United States District Court, Northern District of Illinois, E. D
October 20, 1980
KATHERINE NEVILLE BRADFORD, PLAINTIFF,
MICHAEL MUINZER, MUINZER MOVING & STORAGE CO. AND BEKINS COMPANY, DEFENDANTS.
The opinion of the court was delivered by: Will, District Judge.
Katherine Bradford filed this action against Muinzer Moving
& Storage Co., Michael Muinzer, and Bekins Company, seeking
damages for the wrongful sale of household goods which had
been packed, moved, and stored by the defendants. Bradford has
moved for summary judgment against Michael Muinzer and Muinzer
Moving & Storage on the issue of liability. For the reasons
stated below, we grant Bradford's motion.
In August 1974, Bradford hired Muinzer and Bekins to pack
and transport her household belongings from Chicago to
Florida. According to the Interstate Order for Service
prepared at this time, her goods were valued at $35,000. As
ordered, Bekins packed and shipped the goods to Muinzer's
warehouse in Lafayette, Indiana where they were to be stored
pending later shipment to Florida. The goods remained in the
warehouse until July 1978.
In May 1978, Muinzer decided to sell Bradford's property to
pay the $3,000 to $4,000 in overdue shipping and storage
charges. On May 20, Muinzer sent a letter to Bradford at the
Lafayette, Indiana address she had put on the Interstate Order
for Service, demanding payment of the overdue charges. The
letter stated that Muinzer claimed a lien on the goods in the
amount of $3,295.01 and warned that if Bradford did not pay
the charges by May 28, "the goods will be duly advertised for
sale and sold at public auction." This letter was returned,
unopened, to Muinzer.
On June 8, 15, and 22, 1978, Muinzer placed a notice of sale
with a local newspaper, The Lafayette Leader, stating that "Lot
366566-Katherine Bradford" would be sold on June 26, 1978. The
goods were not sold on this date, however, and on July 20 and
27, 1978, Muinzer placed a similar notice of sale with the
paper. This notice read:
Notice is hereby given that the undersigned
pursuant to the provision of Chapter 182 of the
acts of the Indiana General Assembly of 1919 will
July 29, 1978
6:30 p. m. at
Lot 517- -Robert Bell
Lot 446- -June Gilliam
Lot 366566- -Katherine Bradford
Anyone wanting to know the exact time and date.
Contact Muinzer Moving and Storage Co.
Lafayette, In. 7 20, 27
Meanwhile, Bradford, dissatisfied with the way Bekins and
Muinzer had handled her belongings, filed suit in this court
seeking damages for injury to her property. Muinzer received
the complaint on July 24, 1978, five days before the auction
was scheduled to take place. Although Muinzer noticed that the
complaint listed a Chicago address for Bradford, he never
tried to reach her at this address to inform her of the
All of Bradford's goods were sold by a local auctioneer in
Lafayette on July 29, 1978. The sale brought $9,274.50. The
auctioneer retained a $2,318.62 commission and deducted $69.97
to cover the cost of the repair of a television set sold. The
remainder, $6,885.91 was remitted to Muinzer. From this
amount, Muinzer deducted
$3,295.01 to cover the overdue storage charges and sent the
balance to Bradford.
MUINZER'S COMPLIANCE WITH § 7-210
A principal issue in this case is whether Muinzer, in
selling Bradford's belongings, complied with the provisions of
§ 7-210 of the Uniform Commercial Code, Ind.Code § 26-1-7-210.
This section, which governs a warehouseman's sale of goods to
satisfy his lien, provides:
(1) Except as provided in subsection (2), a
warehouseman's lien may be enforced by public or
private sale of the goods in block or in parcels,
at any time or place and on any terms which are
commercially reasonable, after notifying all
persons known to claim an interest in the
goods. . . .
(2) A warehouseman's lien on goods other than
goods stored by a merchant in the course of his
business may be enforced only as follows:
(a) All persons known to claim an interest in
the goods must be notified.
(b) The notification must be delivered in
person or sent by registered letter to the last
known address of any person to be notified.
