Case Title: Perry v. THOMAS

Citation: 197 Or. 374, 253 P.2d 299

Docket Number: 

State: oregon

Court: Oregon Supreme Court

Date: 1953-02-11T00:00:00Z

Document:
Affirmed as modified February 11, 1953.
*375 John H. Carson, of Salem, argued the cause for appellants. With him on the brief was Gordon A. Ramstead, of Eugene.
John D. Galey and Earl McFarlan argued the cause *376 for respondent. On the brief were Galey & Galey, and Earl McFarlan, of Sweet Home.
Before WARNER, Acting Chief Justice, and ROSSMAN, BRAND, TOOZE and PERRY, Justices.
AFFIRMED AS MODIFIED.
TOOZE, J.
This is an action for the conversion of a logging motor truck and trailer, brought by F.L. Perry, as plaintiff, against Walter Thomas, Charles Thomas, and Albert Yankus, copartners, dba Thomas Brothers Logging Co., as defendants. The case was tried to a jury, and a verdict was returned in favor of plaintiff for $8,500 compensatory damages and $5,000 punitive damages. Judgment was entered accordingly, and defendants appeal.
Prior to and at the time of trial, plaintiff was engaged in the log hauling business, using motor trucks and trailers for the purpose. He operated several such trucks and trailers, some of which he owned, and others of which he rented.
Defendants are engaged in the logging business. They use their own equipment to haul a part of their logs, but most of them are hauled by others under contract. From September 1, 1949, to January 1, 1950, plaintiff hauled logs for defendants under a written contract for such hauling, furnishing his own logging trucks and trailers, with drivers.
On and prior to August 31, 1949, defendants were the owners of two 1947 model Autocar log trucks, one 1947 model Walker log trailer, and one 1948 model Fruehauf log trailer. These trucks and trailers had been mortgaged by defendants to The First National *377 Bank of Portland. On August 31, 1949, there was a balance of $16,000 due on said mortgage indebtedness.
On August 31, 1949, by and with the consent and approval of the bank and of Oregon Truck Sales, Inc. (which had an interest in the transaction as a guarantor of the payment of the mortgage indebtedness to the bank), defendants sold and transferred to plaintiff all their right, title, and interest in and to said trucks and trailers, for the consideration of $16,000. The sale and transfer by defendants were evidenced by a written "Transfer of Equity", the important portions of which read as follows:
Contemporaneous with the execution of the foregoing transfer of equity and as a part of the same transaction, plaintiff paid the sum of $3,000 cash to the bank and executed and delivered to Oregon Truck Sales, Inc., his certain promissory note in the principal sum of $14,053.14, representing the balance due upon the original indebtedness, which sum, with interest, was to be paid in monthly installments of $780.73 each. At the same time, to secure the payment of said promissory note, plaintiff executed and delivered to Oregon Truck Sales, Inc., his certain chattel mortgage covering the two logging trucks and trailers in question. On the same day, Oregon Truck Sales, Inc., assigned said note and mortgage to the bank by written assignment.
Plaintiff took immediate possession of the two trucks and trailers and used them, along with other trucks and trailers, in fulfilling his contract with defendants to haul logs for them. After three or four days of hauling during the forepart of September, 1949, the motor truck to which was attached the Fruehauf trailer broke down, and it was taken to Aberdeen, Washington, for repairs. It is this equipment which is involved in the instant litigation. The repairs were completed, and the truck and trailer were put back in operation during the latter part of September. Plaintiff continued to haul logs for defendants until logging operations were compelled to close about December 31, 1949, because of snow.
*379 Payments to plaintiff by defendants for the log hauling done were somewhat delayed, and because of this, and for other reasons which it is unnecessary to mention, plaintiff refused to renew his work for defendants in the spring of 1950, when logging operations were resumed. On or about the 1st of May, 1950, plaintiff commenced hauling logs for Firchau Brothers. On May 15, 1950, a log fell on the Fruehauf trailer, crushing it, and the truck and trailer were taken to the garage of Emert Brothers in Sweet Home, Linn county, Oregon, for repairs.
