies (5th Ed.) p. 749, § 460, note 58. In a case where the owner waives the tort if he accepts the tort-feasor as his agent both in the taking and in the sale, he would necessarily be limited in his recovery to the money received by the agent. There seems, however, to be no good reason why the owner cannot waive the tortious taking and ignore the subsequent sale and recover the reasonable value of tbe property taken as for goods sold and delivered. See Reynolds v. N. Y. Trust Co. (C. C. A.) 188 F. 611, 39 L. R. A. (N. S.) 391; Cooley on. Torts (3d Ed.) vol. 1, p. 163; 2 R. C. L. 757, § 16, Terry v. Munger, supra. Tbis was done by the appellee, who ignored tbe sale of bis property made by tbe appellants, and sought to recover as upon an implied agreement to pay tbe value of tbe hydraulic plant. Tbe complaint, construed more strongly against tbe pleader, does not allege tbe market value or reasonable value of tbe property taken by tbe appellants. Tbe allegation is of the reasonable value “to him.” Tbis allegation is evidently based upon tbe ease of Swank v. Elwert, 55 Or. 487, 105 P. 901, 902, par. 11, where it is said (page 906) : “Tbe general rule for tbe measure of damages for tbe destruction or conversion of personalty is tbe market value of tbe property at tbe time and place of tbe conversion, if it has such value. Prettyman v. O. R. & N. Co., 13 Or. 341, 10 P. 634; Iler v. Baker, 82 Mich. 226, 46 N. W. [377] 337; Luse v. Jones, 39 N. J. Law, 707; Sutherland on Damages (3d Ed.) § 1109. But if tbe property has no market value at tbe time and place of conversion, either because of its limited production, or because it is of such a nature that there can be no general demand for it, and it is more particularly valuable to tbe owner than any one else, then it may be estimated with reference to ■its value to him. Sutherland on Damages, § 117; Her v. Baker, supra.

Tbis is made clearer by tbe findings of tbe court above quoted, where tbe court held that “the unlawful and oppressive conversion” resulted in compelling tbe abandonment of the appellee’s mining operations, and that “tbe value to him was $8,-000 because of tbe use to which be could have put it.” Assuming that tbis is a proper measure of damages in a suit for conversion under tbe peculiar circumstances found by tbe court, it does not follow that tbe appellee is entitled to recover that amount upon bis counterclaim in which be waived tbe tort. It must be evident that, by consenting to tbe taking of bis property and treating the taking as a sale by him, be cannot in justice or in law count upon tbe special value to him of tbe use of property which be thus declares be no longer intends to use. . While tbe pleadings superseded by amendment no - longer bind tbe parties, it appears front the appellant’s sworn statement of his counterclaim in bis first answer that tbe total cost to him of tbe hydraulic plant was $3,000. Thus, in so far as appears from tbe record here, tbe property could have been replaced at tbe point where it was converted for $3,000.

Tbe significance of tbe allegation of tbe counterclaim and tbe 'finding of tbe court as to tbe value to tbe appellee of said hydraulic plant is manifest, in that it appears that $5,000 was or may have been added by tbe court to tbe cost of said property because of tbe special value of tbe property to tbe plaintiff under tbe circumstances.

Tbe transcript contains no bill of exceptions, and tbe evidence is not before tbis court. Tbe primary question presented by tbe record is tbe sufficiency of tbe counterclaim to state a cause of action against tbe appellant. Tbe demurrer raising tbis point was overruled. It should have been sustained for lack of an allegation as to tbe value of tbe property impliedly sold by tbe appellee to tbe appellant. We do not agree with tbe appellant’s contention that tbe appellee is bound by bis allegation alleging a wrongful taldng so that be cannot assert bis rights as a counterclaim, for under tbe system of code pleading a statement of tbe actual facts, rather than tbe assumed or fictitious facts, with' a statement that tbe party waives tbe tort and' relies upon implied contract, is a proper method of pleading tbe implied contract to pay tbe value of tbe property taken. See 5 C. J. § 41, p. 1305; Woodruff v. Zaban & Son, 133 Ga. 24, 65 S. E. 123, 134 Am. St. Rep. 186, 17 Ann. Cas. 974; Smith v. McCarthy, 39 Kan. 308, 18 P. 204. For tbis error in overruling tbe demurrer, and for tbe further reason that tbe findings do not follow tbe pleadings, in that tbe trial court ignores tbe waiver of tbe tort and gives damages as for a tort, the-judgment must be reversed. In view of tbe-fact that tbis ease must be tried again, it should be stated that, as tbe appellee by bis counterclaim seeks to recover tbe value of the property as upon an implied sale, be should be permitted io amend bis counterclaim and allege that value.

“If tbe wrong-doer has not sold tbe property, but still retains it, tbe plaintiff has tbe right to waive tbe tort, and proceed upon an implied contract of sale to tbe wrong-doer himself, and in such event be is not charged as for money bad and received by him to tbe use of tbe plaintiff. Tbe contract implied is one to pay tbe value of tbe property as if it bad been sold to tbe wrong-doer by tbe owner. If the transaction is thus held by tbe plaintiff as a sale, of course the title to the property passes to the -wrong-doer, when the plaintiff elects to so treat it. See Pom. Rem. (2d Ed.) §§ 567-569; Putnam v. Wise, 1 Hill [N. Y.] 234, 240 [37 Am. Dec. 309], and note by Mr. Hill; Berly v. Taylor, 5 Hill [N. Y.] 577, 584; Norden v. Jones, 33 Wis. 600, 605 [14 Am. Rep. 782]; Cummings v. Vorce, 3 Hill [N. Y]. 283; Spoor v. Newell, 3 Hill [N. Y.] 307; Abbott v. Blossom, 66 Barb. [N. Y.] 353.” Terry v. Munger, 121 N. Y. 161, 24 N. E. 272, 8 L. R. A. 216, 18 Am. St. Rep. 803.

If on the trial it appears that there is no market at the point of conversion or implied sale, as from the findings appears to be the ease, the value must be determined at the nearest market less the costs of transportation thereto, 8 R. C. L. 489, § 49; Watt v. Nevada Cent. Ry. Co., 23 Nev. 154, 44 P. 423, 46 P. 52, 726, 62 Am. St. Rep. 772, for in ease of a waver of a tort in conversion the action ex contractu is sustained rather on the theory of benefit derived by the taker than of damage to the owner, Huganir v. Cotter, 102 Wis. 323, 78 N. W. 423, 72 Am. St. Rep. 884; National Trust Co. v. Gleason, 77 N. Y. 400, 33 Am. Rep. 632; Keener, Quasi Cont. 200; Woodward on the Law of Quasi Contracts, § 292. See, also, 1 C. J. 1040, § 169; 2 R. C. L. 761, § 20.

Interest should be allowed from the date of the taking, as the plaintiff’s election relates back thereto, Newton Mfg. Co. v. White, 53 Ga. 396; Woodward on the. Law of Quasi Contracts, § 293, although there is authority to the contrary, Dougherty v. Chapman, 29 Mo. App. 233.

Judgment reversed.  