Chaney v. Fields Chevrolet Co.

• Decision Date: 12 May 1971
• Citation: 484 P.2d 824,258 Or. 606
• Parties: Robert E. CHANEY, Appellant, v. FIELDS CHEVROLET CO., an Oregon corporation, Respondent.
• Court: Oregon Supreme Court

Page 824

484 P.2d 824

258 Or. 606

Robert E. CHANEY, Appellant, v. FIELDS CHEVROLET CO., an Oregon corporation, Respondent.

Supreme Court of Oregon.

Argued and Submitted June 3, 1970.

Reargued Jan. 5, 1971.

Decided May 12, 1971.

John J. Haugh, Portland, argued the cause and Garry Kahn, Portland, reargued the cause for appellant. With them on the briefs were Pozzi, Wilson & Atchison, Portland.

R. Alan Wight, Portland, argued and reargued the cause for respondent. With him on the brief were King, Miller, Anderson, Nash & Yerke, and Norman J. Wiener, Portland.

Before O'CONNELL, C.J., and McALLISTER, DENECKE, HOLMAN, TONGUE and HOWELL, JJ.

HOWELL, Justice.

This is an action for damages as the result of an alleged scheme to 'cheat swindle and defraud' plaintiff out of money due him upon the repossession and resale of a truck previously purchased by plaintiff from defendant. The plaintiff appeals from a judgment for defendant entered on a directed verdict.

Plaintiff filed an original and three amended complaints. In granting the defendant's motion for a directed verdict, the trial court held (1) that the plaintiff's original complaint was founded on breach of contract; (2) that the amended complaints changed plaintiff's theory to a tort action for fraud and deceit which was barred by the statute of limitations; and (3) that in any event plaintiff's proof failed to establish a cause of action for fraud and deceit.

It is not necessary for us to decide whether plaintiff changed his theory from breach of contract in the original complaint to a tort action for fraud and deceit, and whether the latter is barred by the statute of limitations. Assuming that the original complaint and the subsequent complaints sounded in tort, we conclude that plaintiff failed to prove a cause of action for fraud and deceit sufficient to go to the jury.

The facts involved in the controversy are important.

On December 6, 1963, plaintiff purchased from defendant a used truck, with a van body, for a total price of $6,458.12, under a retail installment contract. During the next few months he suffered business reverses, making it impossible for him to continue these payments. It was then agreed that the truck would be returned by plaintiff and resold by defendant in accordance with the terms of the purchase contract. That contract was in the terms of a chattel mortgage and named defendant as the mortgagee. It also provided that:

'In the event of repossession of said property, mortgagee may either Sell same at public sale (at which mortgagee may bid) or dispose of same, By private sale or otherwise, in such manner and upon such terms as shall be commercially reasonable, without demand for performance, with or without notice to mortgagor (if given, notice by mail to address hereon being sufficient), with or without having said property at place of sale or other disposition thereof. From proceeds of any such sale or disposition of said property, mortgagee shall deduct all expenses for retaking, storing, repairing and selling or otherwise disposing of said property, including a reasonable attorney's fee. The balance thereof shall be applied to the amount due hereunder; Any surplus shall be paid over to mortgagor; in case of deficiency, mortgagor shall pay the same with interest.' (Emphasis added.)

The truck was then delivered by plaintiff to defendant for resale. At that time the balance due was $3,911.54. On July 21, 1964, the truck, without the van body, was resold for $4,000. A 'Repossession Report' was then prepared by defendant's finance manager showing charges for repairs of $400 and for sales commission of $220 which (when added to the balance due of $3,911.54) resulted in a total cost of $4,531.54, or a 'deficiency' of $531.54, after deducting the resale price of $4,000. In fact, however, no such repairs had been made, and the item of $400 was the inventory value placed upon the van body, which had been removed and was sold two weeks later for $865, resulting in a surplus payable to plaintiff.

Defendant's finance manager testified that in preparing the 'Repossession Report' he mistakenly assumed that the item of $400 on the stock card was for repairs, instead of recognizing it to be a credit which should have been allowed to plaintiff for the inventory value of the van body, and that he did not discover that mistake until later.

Notwithstanding the fact that, as a result of the resale of the truck and the van body, defendant had collected money, part of which it had a duty to pay to plaintiff after deducting all proper charges, defendant nevertheless turned over the alleged deficit of $531.54 to a collection agency, which sent a form letter dated September 2, 1964, to plaintiff demanding payment of a balance due to defendant in that amount. Plaintiff then contacted the collection agency for information to 'substantiate the billing and it referred him to defendant.' He then called defendant, but 'received no satisfaction on this matter. Nobody seemed to be able to tell me what it was for.'

