Timmer v. Gray - 395 N.W.2d 477 (Minn. Ct. App. 1986)

Rule:

Considerations of right and justice and various equitable maxims warrant the imposition of an equitable lien in certain instances. The theory of unjust enrichment is founded on the principle that no one ought unjustly to enrich himself at the expense of another. Actions for unjust enrichment may be based on failure of consideration, fraud, mistake, and situations where it would be morally wrong for one party to enrich himself at the expense of another.

Facts:

The Farmers Home Administration (FmHA) acquired title to two farming discs under a security agreement with the owner Terrance Heaton, but it chose to leave the discs on the farmland rented by the owner. The landlord, Tom Glowack, permitted William Gray, a neighboring farmer to take possession of the discs. Gray arranged to have the respondent Jed Maggert, a mechanic, repair the discs, but he never paid for the repairs. Thereafter, the farmers Martin and Lylia Timmer purchased the discs from FmHA at a nominal price, believing that they were in disrepair. At the time of the sale, Gray possessed a fully repaired disc, and Maggert still had possession of the other disc. The Timmers brought an action in replevin and conversion against Gray and Maggert, and Maggert filed a counterclaim to recover the cost of his repairs. The trial court awarded possession of the discs to the farmers subject to an equitable lien in favor of Maggert. The Timmers appeal that portion of the order granting Maggert an equitable lien.

Issue:

Did the trial court err in awarding respondent mechanic an equitable lien on appellants' property based on the theory of unjust enrichment?

Answer:

No.

Conclusion:

On appeal, the court affirmed the judgment. The court ruled that the mechanic was entitled to an equitable lien to prevent unjust enrichment. Moreover, the court held that the farmers could not avoid the lien as bona fide purchasers for value because they failed to inspect the discs. Also, the court held that the farmers did not give value for the discs because they paid a nominal amount for discs that were worth considerably more than the purchase price.