COURT OF APPEALS OF OHIO, EIGHTH DISTRICT COUNTY OF CUYAHOGA NO. 71827 DELOREAN CADILLAC, INC. : JOURNAL ENTRY : AND Plaintiff-appellee : OPINION : -vs- : : THOMAS J. WEAVER, ET AL. : : Defendants-appellants : DATE OF ANNOUNCEMENT OF DECISION: OCTOBER 2, 1997 CHARACTER OF PROCEEDING: Civil appeal from the Court of Common Pleas Case No. CP-CV-150674 JUDGMENT: AFFIRMED. DATE OF JOURNALIZATION: APPEARANCES: For Plaintiff-Appellee: For Defendants-Appellants: JOHN P. TREMSYN, ESQ. DENNIS M. O'TOOLE, ESQ. EDGAR H. BOLES, ESQ. DANIEL D. MASON, ESQ. THOMAS & BOLES WARHOLA, O'TOOLE, LOUGHMAN, 36 South Franklin Street ALDERMAN & STUMPHAUZER Chagrin Falls, Ohio 44022 502 Broadway Lorain, Ohio 44052 2 DYKE, J. Appellant, Bertha Weaver, is appealing the trial court's grant of summary judgment against her and in favor of appellee, DeLorean Cadillac, Inc. For the following reasons, we affirm. DeLorean Cadillac, an automobile dealership, sued appellant Bertha Weaver, and other defendants for conversion of automobiles. Thomas Weaver, appellant's son, was secretary/treasurer and office manager for appellee. Thomas Weaver and the three other members of DeLorean's office staff stole 60 vehicles from DeLorean from 1979 to 1987. Three of these vehicles, a 1980 DeVille, a 1982 Eldorado and a 1984 Eldorado were given to Bertha Weaver by Thomas Weaver. DeLorean had its books audited regularly, but did not discover the thefts until June 23, 1987. On that date, Charles DeLorean received a phone call from a relative of an employee, informing him that office employees were stealing from the dealership. Upon receiving the tip, DeLorean hired a new accounting firm to investigate. DeLorean filed a lawsuit for negligence against the old accounting firm for failing to discover the theft. DeLorean reported the theft to the Lakewood Police Department. The theft was not discovered because Thomas Weaver and the other employees forged documentation to make it appear that they or their relatives had paid the purchase price for the vehicle. The office staff also removed the deal jackets from the premises of DeLorean Cadillac. The deal jackets contained the purchase and finance documents for the automobiles. Thomas Weaver also falsified ledgers and journals, attributing the payments made by 3 legitimate customers to the stolen vehicles. Bertha Weaver stated in an affidavit that her son showed her his business card, stating he was secretary/treasurer of DeLorean. Thomas Weaver told her he was entitled to demo cars for himself and his spouse. As Thomas had no spouse, he was giving the demo to his mother. Bertha deposed that she never saw any documents from DeLorean stating that Thomas was entitled to demo vehicles. Bertha used the first two vehicles for two years each, and used the third car for three years. She did not make any payments on the vehicles. Mark DeLorean stated in affidavit that Thomas Weaver was only entitled to a demo car for himself. Additionally, demo cars are to be used in furtherance of the dealership's business. Bertha Weaver lived out of state, so her use would not further DeLorean's business. Demo cars must be titled in DeLorean Cadillac's name. Thomas Weaver titled all three of the vehicles given to Bertha in his name. The discounted fair market value of the 1980 DeVille was $12,655.24. Discounted fair market value is the price paid when a demo car is sold to an employee or their relative. It is the invoice cost to the dealership plus $300, plus options. Thomas Weaver listed the DeVille as a trade in, valued at $8,600, on the purchase documents for the 1982 Eldorado. The DeVille was returned to DeLorean as a trade-in. The 1982 Eldorado had a fair market value of $20,600.19. This car was listed as a trade in valued at $14,100 for the purchase of the 1984 Eldorado. The 1984 Eldorado 4 had a fair market value of $23,067.15. In 1987, when the police contacted Bertha Weaver about the theft, she turned the 1984 Eldorado over to the police. This vehicle was sold for $5,328. DeLorean claimed it was owed $ 28,294.58 as damages for Bertha's conversion of the vehicles. This figure was computed as follows: 1980 DeVille $ 12,655.24 1982 Eldorado 20,600.19 less trade-in (8,600.00) 1984 Eldorado 23,067.15 less trade-in (14,100.00) less sale price ( 5,328.00) ____________ $ 28,294.58 Bertha is 79 years old. She deposed that her sole income was social security, state retirement, food stamps and Medicaid. The trial court granted summary judgment on the issue of liability in favor of appellee and against appellant. The trial court granted summary judgment on the