Opinion ID: 1386621
Heading Depth: 1
Heading Rank: 1

Heading: The claim of tortious interference.

Text: Although other jurisdictions have decided numerous claims of tortious interference with business relations, this court has had few occasions to consider the elements of this tort. See Wampler v. Palmerton, 250 Or. 65, 439 P.2d 601 (1968), and cases id. at 73 n. 8, 439 P.2d 601; American Sanitary Service, Inc. v. Walker, 276 Or. 389, 554 P.2d 1010 (1976); and Comini v. Union Oil Co., 277 Or. 753, 562 P.2d 175 (1977). We therefore begin with a brief description of the problem. Tort claims for wrongful interference with the economic relationships of another have an ancient lineage. Their history has been traced from interference with members of another's household in Roman law or with his tenants in English law, with his workmen after the 1349 Ordinance of Labourers, with prospective workmen or customers, with existing contracts for personal services, Lumley v. Gye, 118 Eng.Rep. 749 (QB 1853), and with contracts generally, Temperton v. Russell [1893] 1 QB 715 (CA), to contemporary forms not dependent on the existence of a contract. See Wampler v. Palmerton, supra , citing Sayre, Inducing Breach of Contract, 36 Harv.L.Rev. 663 (1923); Carpenter, Interference with Contract Relations, 41 Harv.L.Rev. 728 (1928) (also published in 7 Or.L.Rev. 181, 301 (1928)). Despite these antecedents, protection in tort against interference with business relations has been described as largely a twentieth-century development. Prosser, Handbook of the Law of Torts § 129, at 927 (4th ed. 1971). A recent study regards the generalized concept of tortious interference as [o]ne of the most fluid and rapidly growing tort theories, comparable to products liability, and promising to become the predominant remedy for a multitude of business wrongs. Estes, Expanding Horizons in the Law of Torts  Tortious Interference, 23 Drake L.Rev. 341, 341, 363 (1974). [2] Either the pursuit of an improper objective of harming plaintiff or the use of wrongful means that in fact cause injury to plaintiff's contractual or business relationships may give rise to a tort claim for those injuries. Prosser, Handbook of the Law of Torts § 130 at 952 (4th ed. 1971). However, efforts to consolidate both recognized and unsettled lines of development into a general theory of tortious interference have brought to the surface the difficulties of defining the elements of so general a tort without sweeping within its terms a wide variety of socially very different conduct. [3] These difficulties are shown by the changing treatment of the subject in the American Law Institute's Restatement of the Law of Torts. The main problem is what weight to give to the defendant's objective in interfering with plaintiff's contract or with plaintiff's prospective business relations. If the focus in defining the tort is on defendant's wrongful motive or use of wrongful means, this element will likely be a necessary part of plaintiff's case. If the tort is defined primarily as an invasion of plaintiff's protected interests, defendant's reasons are likely to be treated as questions of justification or privilege. [4] Section 766 of the first Restatement of Torts read: Except as stated in Section 698, one who, without a privilege to do so, induces or otherwise purposely causes a third person not to (a) perform a contract with another, or (b) enter into or continue a business relation with another is liable to the other for the harm caused thereby. [5] The term purposely meant that a defendant must not only have expected, or intended, his conduct to interfere with plaintiff's contract or business relationship but that this interference must have been at least one purpose of defendant's act. [6] Reasons that would excuse such an interference were then stated as privileges in sections 767-774. In preparing the Restatement (Second) of Torts in 1969, the then Reporter, Dean William Prosser, proposed to change purposely to intentionally with respect to any interference with an existing contract that was not justified by a privilege. He would have retained purposely with respect to interference with future contractual relations. [7] However, the change to liability based simply on unprivileged intent was not accepted even with respect to inducing or causing breaches of existing contracts. See American Law Institute, Proceedings of the 46th Annual Meeting 179-205 (1970). The result was a revision by the succeeding Reporter, Dean John W. Wade, of the Restatement chapter dealing with the tort of interference with existing or prospective contracts or, as the Reporter described it, interference with advantageous economic relations, which proposed significant changes in the analysis. See Restatement (Second) of Torts § 766 (Tent. Draft No. 23, 1977). As the Restatement now stands, such interference would give rise to liability if it is both intentional and affirmatively improper (replacing reliance on lack of privilege in the definition of the tort), and a purpose to harm the injured party would be one factor making the interference improper. Restatement (Second) of Torts §§ 766-767 (Tent. Draft No. 23, 1977). [8] The evolution of this restatement of the tort is significant here because it corresponds to a similar division in the recent decisions in this state. In Wampler v. Palmerton, supra , intentional interference with an existing contract was assumed to be prima facie tortious, unless it was justified or privileged as promoting some legitimate interest. In that case, corporate officers were held to have such a privilege in advising the corporation. 