Before us is an appeal in a diversity case from a money judgment in the amount of $35,158.83, plus interest, costs, and attorney fees in the amount of $2,-500.00, entered in favor of Flightcraft, Inc., a corporation organized under the laws of the State of Nevada, having its principal place of business at Portland, Oregon, plaintiff below and appellee in this court, and against Trans-Alaska Telephone Company, a corporation organized under the laws of the State of Alaska, and John E. Field, William Campbell and Harley F. Rolfe, defendants below and appellants here, for the conversion of a twin-engine Beechcraft aircraft.

Appellee at all material times was engaged in the business of selling aircraft and leasing private, non-commercial aircraft. Appellant, Trans-Alaska Telephone-Company, was a public utility corporation engaged in communication service within the State of Alaska. The individual appellants were officers of said corporation.

By written lease dated the 2nd day of February, 1960, on a lease form supplied by Beech Acceptance Corporation, Inc., and designated “LEASE”, Flight-craft, Inc., leased to Trans-Alaska Telephone Company, a twin-engine airplane therein described as a “Beechcraft.” By written assignment similarly dated Flightcraft, Inc., assigned its interest in the lease to Beech Acceptance Corporation, Inc., its successors and assigns.

The term of the lease was for sixty months, and provided for rental payments aggregating $141,748.00, payable in fifty-nine monthly installments of $2,-145.80 per month and a final monthly installment of $15,145.80. The lessor acknowledged that it had received from lessee the sum of $13,000.00.

The lease granted to lessee the option to purchase the airplane on or before the expiration of the forty-eighth month of the lease for the sum of $141,748.00, and also granted to lessee:

Other pertinent provisions in the lease are:

Paragraph 14 of the lease, in pertinent part, provides:

Trans-Alaska made thirteen monthly payments in the amount of $2,145.80 each, aggregating $27,895.40, and in mid-February, 1961, notified Flightcraft, Inc., and Beech Acceptance Corporation, Inc., of its intent to terminate the lease and requested instructions as to procedures to be followed. By letter dated February 21, 1961, Trans-Alaska was informed by Beech Acceptance Corporation, Inc., that in order to terminate the lease Trans-Alaska would be required to pay the additional sum of $5,000.00.

The sum of $5,000.00 plus the security deposit of $13,000.00 totalled $18,000.00 which was the amount required under the lease to be paid in the event of termination occurring during the period of thirteen through twenty-four months of the term of the lease.

By letter dated February 22, 1961, directed to Trans-Alaska, Flightcraft, Inc., endeavored to dissuade Trans-Alaska from proceeding with such intended termination, and stated, inter alia,

By letter dated March 6, 1961, Trans-Alaska notified Flightcraft, Inc., that its decision to terminate the lease was final and on March 5th or 6th, 1961, Trans-Alaska returned the airplane to Flight-craft, Inc., at its Portland, Oregon place of business. On March 31, 1961, Trans-Alaska forwarded to Beech Acceptance Corporation, Inc., the sum of $5,000.00 together with “a check for $95.22 for accrued past due charges as indicated in your letter of February 21.” The transmittal letter enclosing such checks stated:

Flightcraft, Inc., retained possession of said airplane and almost a year later, on February 20, 1962, accepted a purchase order on said airplane for the sum of $65,000.00 from Alaska Barge and Transport, Inc. The purchase order required Flightcraft, Inc., to overhaul the engines of the airplane and submit it to a periodic inspection. Flightcraft, Inc., overhauled the airplane at a cost of $13,361.24, and made the periodic inspection at a cost of $797.59. Following such overhaul and inspection the airplane was delivered to the purchaser in mid-March of 1962. During the period that the airplane was in possession of Flightcraft, Inc., following its return by Trans-Alaska, the airplane was used by Flightcraft, Inc., for demonstrating and income producing flights from which Flightcraft, Inc., received $2,199.98.

Following the sale of the airplane and on March 27,1962, Flightcraft, Inc., filed its complaint against the appellants, the gravamen of which charged that the ap pellants on or about February 8, 1960, converted the airplane to their own use by deceitfully surrendering and turning over the airplane to one Robert P. Walker to be used in an air charter business, contrary to paragraph 14 of the lease, which in pertinent part is set forth above, and in violation of representations made by appellants during negotiations leading up to the execution of the lease agreement.

It is further alleged in the complaint that the appellants:

The complaint further alleges that the acts on the part of the appellants in surrendering the plane to Walker for charter and commercial use were not discovered by plaintiff until after the airplane had been returned to the plaintiff on March 6, 1961.

Following trial to the court, the district court among its findings of fact found:

and that a payment of a penalty of $18,-000.00 upon surrender of the aircraft to the plaintiff was admitted by the plaintiff.

In the findings the court computed plaintiff’s damages as follows:

“Agreed value at time of lease $116,000.00

Less depreciation during term of lease 30,000.00

Value after depreciation Less Recovery: $ 86,000.00

Gross proceeds from sale $65,000.00

Less Engine-propeller overhaul and inspection 14,158.83

Net recovery 50,841.17

Net loss due to conversion $ 35,158.83.”

As conclusions of law the district court found defendants were guilty of deceit and conversion by acts of dominion wrongfully exerted over the aircraft in question, in a manner inconsistent with the lease agreement and in derogation of the contract between the parties; that the defendants converted the aircraft commencing with the 8th day of February, 1960, since the conversion was not discovered until 1961, the damages are determined in view of all of the circumstances bearing on the question.

On the entire record before us, we deem it unnecessary to pass upon the findings and conclusions of the district court that appellants converted the aircraft. Assuming, without deciding that the evidence is sufficient to support the findings of conversion, which we seriously doubt, nevertheless, the judgment must be reversed for the reasons hereinafter stated.

It is clear that Trans-Alaska purported to exercise its option to terminate the lease in compliance with the provisions of the lease. Trans-Alaska notified Flightcraft, Inc., and Beech Acceptance Corporation, Inc., of the exercise of its option to terminate. The aircraft was returned to Flightcraft, Inc., and retained by it. The security payment of $13,000.00 was credited on the obligation imposed by the termination provisions and the balance of $18,000.00 required to be paid on termination, in the amount of $5,000.00, was paid by Trans-Alaska, together with payment of $95.22 for accrued past due charges.

Shortly thereafter Flightcraft, Inc., discovered the acts which it now claims amounted to a conversion of the aircraft. Notwithstanding such discovery Flight-craft, Inc., did nothing to question or challenge the right of Trans-Alaska to exercise the option to terminate. It retained the termination payment which Trans-Alaska made, kept the airplane, and thereafter used the aircraft during the following year for demonstration and income-producing flights. It restored or rehabilitated the aircraft in February and March, 1962, a year after the return of the airplane by Trans-Alaska, and sold the same to Alaska Barge and Transport, Inc.

In these circumstances it must be deemed that- Flightcraft, Inc., waived the right to maintain an action for conversion and that the only cause of action, if any, which it had at the time of filing its complaint was for a breach of that provision of the lease which provided that upon termination of the lease that the aircraft be returned to Flightcraft, Inc., “in the same and as good a condition as when received by lessee, normal wear excepted.” Flightcraft, Inc., asserted no such cause of action in its complaint and offered no evidence as to the cost of “any repairs necessary to restore the plane” to “as good a condition as when received by lessee, normal wear excepted”, if the airplane when returned was in not such condition.

The judgment appealed from is reversed.