issue of damages, and awarded appellee damages of $28,294.58 plus 10% interest from March 16, 1984. I. Appellant's first assignment of error states: THE TRIAL COURT ERRED TO THE SUBSTANTIAL PREJUDICE OF DEFENDANT-APPELLANT BERTHA WEAVER WHEN IT GRANTED PARTIAL SUMMARY JUDGMENT AGAINST DEFENDANT-APPELLANT ON THE ISSUE OF LIABILITY. Summary judgment is proper if: (1) No genuine issue as to any material fact remains to be litigated; (2) the moving party is entitled to judgment as a matter of law; and 5 (3) it appears from the evidence that reasonable minds can come to but one conclusion, and viewing such evidence most strongly in favor of the party against whom the motion for summary judgment is made, that conclusion is adverse to that party. Temple v. Wean United, Inc. (1977), 50 Ohio St.2d 317, 327. A party seeking affirmative relief upon summary judgment must demonstrate the absence of any genuine issues of fact upon each material element of the claim. United Natl. Bank of Parkersburg, W. Va. V. Norton Mach. Co. (1991), 81 Ohio App.3d 101, 104. Conversion is defined as the wrongful or unauthorized act of control or exercise of dominion over another's property, depriving the owner of his right of possession. Taylor v. First National Bank of Cincinnati (1986), 31 Ohio App.3d 49, Fulks v. Fulks (1953), 95 Ohio App. 515. Appellee presented evidence that Thomas Weaver did not have the right to a second demo vehicle or the right to give the same to his mother, the appellant. Appellant used appellee's property, the automobiles, without the authorization or permission of DeLorean, depriving DeLorean of the right to possession. Appellant raised four separate issues concerning her defenses to the conversion action. The first issue states: WHETHER THE STATUTE OF LIMITATIONS APPLIES TO PRECLUDE SUMMARY JUDGMENT ON THE ISSUE OF LIABILITY. An action for conversion must be brought within four years after the cause of action accrued. R.C. 2305.09(B), Investors REIT One v. Jacobs (1989), 46 Ohio St.3d 176. Appellant filed suit in 1988. The conversions took place in 1980, 1982 and March, 1984, but were not discovered until June, 1987. 6 R.C. 2305.09 states that, If the action is for . . . wrongful taking of personal property, the causes thereof shall not accrue until the wrongdoer is discovered . . . . The statute specifically provides that the statute of limitations in a conversion action does not begin to run until the plaintiff discovered, or should have discovered the conversion. Investors REIT One, supra. The statute is different from the common law rule, which stated that the statute of limitations for conversion will only be tolled if the conversion was fraudulently concealed from the plaintiff. Klein v. Linn (App. 1931), 10 Ohio Law Abs. 560. We note that in this case, plaintiff was prevented from discovering the theft by fraudulent concealment. In the case of a negotiable instrument, it has been held that the discovery rule only applies to an action for conversion if there is fraudulent concealment by the defendant. Palmer Mfg. & Supply, Inc. v. BancOhio Nat'l Bank (1994), 93 Ohio App.3d 17. However, that holding was based on the law and policy applicable to negotiable instruments, and should not be applied to conversion of ordinary personal property. The discovery rule applies to toll the statute of limitations for conversion of personal property items which are not negotiable instruments. Investors REIT One, supra, See also Bragg v. Gollahon (Nov. 29, 1996), Montgomery App. No. 15931, unreported. In the case at hand, reasonable minds could only conclude that appellee exercised reasonable diligence, but did not discover the conversion until June, 1987. See Fisher v. Deerhake (1987), 41 7 Ohio App.3d 139, 141. The evidence shows appellee had audits conducted regularly, but no theft was discovered. The fact that appellee sued the accountants for negligence does not give rise to an inference that appellee lacked due care in hiring the accountants. A reasonable jury can not infer that the theft should have been discovered from the fact that 60 cars were stolen over eight years. There is no testimony as to how many cars are acquired and sold by DeLorean each year. Also, the employees concealed the theft by preparing paperwork and altering accounting records. There is no evidence that, as appellants contend, the employees were able to prepare fake documents due to lax office procedures . Appellant has presented no evidence showing appellee was negligent in failing to discover the theft. In this case, reasonable minds could only conclude that