Opinion ID: 1191597
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Heading: the levels of proof in oregon

Text: Since the time of the first Deady Code, Oregon statutes have set forth the level of proof required in civil and criminal actions. See General Laws of Oregon, ch. 9, § 835, pp. 355-56 (Deady 1845-1864). Those standards are now codified at ORS 10.095(5) and (6), as follows: The jury, subject to the control of the court, in the cases specified by statute, are the judges of the effect or value of evidence addressed to them, except when it is thereby declared to be conclusive. They are, however, to be instructed by the court on all proper occasions:    (5) That in civil cases the affirmative of the issue shall be proved, and when the evidence is contradictory, the finding shall be according to the preponderance of evidence; (6) That in criminal cases a person is innocent of a crime or wrong until the prosecution proves otherwise, and guilt shall be established beyond reasonable doubt;  (Emphasis added.) Plaintiff contends that, under ORS 10.095(5), in a civil action, a plaintiff's burden can never be more than a preponderance of the evidence. We disagree. In Cook v. Michael, 214 Or. 513, 526-27, 330 P.2d 1026 (1958), this court stated that there are three standards of proof: a preponderance, clear and convincing and beyond a reasonable doubt. Proof by a preponderance of the evidence means that the jury must believe that the the facts asserted are more probably true than false. To be clear and convincing, evidence must establish that the truth of the facts asserted is highly probable. Beyond a reasonable doubt means that the facts asserted are almost certainly true. This part of the Cook opinion has been endorsed repeatedly by this court. See, e.g., Mutual of Enumclaw Ins. v. McBride, 295 Or. 398, 405-06, 667 P.2d 494 (1983); State ex rel. Redden v. Discount Fabrics, 289 Or. 375, 383, 615 P.2d 1034 (1980); Barkins v. Stuyvesant Ins. Co., 255 Or. 222, 224, 465 P.2d 696 (1970); Bausch v. Myers, 273 Or. 376, 379, 541 P.2d 817 (1975); Sheets v. B & B Personnel Systems, 257 Or. 135, 145, 475 P.2d 968, 476 P.2d 920 (1970). In Mutual of Enumclaw Ins. v. McBride, supra , this court signaled that [t]he time may come when it is proper to address the question of the requirement of a higher level of proof in actions for common law fraud; but we decline to do so here because we disagree that the statutory provisions of fraud and false swearing are sufficiently similar to common law fraud as urged by defendants, nor do we think that to be the proper basis on which to decide this case. 295 Or. at 403, 667 P.2d 494. Acknowledging that skepticism [is] often voiced regarding the practical importance of an intermediate measure of proof, [7] this court nonetheless stated that ORS 10.095 requires the court `on all proper occasions' to instruct the jury `[t]hat in civil cases    the finding shall be according to the preponderance of evidence' while `in criminal cases guilt shall be established beyond reasonable doubt.' ORS 10.095(5), (6). The `proper occasion' for interpolating an intermediate measure of proof is in cases that are between `civil' and `criminal' and where what is to be established is akin to `guilt.' Id. at 405, 667 P.2d 494. One reason for imposing the higher clear and convincing standard in a claim based on deceit is that the defendant is branded with something akin to guilt. In Mutual of Enumclaw, after conceding that setting the clear and convincing standard for fraud was dictum in Cook v. Michael , an assault case, this court said: So well established is this rule that the commentary to OEC 305 states, `[i]n actions that allege fraud or gift, for example, the trier of fact must be persuaded by clear and convincing evidence, which means that the truth of the facts asserted must be highly probable,' citing Cook v. Michael, supra . This is repeated in L. Kirkpatrick, Oregon Evidence 51 (1982). The dictum of Cook v. Michael has become the accepted practice in Oregon. Thus, while the preponderance standard is the rule in most civil cases, an exception to the standard is applied in civil cases of common law fraud. Mutual of Enumclaw, 295 Or. at 403, 667 P.2d 494. Prior to this court's decision in Cook v. Michael , the formulation of the clear and convincing language in this state ranged from the statement in Elfelt v. Hinch, 5 Or. 255, 259 (1874), that fraud cannot be presumed and may only be deduced from circumstances affording a strong presumption, through many reformulations of similar adjectives, such as satisfactory evidence, a clear preponderance, clear and distinct proof, clear and conclusive proof, a preponderance of clear and satisfactory proof, clear and explicit proof, clear, satisfactory and convincing proof, definite proof, clear and satisfactory proof, proof that indicated nothing short of cogency, clear and