(c) The notification must include an itemized
statement of the claim, a description of the
goods subject to the lien, a demand for payment
within the specified time not less than ten (10)
days after receipt of the notification, and a
conspicuous statement that unless the claim is
paid within that time the goods will be
advertised for sale and sold by auction at a
specified time and place.
(d) The sale must conform to the terms of the
(e) . . .
(f) After the expiration of the time given in
the notification, an advertisement of the sale
must be published once a week for two (2) weeks
consecutively in a newspaper of general
circulation where the sale is to be held. The
advertisement must include a description of the
goods, the name of the person on whose account
they are being held, and the time and place of
the sale. The sale must take place at least
fifteen (15) days after the first publication.
Bradford argues that Muinzer failed to comply with the
provisions of § 7-210 in selling her belongings. We agree in
part and disagree in part with her contentions.
Bradford's first assertion is that Muinzer should have sent
the notification of sale to the Chicago address, of which he
first learned five days prior to the sale, rather than to the
Lafayette address listed on the Interstate Order for Service.
According to Bradford, it is not sufficient for a warehouseman
to send the notice to the bailor's last known address; if at
any time before the sale the warehouseman learns of another
address, he must send a notice there. We believe, however,
that Bradford's interpretation of § 7-210 puts a greater burden
on the warehouseman than was intended. Where a warehouseman
does not learn of a bailor's new address until shortly before
the sale, a notice sent to the new address may not comply with
the provisions of § 7-210(2), due to the short period between
the sending of the second notice and the sale, unless the
warehouseman postpones the sale. It would be unreasonable to
expect a warehouseman to postpone a sale and publish new
notices of sale whenever he learns of a new address for the
bailor. Consequently, where, as here, the warehouseman sent
notice to the bailor's last known address, he has done all that
§ 7-210 requires.
Bradford's second contention, that the notification of sale
sent to her was inadequate under § 7-210, is correct. Section
7-210(2)(c) requires that the notice state the time and place
at which the goods will be sold. Muinzer's letter to Bradford
failed to mention either.
Although Bradford has not raised this issue, there is
another problem with the notification of sale sent to her.
Section 7-210(2)(c) requires that the notification include a
"conspicuous statement that unless the claim is paid within
[the time stated]
the goods will be advertised for sale and sold by
auction. . . ." Section 1-201(10) of the UCC, Ind.Code §
A term or clause is conspicuous when it is so
written that a reasonable person against whom it
is to operate ought to have noticed it. A printed
heading in capitals . . . is conspicuous.
Language in the body of a form is "conspicuous"
if it is in larger or other contrasting type or
color. . . . Whether a term or clause is
"conspicuous" or not is for decision by the
The notification sent to Bradford refers in undistinguished
type in the body of the letter to the possible sale of her
goods. This reference is not "conspicuous" as that term is
used in the UCC.
Bradford's third contention is that the published notices of
sale did not include an adequate description of her goods. The
published notice merely stated that "Lot 366566-Katherine
Bradford" would be sold at auction. Muinzer argues that this
description is adequate under section 7-210(2)(f), since all
this section requires is that the notice be sufficient to put
persons claiming an interest in the goods on notice that the
goods will be sold. However, in Grundey v. Clark Transfer Co.,
42 N.C. App. 308, 256 S.E.2d 732 (1979), the court considered
the adequacy of a published notice which read "the following
lot of household goods, to wit: The property of G. Grundey"
would be sold at auction. The court concluded.
[T]his advertisement does not include a
description of the goods sufficient to comply
with subsection (f). We believe that the purpose
of the requirement is to insure that those who
might be interested in buying the items will be
present at the sale. This purpose is not
adequately served by the use of the general term
"household goods," where, as here, the goods to
be sold include such varied items as a stereo,
color TV, lawn mower, aquarium, and washing
Id. 256 S.E.2d at 736. Like the court in Grundey, we believe
that the purpose of section 7-210(2)(f)'s requirement of a
published notice is also to insure that those interested in
purchasing the goods will be present at the auction and,
consequently, that the sale will bring a fair return. It is
clear that the description included in the present case could
not have served this purpose. Thus, it is inadequate under
Bradford also asserts that the sale was held too soon after
the first published notice of sale. Section 7-210(2)(f)
provides that the first published notice must appear at least
15 days before the date of sale. See Kellenberger v. Bob Meyers
Moving and Storage Co., 595 P.2d 1229, 1232 (Okla. App.Ct.