appellee could not have discovered the conversion until June, 1987. Appellee's lawsuit was timely filed in 1988. Appellant's second issue states: THE PLAINTIFF CLOTHED TOM WEAVER WITH APPARENT AUTHORITY LEADING BERTHA WEAVER TO BELIEVE THAT TOM WEAVER COULD GIVE HER A DEMO VEHICLE TO DRIVE. To prove conversion, the plaintiff only need show the wrongful or unauthorized act of control or dominion over plaintiff's property. Fulks v. Fulks (1953), 95 Ohio App. 515, Taylor v. First National Bank of Cincinnati (1986), 31 Ohio App.3d 49. It is not necessary to demonstrate intent or wrongful purpose by the defendant. Id. Mistake or good faith is not a defense to conversion. Id. 8 Appellant argues that she believed in good faith that Thomas Weaver had the authority to give her the cars. As stated above, appellant's good faith belief is not a defense. Appellant further argues that appellee can not recover because it clothed its agent, Thomas Weaver, with apparent authority. A principal is bound by acts of its agent, even if the agent had no authority to do the act, if the principal intentionally or negligently allows third persons to act on apparent authority. See Master Consol. Corp. v. BancOhio National Bank (1991), 61 Ohio St.3d 570, Ammerman v. Avis Rent A Car System, Inc. (1982), 7 Ohio App.3d 338. To prove apparent authority, it must be shown: (1) That the principal held the agent out to the public as possessing sufficient authority to embrace the particular act in question, or knowingly permitted him to act as having such authority, and (2) that the person dealing with the agent knew of the facts and acting in good faith had good reason to believe that the agent possessed the necessary authority. Ammerman, supra, See Master Consol., supra. By giving an agent a title suggestive of certain authority, the principal holds an agent out as having authority in the nature of the responsibilities commensurate with that title. Ammerman, supra. An agent can also be held out as having authority to do a certain act, if the act is very closely related to the agent's other duties. Id.Apparent authority is generally defined as that incident to authority naturally attending the furtherance of the principal's business. Miller v. Benedict (App. 1937), 25 Ohio Law Abs. 359. 9 Turning to the facts of this case, appellee did not communicate to appellant, orally or in writing, that Thomas Weaver had the authority to give appellant a demo vehicle. Appellee gave Thomas Weaver the title of secretary/treasurer and office manager. These titles do not imply that the agent has the right to give demo cars to his mother. Furthermore, giving a demo car to appellant's mother, who lives out of state, would not further appellee's business. Reasonable minds can only conclude that appellee did not confer apparent authority upon Thomas Weaver to give appellant the vehicle. Appellant's third issue states: WHETHER THE PLAINTIFF FAILED TO TIMELY DISCOVER ITS AGENT'S UNAUTHORIZED ACTS, THEREBY CREATING AN ESTOPPEL. Appellant asserts that appellee ratified Thomas Weaver's act of giving the cars to appellant because of appellee's delay in discovering the thefts. A principal ratifies an unauthorized act of an agent if the principal, with full knowledge of the facts, conducts himself in a way which manifests his intention to approve the agent's earlier act which did not bind him. Bailey v. Midwestern Enterprises, Inc. (1995), 103 Ohio App.3d 181, See Illinois Controls, Inc. v. Langham (1994), 70 Ohio St.3d 512. Ratification can not occur unless the principal has full knowledge and understanding of the acts performed by the agent. Testa v. Roberts (1988), 44 Ohio App.3d 161, 165. In this case, DeLorean did not know of the conversion of the vehicles, so DeLorean could not ratify Thomas Weaver's act. 10 Appellant asserts that appellee is precluded from claiming conversion, because appellant is barred by the doctrine of equitable estoppel. If a party is guilty of some negligence or lack of diligence, he must take the consequences of his own acts which mislead others to act to their injury. Murfey, Blossom & Co. v. State (1935), 20 Ohio Law Abs. 176, Ameritrust Co. v. Sherman (Aug. 27, 1986), Lorain App. No. 3987, unreported. If a party negligently, by words or silence, induces another to believe certain facts exist, and the other relies on such belief to his detriment, the party can not be permitted to assert a different set of facts. Fleming v. Steubenville (1931), 44 Ohio App. 121, see generally, First Fed. S&L Assn. v. Perry's Landing, Inc. (1983), 11 Ohio App.3d 135, 145. In