Resulting from the cessation of logging operations and from other causes, plaintiff was unable to make his monthly payments upon his indebtedness to the bank, and he became delinquent in the payment of several installments. In fact, up to June, 1950, his payments to the bank aggregated only $1,100.
Although representatives of the bank and Oregon Truck Sales, Inc., frequently talked with plaintiff about the delinquent payments and requested that something be done about them, nevertheless, neither the bank nor the Oregon Truck Sales, Inc., ever made a firm demand upon plaintiff to bring the payments up to date, nor did either threaten to repossess the property because of the delinquency. According to Walter A. Thomas, one of the defendants, he also discussed the delinquent payments with plaintiff and upon one or two occasions requested plaintiff to park the equipment at defendant's place of business until the payments were made. Thomas testified that plaintiff refused to accede to that request, stating that he was dealing with the bank and would do nothing except upon the bank's demand. These conversations, according to Thomas, occurred in April or May, 1950.
*380 In the meantime and about May 1, 1950, plaintiff, with the cooperation of representatives of the bank and Oregon Truck Sales, Inc., arranged to sell the 1947 model truck and trailer to one Emerick of Aberdeen, Washington, for a net return of $7,077.54. This sale was completed on or about June 14, 1950, and the amount received by plaintiff out of the sale was paid to the bank to apply on the mortgage indebtedness, leaving then a balance due the bank of approximately $6,300. Defendants knew of the negotiations being carried on for this sale. The amount received by the bank upon this sale to Emerick more than paid the delinquent installments upon plaintiff's note.
As a witness for defendants, Walter A. Thomas admitted that neither the bank nor Oregon Truck Sales, Inc., had ever demanded that defendants pay the delinquent installments, nor did defendants pay the same, or any part thereof.
About June 1, 1950, plaintiff received an accidental injury and was taken to the hospital. He remained there for approximately eight days, but he was not able to return to work until about August 1, 1950. While he was in the hospital, the truck and trailer involved in this litigation was being operated for plaintiff by his employe, one Earl Oakley.
Relating to the circumstances surrounding the alleged wrongful taking of the truck and trailer by defendants, we quote from the direct testimony of defendant Walter A. Thomas as follows:
Upon cross-examination, Thomas testified as follows to a conversation he had with Perry about the middle of May, 1950:
*383 Although defendants visited plaintiff while he was in the hospital, they did not inform him of the instructions they had given McClintock; neither did they make any demand upon plaintiff to deliver the truck and trailer to them. Walter A. Thomas testified:
On June 8, 1950, McClintock met Oakley and told him that Thomas wanted the truck and trailer driven to and left at defendants' logging camp. Oakley complied with those directions.
Plaintiff did not discover that the truck and trailer had been taken until after he left the hospital. What *384 occurred then is best illustrated by plaintiff's testimony on direct examination:
On June 12, 1950, a communication was addressed to defendants by plaintiff's attorney as follows:
Under date of June 18, 1950, defendant Walter A. Thomas replied to this communication as follows:
Plaintiff commenced this action on June 20, 1950. After alleging his ownership and possession of the truck and trailer on June 8, 1950, plaintiff alleged in his complaint as follows:
Defendants answered, denying the material allegations of the complaint and affirmatively pleading two separate defenses. As their first affirmative defense, defendants pleaded the provision of the transfer of equity document by which their liability upon the original indebtedness to the bank continued, and alleged in substance that plaintiff had failed to make the payments in accordance with his agreement, as a result of which defendants held the truck pending the time plaintiff would make the payments on the equipment. As their second affirmative defense, defendants alleged in effect that acting upon the information they had and as the agent of the mortgagee, they directed that the equipment be left at defendants' camp until such time as payments could be paid up on the notes of plaintiff. Defendants further alleged that the truck and trailer were "left with the defendants with the consent and knowledge of the plaintiff herein who knew he was in default on the said payments on the note and mortgage, and that he intended to abandon the said equipment. That by the terms of said mortgage, defendant as agent for the mortgagee was entitled to the possession of said truck and trailer."