1979). In the present case, the first published notice stating
the correct date of sale appeared on July 20, 1978; the sale
occurred on July 29, 1978, less than 15 days later.
Bradford next contends that Muinzer violated section 7 210
by selling more goods than were necessary to cover the overdue
charges. She points to section 7-210(1) which states, in
[A] warehouseman's lien may be enforced by public
or private sale of the goods in block or in
parcels at any time or place and on any terms
which are commercially reasonable. . . . A sale
of more goods than apparently necessary to be
offered to insure satisfaction of the obligation
is not commercially reasonable. . . .
As Muinzer was aware, Bradford stated in the Interstate Order
for Service that her belongings were worth $35,000. As Muinzer
also was aware, his lien was for only $3,295.01. Given these
facts, says Bradford, Muinzer's decision to sell all of her
property was improper.
Muinzer replies first that section 7-210(1) applies only to
warehouseman's liens on goods stored by merchants, whereas
this case involves goods stored by a nonmerchant. There are no
cases that have addressed the question whether section
7-210(1) applies only to sales of merchants' goods or to sales
of all goods, and the drafters' and Indiana comments are
silent on this question, Muinzer points out that
subsection (1) begins "Except as provided in subsection
(2) . . ." and that subsection (2) begins "A warehousemen's
lien on goods other than goods stored by a merchant in the
course of his business may be enforced only as follows. . . ."
Thus, he argues, since subsection (2) applies only to
nonmerchants' goods, subsection (1) must apply only to
merchants' goods. The Illinois Code Comment accompanying
section 7-210 apparently accords with Muinzer's view. With
respect to subsection (1) the comment states:
This subsection and (subsection (2)] recognize
a difference in the situation of commercial
storage . . . and the situation of noncommercial
storage, which includes that of household goods
stored by a consumer. The provisions of this
subsection apply to commercial storage.
Muinzer's reading of section 7-210 is not, however, the only
or, we believe, the best interpretation of the first clause of
subsection (1). The better interpretation, we conclude, is
that subsection (1) governs all sales of goods subject to a
warehouseman's lien except to the extent that subsection (2)
imposes stricter or additional requirements on a warehouseman's
selling a nonmerchant's goods. When other UCC provisions apply
only to merchants, the provisions so state explicitly rather
than by inference. See, e. g., UCC section 2-205, section
2-603. Moreover, the reason for section 7-210(2)'s strict
requirements is to prevent overreaching by warehousemen and
transporters. Kellenberger v. Bob Meyers Moving and Storage
Co., supra at 1232. Thus, it seems highly unlikely that the
requirement that a sale be commercially reasonable is
applicable to sales of merchants' goods but inapplicable to
sales of nonmerchants' goods.
Assuming that subsection (1) applies, Muinzer argues that he
nonetheless was justified in selling all of Bradford's goods.
He cites Schmidt v. Cowen Transfer and Storage Co.,
170 Colo. 550, 463 P.2d 445 (1970), in which the court held that a
warehouseman who sold part of a nonmerchant's goods to satisfy
a lien should have sold all of them. Id. 463 P.2d at 447.
Although Schmidt was decided under a provision of the Uniform
Warehouse Receipts Act, the predecessor of Article 7 of the
UCC, Muinzer argues that section 7-210 is basically a
recodification of the UWRA. Muinzer overlooks, however, that
unlike section 7-210(1), the UWRA did not include a specific
prohibition against a warehouseman's selling more goods than
apparently necessary to satisfy his lien. Schmidt is,
Muinzer also contends that he had serious reservations about
whether a sale of all of Bradford's property would satisfy his
lien. Because of his doubt, Muinzer argues, he did not sell
"more goods than apparently necessary" to insure satisfaction
of the lien and, thus, did not violate section 7-210(1).
