In Idaho, Waiver/Estoppel Law Applies to Conversion Cases Involving Auctioneers

In Seaport Citizens Bank v. Dippel, 112 Idaho 736 (Idaho Ct. App. 1987), the Idaho Court of Appeals held that the waiver/estoppels law applies to conversion cases in which the auctioneers are involved.  This case involved an action by plaintiff bank against defendant auctioneer for conversion of an auction sale proceeds in which the bank had security interests.  After analyzing the elements of conversion and the facts of the case, the appellate court upheld the trial court’s decision which found that the bank had waived its security interest. 

In Seaport Citizens Bank, Michael Blewett (“Blewett”,) a debtor, hired auctioneer Dippel (“Defendant”) to sell some goods. Seaport Citizens Bank, the plaintiff in this case (“Plaintiff”) came to know of this auction. It mailed a letter to Defendant advising that it held a security interest in all of Blewett's machinery. Defendant contacted Plaintiff bank, who had a security interest in the goods and obtained confirmation that it had no objection to the sale going forward.

After the auction sale, the Defendant auctioneer contacted the bank, who claimed $ 12,420.46 of the proceeds. The auctioneer met with the bank president and other officers, and tendered a check for that amount. The bank accepted the check, and did not make any further demands. The auctioneer distributed the remainder of the proceeds, primarily to lienholders junior to the Bank. However, two years later, the bank sued the auctioneer, claiming it had converted part of the proceeds. The trial court found that the Plaintiff had waived any other interest in the proceeds. On appeal by the bank, the court affirmed. The court held that the evidence, although conflicting, supported the trial court's conclusion that the Plaintiff's actions waived further interest in the proceeds.

The appellate court analyzed whether the Plaintiff bank had actually waived their interest in the sale proceeds. Id. at 738.  The court observed that the Defendant acknowledged that Plaintiff had an interest in the proceeds of the sale. Id.  However the Defendant contended that the bank's officers waived any interest in the proceeds beyond the amount transmitted by check one week after the sale. Id.  In addition, the Defendant asserted that the conduct of the bank's officers at the meeting following the sale and their failure to demand payment on all of Blewett's accounts all evidenced bank’s waiver. Id. 

The appellate court discussed the elements of waiver. The court stated that, “Waiver is a voluntary, intentional relinquishment of a known right or advantage.” Id. at 739 (citing Brand S Corp. v. King, 102 Idaho 731, 639 P.2d 429 (1981); Crouch v. Bischoff, 78 Idaho 364, 304 P.2d 646 (1956)). The court also stated that waiver is actually a question of intent; and a waiver can be established only if there is a clear intention to waive. Id. (internal citations omitted).  

The court found that waiver is a mixed question of law and fact. Id. To know if there is a waiver or not, a court must first find whether the facts alleged to constitute a waiver are true. Secondly, the court must decide whether, if true, these facts suffice as a matter of law to show waiver. Id. (citing Jones v. Maestas, 108 Idaho 69, 696 P.2d 920 (Ct.App.1985)). The court stated that the doctrine of implied waiver by silence is disfavored. Id. The court also stated that a waiver will not be inferred except from a clear and unequivocal act manifesting intent to waive, or from conduct amounting to estoppel. Id. The court stated that, where a waiver arises out of conduct and partakes of the nature of an estoppel, no consideration is necessary. Id. (citing Idaho Bank of Commerce v. Chastain, 86 Idaho 146, 383 P.2d 849 (1963)). The court also stated that law of waiver or estoppel is applicable to cases of conversion by an auctioneer. Id. See generally Annotation, Auctioneer -- Liability for Conversion, 96 A.L.R.2d 208, § 13 (1964).

The appellate court observed that this case presented elements of both waiver and estoppel. Id. The appellate court referred to the Idaho Supreme Court’s discussion in Independent Gas & Oil Co. v. T.B. Smith Co., 51 Idaho 710, (1932). The court stated that, “‘as noted by our Supreme Court , approving and adopting the analysis of a district judge: The only distinction that I can observe between an implied waiver such as pleaded here and estoppel would seem to be that in the case of an implied waiver there must be some conduct on the part of the person waiving from which it may be inferred that the person waiving intended to waive; in other words, affirmative action on the part of the person waiving indicating an intention to waive some benefit or advantage; whereas, in estoppel a barrier is simply set up regardless of the parties' intentions which precludes one from asserting a right which he would otherwise have but for the matters and things pleaded by the way of estoppel, if such matters and things are properly pleaded and proven. In other words, it is conceivable that an estoppel might sometimes apply in a case where at the same time the evidence would not support the conclusion that some right had been impliedly intentionally waived.’” Id. (quoting Independent Gas & Oil Co. v. T.B. Smith Co., at 720(1932) (quoting district court's memorandum opinion)).

The court after analyzing the facts and testimony found that the Defendant’s clerk’s testimony supported his (Defendant’s) version of the meeting. Id. at 740. The court observed that the bank’s officers denied any intent to waive their security interest in the remaining proceeds. Id. But the officers did not substantially refute auctioneer's description of the meeting. Id . Further, they did not contend that any other security interest in the proceeds was mentioned at the meeting. Id.

The appellate court stated that the task of weighing conflicting evidence rests with the trial court. Id. ( citing Price v. Aztec Limited, Inc., 108 Idaho 674, 701 P.2d 294 (Ct.App.1985)).  The court noted that a trial court's findings based upon substantial and competent, though conflicting, evidence will not be disturbed on appeal. Id. The trial court found that the Defendant auctioneer and his clerk described a meeting where the officers' statements reasonably could be interpreted as waiving any interest in the remaining proceeds. Id. The appellate court found that the trial judge was persuaded by the Defendants’ facts of the meeting and the court's findings in that regard will not be disturbed on appeal. Id.  The appellate court concluded that the trial court's conclusion of law that a waiver occurred flows logically from those findings and is not erroneous. Id. The appellate court upheld the trial court's determination that the bank had waived its security interest in the auction sale proceeds.