By his reply, plaintiff denied all the new matter contained in the answer inconsistent with or contradictory to the allegations of his complaint.
Defendants first assign as error the denial of their motion for an involuntary nonsuit. Defendants' theory upon this assignment of error may best be stated by quoting from their brief as follows:
Basically, the first contention of defendants is founded upon the proposition that the delivery to them of the truck and trailer by the employe of plaintiff, upon their demand, rendered their taking a lawful one.
1. Oakley was an employe of plaintiff, engaged in the driving of the logging truck and trailer upon the business of plaintiff. He was the agent of plaintiff in the operation of this equipment. Any act performed by him within the real or apparent scope of his authority as such agent would, of course, be binding upon plaintiff as to third parties, but it is axiomatic that plaintiff could not be deemed bound by any act of his agent performed wholly beyond the real or apparent scope of his authority, in the absence of ratification or estoppel. 3 CJS, Agency, 138, § 231.
In 3 CJS, Agency, 140, § 231, the following rule is stated:
2. It is manifest that in employing Oakley as a truck driver, plaintiff did not place him in such position that persons of ordinary prudence and reasonably conversant with business usages and customs could assume that he had actual or apparent authority to dispose of plaintiff's property. Engaged as they were in the logging business and employing drivers to operate their own logging trucks, defendants were obviously conversant with the duties and authority of a logging truck driver. Oakley had no real or apparent authority to deliver the truck and trailer to defendants upon their demand, and his act in so doing had no effect whatever upon plaintiff's rights. The taking of the property under the circumstances, knowing it to be owned by plaintiff, constituted a wrongful taking thereof by defendants, even though Oakley consented thereto.
3. Defendants' second contention is based upon the construction which they place upon paragraph numbered 3 of the transfer of equity agreement, supra. They contend that that provision of the agreement made them joint mortgagors with plaintiff. They then state:
It will first be observed that in paragraph 1 of the agreement defendants make an absolute sale to plaintiff of all their interest in the property, free and clear of all encumbrances except the prior chattel mortgage executed by them. That provision of the contract is wholly inconsistent with a claim that defendants retained any right of ownership in the equipment. By paragraph 2 and as a part of the consideration to be paid by him for the trucks and trailers, plaintiff assumed and agreed to pay the balance of the indebtedness secured by that mortgage.
Paragraph 3 was written into the agreement for the benefit of the bank. Apparently the bank was unwilling to approve a complete novation by accepting a new debtor in place of defendants and consented to the sale only upon the condition that defendants would continue liable until the debt was paid. As a result of these transactions between the parties, the primary responsibility for the payment of the indebtedness to the bank, as between plaintiff and defendants, became plaintiff's.
Defendants were neither joint mortgagors nor joint owners with plaintiff of this property. The sole ownership thereof, with exclusive right to possession, was in plaintiff, subject only to the provisions of the chattel *390 mortgage. For nonpayment of the installments due upon the note executed by plaintiff, or for other breach of the conditions of the chattel mortgage, the bank, or its assignees, only, could lawfully repossess the equipment and foreclose the mortgage. Defendants enjoyed no such rights.
4. This is not a case where the guarantor or surety has been compelled to pay the debt and is subrogated to the rights of the original creditor. The evidence is conclusive that defendants never paid anything on the mortgage indebtedness after the sale of the property to plaintiff and prior to their repossession of the equipment. The record also establishes the undisputed facts that neither the bank nor Oregon Truck Sales, Inc., ever made a firm demand upon defendants for the payment of the delinquent installments, or any part thereof, nor did they, or either of them, directly or indirectly, authorize defendants on their behalf, or on behalf of either of them, to take possession of the truck and trailer. After taking possession of this equipment, defendants made use thereof in connection with their own business. Under the facts and circumstances of this case, the taking and detention of this property by defendants, depriving plaintiff of the possession and use thereof, constituted an unlawful taking and conversion.
In the light of the facts of this case, viewed from the standpoint most favorable to defendants, the trial court properly withdrew from the jury's consideration the two separate defenses of defendants, and it also correctly instructed the jury to return a verdict in favor of plaintiff. There was no issue of fact for determination by the jury other than the question of *391 damages. Plaintiff was entitled to a verdict upon defendants' own testimony.
