Volume 256 — Virginia Reports

<italic>Since a manufacturer's sales representative was the "agent" of</italic><italic>the manufacturer within the meaning of Code § <cross_reference>8.3A-420</cross_reference> and</italic><italic>was liable to the manufacturer for conversion of several checks,</italic><italic>the manufacturer is entitled to offset such liabilities in a</italic><italic>garnishment proceeding brought by a judgment creditor of the</italic><italic>agent. The decision below is affirmed in part, reversed in part,</italic><italic>and remanded for entry of a final judgment.</italic> <bold>Practice and Procedure — Creditors' Rights — Garnishment — Offsets —</bold><bold>Agency — Special Agents — Conversion</bold> A manufacturer of ventilation equipment executed a contract with a Virginia corporation which agreed to act as a sales representative on a commission basis. In 1995, certain customers ordered the manufacturer's products and sent the sales representative a total of five checks in the aggregate amount of $34,387.93. Although each of the checks was made payable solely to the manufacturer, the sales representative improperly indorsed the checks and deposited them to its account without the manufacturer's knowledge or consent. Another customer delivered a check payable solely to the sales representative, which indorsed and negotiated the check. A judgment creditor of the sales representative initiated garnishment proceedings against the manufacturer based on commissions allegedly owed by the manufacturer to the sales representative. The trial court ruled that the manufacturer never acquired an interest in the checks and therefore did not have a conversion claim against the sales representative. Hence the trial court concluded that the manufacturer could not offset the amount of the checks against the commissions it owed, and the court awarded the creditor a judgment in the amount of $33,183.04. The manufacturer appeals. 1. Code § <cross_reference>8.3A-420</cross_reference>(a) provides in part that the law applicable to conversion of personal property applies to instruments. An instrument is also converted if it is taken by transfer, other than a negotiation, from a person not entitled to enforce the instrument or a bank makes or obtains payment with respect to the instrument for a person not entitled to enforce the instrument or receive payment. 2. Under Code § <cross_reference>8.01-511</cross_reference> garnishment effectively is a proceeding by the judgment debtor in the name of the judgment creditor against the garnishee. The judgment creditor stands on no higher ground than the judgment debtor and can have no right greater than the judgment debtor possesses.<page_number>Page 295</page_number> 3. A garnishee may offset against the lien of the judgment creditor any amount for which the judgment debtor is liable to the garnishee as of the return date of the garnishment summons. 4. Here the judgment creditor can assert no greater rights in this garnishment proceeding against the manufacturer than those possessed by the sales representative. 5. Under Code § <cross_reference>8.3A-420</cross_reference>, the manufacturer can maintain a claim for conversion of the checks in offset of the commissions due to the sales representative only if the manufacturer received delivery of the checks through the sales representative acting as its agent. 6. Agency is defined as a fiduciary relationship arising from the manifestation of consent by one person to another that the other shall act on his behalf and subject to his control, and the agreement by the other so to act. 7. The party who alleges an agency relationship has the burden of proving it. 8. A special agent is one who is authorized to perform one or more specific acts in pursuance of particular instructions, or within restrictions necessarily implied from the stated acts to be performed. The powers of a special agent must be strictly construed. 9. When, as here, the question of special agency rests on a written document, the question presents an issue of law and the authority of a special agent must be ascertained from the terms of the instrument itself. 10. No authority will be implied from the terms of the instrument, except that indispensable to the exercise of the powers expressly conferred. 11. Although the agreement here specifically stated that the sales representative was an independent contractor, and not the "legal representative" of the manufacturer, the use of these terms is not dispositive. 12. Here the agreement narrowly defined the sales representative's authority with regard to payments made by the purchasers of the products and authorized it to forward all payments or remittances received. This authority necessarily implied authority to receive payments for the manufacturer, rather than to return the payments to the customers with instructions to pay the manufacturer directly. Thus the language of the agreement and the authority indispensable to the exercise of the power expressly conferred therein made the sales representative the special agent of the manufacturer for the limited purpose of receiving payments from customers and forwarding those payments. 13. Since it was a special agent for this limited purpose, the sales representative was acting as an "agent" of the manufacturer within the meaning of Code § <cross_reference>8.3A-420</cross_reference> when it received the checks. Therefore, under the terms of the statute, five checks were delivered to the manufacturer when they were delivered to its special agent, and the manufacturer could maintain an action against the agent for their conversion. 14. The law governing the conversion of personal property is applicable to negotiable instruments. Code § <cross_reference>8.3A-420</cross_reference>(a).<page_number>Page 296</page_number> 15. Conversion is a tort involving injury to property, in which one wrongfully exercises or assumes authority over another's goods, depriving him of their possession. 16. Conversion includes any distinct act of dominion wrongfully exerted over property that is in denial of, or inconsistent with, the owner's rights. 17. Generally, the measure of damages for the conversion of commercial paper is prima facie the face value of the converted instrument. 18. The sales representative's indorsement and negotiation of checks without permission constitutes a conversion because it was a wrongful exercise of authority depriving the manufacturer of possession and an act of dominion wrongfully exerted over the checks inconsistent with the manufacturer's ownership rights. 19. Since the agent converted these checks in violation of the manufacturer's rights, the manufacturer was entitled to offset the total amount of those checks from the commissions owed to the agent in determining the amount the manufacturer owed to the judgment creditor in the garnishment. 20. The stipulated facts, however, state that one check was made payable solely to the sales representative and do not indicate whether this payment was made for the purchase of the manufacturer's products. On this item there is insufficient evidence to support a conversion claim and thus the manufacturer cannot deduct the amount of that check from the commissions owed. For the same reason, the judgment creditor has no claim against the manufacturer for any commission allegedly due based on this check. 21. The trial court erred in failing to allow the manufacturer to offset the amount of $34,387.93 against the commissions due the sales representative, based on conversion of the checks. The trial court did not err, however, in failing to allow offset for the amount of the remaining check. 22. When, as here, the trial court has reached the correct result for the wrong reason in a portion of its judgment, the correct reason will be assigned and that portion of the judgment affirmed.