250 Or. at 73-78, 439 P.2d 601. [9] A similar approach was followed in North Pac. Lumber Co. v. Moore, 275 Or. 359, 551 P.2d 431 (1976), but the court held that it was plaintiff's burden to prove both that defendant intentionally interfered with plaintiff's prospective sales and that defendant had no privilege to do so. In that case, defendant was plaintiff's competitor, and the court assumed that its privilege as a competitor might be overcome by proof that it had made use of customer and market information obtained by hiring one of plaintiff's employees. The effect is that the propriety of defendant's objective or motive is really a part of plaintiff's case rather than an affirmative defense of privilege. However, even when defendant's objectives are not improper, for instance the pursuit of competition or other legitimate interests, defendant may still be liable for using improper means to achieve these objectives. Meanwhile, the decision in Nees v. Hocks, 272 Or. 210, 536 P.2d 512 (1975), rejected the concept that every intentional infliction of harm is prima facie a tort unless justified. Finding that this concept was no longer needed to escape the rigidity of the common-law forms of pleading, the court concluded that it created as many difficulties as it solved. [10] However, the court found that the plaintiff had effectively pleaded and proved that her discharge by defendant was tortious by reason of an improper motive. We conclude that the approach of Nees v. Hocks is equally appropriate to claims of tort liability for intentional interference with contractual or other economic relations. In summary, such a claim is made out when interference resulting in injury to another is wrongful by some measure beyond the fact of the interference itself. Defendant's liability may arise from improper motives or from the use of improper means. They may be wrongful by reason of a statute or other regulation, or a recognized rule of common law, [11] or perhaps an established standard of a trade or profession. No question of privilege arises unless the interference would be wrongful but for the privilege; it becomes an issue only if the acts charged would be tortious on the part of an unprivileged defendant. Even a recognized privilege may be overcome when the means used by defendant are not justified by the reason for recognizing the privilege. See Sloan v. Journal Publishing Co., 213 Or. 324, 358-359, 324 P.2d 449 (1958). To this extent we agree with the analysis of the second Restatement. [12] In the present case, Top Service pleaded both improper motives and improper means of interference. It alleged that Allstate sought to and did induce Top Service's patrons not to have Top Service repair their automobiles, making false statements about the quality of plaintiff's workmanship and threats about withdrawing insurance coverage or subjecting the settlement of claims to possible arbitration. It also alleged that this was done with the sole design of injuring Plaintiff and destroying his business, and in an endeavor to compel Plaintiff to abandon the same. If proved, along with damages and causation, these allegations satisfy the elements of the tort we have reviewed above. Defendant contended successfully in the trial court that the evidence, taken most favorably to plaintiff, was insufficient to support a verdict for plaintiff. Judge Warden's order recited two grounds for allowing the motion for judgment n.o.v. on the first cause of action. The first was that there was no evidence that defendant's conduct was the result of a specific intent directed at the plaintiff or that its purpose was to interfere with the plaintiff, as such. Any impact on plaintiff of defendant's dealings with its insurance claimants was described as incidental and collateral. The second ground was that defendant acted only within its legal privilege of dealing with its insurance claimants in pursuit of its own lawful business interests. As to the first issue, Top Service does not really argue that there was direct evidence to show that Allstate had acted with the destructive design quoted above. [13] It claims that even without direct evidence of a specific purpose of defendant to destroy Top Service's business, the jury could have inferred such a purpose from evidence of defendant's conduct in directing customers to other body repair shops. But the record will not support an inference that Allstate had any design or purpose to inflict injury on Top Service as such, even short of the sole design to put Top Service out of business that the complaint alleged. Taken most favorably to plaintiff, as is proper after a verdict for plaintiff, the evidence showed that Allstate has a practice of designating certain repair shops in the locality as competitive shops to which it prefers to send insurance claimants for whose repairs Allstate is obligated; that Top Service at one time was a drive-in shop for Allstate, where claimants would be directed for an estimate by an Allstate insurance adjuster; that after a dispute Top Service's owner decided that it would not continue as a drive-in shop for Allstate; and that thereafter Allstate adjusters would actively discourage claimants under its insurance policies from taking work to be paid for by Allstate to Top Service, sending them instead to other shops on its preferred list. As specific bases for an inference of destructive purpose, Top Service lists two occasions when Allstate adjusters disparaged the quality of Top Service's work (apart from its relative cost), although Allstate personnel had generally considered Top Service a high quality shop; Allstate's willingness to disappoint its own insured who preferred Top Service; one occasion when Allstate took its option to total a car, i.e. to pay off its value, when the insured wanted it repaired at Top Service; and finally Allstate's resort to improper and unlawful means to direct business away from Top Service to other shops. Without setting forth here the excerpts of the record cited by plaintiff, we agree with the trial court that these acts were wholly consistent with Allstate's pursuit of its own business purposes as it saw