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IN THE SUPREME COURT OF THE STATE OF KANSAS

No. 101,063

RODNEY G. SCHOENHOLZ,
Appellant/Cross-appellee,

v.

JANINE HINZMAN,
Appellee/Cross-appellant.

SYLLABUS BY THE COURT

1.
As a general principle, a statutory remedy will supersede a common-law remedy so long as the statute provides an adequate substitute remedy.

2.
K.S.A. 58-207 et seq. governs liens on and sales of farm animals that are subject to bailment arrangements.

3.
The interpretation and application of a statute of limitations is a question of law over which an appellate court exercises unlimited review. An appellant court's review of a lower court's conclusions of law is likewise unlimited.

4.
A gratuitous bailment is one in which either the bailor or the bailee is the sole beneficiary of the bailment.


5.
In the case of a bailment for an indefinite period, causes of action do not accrue until the bailor makes a demand for the property.

6.
A gratuitous bailee is not liable for any injury arising from nonfeasance, that is, from inaction, but may be liable for action that undermines the bailor's property interest.  

7.
A gratuitous bailee has no right to recover from the owner the costs of caring for the property.

8.
The keepers of livery stables and all others engaged in feeding horses, cattle, hogs, or other livestock shall have a lien upon such property for reasonable or stipulated charges for such feed and care. K.S.A. 58-207.

9.
Whether the law permits a remedy ordered by the district court is a question of law over which an appellate court exercises unlimited review.

10.
Courts have inherent equitable powers to fashion remedies and to impose sanctions.

11.
The award of sanctions, including attorney fees, for discovery violations is reviewed on appeal using an abuse of discretion standard.

Review of the judgment of the Court of Appeals in an unpublished opinion filed January 29, 2010. Appeal from Cloud District Court; KIM W. CUDNEY, judge. Opinion filed October 12, 2012. Judgment of the Court of Appeals affirming in part and reversing in part the district court is affirmed in part and reversed in part. Judgment of the district court is affirmed in part, reversed in part, and remanded with directions.

Don W. Noah, of Noah Law Office, P.A., of Beloit, argued the cause, and Mark J. Noah, of the same firm, was with him on the briefs for appellant/cross-appellee.  

William R. Thompson, of Condray & Thompson, LLC, of Concordia, argued the cause and was on the briefs for appellee/cross-appellant.

The opinion of the court was delivered by

ROSEN, J.:  This is an unfortunate story of a business and familial relationship gone bad. Rodney Schoenholz entered into an oral agreement with his sister, Janine Hinzman, for the bailment of farm animals and farm equipment on her land. Four years after their cooperative effort to breed horses broke down, Hinzman sold her farm and the horses. Schoenholz subsequently retrieved most of his equipment from the farm and sued Hinzman for conversion and breach of the bailment contract. Hinzman counterclaimed for the expenses of maintaining the equipment and caring for the horses.  

The district court awarded no damages. The Court of Appeals affirmed the rulings against Schoenholz but found the district court had erred in denying Hinzman compensation for caring for some of the horses and had abused its discretion in denying sanctions against Schoenholz. We disagree with the principal parts of the Court of Appeals' decision and remand the case to the district court for further proceedings.

The dates and substance of the parties' actions are significant to our analysis. In 1999, Schoenholz and Hinzman orally agreed to operate a joint horse-breeding enterprise. Schoenholz was to provide breeding horses, and Hinzman was to take care of the horses on her farm and would promote breeding with her own horses. Schoenholz would store equipment, including a tractor, and materials on her farm to aid in the enterprise, and the two would evenly split the proceeds from the sale of the horses.  

In August 2002, after an argument about payments, Schoenholz and Hinzman ended the joint enterprise, and Schoenholz agreed to remove his animals from the farm by April 2003. As of April 2003, he had removed neither his horses nor his equipment. He did not remove any of his equipment other than his tractor until 2007. He explained that he refused to retrieve his property because he had no place to store it.

Hinzman stopped using the tractor in 2003, and it sat idle on her farm for more than 3 years until Schoenholz retrieved it at the end of 2006. Hinzman provided all the care for the horses, including not only the original horses that Schoenholz had provided but also the unsold offspring of those horses, from April 2003 until she sold them.  

One of Schoenholz' horses, World Ruler, developed health problems and had to be quarantined. Hinzman initially boarded World Ruler at her daughter's farm, and then moved the horse to her own farm for a period of 1,260 days after April 2003.  

The parties had multiple conversations during which Hinzman complained about Schoenholz storing his equipment on her farm. During the course of one of these discussions, when Hinzman asked him to remove the horses and equipment, Schoenholz struck Hinzman, and he was charged with battery.  