5, 6. Upon the question of damages, there is substantial evidence in the record to support the jury's finding of $8,500 as compensatory damages. This being true, we are bound by the verdict of the jury in that respect.
Upon the conclusion of the trial, defendants moved the court for an order taking from the consideration of the jury the matter of punitive damages. In effect, the court denied the motion and in its instructions to the jury submitted the question of punitive damages. Defendants assign that as error.
7. Punitive damages are not recoverable merely because a conversion took place. The plaintiff must prove not only that a conversion occurred, but also that defendants' wrongful conduct was attended with aggravating circumstances.
In 25 CJS, Damages, 715, § 119, the following rules are stated:
*392 In Davis v. Aetna Acceptance Co., 293 US 328, 55 S Ct 151, 79 L ed 393, 396, Mr. Justice CARDOZO, speaking for the court, said:
In a number of decisions by this court, awards of punitive damages have been upheld, but in those cases the evidence disclosed the existence of aggravating circumstances. Our latest decision in which an award of punitive damages was upheld is Denton v. Arnstein, 197 Or 28, 250 P2d 407. In that case the evidence disclosed that defendant had wilfully and deliberately run his automobile into the rear end of the car being driven by plaintiff, causing plaintiff to suffer personal *393 injuries. Immediately following the collision, defendant was arrogant and belligerent.
In McCarthy v. General Electric Co., 151 Or 519, 49 P2d 993, 100 ALR 1370, we upheld an award of $1,500 punitive damages. We said: "If the evidence offered on behalf of the plaintiff is to be given full faith and credit, it seems clear that there was a wilful and wanton disregard of the property rights of the plaintiff." (Italics added.)
In Pelton v. General Motors Acceptance Corporation, 139 Or 198, 7 P2d 263, 9 P2d 128, the record showed that repossession of the automobile was accomplished in the middle of the night, several hours after plaintiff had placed his contract in good standing. There were a number of most aggravating circumstances in the case that fully justified the award of punitive damages.
In Kingsley v. United Rys. Co., 66 Or 50, 57, 133 P 785, this court said:
In Martin v. Cambas, 134 Or 257, 261, 293 P 601, we denied an award of punitive damages in a case involving false imprisonment. The court said:
Also see Gill v. Selling, 125 Or 587, 267 P 812, 126 Or 584, 270 P 411, 58 ALR 1556.
8. We are of the opinion that the evidence in this case is insufficient to justify an award of punitive damages against defendants. Defendants were rightfully concerned with plaintiff's failure to keep up his payments on the indebtedness. Plaintiff's default was serious. Commencing October 15, 1949, plaintiff was required to pay $780.73 per month. To May, 1950, his total payments aggregated $1,100 only. Defendants frequently discussed the matter with plaintiff. Quite understandably, they were worried because of their own continuing liability to the bank. They mistakenly thought that they had a right to possession of the truck and trailer for their own protection, and that plaintiff should not make use thereof until he had brought his payments up to date. With that end in view, they had requested plaintiff to park the equipment at their logging camp site. They did not forcibly repossess the property. After discovering the fact that his employe had left the equipment with defendants at their request, plaintiff made no real attempt to secure its return. The letter written by his attorney on June 12, 1950 constituted a threat of criminal prosecution rather than a demand for the return of the property. The record supports the conclusion that plaintiff did not really want the equipment returned. Had he wanted the equipment rather than the money, he would have proceeded in replevin. Taking the evidence as a whole, it is clear that defendants' acts were prompted by a misunderstanding by them of their legal rights. The record will not support a *395 conclusion that they were in any manner actuated by a spirit of malice, nor that they were guilty of any fraud. Their actions, though perhaps negligent, did not constitute gross negligence nor wilful and wanton conduct within the meaning of the law.
The judgment of the circuit court will be corrected by eliminating therefrom all that part relating to punitive damages. The judgment in favor of plaintiff for the sum of $8,500 as compensatory damages will be affirmed.