BEALL TRANSPORT EQUIP. CO. v. SO. PACIFIC

• Decision Date: 13 March 2003
• Citation: 186 Or. App. 696,64 P.3d 1193
• Parties: BEALL TRANSPORT EQUIPMENT CO., an Oregon Corporation, Respondent, v. SOUTHERN PACIFIC TRANSPORTATION, a Delaware Corporation; Union Pacific Railroad Company, a Utah corporation; City of Portland; State of Oregon, acting by and through the Department of Motor Vehicles; John Hren; John R. Greisen; Thomas Morrison; W. Raymond Horn; Stuart Abrams; Wayne C. Klepper, and Stuart Abrams, dba Abrams Metals, Inc., Defendants, and Abrams, Inc., dba Abrams Scrap Metals, Inc., Appellant. Southern Pacific Transportation Company, a Delaware Corporation, and Union Pacific Railroad Company, a Utah Corporation, Third-Party Respondents, v. Wayne C. Klepper, Third-Party Defendant, and Stuart Abrams, Third-Party Appellant. Abrams, Inc., Appellant, v. Southern Pacific Transportation Company, a Delaware Corporation, and Union Pacific Railroad Company, a Utah Corporation, Respondents.
• Court: Oregon Court of Appeals

64 P.3d 1193

186 Or. App. 696

BEALL TRANSPORT EQUIPMENT CO., an Oregon Corporation, Respondent, v. SOUTHERN PACIFIC TRANSPORTATION, a Delaware Corporation; Union Pacific Railroad Company, a Utah corporation; City of Portland; State of Oregon, acting by and through the Department of Motor Vehicles; John Hren; John R. Greisen; Thomas Morrison; W. Raymond Horn; Stuart Abrams; Wayne C. Klepper, and Stuart Abrams, dba Abrams Metals, Inc., Defendants, and Abrams, Inc., dba Abrams Scrap Metals, Inc., Appellant.

Southern Pacific Transportation Company, a Delaware Corporation, and Union Pacific Railroad Company, a Utah Corporation, Third-Party Respondents, v. Wayne C. Klepper, Third-Party Defendant, and Stuart Abrams, Third-Party Appellant.

Abrams, Inc., Appellant, v. Southern Pacific Transportation Company, a Delaware Corporation, and Union Pacific Railroad Company, a Utah Corporation, Respondents.

9701-00347, 9701-00757; A102619.

Court of Appeals of Oregon.

Submitted on Remand January 28, 2003.

Decided March 13, 2003.

Thomas M. Christ and Michael H. Bloom, Portland, for appellant Abrams, Inc., and third-party appellant Stuart Abrams.

Patrick L. Block, Portland, Steven G. Marks, and Buono Block PC, Portland, for respondent Beall Transport Equipment Co.

Christopher T. Carson, Gregory B. Snook, Jeffrey A. Kilmer, and Kilmer, Voorhees & Laurick, P.C., Portland, for third-party respondents Southern Pacific Transportation Company and Union Pacific Railroad Company.

Before HASELTON, Presiding Judge, and LINDER and WOLLHEIM, Judges.

HASELTON, P.J.

This case is before us following remand from the Oregon Supreme Court. Beall Transport Equipment Co. v. Southern Pacific, 335 Or. 130, 60 P.3d 530 (2002). The only remaining issue for our determination is whether the trial court erred in refusing to give an instruction, requested by appellants Stuart Abrams and Abrams, Inc. (collectively "Abrams"),¹ describing factors pertaining to the jury's determination of liability for conversion. In our initial opinion, we concluded that Abrams had not preserved that assignment of error. Beall Transport Equipment Co. v. Southern Pacific, 170 Or.App. 336, 13 P.3d 130 (2000). On review, the Supreme Court rejected our nonpreservation analysis and directed us to address the merits of that assignment. Beall Transport Equipment Co., 335 Or. at 141, 60 P.3d 530. We now conclude that the trial court erred in failing to give Abrams's requested instruction and that, in the totality of the circumstances, that error was not harmless. Accordingly, we reverse the trial court's judgment in Southern Pacific's favor against Abrams and remand for a new trial.

To place the remaining assignment of error in context, we briefly recapitulate the dispute:

"Wayne Klepper was the manager of Southern Pacific's Brooklyn Yard in southeast Portland. On any given day, the yard was filled with several hundred semi-trailers, which Southern Pacific used to transport goods by both highway and rail. The trailers were hauled to the Brooklyn Yard by trucks, stacked on flatbed or specially designed rail cars and transported to other rail yards, where they were again attached to trucks and hauled to their final destination. * * *

"* * * * *

"In May 1995, Klepper, falsely purporting to act on behalf of Southern Pacific as the Brooklyn Yard manager, sold several trailers to Abrams, a Portland scrap metal dealer. Klepper told Abrams that the trailers were excess trailers owned by Southern Pacific but, in fact, they were only leased by Southern Pacific. By the end of 1996, Klepper had sold Abrams about 130 such trailers from the Brooklyn Yard. Abrams, in turn, sold at least 79 of the stolen trailers to Beall, a used trailer dealer, who then resold 55 of the trailers to third parties. Klepper kept all of the proceeds from each sale for himself. He later pleaded guilty to criminal charges arising from these transactions.