On September 22, 2006, Schoenholz entered into a diversion agreement for the battery, one condition of which was that he would "remove all of his personal property, of whatever kind, from the victim's residence . . . within sixty (60) days of the signing of the diversion." A provision was made that he would "be accompanied by law enforcement if deemed appropriate by the victim." On August 6, 2007, the State filed a motion to dismiss the charges with prejudice based on Schoenholz' alleged satisfaction of the terms of the diversion agreement. The district court granted the motion, even though Schoenholz had not removed his property from his sister's farm.  

Finally, in 2006, Hinzman sold her farm and the horses. In 2007, after Hinzman had turned the farm over to a new owner, Schoenholz removed his property from the farm.

On May 3, 2007, Schoenholz filed a petition in district court seeking damages for horses that were not returned, depreciation of the tractor, and loss of fencing materials, a bale fork and link, and other farm-related materials. Hinzman filed an answer and counterclaim for the costs associated with storing Schoenholz' equipment and caring for his horses. Following unsuccessful motions for summary judgment and sanctions, a trial was held on January 24-25, 2008. The district court essentially ruled against both parties on all claims and counterclaims, as well as on requests for sanctions.

The Court of Appeals, in an unpublished opinion, affirmed the district court in denying Schoenholz' claims but reversed the district court's finding that Hinzman was not entitled to damages for the care of the horses and in finding that Hinzman was not entitled to costs for violations of a discovery order. Schoenholz v. Hinzman, No. 101,063, 2010 WL 445693 (Kan. App. 2010) (unpublished opinion).

Schoenholz filed a petition for review, which this court granted. Hinzman did not file a petition for review of the issues on her cross-appeal.  

Preliminary Discussion of the Law of Farm Bailments and Gratuitous Bailments

Although the parties did not base their claims on or address the statutory scheme, the Kansas Legislature has enacted several statutes that govern bailments of livestock and unpaid costs for feeding and caring for that livestock. K.S.A. 58-207 et seq. has been in effect, with only minor modifications, since 1868.  

As a general principle, a statutory remedy will supersede a common-law remedy so long as the statute provides an adequate substitute remedy. See, e.g., Bair v. Peck, 248 Kan. 824, 838-39, 811 P.2d 1176 (1991). For this reason, we must examine the parties' claims and counterclaims in light of the statutory requirements, notwithstanding the parties' arguments that are grounded in the common law.

K.S.A. 58-207 establishes a lien on boarded livestock and allows a bailee of horses to sell the horses if the bailor fails to pay for their feed and care for 60 days after a demand is made:
  
"The keepers of livery stables, and all others engaged in feeding horses, cattle, hogs, or other livestock, shall have a lien upon such property for the feed and care bestowed by them upon the same, and if reasonable or stipulated charges for such feed and care be not paid within sixty (60) days after the same becomes due, the property, or so much thereof as may be necessary to pay such charges and the expenses of publication and sale, may be sold as provided in this act: Provided, however, That any lien created by this act may be assigned." (Emphasis added.)

K.S.A. 58-208 allows a bailee to sell goods left in the possession of the bailee for more than 6 months, if there is a lien on the goods and if the bailee properly advertises the sale:  

"Any forwarding merchant, warehouse keeper, stage, express or railway company, hotelkeeper, carrier, or other bailee not hereinbefore named, having a lien upon goods which may have remained in store or in the possession of such bailee for six months or more, may proceed to sell such goods, or so much thereof as may be necessary to pay the amount of the lien and expenses, according to the provisions of this act: Provided, That such sale may be advertised and made by any carrier in any city of the first, second or third class through which its line runs, where, in the judgment of such carrier, the best price can be obtained for the property to be sold." (Emphasis added.)

K.S.A. 58-209 allows a bailee of livestock and perishable property to dispose of the property in order to pay for the expenses of maintaining the livestock or other perishable property 30 days after charges for the upkeep become due:  

"If the property bailed or kept be horses, cattle, hogs, or other livestock, or is of a perishable nature and will be greatly injured by delay, or be insufficient to pay such charges for any further keeping, the person to whom such charges may be due may, after the expiration of thirty days from the time when such charges shall have become due, proceed to dispose of so much of such property as may be necessary to pay such charges and expenses as herein provided." (Emphasis added.)

K.S.A. 58-211 requires the bailee to provide written notice to the bailor before disposing of property if the name and residence of the owner is known:

"Before any such property shall be sold, if the name and residence of the owner thereof is known, notice of such sale shall be given the owner in writing, either personally or by mail, or by leaving a notice in writing at such person's residence or place of doing business. If the name and residence is not known, the person having the possession of
such property shall cause a notice of the time and place of sale, and containing a description of the property, to be published at least once a week for three consecutive weeks in a newspaper, if there is one published in the county where such sale is advertised to take place, and if there is no newspaper published in such county, then the notice shall be published in some newspaper of general circulation in such county. If the value of the property does not exceed $100, such notice may be given by written or printed handbills posted in at least five public places in the township or city where the bailee resides or the sale is to take place, one of which shall be in a conspicuous part of the bailee's place of business. Notices given under this section shall state that if the amount due with storage keeping and sale costs is not paid within 15 days from the date of mailing, personally giving or posting of the notice (as the case may be), the property will be sold at public auction." (Emphasis added.)

