Opinion ID: 1123714
Heading Depth: 1
Heading Rank: 2

Heading: Evidence of Representations to Other Persons May Be Admissible To Show A Larger or Continuing Plan or Design.

Text: Defendants acknowledge that evidence of other acts or representations may be admissible to show a continuing plan or scheme, as an exception to the general rule excluding such evidence. Defendants contend, however, that this exception is applicable only to cases of fraud in which the pleadings allege a plan or scheme to defraud, citing Union Central Life Insurance Co. v. Kerron, 128 Or. 70, 79-80, 264 P. 453, 457 (1928), and McCormick on Evidence § 164(2). Defendant also contends that, in any event, this exception does not permit the introduction of evidence of similar representations for the purpose of showing that other representations were in fact made, but only to show intent, motive or knowledge, which was not in issue in this case, citing May v. Roberts, 126 Wash. 645, 219 P. 55, 57-58 (1923). It is true that Union Central Life Insurance Co. v. Kerron, supra , while not an action for fraud, was a foreclosure suit in which defendant pleaded fraud as a defense. That decision, however, did not limit evidence of other fraudulent acts in fraud cases to the issue of motive, intent or knowledge, as distinguished from evidence offered to establish the performance of the fraudulent act in issue, as in this case. Also, that decision did not limit such evidence to cases in which a plan or design to defraud had been pleaded, as in a conspiracy case. On the contrary, no such design or plan was pleaded in that case and this court, after recognizing that such evidence may be admissible to show motive or intent, went on to state, 128 Or. at pp. 79-80, 264 P. at pp. 456-457: In treating of the subject of relevant evidence to establish a fraudulent act by another similar act, 6 Ency. of Ev., page 35, says that evidence of such other similar fraudulent acts has often been held competent to prove a system of fraud. (Emphasis added) According to McCormick on Evidence § 164, also cited by defendant, the exception relating to evidence of other representations to show knowledge or intent is treated as one which is separate and distinct from the offer of such testimony as probative evidence that the representations in issue were in fact made. Thus, it is stated by McCormick, at p. 346: If the actual making of the misrepresentations charged in the suit is at issue, then to show the party's conduct in making the representations or committing the other acts of fraud as alleged, it is competent to prove other representations closely similar in purport or other fraudulent acts, when they may be found to be parts of a larger or continuing plan or design, of which the acts or misrepresentations in suit may also be found to be an intended part or object. (Emphasis added) After citing cases in support of this statement McCormick then adds, also at p. 346, note 4: Courts often seem to overlook the availability of this theory of admissibility   . The rationale for such a rule is stated as follows in 2 Wigmore on Evidence 202, § 304: When the very doing of the act charged is still to be proved, one of the evidential facts receivable is the person's Design or Plan to do it   . This in turn may be evidenced by conduct of sundry sorts    as well as by direct assertions of the design    But where the conduct offered consists merely in the doing of other similar acts, it is obvious that something more is required than that (of) mere similarity   . The added element, then, must be, not merely a similarity in the results, but such a concurrence of common features that the various acts are naturally to be explained as caused by a general plan of which they are the individual manifestations. Substantially the same rule is recognized in criminal cases as one of the exceptions to the general rule that evidence of other crimes is inadmissible. See 1 Underhill's Criminal Evidence (5th ed) 502, § 212. Despite some confusion and conflict in the cases on this question, the courts have applied such a rule in numerous cases, including the following: Albrecht v. Rathai, 150 Minn. 256, 185 N.W. 259, 261 (1921), an action on promissory note, with defense that note procured by fraudulent representations  evidence of other similar fraudulent acts held admissible, not only to show intent, but as substantiative proof of fraud by showing a scheme to defraud; Mudsill Min. Co. v. Watrous, 61 F. 163, 171-184 (6th Cir.1894), a suit to rescind sale of mine for salting ore samples  evidence of previous salting incidents admitted; Altman v. Ozdoba, 237 N.Y. 218, 142 N.E. 591, 592-593 (1923), an action on promissory note with defense that note was forgery  evidence of other forgeries admitted; Shingleton Bros. v. Lasure, 122 W. Va. 1, 6 S.E.2d 252 (1939), an action to collect account based on credit secured by false representations  evidence of other misrepresentations admitted. None of these cases required that such a scheme or plan must be pleaded, as in a conspiracy case. [3] Although this court