BEALL TRANSPORT EQUIP. CO. v. Southern Pacific
| Decision Date | 11 October 2000 |
| Citation | 170 Or. App. 336,13 P.3d 130 |
| 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, Respondents, v. Wayne C. Klepper, Third-Party Defendant, and Stuart Abrams, Appellant. |
| Court | Oregon Court of Appeals |
Thomas M. Christ, Portland, argued the cause for appellant Abrams, Inc., and Stuart Abrams. With him on the briefs was Michael H. Bloom.
Patrick L. Block, Portland, argued the cause for respondent Beall Transport Equipment Co. With him on the brief were Steven G. Marks and Buono Block PC.
Christopher T. Carson, Portland, argued the cause for respondents Southern Pacific Transportation Company and Union Pacific Railroad Company. On the brief were Gregory B. Snook, Jeffrey A. Kilmer, and Kilmer, Voorhies & Laurick, P.C.
Before De MUNIZ, Presiding Judge, and HASELTON and WOLLHEIM, Judges.
These consolidated civil cases arise from the theft of approximately 130 semi-trailers from the Southern Pacific Transportation Company's Brooklyn (eastside Portland) rail yard. Stuart Abrams and Abrams, Inc. (collectively, Abrams), who purchased the trailers from the thief, appeal from judgments (1) in favor of Southern Pacific on its conversion claim against Abrams, and (2) in favor of Beall Transport Equipment Co. (Beall), to whom Abrams sold many of the trailers, on its claim against Abrams for breach of contract. Abrams raises six assignments of error, contending, inter alia, that the trial court erred in striking Abrams's negligence defense to Southern Pacific's conversion claim and in refusing to give Abrams's requested jury instruction on conversion. We affirm.
The following facts are undisputed. 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 destinations. Use of such trailers for "intermodal" transport operations is common, and a trailer that is used by one railroad one day may be used by another the next day.
Trailers are generally not owned by the railroads that use them. Rather, they are owned by leasing companies that charge daily fees for use of their trailers. An elaborate interchange keeps track of which railroad has which trailers on which days, and each railroad is billed accordingly. Occasionally, a trailer is damaged during use. If the cost of repairing a trailer is greater than its depreciated value, the leasing companies often elect to sell the damaged trailer to a railroad for its depreciated value. The railroad is then free to sell the damaged trailer for scrap or other use, including use as a stationary storage container.
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.
Those circumstances led to the filing of the two consolidated cases now before us. First, in Multnomah County Case No. 9701-00347, Beall filed a complaint against, inter alia, Southern Pacific and Abrams,1 for conversion, breach of contract, breach of warranty, and fraud. Southern Pacific responded with a cross-claim against Abrams for conversion, and Abrams cross-claimed against Southern Pacific for conversion and indemnity. Second, in Multnomah County Case No. 9701-00757, Abrams initiated a separate action against Southern Pacific, alleging, among other things, breach of contract and conversion. Southern Pacific counter-claimed, again alleging conversion. In both cases, Abrams's theory of recovery was that Southern Pacific was required to indemnify him for whatever he might owe Beall, because Klepper had "apparent authority" to sell him the trailers. Because the two lawsuits presented overlapping claims, they were consolidated for discovery and trial.
Before trial, the court granted partial summary judgment against Abrams on Beall's breach of contract claim, reasoning that Abrams's failure to convey good title to the trailers was a breach as a matter of law. Thus, the only issues remaining on Beall's claims against Abrams were the damages portion of the breach of contract claim and the fraud claim. Thereafter, on the eve of trial, Beall and Southern Pacific entered into a settlement agreement to dismiss their claims against each another and to cooperate in prosecuting their remaining claims against Abrams. Under the agreement, Beall acknowledged that it owed $103,001.07 to Southern Pacific, but Southern Pacific agreed that it would seek to collect that amount only if Beall succeeded in recovering at least that much from Abrams. Thus, the only matters remaining for trial were (1) the amount of Beall's breach of contract damages, and Beall's fraud claim, against Abrams; and (2) Abrams's and Southern Pacific's claims against each other.
The jury returned two special verdicts, the first relating to Beall's claims against Abrams and the second relating to all claims between Southern Pacific and Abrams in both cases. In the first verdict, the jury found that Beall had suffered damages of $209,875.61 from Abrams's breach of contract but that Abrams did not commit fraud. In its second verdict, the jury found in favor of Southern Pacific, rendering a special interrogatory response that Klepper did not have "apparent authority to sell non-scrap trailers to Abrams, Inc." The jury further found that Southern Pacific was entitled to damages from both Abrams, Inc. and Stuart Abrams for conversion of the trailers. Thereafter, pursuant to a stipulation by the parties, the trial court conducted a bench trial and determined that Southern Pacific was entitled to recover damages of $211,334.55 from Abrams, Inc. and $314,316.25 from Stuart Abrams.2 The trial court then entered judgments in both cases in accordance with the jury's verdicts and its own determination of damages.
On appeal from those judgments, Abrams raises six assignments of error. For clarity, we address each in the order in which it arose at trial, beginning with Abrams's fourth assignment, which asserts that the trial court erred in striking Abrams's "negligence defense" to Southern Pacific's conversion claims before trial.
In Southern Pacific's third-party claim against Abrams in the Beall v. Southern Pacific case (No. 9701-00347), Southern Pacific sought damages from Abrams for conversion of the trailers that Abrams purchased from Klepper. Likewise, in Southern Pacific's counterclaim against Abrams for conversion in the Abrams v. Southern Pacific case (No. 9701-00757), Southern Pacific sought damages for Abrams's alleged conversion of the trailers. In both cases, Abrams's response to Southern Pacific's conversion claim was that Southern Pacific was "prevented from recovering" because it had been "negligent" in allowing Klepper to dispose of the trailers.3
Before trial, Southern Pacific moved to strike Abrams's negligence defense to Southern Pacific's conversion claim, arguing that, as a matter of law, negligence is not a defense to conversion. After "reviewing the authorities and hearing arguments," the trial court granted Southern Pacific's motion. We review the trial court's order striking Abrams's negligence defense for legal error.
On appeal, Abrams asserts, and Southern Pacific and Beall dispute, that negligence is a defense to conversion under Oregon law. We note, and emphasize, at the outset, that the parties did not argue to the trial court, or on appeal, that the availability of such a defense in these circumstances is to be determined by reference to the Uniform Commercial Code. The parties advance no arguments that UCC provisions have displaced any common-law defenses to conversion, and we specifically reserve that question. See ORS 71.1030 (). In particular, Abrams did not invoke the "merchant entrustment" principle of ORS 72.4030(3) by contending that Klepper was a "merchant" within the meaning of the provision.4Accord Thorn v. Adams, 125 Or.App. 257, 262 n. 3, 865 P.2d 417 (1993) (applying UCC entrustment provisions).5 Rather, the parties frame this dispute exclusively in terms of the Oregon common law of conversion. At the core of that dispute is Valley Motor Co. v. Ralls, 224 Or. 290, 355 P.2d 1100 (1960).
In Valley Motor, the plaintiff, a car dealership, gave its...
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