Hinzman fell within the provisions of these statutes. She had the option of selling Schoenholz' horses, or shares of horses, but only after she had made a demand for the reasonable costs of upkeep and only after providing printed notice of the sale. She did not follow the statutory mandates for disposing of the horses, and, as a consequence, she incurred certain ongoing responsibilities for taking care of them.

The Statute of Limitations

The interpretation and application of a statute of limitations is a question of law over which an appellate court exercises unlimited review. An appellate court's review of a lower court's conclusions of law is likewise unlimited. Smith v. Graham, 282 Kan. 651, 655, 147 P.3d 859 (2006).

Because she did not follow the statutory procedures for selling the horses, Hinzman remained a bailee even after Schoenholz stopped making contributions to the upkeep of the bailment property. A gratuitous bailment has been defined as one "in which either the bailor or the bailee is the sole beneficiary of the bailment." Waggoner v.
General Motors Corp., 771 P.2d 1195, 1198 (Wyo. 1989). Schoenholz was the only party benefitting from the bailment arrangement after April 2003, and Hinzman was therefore a gratuitous bailee from that time on.  

The gratuitous bailment was open-ended. It would last until Schoenholz claimed his property or until Hinzman elected to take the recourse afforded by K.S.A. 58-207 et seq. In the case of a bailment for an indefinite period, the cause of action does not accrue until the bailor makes a demand for the property. Jay-Ox, Inc. v. Square Deal Junk Co., Inc., 208 Kan. 856, 858, 494 P.2d 1103 (1972). The statute of limitations did not begin to run until Schoenholz approached Hinzman and told her he wanted his property back. Until that time, she was a gratuitous bailee of all of Schoenholz' property.  

The statute of limitations for oral contracts is 3 years. K.S.A. 60-512. The statute of limitations for torts involving taking, detaining, or injuring personal property is 2 years. K.S.A. 60-513(2).

The district court found that the statute of limitations for both Schoenholz' contract and tort claims began to run in April 2003, the date Hinzman gave him to remove his horses and equipment from her farm. On that date, according to the district court, the bailment contract expired. This conclusion was erroneous. A bailment relationship remained in effect because Hinzman still voluntarily retained possession of Schoenholz' property. The statute of limitations did not begin to run until Hinzman sold the property in 2006. Schoenholz filed suit on May 3, 2007, well within the limitation periods for both contract and tort claims.  

The Court of Appeals affirmed the district court's ruling with respect to the statute of limitations. The Court of Appeals stated that it was reviewing the district court's finding of "abandonment" under a substantial competent evidence standard. It held that
Schoenholz "abandoned" his property for over 3 years without just cause, exceeding the limits of the statutes of limitations.
  
As the Court of Appeals correctly noted, abandonment is a question of fact. See Rodgers v. Crum, 168 Kan. 668, 673, 215 P.2d 190 (1950). The Court of Appeals also correctly noted that an appellate court reviews findings of fact to determine whether those findings are supported by substantial competent evidence. See, e.g., In re Adoption of J.M.D., 293 Kan. 153, 171, 260 P.3d 1196 (2011). It erred, however, when it inexplicably relied on a factual finding that the district court rejected. The district court explicitly determined that Schoenholz did not abandon his property. He merely relinquished possession, and he remained the owner of the horses when Hinzman sold them.  

Abandonment is the voluntary relinquishment of ownership, so that something ceases to be the property of any person and becomes the subject of appropriation by the first taker. Rodgers, 168 Kan. at 672-73. Abandonment requires an intent by the owner to give up the rights of ownership in the property. See In re Estate of Sauder, 283 Kan. 694, 714, 156 P.3d 1204 (2007); Herron v. Whiteside, 782 S.W.2d 414, 416 (Mo. App. 1989) (abandonment of property requires intent plus an act); Conway et al. v. Fabian et al., 108 Mont. 287, 306, 89 P.2d 1022 (1939) (in determining abandonment intention is first and paramount factual inquiry).

The record on appeal supports the district court's finding that Schoenholz did not abandon his property, and the record does not support the inappropriate reweighing of the evidence by the Court of Appeals. Schoenholz testified that he intended to retrieve his property whenever he could find a place to store his equipment and board his horses. That he made minimal

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