has never ruled directly upon this question, the adoption of such a rule is not only supported by our previous decision in Union Central Life Insurance Co. v. Kerron, supra , as quoted above, but is also consistent with our decision in other cases. Thus, in State v. Kristich, 226 Or. 240, 246, 359 P.2d 1106 (1961), evidence of other acts was held admissible to prove the existence of a larger continuing plan [or] scheme, quoting from McCormick, supra, although that case involved a charge of rape and was thus subject to a separate exception sometimes recognized in such cases. Also, in State v. Long, 195 Or. 81, 114, 244 P.2d 1033 (1952), involving a charge of murder, Underhill's Criminal Evidence, supra, was quoted to the same effect. And in Boord v. Kaylor, 100 Or. 366, 197 P. 296 (1921), it was held (at p. 376, 197 P. 296) that testimony to show other fraudulent acts of the same nature was admissible, although collateral and only remotely relevant. Similarly, while not directly in point, it was held in Kelty v. Fisher, 101 Or. 110, 118-119, 199 P. 188 (1921), a malpractice case, that evidence of another almost identical act by defendant on another patient with the same illness and in the same hospital room was relevant and admissible for the reason that such evidence had probative value on the question whether the act of malpractice involving plaintiff's decedent was done, as alleged. [4] Defendants' final contention in this case is that: Since this was not a fraud case in which there was an issue concerning respondents' scienter or conduct, it was prejudicial error to permit the introduction of testimony concerning similar statements allegedly made by respondent Kelley to other persons at other times. Such a contention involves two basic misconceptions. First, while an action by the purchaser of stock under ORS 59.115 is not a common law action for fraud, the primary basis for such an action is fraud. Ouachita Industries, Inc. v. B.F. Willingham et al., 179 F. Supp. 493, 505 (W.D.Ark. 1959), and 3 Loss, Securities Regulations (2d ed) 1704. Also, this court has expressly held that the Oregon Blue Sky Law is to be construed to afford the greatest possible protection to the public. Spears v. Lawrence Securities, Inc., 239 Or. 583, 587, 399 P.2d 348, 350 (1965). Furthermore, as held by the foregoing authorities, even in cases in which there is no issue of scienter, but in which the issue is one of conduct, as in this case, evidence of other similar conduct may be admissible on that issue if there is such a concurrence of common features that the various acts are naturally explained as caused by a general plan of which they are the individual manifestations (2 Wigmore, supra, 202). Thus, it remains to consider whether the evidence of other representations, as offered in this case, satisfies this test. In this case, aside from the testimony of representations that the prospectus was out of date and to be disregarded, plaintiff testified that defendant Kelley represented to him that the direct sale of the stock was definitely being closed; that there was only a limited amount of the stock still available and that plaintiff would be fortunate to be able to get some of it. He testified that these representations were made to him on June 1, 1968, and June 6, 1968. The representations by Kelley to the two witnesses offered by plaintiff, as testified by them, were strikingly similar. Thus, they both testified that at about the same time in June of 1968 Kelley also represented to them that the issues were almost sold out and he had a few left; that if we wanted some we should talk to him that night; that if there was a possibility that it wasn't sold out at that time that we could get in on it, and that we were pretty lucky in getting in on it. In our judgment, such representations, as made to these two witnesses, according to their testimony, when compared with those testified to by plaintiff, also on two separate occasions, demonstrates such a concurrence of common features so as to lead to the conclusion that the various acts are naturally explained as caused by a general plan of which they are the individual manifestations, within the meaning of the test as stated in 2 Wigmore, supra, at 202. [5] It follows that the testimony of such representations by these two witnesses was admissible on the issue whether defendant Kelley made the representations testified to by plaintiff and denied by Kelley. Defendants' primary contention, that the admission of such evidence was prejudicial to them for the reason that it was not admissible to prove he has made similar representations to plaintiff, thus has no merit under the facts and circumstances of this case. It also follows that defendants were not prejudiced by the admission of that evidence under limiting instructions which were more favorable to defendants than they were entitled to request. [6] For all of these reasons we hold that the jury verdict in favor of plaintiff, which resolved this issue of fact, was a proper verdict and should be reinstated. Reversed and remanded.