convincing proof, and a clear and satisfactory preponderance. [8] Out of this mishmash of legal standards, the trial court in this case latched onto wording from the 1935 case of Metropolitan Cas. Ins. Co. v. Lesher, 152 Or. 161, 52 P.2d 1133 (1935). In that case, the court held that where fraud was relied on as a defense to an action it was not error to instruct the jury that it was necessary to establish the fraud by clear and convincing evidence even though preponderance of the evidence remained the standard in civil cases. Justice Lusk subsequently wrote about that case in Wilkerson Estate Hill v. U.S. Nat. Bank, 187 Or. 635, 213 P.2d 209 (1949), reflecting that [a] careful study of the [ Lesher ] opinion by Mr. Justice Rand, and of the numerous authorities from which he quoted, shows that the court in so deciding did not abandon the principle that a preponderance of the evidence is the ultimate requirement for the finding of a fact in a civil action. Both Justice Rand and Justice Lusk quoted with approval from Note, Degrees of Proof, 69 U.S.L.Rev. 169, 178 (1935), as follows: `   the courts are repeatedly confusing two distinct things  the weight, on the one hand, to be attached to evidence because of its nature or because of the nature of the fact sought to be established, and, on the other hand, the matter of the degree of proof. `    ' Lesher, 152 Or. at 164-65, 52 P.2d 1133; Wilkerson, 187 Or. at 638, 213 P.2d 209. Both justices concluded that while proof of fraud must be clear and convincing, issues of fact in civil cases are nevertheless determined by a preponderance of the evidence. Those most learned and highly respected justices may have been enamored with this distinction, but we doubt that any jury then or now could follow an instruction that encompasses such legal double talk. Cook v. Michael partially overruled Lesher insofar as the applicability to civil cases of ORS 41.110 (defining satisfactory evidence) is concerned. Cook, 214 Or. at 524, 330 P.2d 1026. We now overrule the balance of the statements in Lesher and Wilkerson which imply that a clear and convincing proof standard can co-exist with a preponderance standard on the issue of burden of persuasion. The Oregon cases cited in this section of this opinion intertwine the terms fraud, deceit and misrepresentation or refer to fraud without specific definition. As cogently described by Prosser & Keeton, Torts 727, § 105 (5th ed 1984), [t]he law of misrepresentation is    considerably broader than the action for deceit, and the confusion over terms is compounded by the use of the word fraud, a term so vague that it requires definition in nearly every case. These noted authors state: Liability in damages for misrepresentation, in one form or another, falls into the three familiar divisions     it may be based upon intent to deceive, upon negligence, or upon a policy which requires the defendant to be strictly responsible for his statement without either. For the most part, the courts have limited deceit to those cases where there is an intent to mislead, and have left negligence and strict liability to be dealt with in some other type of action. There has been a good deal of overlapping of theories, and no little confusion, which has been increased by the indiscriminate use of the word `fraud,'   . Id. (footnotes omitted). Prosser & Keeton list the elements of the tort action in deceit as follows: 1. A false representation made by the defendant. In the ordinary case, this representation must be one of fact. 2. Knowledge or belief on the part of the defendant that the representation is false  or, what is regarded as equivalent, that he has not a sufficient basis of information to make it. This element often is given the technical name of `scienter.' 3. An intention to induce the plaintiff to act or to refrain from action in reliance upon the misrepresentation. 4. Justifiable reliance upon the representation on the part of the plaintiff, in taking action or refraining from it. 5. Damage to the plaintiff, resulting from such reliance. Id. at 728 (footnotes omitted). Plaintiff in this case alleged each of these elements, and the trial court instructed the jury that plaintiff must prove each of these elements as it pertained to the facts alleged in the complaint. This court recognized that deceit is a distinct tort in U.S. National Bank v. Fought, 291 Or. 201, 221, 630 P.2d 337 (1981), and essentially adopted the listed elements, noting that the right to rely or justifiable reliance upon the representation by the plaintiff is a conclusion of law that need not be pleaded as ultimate fact. The unique element in the tort of deceit is the intent to deceive. Prosser & Keeton, supra at 741, § 107. As demonstrated by Prosser & Keeton, the presence of the intent to deceive makes deceit a much more serious offense than many other torts: The intent which underlies an intentional misrepresentation is a more complex matter than the relatively simple intention in the case of assault and battery. It involves the intent that a representation shall be made, that it shall be directed to a particular person or class of persons, that it shall convey a certain meaning, that it shall be believed, and that it shall be acted upon in a certain way.       