Whether Muinzer sold more goods than necessary to cover his
lien on Bradford's goods is a question of fact. Cf. Hall v.
Owen County State Bank, 370 N.E.2d 918, 929 (Ind. App. 1977)
(whether secured party's sale under UCC section 9-504 was
"commercially reasonable" is a question of fact); Gulf Homes v.
Goubeaux, 124 Ariz. 142, 602 P.2d 810, 812 (1979). While the
facts in this case suggest that Muinzer's sale of goods
purportedly valued at $35,000 to cover a $3,300 lien was
unnecessary, the issue cannot be resolved on the basis of the
information we have at present: Muinzer's deposition testimony
regarding his subjective opinion and Bradford's estimate, at
the time the goods were turned over to Muinzer, of the value of
Bradford's final contention is that Muinzer violated section
7-210 when he repaired her television before the auction
without her permission. She argues that, absent express
authority to undertake such repairs, a warehouseman cannot do
so. We disagree. A warehouseman has implied authority under
section 7-210(1) to repair or refurbish property before sale.
Section 7-210(1) expressly states that a warehouseman's sale
must proceed in a "commercially reasonable" manner. It is
"commercially reasonable" for a warehouseman to repair an item
which is to be sold if the repair will
significantly enhance the value of the item and insure that it
brings a higher price at the sale, provided, of course, that
the cost of the repair does not exceed the expected increase
in the item's value.
Section 9-504 of the UCC, Ind.Code section 26-1-9-504,
supports this notion. Sections 9-504 and 9-507 govern a
secured party's sale of collateral to satisfy an overdue debt.
These sections, like section 7-210, provide that the sale must
be conducted in a "commercially reasonable" manner. Courts
have held that in some cases a secured party's failure to
repair or refurbish collateral prior to sale was not
commercially reasonable. See, e. g., Connex Press, Inc. v.
Int'l Airmotive, Inc., 436 F. Supp. 51, 55-57 (D.D.C. 1977)
(failure to repair defects such as broken windows in an
airplane prior to sale was not commercially reasonable);
Liberty Nat'l Bank & Trust Co. of Oklahoma City v. Acme Tool
Division of Rucker Co., 540 F.2d 1375, 1381-82 (10th Cir. 1976)
(failure to clean, paint, and dismantle an oil rig before sale
was not commercially reasonable). Of course, unlike section
7-210, section 9-504 expressly provides that a secured party
may "prepare" collateral for sale if it would be commercially
reasonable to do so. Nevertheless, that it is commercially
reasonable for a secured party disposing of collateral to
prepare the collateral for sale is a strong indication that it
is commercially reasonable for a warehouseman to prepare bailed
goods for sale. Thus, contrary to Bradford's assertion, we
believe Muinzer had implicit authority under section 7-210 to
repair Bradford's goods prior to sale if to do so would enhance
their value. Moreover, Muinzer was entitled to deduct the cost
of repairs from the proceeds of sale under section 7-209(1),
Ind.Code section 26-1-7-209(1) (allowing warehousemen to deduct
from the proceeds of sale expenses reasonably incurred in the
course of it).
MUINZER'S EQUITABLE DEFENSES
In defense, Muinzer argues that he acted in good faith while
Bradford acted in bad faith. Muinzer points specifically to
Bradford's apparent refusal to open any correspondence sent by
Muinzer. Because of her bad faith actions, he asserts, she
should be barred from recovering under section 7-210. Bradford
has moved to strike this defense.
Muinzer's defenses should be stricken. Muinzer points to
nothing which suggests that bad faith on the part of the
bailor excuses the warehouseman's failure to follow the
procedure for selling bailed goods set out in section 7-210,
and our research has produced nothing so suggesting.
Conversely, so far as Muinzer's good faith is concerned,
nothing in our research or in Muinzer's brief suggests that a
warehouseman's good faith excuses his failure to adhere to
section 7-210. Whether or not a warehouseman acted in good
faith may determine the extent of his liability under section
7-210, i. e., whether he is liable for actual damages or for
conversion. But, good faith does not entirely excuse a
warehouseman's failure to comply with section 7 210.
