A. Wagner's Motion for Summary Judgment
Wagner contends that it is entitled to summary judgment as to
the negligence claims on the ground that the storage agreement
between it and the Cullmans limits its liability to the $100
assigned value of each fur. Magistrate Francis found that,
under New York law, Wagner could only rely on this limitation
of liability if it gave the Cullmans an opportunity to obtain
an increased valuation by paying increased storage rates.
Report at 11-12.*fn5 He concluded that there was a genuine
issue of material fact, precluding summary judgment, as to
whether such an opportunity had been afforded, because while
the language of the storage agreement would seem to permit a
customer to obtain an increased assigned value,*fn6 there was
evidence that Wagner's policy was to assign a value of $100 per
article and to decline any requests for increases. Report at
Wagner objects that the parol evidence rule prevents our
consideration of its valuation policy as contradicting the
terms of the storage agreement. We disagree. The testimony as
to Wagner's policy is not evidence of a "prior oral or written
agreement or of [a] contemporaneous oral agreement" between
Wagner and the Cullmans. Richardson on Evidence, § 601 (J.
Prince 10th ed. 1973). Rather, it goes to the claim that the
language of Wagner's storage agreement concerning increased
valuations was a mere recital, which was insufficient to
satisfy the extracontractual duty imposed upon Wagner by New
York law.*fn8 See I.C.C. Metals, Inc., supra n. 5. Since we
agree with Magistrate Francis's conclusion that the evidence
raises a genuine issue of fact as to whether Wagner afforded
the Cullmans an opportunity to obtain increased "coverage"
against the loss of their furs, summary judgment for Wagner as
to the negligence claim is denied.
On the claims of conversion against Wagner, Magistrate
Francis found that the record revealed "no evidence that
[Wagner] converted the furs for its own use," and thus that it
was entitled to summary judgment. Report at 13. Plaintiff
objects that Magistrate Francis improperly applied the law of
conversion in considering whether the evidence showed any
benefit to Wagner from the misdelivery of the furs. We agree.
The tort of conversion commonly refers to "the act of
wrongfully converting (something) to one's own use." Garner, A
Dictionary of Modern Legal Usage 153 (1987). More precisely,
however, a conversion is any "intentional exercise of dominion
or control over a chattel which so seriously interferes with
the right of another to control it that the actor may justly be
required to pay the other the full value of the chattel." ALI,
Restatement (Second) of Torts,
§ 222A(12) (1964).*fn9
The requisite interference with an owner's right of control
will readily be found where bailed property is misdelivered.
Any unauthorized delivery of bailed property by a bailee —
even delivery to the wrong person resulting from the bailee's
good faith mistake — constitutes a conversion. Id., § 234 &
Comment a.*fn10 Thus, in Jacobson v. Richards & Hassen
Enterprises, Inc., 172 F.2d 464, 466 (2d Cir. 1949), the Second
Circuit, applying New York law, held the operator of a
coat-check in a hotel restaurant liable for conversion of a fur
coat where the defendant's employee turned the coat over to an
imposter posing as its owner. See also Wabco Trade Co. v. S.S.
Inger Skou, 482 F. Supp. 444, 448 (S.D.N.Y. 1979) ("The absence
of benefit to [the defendant-bailee] does not preclude
liability. An action for conversion may be based on
transferring possession of the owner's property to one not
authorized to receive it. In particular, a bailee who transfers
goods in a manner inconsistent with an owner's instructions is
liable for conversion to his bailor. [Citations omitted]");
David Crystal, Inc. v. Cunard Steam-ship Co., 223 F. Supp. 273,
284-87 (S.D.N.Y. 1963) (reviewing New York cases standing for
the proposition that bailees are "'not only liable for losses
occasioned by their negligence, but for those which arise from
innocent mistakes in the delivery of goods to persons not
entitled to receive them.' [Bank of Oswego v. Doyle, 91 N.Y. 32,
Under these principles, Wagner could be found liable for
conversion if it misaddressed the furs, and thus caused them to
be misdelivered and lost, even if, as it appears, this was
merely a mistake and Wagner received no benefit from the
misdelivery. In other words, plaintiff need not prove that
Wagner converted the furs "for its own use" in order to succeed
on this claim.*fn11 Accordingly, summary judgment for Wagner
on the conversion claim is inappropriate.
B. UPS's Motion for Summary Judgment
UPS moves for summary judgment on the grounds that its
liability for the loss of the furs is also limited to $100 per
package, the value stated on the UPS pickup record prepared by
Wagner prior to shipping the furs.*fn12 There is no dispute
that Wagner, as agent for the Cullmans, was provided an
opportunity to obtain increased valuation from UPS by paying a
higher fee, permitting enforcement of UPS's limitation of
liability under New York law. Nonetheless, Magistrate Francis
found that summary judgment for UPS on this ground would be
inappropriate because plaintiff has alleged that UPS was
grossly negligent in misdelivering the furs. Report at 17-18.
