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Johnson v. GMAC Mortgage Corp.2/22/2005
nd an escrow account and the defendant never established an escrow but rather took the money for its own use and purposes; tender is not a precondition for plaintiff's recovery under a conversion theory."
As with many of his other claims, Mr. Johnson has abandoned the conversion claim in his first amended petition by replacing it with a new conversion claim in his second amended petition, which was filed with leave of the court. We therefore review only the dismissal of the conversion claim in his second amended petition.
As the trial court recognized and as the parties agree, conversion generally is not a proper theory where the claim involves money, as opposed to a specific chattel. See Biermann v. Gus Shaffar Ford, Inc ., 805 S.W.2d 314, 318 (Mo. App. S.D. 1991). As the trial court also recognized and as the parties further agree, this rule is subject to a " narrow exception" in cases where the plaintiff delivers funds to the defendant for a specific purpose only to have the defendant divert those funds to another and different purpose of the defendant. Knight , 647 S.W.2d at 817.
Mr. Johnson has alleged that he made two payments to GMAC for the specific purpose of funding his escrow account and assuring that taxes and insurance were paid. And he alleges that GMAC failed to establish an escrow account or to credit the money to any escrow account. Although respondents contend that Mr. Jones' purported purpose in making the payments -- to fund the escrow account -- is at odds with Mr. Johnson's cancellation of the loan agreement, the two positions are not necessarily mutually exclusive: Mr. Johnson could have decided to make the payments even as he sought to rescind the agreement because he saw that GMAC was not taking any action to unwind the agreement and wanted to make sure that the taxes and insurance were paid during the dispute and that his credit was not damaged.
We believe that these allegations are sufficient for a conversion claim. Again, we do not believe that tender is a necessary element of this claim. Mr. Johnson's conversion claim is predicated upon respondents' failure to comply with the statutory requisites of TILA, not the common law. When a borrower rescinds under TILA, he is "not liable for any finance or other charge" and the lender must return "any money or property given as earnest money, down payment, or otherwise" within twenty days of receiving notice of rescission. 15 U.S.C.A. section 1635(b).
If Mr. Johnson properly exercised his right to rescind in this case, then respondents had no right to receive payment from him and could be subject to liability for converting his money to their own use. Because Mr. Johnson' s claim is premised upon respondents' violation of TILA, rather than the common law, we do not believe that Mr. Johnson must plead tender here. That distinguishes his case from the case relied upon by respondents. See Haas v. Town & Country Mortgage Co. , 886 S.W.2d 225, 228 (Mo. App. E.D. 1994) (where borrower essentially sought rescission of loan agreement at common law, mortgage lender had no duty to refund money until borrowers also tendered title to the property because rescission of contract involves restoration of status quo, unless parties have agreed otherwise, and lender was not liable for conversion), overruled on other grounds by Bell v. May Dep't Stores Co. , 6 S.W.3d 871 (Mo. banc 1999).
IV . CONCLUSION
For the reasons explained above, we reverse the judgment of the trial court dismissing Mr. Johnson's TILA claims and reverse the judgment of the trial court dismissing the declaratory judgment, quiet title, and conversion counts of his second amended petition. The case is r
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