the case at hand, there is no evidence DeLorean acted negligently in failing to discover and disaffirm the thefts. Neither is there any evidence that appellant was injured by appellee's failure to discover the theft. Appellant benefitted by the use of the Cadillacs for seven years. Appellee should not be estopped from asserting its claim for conversion. Appellant's fourth issue states: WHETHER THE TWO-INNOCENT PARTY RULE APPLIES IN THIS CASE. The two innocent party rule states that if one of two innocent parties must suffer a loss, the loss must be borne by the party who could have prevented the loss or the party who rendered the injury possible. Hillside Dairy Co. v. Cleveland Trust Co. (1944), 142 Ohio St. 507, Edgar v. Haines (1923), 109 Ohio St. 159, Wilson v. 11 Hicks (1884), 40 Ohio St. 418, Thomas v. Fields (App. 1964), 94 Ohio Law Abs. 48, Koslen v. Lippencott Distributing Co. (App. 1936), 22 Ohio Law Abs. 417. This rule applies even if there was no positive fault, but will especially apply if the losing party's carelessness contributed to the loss. Wilson v. Hicks, supra. The two innocent parties rule is based upon the principal of equitable estoppel. See 42 O Jur.3d Estoppel and Waiver, section 53. In all of the above cited cases, the winning innocent party was a bona fide purchaser for value. In this case, appellant paid no value for the cars, and was not on equal footing with appellee. Also, appellee did not intend to give title to appellant and appellee was not negligent. The two innocent party rule does not apply when the owner of the chattel did not give anyone indicia of title and was in no way negligent, when value was not paid for the chattel by the other party. East Ohio Gas v. Sherman (1938), 30 Ohio Law Abs. 415. See also Grever v. Taylor (1895), 53 Ohio St. 621 (When a voidable sale occurs due to the fraud of a vendee, the defrauded vendor may retake the property from one who obtained the property from the vendee without paying consideration.) The two innocent party rule does not apply in this case. The plaintiff-appellee was not estopped from asserting conversion. Reasonable minds can not conclude that appellee vested Thomas Weaver with apparent authority to give appellant the automobiles. Neither did appellee ratify Thomas Weaver's act. The action was filed within the statute of limitations. There was no genuine issue of material fact. Reasonable minds 12 could only conclude from the evidence that appellant converted the automobiles. Accordingly, this assignment of error is overruled. Appellant's second assignment of error states: THE TRIAL COURT ERRED TO THE SUBSTANTIAL PREJUDICE OF DEFENDANT-APPELLANT BERTHA WEAVER WHEN IT GRANTED SUMMARY JUDGMENT AGAINST DEFENDANT ON THE ISSUE OF DAMAGES. Appellant asserts that there is a genuine issue of material fact as to whether appellant owes a lesser amount of damages, due to plaintiff-appellee's failure to timely discover its missing vehicles. For example, if appellee should have discovered the thefts in six months, Bertha Weaver would only have to pay for use of the Cadillac for six months. As stated above, appellant did not present any evidence that plaintiff-appellee should have discovered the thefts at an earlier time. The trial court correctly calculated the damages as the value of the property at the time of the conversion, plus interest from the time of the conversion. Keys v. Pittsburgh & Wheeling (1898), 58 Ohio St. 246, Booth v. Cincinnati Finance Co. (1923), 19 Ohio App. 130, aff'd (1924), 11 Ohio St. 361. Accordingly, this assignment of error is overruled. The decision of the trial court is affirmed. 13 It is ordered that appellee recover of appellants its costs herein taxed. The Court finds there were reasonable grounds for this appeal. It is ordered that a special mandate issue out of this Court directing the Common Pleas Court to carry this judgment into execution. A certified copy of this entry shall constitute the mandate pursuant to Rule 27 of the Rules of Appellate Procedure. PORTER, P.J., AND ROCCO, J., CONCUR. ANN DYKE JUDGE N.B. This entry is an announcement of the court's decision. See App. R. 22(B), 22(D) and 26(A); Loc.App.R. 27. This decision will be journalized and will become the judgment and order of the court pursuant to App. R. 22(E) unless a motion for reconsideration with supporting brief, per App.R. 26(A), is filed within ten (10) days of the announcement of the court's decision. The time period for review by the Supreme Court of Ohio shall begin to run upon the journalization of this court's announcement of decision by the .