This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480A.08, subd. 3 (1996).




Kim Goodwin,



Bob Harmon, d/b/a Harmon's Garage,


Filed December 16, 1997


Davies, Judge

Polk County District Court

File No. C7961123

James C. Fischer, Fischer Law Office, P.O. Box 644, Crookston, MN 56716 (for respondent)

Edward F. Kautzer, Ruvelson & Kautzer, Chartered, Suite 510, Spruce Tree Centre, 1600 University Ave. W., St. Paul, MN 55104 (for appellant)

Considered and decided by Lansing, Presiding Judge, Davies, Judge, and Willis, Judge.



Appellant seeks reversal of the judgment in a conversion action. We affirm.


On January 14, 1996, respondent Kim Goodwin purchased a 1980 Ford van from appellant Bob Harmon (d/b/a Harmon's Garage). The purchase price, after a trade-in allowance, was secured by a retail installment contract and security agreement. Harmon assigned the contract to the First National Bank of Bagley.

When Goodwin had mechanical problems with the van, Harmon said he would attempt to repair it. After starting the repairs, Harmon alleged that Goodwin had mistreated the van and told her the van's engine would have to be replaced. Harmon stated he would only repair the van if Goodwin paid for the entire estimated amount of repairs in advance, so Goodwin made arrangements for another party to do the repairs. But Harmon still refused to release the van unless Goodwin paid the contract to the bank in full.

In October 1996, Goodwin brought an action against Harmon for conversion. Harmon responded that, because he assigned the contract to the bank "with recourse," he had a common law seller's lien and a right to keep the van. The trial court found that Goodwin was not in default under the contract and, even if she were in default, only the bank had a right to repossess the van, notwithstanding the right of recourse. The trial court found that any lien secured the bank, not Harmon. The trial court held that Harmon's act constituted conversion and awarded Goodwin $2,777.35 in damages and $200 in punitive damages.


I. Conversion

Where a case is decided on stipulated facts, the only issue on appeal is whether the trial court erred in its application of the law. Fingerhut Corp. v. Suburban Nat'l Bank, 460 N.W.2d 63, 65 (Minn. App. 1990).

Conversion is a willful act, done without lawful justification, that interferes with property so that a person entitled to the property is deprived of its use and possession. Larson v. Archer-Daniels-Midland Co., 226 Minn. 315, 317, 32 N.W.2d 649, 650 (1948). Because the record establishes unequivocally that Harmon withheld the van from Goodwin, the only question is whether Harmon's act was legally justified.

The Minnesota Uniform Commercial Code (U.C.C.) applies to any sale of chattel paper. Minn. Stat. § 336.9-102(1)(b) (1996). In this case, the retail installment contract also states that it will be governed by the U.C.C. Chattel paper is a writing that evidences both a monetary obligation and a security interest in specific goods. Minn. Stat. § 336.9-105(1)(b) (1996). An installment sales contract signed by the buyer of a motor vehicle is chattel paper. Ronald A. Anderson, 8 Anderson on the Uniform Commercial Code § 9-105:14 (3rd ed. 1985).

Under U.C.C. Article 9, Harmon initially was the "secured party" in whose favor a security interest arose. Minn. Stat. § 336.9-105(1)(m) (1996). Goodwin was the "debtor" owing payment of the secured obligation. Id. § 336.9-105(1)(d) (1996). But once Harmon assigned the contract to the bank, he became the "debtor," the bank became the "secured party," and Goodwin became the "account debtor," the original obligor who is obligated on the chattel paper. Id. § 336.9-105(1)(a) (1996). A "debtor" owes performance of the secured obligation, "whether or not the person owns or has rights in the collateral, and includes the seller of accounts or chattel paper." Id. § 336.9-105(1)(d). A "secured party," in this case the bank, is the party "to whom accounts or chattel paper have been sold." Minn. Stat. § 336.9-105(1)(m). See also Minn. Stat. Ann. § 336.9-105 cmt. 2 (West Supp. 1997) (defining and explaining terms).

In this case, Goodwin was not in default. Even if she were, under Minn. Stat. § 336.9-503 only the bank, as the secured party, had the right to repossess the van. Harmon argues that if he were afforded the rights of a secured party, instead of those of a debtor, his act would not amount to conversion, but instead would constitute an exercise of protective power. Under Minnesota law, Harmon is not afforded the rights of a secured party, however, and therefore his act does amount to conversion. The trial court did not err in determining that Harmon committed conversion by withholding Goodwin's van.

II. Punitive Damages

The trial court awarded Goodwin $200 in punitive damages. Punitive damages are allowed in civil actions upon clear and convincing evidence that the acts of the defendant show a deliberate disregard for the rights of others. Minn. Stat. § 549.20, subd. 1(a) (1996). Harmon argues that the trial court erred in awarding punitive damages because it failed to address the statutory requirements of Minn. Stat. § 549.20. We disagree.

We cannot say the trial court erred in determining that the stipulated facts presented "clear and convincing evidence" that Harmon acted with deliberate disregard for the rights of Goodwin. To the contrary, Goodwin at all times has been in compliance with the contract, and Harmon has been aware of this fact. Nevertheless, for nearly a year and a half, Harmon has unlawfully continued to withhold Goodwin's van. This is the kind of conduct punitive damages were intended to address.

The fact that the trial court, in awarding punitive damages, did not specifically address each individual factor listed in Minn. Stat. § 549.20 is not fatal to the award. Further, the modest award involved ($200) makes a remand for individualized findings an inappropriate remedy.