Opinion ID: 1405799
Heading Depth: 2
Heading Rank: 1

Heading: Oregon cases before Hanset v. General Construction Company.

Text: The first reported case in Oregon that we can find on the measure of damages for the tortious injury to real property is Olds v. Von der Hellen, 127 Or. 276, 263 P. 907, 270 P. 497 (1928). The plaintiff was the owner of a building that had been constructed by Pacific and Eastern Railroad Company as a depot in Eagle Point in Jackson County. The defendant was storing gasoline in the old depot building, without permission, when it was destroyed by fire. An expert builder testified that it would cost $5,000 to replace the burned building with a new building of the same kind and class    and that in his estimation it had depreciated 20 or 25 per cent. The trial court assessed damages in the amount of $4,000. [2] On appeal, this court stated: We think that, in adopting this measure of damage, the court applied a wrong principle of law and failed to consider other factors which should have entered into the determination of its value. The building was a wooden structure ten years of age and had been built as a railroad depot and for railroad purposes only. The railroad was not in operation and had not been completely constructed and there was nothing to show that there was any likelihood that the building would ever be serviceable for railroad purposes. It was situate at a remote point from any operating railroad and near a very small village and there was nothing to show that the building had any rental value for any purpose. We think that these circumstances should have been considered in determining the question of value.    We think that under the evidence and the facts and circumstances surrounding the case that the value of the building at the time of the fire did not exceed the sum of $2,500. 127 Or. at 288, 263 P. 907, 270 P. 497. Huber v. Portland Gas and Coke Co., 128 Or. 363, 274 P. 509 (1929), was an action for damages for an alleged trespass by the defendant for maintaining a gas main across the plaintiffs' property. The case was decided by the trial court and affirmed by this court on the basis that the plaintiffs had not properly alleged facts constituting either a permanent or temporary injury. This court quoted Ruling Case Law for the general propositions that the proper measure of damages for permanent injury to real property is the diminution in the market value and that for temporary injury, in many jurisdictions, the proper measure is the reasonable cost of repair. 8 RCL Section 44, 45 Damages. In Hanns v. Friedly, 181 Or. 631, 184 P.2d 855 (1947), this court affirmed the trial court which enjoined the defendant from the further construction of a road across the plaintiff's property. The plaintiff was also awarded damages in the sum of $250. This court said: The measure of damages for permanent injury to real property is the difference between the market value of the property before and after the injury suffered or, in other words, the diminution in market value which the property has sustained by the injury. Huber v. Portland Gas & Coke Co., 128 Or 363, 367, 274 P. 509. 181 Or. at 642, 184 P.2d 855. Ore. Mutual Fire Ins. Co. v. Mathis, 215 Or. 218, 334 P.2d 186 (1959), was a subrogation action by the plaintiff to recover damages by fire to the Yamhill County Courthouse due to the alleged negligent use of overheated asphalt by the defendant in an attempt to repair the roof. This court stated: It appears that, since the allowance of damages is to award just compensation without enrichment, there is no universal test for determining the value of property injured or destroyed and that the mode and amount of proof must be adapted to the facts of each case. 4 Sutherland Damages (4th ed) 3748, § 1015. 215 Or. at 224, 334 P.2d 186. In reaching its decision, this court quoted from 25 C.J.S. 604, Damages, Section 84. Where the injury to real property is merely temporary, or where the property can be restored to its original condition, the measure of damages may be, or should include, the cost of restoration, as where the injury is susceptible of remedy at a moderate expense and the cost of restoration may be shown with reasonable certainty, or where the cost of restoration is less than the diminution in the value of the property. This is particularly true where the adoption of the difference in value as the measure of damages would be difficult and uncertain, or where the injury is not so much to the land itself as to the improvements thereon. The recovery is limited to the cost of restoring the premises to their original condition and not to that of placing them in better condition than they were in originally. The cost of restoration, however, cannot be adopted, where the cost of restoring the property would exceed the value thereof, or the actual damage sustained by plaintiff, or where restoration is impracticable. 215 Or. at 226, 334 P.2d 186. The court also quoted extensively from McCormick, Damages 482 (1935). See post at 849-850. This court concluded that because the cost of repair was far less than the reasonable value of the building, justice would be served by allowing the cost of repair. [3] In Lemon v. Madden, 216 Or. 539, 340 P.2d 977 (1959), the plaintiff brought an action in trespass against the defendant for destroying a line fence between the ranch properties of the parties in Gilliam County. This court affirmed a verdict for the plaintiff and as to the measure of damages said: This was not a permanent injury to the real property and the diminution in value to the property would have been unrealistic as well as not legally applicable. Huber v. Portland Gas & Coke Co., 128 Or 363, 274 P 509. In this instance we believe the court properly considered that the measure of damages should be the cost of restoration. McCormick on Damages 482, § 126. 