Colonial Leasing Co. of New England v. Best, Civ. No. 82-549.

Citation552 F. Supp. 605
Decision Date28 October 1982
Docket NumberCiv. No. 82-549.
PartiesCOLONIAL LEASING COMPANY OF NEW ENGLAND, INC., a Massachusetts corporation, dba Colonial-Pacific Leasing Company, Plaintiff, v. Harold BEST, individual, and H.B. Best, Inc., dba Harold's Service Center, Defendant.
CourtUnited States District Courts. 9th Circuit. United States District Court (Oregon)

James D. Huegli, Charles R. Markley, Schwabe, Williamson, Wyatt, Moore & Roberts, Portland, Or., for plaintiff.

Charles P. Starkey, Weiss, Derr & DesCamp, Portland, Or., for defendant.

OPINION

REDDEN, Judge:

The plaintiff is the lessor of certain equipment to an automobile mechanic in St. Louis, Missouri and sues in Oregon for the deficiency allegedly owing on the lease. The lease contains a clause by which the defendant lessee purportedly consents to Oregon jurisdiction in any suit on the lease. That clause reads as follows:

22. CHOICE OF LAW. Choice of Laws. This Lease shall be considered to have been made in the State of Oregon, and shall be interpreted, and the rights and liabilities of the parties hereto determined, in accordance with the constitution, statutes, judicial decisions, and administrative regulations of the State of Oregon. Lessees waive all right to a trial by jury in any litigation relating to any transaction under this agreement.
Lessee hereby designates ______ as its agent for the purpose of accepting service of process within the State of Oregon and further agrees to arrange for any transmission of notice of such service of process from said agent to Lessee as Lessee deems necessary or desirable. Lessee consents to Oregon jurisdiction in any action, suit or proceeding arising out of the Lease, and concedes that it, and each of them, transacted business in the State of Oregon in entry into this lease. In the event of suit enforcing this Lease, Lessee agrees that venue may be laid in the county of Lessor's address below.

The line to be used for the designation of an agent for service is not filled in on the lease. The clause is at the bottom of the second page of the lease and is in fine print.

This is not a true forum selection clause, but a clause by which the defendant consented to Oregon jurisdiction. The clause does not prevent suit in Missouri where the cause of action may have arisen. Keaty v. Freeport Indonesia, Inc., 503 F.2d 955, 957 (5th Cir.1974). The clause by its terms does not prevent transfer of venue of this case to Missouri; it merely provides that venue "may" lie in Oregon.

Defendant asserts that this clause is unconscionable, in that it was inserted into a contract of adhesion, was not negotiated, was in fine print, and was not understood by the unsophisticated defendant when he signed the lease. Defendant asserts that this case should be dismissed for want of jurisdiction over the person of defendant.

Defendant submitted an affidavit with his motion. The defendant's affidavit states in essence that he is an auto mechanic in Missouri, that he thought he was dealing with a company from New York, not Oregon, that he signed certain documents which he believed were financing agreements and did not realize that he could be sued in Oregon as a result of signing the agreements. Since the plaintiff has not controverted any of these facts by affidavit or otherwise, there are no material issues of fact in dispute.

If the choice of laws clause did not appear in the contract, Missouri law would apply because the contract was made in Missouri and was intended to be performed in Missouri. If Missouri law were applied the clause would be invalidated without further inquiry, since such clauses are void under Missouri law. State of Missouri ex rel. Gooseneck v. Barker, 619 S.W.2d 928, 929 (Mo.Ct.App., 1981) (Such a clause is void as against public policy; contrary interpretation of Missouri law as applied by federal courts in Missouri disapproved).

However, in this case the clause would be invalidated under Oregon law as well, and therefore I am not called upon to decide a "true" conflict of laws question, because the laws of the two states will lead to the same result. In Oregon, a clause such as the one at issue is not void per se, but will be given effect if not "unfair or unreasonable," Reeves v. Chem. Ind. Co., 262 Or. 95, 101, 495 P.2d 729 (1972). The standard of "unfair or unreasonable," which has been enunciated by the Oregon Supreme Court in Reeves, is designed to invalidate clauses such as the one in question here, which is an adhesion contract in which the clause is not negotiated by the parties or is the result of unequal bargaining power:

As previously stated, a contractual clause agreeing on an exclusive forum will not be enforced if it is determined to be unfair or unreasonable. Clauses in contracts which are now termed contracts of adhesion, "i.e., a `take it or leave it'— contract and was the product of unequal bargaining power between the parties," are in this category.

Reeves, supra, at 101, 495 P.2d 729, quoting Professor W. Reese, 13 American Journal of Comparative Law 187, 188 (1964). Significantly, the Oregon Supreme Court pointed to the precedent of State ex rel. Kahn v. Tazwell, 125 Or. 528, 266 P. 238 (1928), as one containing a clause which would probably be invalidated under this standard. Reeves, supra, at 101, 495 P.2d 729. The clause in Kahn was contained in an insurance contract entered into in Germany. The insurance company in question was located in Karlsruhe, Germany, and inserted this clause into the insurance contract:

For the fulfillment of this contract only the courts of Karslruhe are competent; as the legal domicile of the company is agreed upon as its office at Karlsruhe and for the insured or his legal successor the place mentioned in the application for insurance...

125 Or. 532, 266 P. 238.

The Oregon Supreme Court in Kahn (1928) held that this clause was void; the Oregon Supreme Court in Reeves (1972) pointed to this clause as one which it would probably...

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5 cases
  • High Life Sales Co. v. Brown-Forman Corp., BROWN-FORMAN
    • United States
    • United States State Supreme Court of Missouri
    • January 28, 1992
    ...grounds of unfairness if the contract was entered into under circumstances that caused it to be adhesive. Colonial Leasing Co. of New England, Inc. v. Best, 552 F.Supp. 605 (D.Or.1982). An adhesive contract is one in which the parties have unequal standing in terms of bargaining power (usua......
  • State ex rel. Jones v. Crookham
    • United States
    • Supreme Court of Oregon
    • April 17, 1984
    ...on a forum selection clause of the lease. It has since abandoned this position, perhaps due in part to Colonial Leasing Co. of New England v. Best, 552 F.Supp. 605 (D.Or.1982), in which the court found an identical provision in another contract to be invalid because it was "unfair or unreas......
  • Colonial Leasing Co. of New England v. McIlroy
    • United States
    • Court of Appeals of Oregon
    • December 7, 1988
    ...differs only slightly from the present one. It concluded: "We agree with the district court's analysis in Colonial Leasing Co. [of New England] v. Best, 552 F.Supp. 605 (D.Or.1982), that the standard of 'unfair or unreasonable' is designed to invalidate clauses such as those in question her......
  • Colonial Leasing Co. of New England, Inc. v. Pugh Bros. Garage, s. 83-4033
    • United States
    • United States Courts of Appeals. United States Court of Appeals (9th Circuit)
    • June 18, 1984
    ...the resisting party to be 'unreasonable' under the circumstances"). We agree with the district court's analysis in Colonial Leasing Co. v. Best, 552 F.Supp. 605 (D.Or.1982), that the standard of "unfair or unreasonable" is designed to invalidate clauses such as those in question here. The e......
  • Request a trial to view additional results

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