them and did not suffice to support an inference of the alleged improper purpose to injure Top Service. The court's ruling on this point was not error. Plaintiff argues, however, that evidence that would support such an inference was improperly excluded. Several witnesses were called to testify to occasions, after the complaint in this case was filed, when Allstate discouraged their taking repair jobs to Top Service. In its brief, plaintiff represents that this evidence would have shown continued interference and disparagement by Allstate after Allstate was on notice, by virtue of the complaint, that Top Service regarded its conduct as wrongful and damaging to Top Service. [14] Such evidence of acts by a defendant similar to those charged in the complaint is sometimes admissible. See Union Central Life Ins. Co. v. Kerron, 128 Or. 70, 79, 264 P. 453 (1928) (fraud), quoted with approval in Carpenter v. Kraninger, 225 Or. 594, 601-602, 358 P.2d 263 (1961) (fraud); Peck v. Coos Bay Times Pub. Co., 122 Or. 408, 422-423, 259 P. 307 (1927) (libel). However, the statements described in plaintiff's brief appear to be cumulative instances of the same kind of dealings with Allstate's insurance claimants that the trial court, and we, have found insufficient for an inference that Allstate's motive and purpose was to drive Top Service out of business, as the complaint alleged. More directly to this point, plaintiff offered the testimony of two witnesses to remarks made by William Erickson, a former claims adjuster for Allstate in Coos Bay who had become a claims supervisor for the company in Eugene. Donald Stover, claims manager for another insurance company, testified in an offer of proof to a conversation in November 1975 in which Erickson said that if Top Service continued with its lawsuit against Allstate, they would bring up matters documented in their files that would put Top Service out of business. Hugh Berger, son of Top Service's owner, similarly testified in an offer of proof that on a social visit to Erickson's home in December 1975 Erickson was bragging about how much power he had with Allstate; that Erickson was talking about how he could close my dad's doors and he said, `I'm going to get Donald Berger and I'm going to get him good.' The trial court ruled that Erickson was not speaking within the scope of his employment with Allstate so as to except these statements from the hearsay rule as admissions by an agent. In Timber Access Industries Co. v. U.S. Plywood-Champion Papers, Inc., 263 Or. 509, 503 P.2d 482 (1972), this court compared the rule for the admissibility of an agent's admissions against his employer stated in McCormick on Evidence and in the Model Code of Evidence, [15] which lets in the agent's statements concerning a matter within the scope of his employment even if the statement is made while acting outside that scope, with the older rule stated in Hansen v. Oregon-Wash. R. & N. Co., 97 Or. 190, 188 P. 963 (1920), that such statements are admissible only if the agent is authorized to make them for his employer or if he makes them while acting within the scope of his agency, and about the business of his principal, concerning such business. The court concluded in Timber Access that the agent, having been transferred, was not speaking within the scope of his agency, but that it was doubtful whether testimony to his statement would be admissible even under the broader modern rule. 263 Or. at 515-518, 503 P.2d 482. In the present case, Erickson's comments while visiting with Stover and later with Berger were not made within the course of conducting Allstate's business. Assuming that they are nevertheless admissible by the more modern test, the first comments ascribed to Erickson in November related only to what they, presumably meaning Allstate, might bring up if Top Service went forward with its lawsuit. Nothing in them related to Allstate's motives for directing claimants to body repair shops other than plaintiff's, which gave rise to the lawsuit in the first place. The remarks ascribed to Erickson by Hugh Berger were said to have been made a month after those to Stover, and they state future, not past, intentions on Erickson's part. Although the quoted words do not expressly mention Top Service's lawsuit against Allstate, we think that in the context of dates this offer of proof was too brief and incomplete to show that it related back to a hostile motive preceding the impending litigation to which Erickson had referred previously. While Hugh Berger's testimony might technically have been admissible, it would not sufficiently support a finding of an earlier purpose to destroy Top Service's business for its exclusion to require reversal of this judgment. Plaintiff contends that its case did not depend solely on proof of Allstate's wrongful motive. It argues that, contrary to the trial court's conclusion, Allstate would not be privileged to interfere with plaintiff's business relations by unlawful or otherwise improper means even in pursuit of its own business objectives. As unlawful or improper practices, plaintiff points to defendant's disparagement of its services, the price discriminations discussed in Part II, below, and violation of other statutory policies. [16] Plaintiff's contention may well be a correct view of the law, as we have reviewed it above, but it does not help plaintiff on this appeal. The difficulty is that the case was submitted to the jury solely on the theory of liability for purposely seeking to harm plaintiff's business. [17] Even if defendant might also have been liable on an alternative theory of tortious interference by improper means, we cannot reinstate the verdict on that theory, which was not presented to the jury. [18] Since the trial court did not err in its ruling under the theory on which the case was submitted, the judgment on the first cause of action must be affirmed.