"When Southern Pacific finally learned that the trailers were missing, it immediately reported them stolen. With the aid of the police, Southern Pacific was able to recover many of the trailers from both Abrams and Beall."

Beall Transport Equipment Co., 170 Or.App. at 339-40, 13 P.3d 130 (emphasis in original).

Thereafter, Beall brought an action asserting various claims against Southern Pacific and Abrams. Southern Pacific, in turn, cross-claimed against Abrams for conversion, and Abrams cross-claimed against Southern Pacific for conversion and indemnity. Abrams later instituted a separate action against Southern Pacific alleging, inter alia, breach of contract and conversion, and Southern Pacific counterclaimed, again alleging conversion. Both actions were consolidated for trial. Id. at 340, 13 P.3d 130.

The trial court's disposition of Beall's claims against Abrams and Southern Pacific is described in our initial opinion. Id. at 340-41, 13 P.3d 130. Although Abrams raised several assignments of error that pertain both to the trial court's judgment for Beall and to the judgment for Southern Pacific, we rejected those assignments. Id. at 342-49, 357, 13 P.3d 130. The only remaining assignment of error following the Supreme Court's remand relates solely to Abrams's and Southern Pacific's claims between themselves. Consequently, the balance of our discussion concerns only those parties and that assignment of error.²

At trial, Abrams submitted the following requested instruction, which was derived virtually verbatim from section 222A of the Restatement (Second) of Torts (1965):

"Conversion is an intentional exercise of dominion or control over personal property which so seriously interferes with the right of another to control it that the actor may be justly required to pay the full value of the personal property.

"In determining the seriousness of the interference and the justice of requiring the actor to pay the full value, the following factors are important:

"(a) The extent and duration of the actor's exercise of dominion or control;

"(b) The actor's intent to assert a right in fact inconsistent with the other's right of control;

"(c) The actor's good faith;

"(d) The extent and duration of the resulting interference with the other's right of control;

"(e) The harm done to the chattel;

"(f) The inconvenience and expense caused to the other."

Conversely, Southern Pacific submitted an instruction limited to only the first paragraph of Restatement section 222A. Counsel for Southern Pacific objected to the second paragraph of Abrams's requested instruction, arguing that its identification of "the actor's intent to assert a right in fact inconsistent with the other's right of control" and "the actor's good faith" as pertinent factors in determining whether defendant was liable for conversion constituted misstatements of law:

"An intent that is necessary for conversion has nothing to do with wrongful intent. All it means is that the exercise of control is intended. * * * [A]nd the law is absolutely clear that good faith of the convertor is not a defense to conversion."

Counsel for Southern Pacific made no other recorded exception to Abrams's requested instruction.

Ultimately, the trial court gave Southern Pacific's requested instruction on conversion, which was based on only the first paragraph of Restatement section 222A. The court, without any recorded explanation, failed to give Abrams's requested instruction, including the "factors" paragraph. On appeal, Abrams argues that it was entitled to the requested instruction in that it was legally correct, supported by evidence, and consonant with Abrams's theory of the case. Abrams emphasizes that, in Mustola v. Toddy, 253 Or. 658, 663-64, 456 P.2d 1004 (1969), the court endorsed Restatement section 222A in its entirety, including the reference to the "good faith" factor in the second paragraph, and that both the Supreme Court and this court have subsequently, consistently reiterated and applied that formulation. Abrams contends that no instruction that was given conveyed the substance of the second paragraph of its requested instruction and that, in the totality of the circumstances, the failure to give that instruction may well have affected the jury's determination of conversion.

Southern Pacific counters that the court's failure to give the requested instruction was not erroneous or, at least, was not reversible error, for any of three reasons: (1) The second paragraph of the instruction—and, particularly the reference to "the actor's good faith"—is incorrect as a matter of law. (2) Several of the other factors listed in the instruction's second paragraph were potentially misleading or confusing because some of the factors were inapposite to the circumstances of this case and the evidence as to others overwhelmingly favored Southern Pacific. (3) In all events, any error in failing to give the instruction was harmless when evaluated in context against the totality of the evidence, including evidence showing Abrams's lack of good faith, and the instructions on conversion that the jury did receive.

"A litigant is entitled to instructions on his theory of the case, if the instructions correctly state the law and are based on the pleadings and proof." Kilgore v. People's Savings & Loan Ass'n., 107 Or.App. 743, 750, 814 P.2d 163 (1991), rev. dismissed, 313 Or. 300, 832 P.2d 456 (1992) (citing Denton v. Arnstein, 197 Or. 28, 46, 250 P.2d 407 (1952)). Error in failing to give a requested instruction "requires reversal only if the jury instructions given by the trial court, considered as a whole, cause prejudice to the party requesting the instruction." Hernandez v. Barbo Machinery Co., 327 Or. 99, 106, 957 P.2d 147 (1998). The failure to give an instruction is prejudicial "if the trial court's failure to give the requested instruction probably created an erroneous impression of the law in the minds of the members of the jury and if that erroneous impression may have affected the outcome of the case." Id....