The intent which becomes important is the intent to deceive, to mislead, to convey a false impression. Obviously this intent, which has been given the name of `scienter' by the courts, must be a matter of belief, or of absence of belief, that the representation is true   . The state of the speaker's mind, notwithstanding its elusiveness as a matter of psychology and its difficulty of proof, must be looked to in determining whether the action of deceit can be maintained. Id. at 741 (footnotes omitted). In this case, plaintiff alleged that the representations were made intentionally or were made recklessly. Of course, there is no difficulty in finding an intent to deceive in a case where it is apparent that the speaker believes his statement to be false, but what if the representation is made recklessly? We agree with Prosser & Keeton that the tort of deceit may still be proven if the representation is made without any belief as to its truth, or with reckless disregard whether it be true or false, and in cases where representations are made by one who is conscious that he has no sufficient basis of information to justify them. Id. at 741-42; see Dizick v. Umpqua Comm. College, 287 Or. 303, 306, 599 P.2d 444 (1979); Elizaga v. Kaiser Found. Hospitals, 259 Or. 542, 546-47, 487 P.2d 870 (1971). A party who is found guilty of deceit is not found merely negligent in deceiving the victim. That party must have intended to deceive the victim or acted in reckless disregard for the truth. The type of interest protected by the law of deceit is the interest in formulating business judgments without being misled by others  in short, in not being cheated. See U.S. National Bank v. Fought, supra, 291 Or. at 220, 630 P.2d 337. A person who has been found guilty of deceiving or cheating someone certainly has been found guilty of conduct which carries the same stigma of guilt whether the conduct is a criminal or civil act of deceit. As mentioned in Mutual of Enumclaw v. McBride, supra, ORS 10.095 is not cast in absolute terms. It requires the jury be instructed to apply the preponderance standard on all proper occasions, thus leaving some discretion for this court to decide which cases are proper for such an instruction and which are not. We conclude that the standard of proof in a civil action for common law deceit must be clear and convincing. As our discussion above of the origins of the words points out, the evidence must be free from confusion, fully intelligible, distinct and establish to the jury that the defendant intended to deceive the plaintiff or did so with a reckless disregard for the truth. To be both clear and convincing, the truth of the facts asserted must be highly probable. Cook v. Michael, supra, 214 Or. at 527, 330 P.2d 1096. A trial judge should not tell a jury in a deceit case that it must be convinced by clear and convincing evidence. This misuse of parallel words would thrust us back to the dark ages. As Justice O'Connell cautioned in Cook v. Michael , 214 Or. at 528, 330 P.2d 1096. when the proposition to be proved must be established by clear and convincing evidence, we regard it as improper for the trial court to use the word `preponderance' in any of the instructions relating to that proposition.    However, as this court held in Dizick v. Umpqua Comm. College, supra, 287 Or. at 311, 599 P.2d 444, even though fraud must be proved by clear and convincing evidence, the extent of damages need only be proved by a preponderance of the evidence. See also Byers v. Santiam Ford, Inc., supra, 218 Or. at 418, 574 P.2d 1122 (Lent, J., specially concurring). In sum, in a common law deceit action the trial judge, when referring to the basic elements of the claim, should tell the jury that proof by clear and convincing evidence is required, which means that the truth of the facts is highly probable. However, when considering the issue of damages, be they general or punitive, the judge should instruct the jury that the proponent need only prove those damages by a preponderance, or greater weight of the evidence. [9] We agree with the Court of Appeals' disposition as to defendant's assignment of error in the submission of the jury verdict form, which inferred that punitive damages could be allowed for simple negligence. Other assignments of error raised by defendant are not meritorious. The Court of Appeals is affirmed, and the case is remanded to the trial court for a new trial only on the deceit claim and punitive damages issues; the trial court is otherwise affirmed. [10]