Title: Schmidt v. Pine Tree Land Development Co.
Citation: 291 Or. 462, 631 P.2d 1373
Docket Number: N/A
State: Oregon
Issuer: Oregon Supreme Court
Date: August 4, 1981

631 P.2d 1373 (1981)
291 Or. 462
Harold M. SCHMIDT and Jenell T. Schmidt, Husband and Wife, Petitioners,
v.
PINE TREE LAND DEVELOPMENT CO., an Oregon Corporation; and Tree Lake Development Co., an Oregon Corporation, Respondents.
No. TC 77-189 L; CA 15704; SC 27505.

Supreme Court of Oregon, In Banc.
Argued and Submitted April 6, 1981.
Decided August 4, 1981.
Mike Ratliff, of Parks &amp; Ratliff, Klamath Falls, argued the cause and filed a brief for petitioners.
Rex E.H. Armstrong, of Lindsay, Hart, Neil &amp; Weigler, Portland, argued the cause and filed briefs for respondents.
LINDE, Justice.
The narrow issue in this case is whether the Court of Appeals erred in setting aside an award of punitive damages in an action for reckless misrepresentation in the sale of real property, when defendant had moved to have the issue of punitive damages taken from the jury's consideration but failed to move for a directed verdict on the underlying tort. The Court of Appeals permitted defendants to pursue their assignment of error as to the motion they did make, and it concluded that the evidence, viewed most favorably for plaintiff, "shows no more than negligent business practices and was not sufficient" to support punitive damages. 49 Or. App. 323, 619 P.2d 673 (1980). We allowed review to examine whether defendants' challenge to the evidentiary basis of the award of punitive damages was precluded because a corresponding challenge to the judgment as a whole was precluded by defendants' failure to move for a directed verdict. We affirm the decision of the Court of Appeals.
*1374 Plaintiffs pleaded and tried a cause of action for deceit, predicated on allegations that defendants sold them a plot of land and represented that upon payment of the purchase price defendants could convey clear title, but that "defendants' representations were false and made ... with reckless disregard for their truth or falsity," in that defendants had previously sold the same land to someone else. Defendants claimed that the double sale resulted from a clerical error after the original buyer first defaulted but later was permitted to reinstate his contract. They moved to withdraw plaintiffs' claim for punitive damages from the jury but did not move to direct a verdict against plaintiffs' claim for general damages. The trial court submitted both claims to the jury, which returned a verdict for $25,000 in general damages and $250,000 in punitive damages.
A long line of decisions dating from 1895 holds that a party which has not moved for a directed verdict cannot assert on appeal that the evidence does not support a jury verdict. See R.J. Frank Realty, Inc. v. Heuvel, 284 Or. 301, 311, 586 P.2d 1123 (1978); Shmit v. Day, 27 Or. 110, 116-17, 39 P. 870 (1895). The rule is addressed to the logic of appellate practice, not to the merits of the appellant's assertion. A litigant who has not asked the trial court to rule that there is insufficient evidence to place an issue before the jury cannot show that the court committed error. Since reversal in an action at law must be based on an error, ORS 19.125(2),[1] failure to present the issue to the trial court can prevent a reversal, as defendants recognize in briefing this appeal.
It does not necessarily follow, however, that the decision so placed beyond appeal was correct on the merits and is beyond examination in the context of other issues that were properly preserved for appeal. In another procedural sequence, this effect can follow from the doctrines of res judicata or the law of the case. Here the motion to withdraw the question of punitive damages was made before the case was submitted to the jury, so that the trial court's responsibility to allow or deny that motion was not foreclosed by the jury's subsequent verdict. We conclude that the Court of Appeals did not err in examining defendants' first assignment of error.
We also affirm the court's conclusion in making that examination. As stated above, plaintiff's theory of fraud was that defendants were "reckless" in disregarding the possibility that their salesmen might sell a lot already sold, not that defendants deliberately tried to profit by selling the same lot to two buyers. The function of punitive damages to penalize harmful acts done with a bad motive may ordinarily justify liability for such damages in cases of intentional fraud, see Green v. Uncle Don's Mobile City, 279 Or. 425, 432, 568 P.2d 1375 (1977), Lewis v. Worldwide Imports, Inc., 238 Or. 580, 582, 395 P.2d 922 (1964), but this court has not held that punitive damages may always be recovered for recklessly false representations. See Chamberlain v. Jim Fisher Motors, Inc., 282 Or. 229, 238, 578 P.2d 1225 (1978).
In the wide range of situations said to justify punitive damages, the present case is not one of giving vent to personal and societal outrage at aggressive or malicious wrongdoing, see, e.g., Roshak v. Leathers, 277 Or. 207, 560 P.2d 275 (1977) (assault and battery), Linkhart v. Savely, 190 Or. 484, 227 P.2d 187 (1951) (same), Gumm v. Heider, 220 Or. 5, 34, 348 P.2d 455 (1963) (malicious prosecution). The large scale of these corporate defendants' land development and marketing project places the case rather with those in which punitive damages serve the function to deter enterprises from accepting the risks of harming other private or public interests by recklessly substandard *1375 methods of operation at the cost of paying economic compensation to those who come forward to claim it. See, e.g., McElwain v. Georgia-Pacific Corp., 245 Or. 247, 421 P.2d 957 (1966) (air pollution); cf. Reynolds Metals Co. v. Lampert, 316 F.2d 272 reh. 324 F.2d 465 (9th Cir.1963), 372 F.2d 245 (9th Cir.1967) (same). Such operations may well be wholly impersonal with respect to any victim, indeed conducted with the hope that no harm will occur, and they may not involve a culpable attitude on the part of any one person responsible for the management of the enterprise; yet this court has held that such lack of managerial culpability alone does not foreclose punitive damages. See Stroud v. Denny's Restaurant, Inc., 271 Or. 430, 532 P.2d 790 (1975), contrary to dicta in Sullivan v. Oregon Ry. &amp; Nav. Co., 12 Or. 392, 7 P. 508 (1885). Still, to justify punitive damages the conduct must go beyond mere carelessness to a willful or reckless disregard of risk of harm to others of a magnitude evincing a high degree of social irresponsibility. In such a setting the plaintiff whose economic loss may be insignificant to the enterprise and perhaps too small to justify the expenses of pressing a claim represents social interests larger than his own. See generally Mallor and Roberts, Punitive Damages: Toward a Principled Approach, 31 Hast.L.J. 639, 649, 652 (1980).
Therefore we pass by defendants' suggestion that punitive damages for misrepresentation should be limited to intentional fraud and turn to the factual merits of the present case. On that issue, we approve and adopt the decision of the Court of Appeals. For convenience, we set out relevant parts of the court's opinion here:
49 Or. App. 325-327, 619 P.2d 673. After a review of precedents, the opinion continued:
49 Or. App. 329-330, 619 P.2d 673.
The court's conclusion made it unnecessary for it, or for this court, to reach defendants' second assignment of error.
Affirmed.
[1]  ORS 19.125(2):

"(2) No judgment shall be reversed or modified except for error substantially affecting the rights of a party."
This court, by contrast, has set aside an award of punitive damages in equity despite the appellant's failure to object in the trial court. Hay v. Stevens, 271 Or. 16, 22, 530 P.2d 37 (1975).
[2]  The opinion then stated that evidence of attempts to conceal the improper double sales from purchasers did not show that these double sales themselves had resulted from a wanton or willful attitude, citing Noe v. Kaiser Foundation Hosp., 248 Or. 420, 426-427, 435 P.2d 306 (1967) and O'Harra v. Pundt, 210 Or. 533, 310 P.2d 1110 (1957).