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You owed it, you paid it, but I can’t keep it?


Sounds funny. But it’s not.

Moore Equipment sells John Deere farming equipment in Chillicothe, Missouri. Moore sold Sholten a big tractor with a warranty on the drive train. Moore’s warranty to the buyer was backed by PRS, an insurance company. If Moore had to make the warranty good, PRS would pay Moore.

Sholten sold the tractor to Callen, with the warranty transferred to Callen. The tractor’s drive train failed and it was taken to another mechanic–not Moore– for repairs, and a claim was filed with PRS. PRS reviewed the claim and sent a check to Moore for nearly $20,000. Moore cashed the check. PRS notified Moore that the check was sent to Moore by mistake.

Callen paid its mechanic and sued Moore and PRS for the money that should have gone to Callen’s mechanic. Callen alleged that Moore had “converted” the check and that PRS and Moore each owed Callen the cost of the repairs. The trial court granted summary judgment for Callen, and Moore appealed.

“Summary judgment” is a procedure in which a party persuades a court that there are no important facts in dispute, so that the court can make a decision based on a statement of facts and application of  legal rules. The opposing party has an opportunity to argue that there are important questions of fact that require a trial and that the other party’s legal arguments don’t make sense.

Moore claimed that PRS owed Moore money on two other jobs, and also claimed that Callen failed to properly comply with the warranty claim procedures (my guess is that  Moore would rather that Callen had hired Moore to do the warranty work).

“Conversion” is a legal term for unjustified interference with another person’s right to possess property.  Moore didn’t convert the check by receiving it, but by refusing to return the value of the check after demand was made.

Moore’s attorneys raised two technical arguments, arguing that conversion applies only to chattels (tangible objects), not money, and that Callen would be able to collect from PRS and from Moore. The trial court and the appellate court were not impressed.

The Court of Appeals for the Western District of Missouri, in Moore v. Callen WD70011affirmed the trial court’s summary judgment in favor of Callen (most summary judgments in Missouri’s state courts, if appealed, are reversed by the court of appeals, because the standard for showing a dispute about facts is very low).

The court of appeals noted that a check is a “specific chattel” because it is a “representative of value.” PRS’s check to Moore was numbered and could be traced to repairs for Callen’s tractor, not the other accounts for which PRS owed money to Moore. The court of appeals also dispensed with the double-recovery argument, stating that there may be only one satisfaction for one injury, so that Callen has the option to collect from either PRS or Moore.

If the court had ruled for Moore, Moore would have received a windfall as a result of PRS’s mistake.  PRS would still owe Callen on the warranty claim. Seems like a no-brainer.

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About Harry Styron

I'm a lawyer who lives in Branson, Missouri, whose professional interests involve real estate, construction and local government.

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