Magistrate Francis found the gross negligence claim supported
by the evidence,*fn13 and concluded that, under New York law,
such a claim would bar enforcement of the limitation of
liability as a matter of public policy. Id. We disagree.
In Calvin Klein Ltd. v. Trylon Trucking Corp., 892 F.2d 191,
195 (2d Cir. 1989), decided in the same month in which
Magistrate Francis issued his Report, the Second Circuit held
that New York law would not deem gross negligence to bar such
enforcement. Accordingly, UPS's motion for summary judgment
limiting its liability on the claim and cross-claims of
negligence to $300 is granted.
Magistrate Francis found as to UPS, as he did as to Wagner,
that it had overcome the presumption of conversion set forth in
I.C.C. Metals, supra, since it "offered an adequate explanation
for the disappearance of the Cullman package." Report at 16.
However, as we have indicated, evidence of misdelivery, even if
inadvertent, is sufficient to support a claim of conversion
against a bailee. Since there is evidence in the record to
support an inference that UPS's driver misread the label on the
furs and thus caused the misdelivery, UPS may be liable for
UPS cites the recent decision of the New York Court of
Appeals in Art Masters Associates, Ltd. v. United Parcel
Service, 77 N.Y.2d 200, 566 N.Y.S.2d 184, 187, 567 N.E.2d 226,
229-30 (1990), in which the Court declined to apply the I.C.C.
Metals presumption of conversion to claims against common
carriers. However, as noted above, there is affirmative
evidence in the present case sufficient to support the claim
that the bailee misdelivered the bailed property, eliminating
the need for plaintiff to rely on the presumption of
conversion. The distinction between these categories of
conversion cases was explained in Wamsley v. Atlas Steamship
Co., 168 N.Y. 533, 536, 61 N.E. 896 (1901), a case on which the
Art Masters court particularly relied:
The general rule is that a common carrier is not
liable in conversion for mere
non-feasance, although he may be liable for
negligence. So on the contrary he may be held in
trover when he is guilty of misfeasance, although
the wrong may have been unintentional*fn15 . . .
'. . . as when goods are by mistake, or under a
forged order, delivered to the wrong person.'
(Citation omitted; emphasis added). Thus, like any other
bailee, a common carrier is liable for conversion if it
misdelivers property, even by innocent mistake. Prosser and
Keeton, supra, § 15 at 97. The decision
in Art Masters did not alter this basic rule. Like I.C.C.
Metals, Art Masters was concerned with cases in which the
evidence at most indicates non-feasance by the bailee. Since
the evidence in the present case, on the other hand, suggests
misdelivery by UPS, summary judgment for UPS on the claim of
conversion is inappropriate.
c. Owners' Motion for Summary Judgment
Owners do not object to Magistrate Francis's conclusion that,
as a gratuitous bailee, they owed a duty of care to the
Cullmans to refrain from gross negligence as to the furs.
E.g., Linares v. Edison Parking, Inc., 97 Misc.2d 831, 832, 414
N YS.2d 661, 662 (Civ.Ct.N.Y.Cty. 1979). We agree with the
Magistrate that the evidence in the present case is sufficient
to support a conclusion that Owners were grossly negligent in
accepting the misdelivered furs and placing them in an
inadequately secured service elevator.
Nor are Owners entitled to rely upon UPS's limitation of
liability, as they contend. Neither owners' policy of accepting
packages for their tenants nor the misdelivery of the furs
created an agency relationship between UPS and Owners that
would entitle the latter to benefit from such a limitation in
this case. There is certainly no evidence of any agreement that
Owners would act for UPS in completing delivery of packages,
such as the one here, intended for non-tenants of 785 Park
Avenue, as would be required to establish an agency. See S.E.C.
v. American Board of Trade, Inc., 654 F. Supp. 361, 366 (S.D.N.
Y. 1987), cert. denied, 485 U.S. 938, 108 S.Ct. 1118, 99
L.Ed.2d 278 (1988). Therefore, Owners' motion for summary
judgment as to the negligence claims is denied.
Likewise, we agree with Magistrate Francis's conclusion that
Owners are not entitled to summary judgment as to the
conversion claims against them. Unlike our analysis of the
claims as to Wagner and UPS, above, analysis of whether Owners
may be held liable for conversion turns on an application of
I.C.C. Metals v. Municipal Warehouse Co., supra. Since they
were gratuitous bailees of the furs, and since they have failed
to offer any adequately supported explanation for their loss,
Owners have not overcome the presumption of conversion, and
thus are not entitled to summary judgment. See id., 431
N YS.2d at 377 n. 3, 409 N.E.2d at 857 n. 3.
Defendant Wagner's motion for summary judgment is denied as
to all claims and cross-claims. UPS's motion for summary
judgment limiting its liability on the claim and cross-claims
of negligence to $300 is granted; UPS's motion as to the claim
and cross-claims of conversion is denied. Owners' motion for
summary judgment is denied as to all claims and cross-claims.
It is so Ordered.