THE EFFECT OF NONCOMPLIANCE WITH SECTION 7-210
Under section 7-210(9), "[t]he warehouseman is liable for
damages caused by failure to comply with the requirements of
sale under this section and in case of willful violation is
liable for conversion." Muinzer argues that, at most, he is
liable for the actual damages Bradford suffered as a result of
his "technical" failure to comply with section 7-210. Before
Muinzer could be held liable for conversion, Bradford would
have to demonstrate that Muinzer's violation was "willful,"
i. e., that the violation was part of a deliberate design or
that Muinzer acted with malice. Bradford replies that malice or
bad faith is not a necessary component of "willfulness." It is
sufficient, she argues, that Muinzer acted deliberately, as
opposed to inadvertently.
The drafters comments and Indiana comments accompanying
section 7-210 are silent as to the meaning of "willful." Cases
under section 7-210 are equally unenlightening. Two courts
that have considered this question have concluded, without any
discussion, that a violation of section 7-210's
requirements results in liability for conversion. See Flores v.
Didear Van & Storage Co., 489 S.W.2d 406, 409 (Tex.Civ. App.
1972); Kellenberger v. Bob Meyers Moving & Storage Co., supra
at 1232. Other courts that have addressed this issue have
concluded, also without discussion, that a violation of this
section results in liability only for actual damages caused by
the violation. See United Elastic Corp. v. Roadway Express,
Inc., 5 UCC Rep.Serv. 1008, 1010 (N.Y.Sup.Ct. 1968); Grundey v.
Clark Transfer Co., 42 N.C. App. 308, 256 S.E.2d 732, 736
(1979). Unfortunately, none of these courts reported sufficient
facts for us to infer a definition of "willful."*fn1
Courts that have tried to define "willful" in the context of
other civil statutes lend some aid. These courts generally
agree that a "willful" violation of a statute is an action
taken deliberately or intentionally with knowledge of the
statute's application and with disregard of the action's
legality. See, e. g., Turner v. Lyon, 189 Colo. 234,
539 P.2d 1241, 1243 (1975) (statute governing landlords' handling of
tenants' security deposits); Intercounty Construction Co. v.
Occupational Safety & Health Review Comm'n, 522 F.2d 777,
779-80 (4th Cir. 1975), cert. denied, 423 U.S. 1072, 96 S.Ct.
854, 47 L.Ed.2d 82 (1976) (OSHA); Walker v. Security Trust Co.
of Rochester, 85 Misc.2d 614, 379 N.Y.S.2d 308, 316 (N.Y.
Sup.Ct. 1976) (Motor Vehicle Sales Act); Herman v. Roosevelt
Federal Savings & Loan Ass'n, 432 F. Supp. 843, 851 (E.D.Mo.
1977), aff'd, 569 F.2d 1033 (8th Cir. 1978) (Fair Labor
Standards Act). These courts also generally agree that, in
civil statutes, for a violation to be "willful" the actor need
not have had a bad purpose or evil motive. See, e. g., Herman
v. Roosevelt Federal Savings & Loan Ass'n, supra at 851;
Intercounty Construction Co. v. Occupational Safety & Health
Comm'n, supra at 780.
We conclude that the term "willful" violation in section
7-210(9) means, as it does in other civil statutes, a
deliberate or intentional action taken with knowledge of the
statute's application and with disregard of the action's
Moreover, based on the undisputed facts in this case, it
appears that Muinzer's violation of section 7-210 was willful.
He unquestionably was aware of section 7-210, its
requirements, and its applicability to his sale of Bradford's
property. Nevertheless, Muinzer failed in a number of respects
to comply with that section's requirements. At no time has he
contended that his failure to comply was accidental. These
facts, coupled with the fact that Muinzer decided to proceed
with the auction after he learned of Bradford's having filed
suit for injury to her property, convinces us that he acted in
disregard of the legality of his actions. We conclude,
therefore, that Muinzer is liable for conversion of Bradford's
property pursuant to section 7-210(9).
An appropriate order granting Bradford's motion for summary
judgment against Michael Muinzer and Muinzer Moving & Storage
Co. will enter.