Opinion ID: 2615130
Heading Depth: 1
Heading Rank: 2

Heading: ADAMS v. CRATER WELL DRILLING

Text: This court has held that where a contractual relationship exists between persons which creates a duty, the violation of which constitutes a tort, a party may recover money wrongfully obtained or withheld either in a tort action or by suing in assumpsit. Snow v. Tompkins, supra, 205 Or. at 65-66, 286 P.2d 119, is illustrative. Not until Adams v. Crater Well Drilling, Inc., 276 Or. 789, 556 P.2d 679 (1976), however, did we consider a claim of punitive damages in an assumpsit case. In Adams, the plaintiff and the defendant had an agreement that the defendant would drill a well at a rate of $4 per foot for soft rock, and $8 per foot for hard rock. The well was drilled to a depth of 500 feet, and defendant's charge was based upon its claim that 437 of the 500 feet drilled was hard rock. Plaintiff disagreed, and paid only $2,000, the amount which would have been due for drilling 500 feet in soft materials at the contract rate of $4 per foot. The defendant insisted upon payment of the full amount billed. Plaintiff paid defendant the balance under protest in order to avoid litigation, 276 Or. at 789, 556 P.2d 679, and thereafter sued for general and punitive damages. The plaintiff's complaint alleged the foregoing facts and that the defendant falsely, knowingly and willfully misrepresented that drilling took place in hard rock. At the beginning of trial the defendant demurred to the plaintiff's complaint asserting (as had the defendants in Snow v. Tompkins, supra ) that no cause of action was stated. The trial court agreed that no claim for fraud was alleged because the plaintiff had not paid the money in reliance upon the defendant's misrepresentations, but nonetheless overruled the demurrer, opining that the allegations stated a claim in assumpsit for money had and received. The jury returned a verdict in the amount of the overcharge and for punitive damages. The defendant appealed, claiming (1) that the complaint failed to state a cause of action, and (2) that the award of punitive damages was improper because punitive damages are not allowed in a contract action. We affirmed. On the first question we stated: The complaint apparently was framed on the theory of an action for fraud. Assuming that the allegation of `payment' is sufficient to constitute an allegation of reliance, the complaint would withstand a demurrer. However, the facts show that payment was not made in reliance upon defendant's misrepresentation but, according to plaintiff's own testimony, to avoid the trauma his wife would feel if an action were brought. Therefore, plaintiff cannot recover on the theory of fraud and deceit.   . Taking into account these procedural moves and rulings, we regard the case as presenting on appeal the sole issue of whether there was evidence to sustain an action for money had and received. There was sufficient evidence to establish that at the time defendant threatened to bring action against plaintiff, defendant, through its agent, knew that the amount claimed exceeded the amount plaintiff owed for the work done. The evidence clearly establishes that plaintiff paid the amount demanded. The only remaining question is whether plaintiff's payment was made under circumstances which would entitle him to restitution. As a general rule money which is voluntarily paid with full knowledge of facts which would excuse payment cannot be recovered. Recovery of money paid is allowed, however, where payment is made as a result of fraud, mistake, duress or coercion. The threat of a civil suit alone does not constitute duress or coercion sufficient to permit recovery of money paid to avoid the litigation. However, if payment is made in response to a threat of civil proceedings and the threat is made `without probable cause with no belief in the existence of the cause of action,' recovery in an action for money had and received is permitted. 276 Or. at 792-94, 556 P.2d 679. (Footnotes omitted.) On the second question  whether punitive damages are recoverable in a contract action  we held: Defendant finally contends that because punitive damages are not allowed in a contract action, they are improper in a money had and received action which arises out of a contractual transaction between the parties. However, this contention does not take account of the fact that defendant, in threatening to sue knowing that he had no rightful claim, is a wrongdoer in a tortious sense. That being the case, the same reasons for allowing punitive damages in actions brought to recover damages for tortious conduct should apply when the action is to recover payment made as a result of essentially tortious conduct.   . (Emphasis added.) 276 Or. at 794, 556 P.2d 679. Adams did not involve a punitive damage pleading question. The defendant did not claim that the punitive damage allegations were legally insufficient. The defendant's objection to punitive damages was that punitive damages are not allowed in a contract action. [6] We held, in essence, that the plaintiff had pleaded and proved tortious conduct which allowed recovery of punitive damages.