Plaintiff heard nothing further for over a year, and then received another form letter from the collection agency, dated September 21, 1965, stating that 'our previous notices have been ignored,' and threatening legal action unless the alleged balance of $531.54 was paid immediately. Upon receiving this second letter, plaintiff consulted an attorney, who then undertook to investigate the matter.

By letter dated September 29, 1965, plaintiff's attorney wrote to the collection agency, asking information how it arrived at the 'deficiency' of $531 and was told that this was the balance remaining after addition of charges for repairs of $400 and a sales commission of $220. He then asked for copies of the repair documents and other documents involved, but received no answer. About a month later, in response to a letter to the repurchaser of the truck, he learned that the truck had been resold 'less the van body.'

For the next several months plaintiff's attorney wrote a series of letters to the collection agency, and then to defendant, asking for copies of documents supporting the repairs and commission, and also asking what credit was given for the van body. During that period the only response was a letter from defendant's finance manager stating that 'due to microfilm process I have been unable to find repair documents' and offering to accept payment of a 'deficiency' of $131.54.

On February 10, 1967, plaintiff's attorney wrote a final letter stating that he was aware of the fact that the van body had been sold separately and demanding payment of $750 as its value, 'less what you are claiming as deficiency.' Again, he received no response. The original complaint in this case was then filed on May 8, 1967.

On June 6, 1967, one month after the original complaint was filed, the attorney who then represented defendant, based upon his understanding of information supplied to him by defendant, wrote to plaintiff's attorney stating that the truck had been resold for $4,000 without the 'box' (van body), less reconditioning costs of $400 and a sales commission of $220; that the 'box' subsequently was resold for $400, resulting in 'net proceeds of $3,780,' and that since defendant paid GMAC $3,911.54, there was still a 'deficiency,' but offering to pay $250 to plaintiff to settle the case. In fact, however, as previously noted, there had been no such 'reconditioning costs', and the van body had been resold for $865, but defendant's attorney was apparently not aware of such facts. By further letter dated June 15, 1967, defendant's attorney wrote to plaintiff's attorney that the $400 charges were not for 'reconditioning' the truck, but for 'selling and overhead expenses, exclusive of commissions.'

In October, 1967, plaintiff's attorney learned, for the first time, that the actual resale price of the van body was the sum of $865. On November 28, 1967, after the substitution of plaintiff's present attorneys for his original attorney, an amended complaint was filed. Subsequently, two further amended complaints were filed.

The elements involved in a common law action of fraud and deceit were set forth in Musgrave et ux. v. Lucas et ux., 193 Or. 401, 410, 238 P.2d 780 (1951):

'Comprehensively stated, the elements of actionable fraud consist of: (1) a representation; (2) its falsity; (3) its materiality; (4) the speaker's knowledge of its falsity or ignorance of its truth; (5) his intent that it should be acted on by the person and in the manner reasonably contemplated; (6) the hearer's ignorance of its falsity; (7) his reliance on its truth; (8) his right to rely thereon; (9) and his consequent and proximate injury. (Citing cases.) * * *.' 193 Or. at 410, 238 P.2d at 784.

The plaintiff failed to prove that he relied on any misrepresentation of the defendant. Plaintiff always considered that the defendant's claim for a deficiency was inaccurate, and he did not rely on it and refused to pay it.

The plaintiff does not seriously challenge the fact that the proof did not sustain the charge of fraud and deceit. ¹ Although the case was tried in the trial court on the theory that the amended complaints, and particularly the third and last amended complaint, were based on fraud and deceit, the plaintiff for the first time in this court raises an entirely new theory. Plaintiff states that it is not necessary that his tort action 'have a name' and now contends that he was entitled to have his case submitted to the jury on the theory of 'extreme outrage,' Prosser, Torts 47, § 11 (3d ed 1964); or 'extreme and outrageous conduct' as it is denominated in 1 Restatement (Second) Torts 71, § 46 (1965). See also Pakos v. Clark, 253 Or. 113, 453 P.2d 682 (1969).

On oral argument the plaintiff frankly conceded that this theory was not mentioned in the trial court. Under similar circumstances in Edwards, Guardian, v. Hoevet, 185 Or. 284, 200 P.2d 955 (1949), we...