Harper v. Interstate Brewery Co.

• Citation: 168 Or. 26,120 P.2d 757
• Parties: HARPER ET AL. <I>v.</I> INTERSTATE BREWERY CO. ET AL.
• Decision Date: 28 October 1941
• Court: Oregon Supreme Court

168 Or. 26

120 P.2d 757

HARPER ET AL.

v. INTERSTATE BREWERY CO. ET AL.

Supreme Court of Oregon.

Argued at Pendleton, October 28, 1941.

Affirmed January 13, 1942.

Action on the case — Torts

1. Generally, a mere breach of contract does not constitute a "tort" nor authorize an action on the case.

Action — Torts — Contracts

2. In determining whether a particular act or course of conduct subjects the wrongdoer to an action in tort or merely to an action for breach of contract, the test to be applied is the nature of the right which has been invaded, and if the right was created solely by an agreement of the parties, the plaintiff is limited to an action ex contractu, and if it was created by law, the plaintiff may sue in tort.

Torts — Breach of contract

3. Causes of action need not be completely disconnected from contracts in order to constitute "torts", and the existence of a contract may be one of the circumstances requisite to give to particular conduct the character of a breach of duty and thus to make it "tortious".

Action — Torts

4. Where there is a breach of duty imposed by law apart from any consent of the person owing the duty, and the remedy claimed is not the payment of a definite sum of money but pecuniary compensation for the injury, then there is a wrong independent of contract, giving rise to an action of "tort".

Action — Breach of contract

5. A plaintiff to recover for a breach of duty may be required to show a contract between himself and defendant, in order to establish that defendant has assumed a position, relation or status on which the general law predicates a duty independent of terms of the contract, and if from the position, contractually assumed, a duty be raised independent of the contract, an action in "tort" may lie.

Action — Torts — Contracts

6. A mere breach of contract cannot be sued on as a "tort", but for tortious acts, independent of the contract, one may sue in tort, though one of the consequences is a breach of contract.

Action — Torts — Contracts

7. An action in "tort" may arise directly out of a contract if based on a fraudulent promise which the promisor never had any intention of fulfilling, and which he successfully employed for the purpose of deceiving the promisee.

Mortgages — Deed to secure debt payment

8. Where debtors executed and delivered to creditors deeds, absolute in form, to realty, and they entered into a collateral agreement that the deeds were executed to secure the creditors for the indebtedness and debtors were to have 30 days to pay the debt, during which time creditors were not to record deeds but merely to hold them as security, and if debt was paid, deeds were to be returned, but if not paid creditors were authorized to record deeds and sell realty at private sale and pay the surplus, if any, from the sale to the debtors, the transaction constituted in effect a "mortgage".

Liens — Foreclosure

9. The procedure provided for by statute requiring that a lien on realty shall be foreclosed by suit is exclusive.

Mortgages — Wrongful sale

10. If mortgagee, pursuant to stipulations of contract but contrary to statute, sold the realty at private sale, mortgagee's wrong could not relieve the mortgagee of the duties which the mortgagee would have had if the provisions for private sale had been valid.

Mortgages — Power of sale

11. A mortgagee in exercise of a power of sale of realty owes a duty, recognized both at law and in equity, to act in good faith, using all reasonable efforts to make the sale beneficial to the mortgagor by obtaining for the property the best price reasonably obtainable.

Mortgages — Power of sale

12. Where, pursuant to contract between creditor and debtors, creditor received deeds to realty as security for indebtedness with a purported power of sale, creditor thereby assumed a relationship to the debtors on which the law imposed a duty to act in good faith using reasonable efforts to make sale beneficial to the debtors by obtaining the best price reasonably obtainable, and that duty was independent of contract, and a breach of that duty was an actionable "tort".

Mortgages — Deed as security

13. Whether conveyance of realty be by mortgage, by absolute deed given as security, or by trust deed given to a creditor to secure the debt of the grantor, the instrument is in effect a "mortgage," and in the exercise of a purported power of sale, the mortgagee or creditor has certain duties for the breach of which the law, as distinguished from equity, gives a remedy ex delicto.