216 Or. at 546, 340 P.2d 977. In Union Pacific Railroad Co. v. Vale, Oregon Irrigation Dist., 253 F. Supp. 251 (D. Or. 1966), the United States District Court for Oregon allowed the plaintiff the sum of $19,138 for damage to its railroad right-of-way and tracks resulting from water escaping from the defendants' irrigation canal. The court said: The reasonable cost of restoring the premises, rather than the diminution of its fair market value is the proper measure of damages. Norwood v. Eastern Oregon Land Co., 139 Or 25, 5 P2d 1057, 7 P2d 996 (1932) and Oregon Mutual Fire Ins. Co. v. Mathis, 215 Or 218, 334 P2d 186 (1959). [4] In Hudson v. Peavey Oil Company, 279 Or. 3, 566 P.2d 175 (1977), the plaintiffs brought an action in trespass against the defendant service station owner claiming damages to their adjoining property resulting from the seepage of gasoline from the defendants' underground storage tanks. The plaintiffs claimed that because of the condition they had been unable to find a tenant for a portion of their property and that the property might be uninsurable. The plaintiffs' expert testified that it was possible that the condition could last from five to ten years. After a jury verdict for the plaintiffs, the defendant appealed to this court contending there was no evidence that the damage was permanent. In regard to the measure of damages this court said: A permanent injury to land justifies an award of damages measured by the resulting diminution in the value of the property. Furrer v. Talent Irrigation District, supra [258 Or.] at 520 [466 P.2d 605]; Hanns v. Friedly, 181 Or 631, 642, 184 P2d 855 (1947); Huber et ux v. Portland Gas & Coke Co., 128 Or 363, 367, 274 P 509 (1929). Temporary injury, or injury which is reasonably susceptible of repair, justifies damages measured by the loss of use or rental value during the period of the injury, or the cost of restoration, or both, depending on the circumstances. Lemon v. Madden, 216 Or 539, 546, 340 P2d 977 (1959); Huber v. Portland Gas & Coke Co., supra [128 Or.] at 367-68 [274 P. 509]. See also Ore. Mutual Fire Ins. Co. v. Mathis, 215 Or 218, 226, 334 P2d 186 (1959).    [5] 279 Or. at 10, 566 P.2d 175. This court found that there was evidence from which the jury could have found that the injury was permanent. It explained permanent injury in this manner: Permanent injury, in this context, merely describes the kind of injury for which a particular measure of damages is appropriate.       Injury to real property need not be permanent in the sense that it will last forever in order to justify the use of the diminution of value measure of damages. It is enough that the injury be of a kind that makes it appropriate to consider the owner's loss in terms of the reduced value of the property rather than in terms of the cost of restoring it to its original condition.    Id. In Northwestern Mutual Ins. Co. v. Peterson, 280 Or. 773, 572 P.2d 1023 (1977), the plaintiff in a subrogation action sued the defendant for negligence in connection with building a church in Baker. The church was only partly completed when it collapsed during a windstorm. This court reversed the decision of the trial court and remanded to allow the jury to consider the defendant's Act of God defense. As to the measure of damages we said: The cost of repairs may, under certain circumstances, be the proper measure of diminution of value. 280 Or. at 782, 572 P.2d 1023. The foregoing summary includes all of the pre- Hanset cases in this court that we have been able to find on the measure of damages for tortious injury to buildings or fixtures on real property. It seems clear that before Hanset this court recognized that the prime goal for the allowance of damages to the owner of a building injured or destroyed by tort was just compensation without enrichment. Although there was no fixed or exclusive rule to determine the amount of damages, this court has generally held that when the injury to real property was permanent, the damages were measured by the difference in value immediately before and immediately after the injury or the diminution-in-value rule. On the other hand, when the injury was temporary the damages were measured by the cost of repairing or restoring the property to the condition that it was in immediately before the injury provided that the cost of repair or restoration did not exceed the pre-tort value of the property. The Barneses in their petition for review recognize that it is well established in Oregon that permanent injury and temporary injury to real property warrant different measures of damage. See ante at 841. Hanns v. Friedly, supra , and Hudson v. Peavey Oil Co., supra , are examples of where this court applied the permanent damage rule. Ore. Mutual Fire Ins. Co. v. Mathis, supra , and Lemon v. Madden, supra , are examples of the application of the temporary damage rule. There are times when the cost of repair and the diminution in value are the same. Northwest Mutual Ins. Co. v. Peterson, supra .