Mortgages — Foreclosure — Sale

14. An ordinary "foreclosure of a mortgage" is accomplished by proceedings in a court of equity in which the power of the chancellor is adequate to insure a proper sale of the securities,

or to deny confirmation, whereas the exercise of a "power of private sale" is not at the time subject to equitable supervision and constitutes at best a harsh remedy.

Mortgages — Equity — Jurisdiction

15. Where relief sought by mortgagor is the avoidance of a private sale, equity is the proper forum, and where a cancellation is sought by suit, the chancellor may properly assimilate the situation to that of a trust or raise a constructive trust in the process of doing equity, but in an action at law by a mortgagor seeking only damages for breach of duty by mortgagee in selling mortgaged realty, the mortgagor need not rely on the law of trusts.

Jury — Trial — Damages

16. Where mortgagors sought to recover damages from mortgagee and its president for breach of duty with respect to private sale of mortgaged realty, and there was no trust res in mortgagee's hands and no accounting to be had of funds received, and assessment of damages properly estimated would terminate and completely adjust the right of parties, there was no occasion for mortgagors to resort to equity, and hence mortgagors were entitled to trial by jury.

Trial — Instructions

17. In action in tort by mortgagors against mortgagee and its president to recover for breach of duty by mortgagee with respect to private sale of mortgaged realty, instruction that there was a fiduciary or trust relationship between mortgagee and mortgagors, and that mortgagee had duty of using that degree of diligence in selling realty that average prudent man would use in selling his own realty, was not reversibly erroneous as against contention that duty was improperly labeled as growing out of a trust relationship, since though there was no "express trust" or "technical trust" there was a "trust relationship" or "fiduciary relationship."

Trial — Instructions

18. In action in tort by mortgagors against mortgagee and its president to recover for breach of duty by mortgagee with respect to private sale of mortgaged realty, instruction that mortgagee and its president could not reimburse themselves for any loss suffered in operating a plant on realty, while they were attempting to sell realty, was not reversibly erroneous, where no issue was made by them in pleadings concerning any right to charge mortgagors with any loss, one who purchased realty at private sale reimbursed mortgagee for loss, and there was no evidence that mortgagee was required by agreement to operate the plant, that operation was competently performed, or that the loss was not result of mortgagee's own fault.

Appeal and error — Transcript on appeal

19. Where it appeared from transcript that portions of trial court's instructions to jury were omitted from the transcript, objection that trial court committed reversible error in refusing to define a certain term was not reviewable.

Appeal and error — Record on appeal

20. The fact that defendants' assignment of error, that trial court committed reversible error in refusing to define term ratification to jury, was not before the supreme court for review, because of the fact that one of the notebooks containing instructions to the jury was lost, did not result in injustice to defendants, where undisputed evidence established that ratification by one defendant of the acts of the other defendant actually existed.

Corporations — Torts — Damages

21. In action in tort against corporation and its president to recover damages for breach of duty by corporation with respect to private sale of realty which had been mortgaged to the corporation, evidence established that corporation's president with respect to operation of the mortgaged realty was acting as the corporation's authorized agent and that the corporation ratified the president's actions.

Trial — Instructions

22. Alleged rule that a proper exception to an erroneous instruction is equivalent to a proper request which was refused and exception allowed, has not been approved by the supreme court.

Corporations — Torts — Damages

23. In action in tort against corporation and its president to recover damages for breach of duty by corporation with respect to private sale of realty which had been mortgaged to the corporation, jury, after having found that president acted maliciously in disregard of the rights of plaintiffs, was authorized to impose punitive damages against both corporation and president, where president acted as the authorized agent of the corporation, and his actions were ratified by the corporation.

                  See 1 Am. Jur. 441; 37 Am. Jur. 137
                  1 C.J.S., Actions, § 44
                

Before KELLY, Chief Justice, and RAND, BAILEY, LUSK and BRAND, Associate Justices.

Appeal from Circuit Court, Malheur County.

ROBERT M. DUNCAN, Judge.

Action in tort by Maurice Harper and Fred J. Test against the Interstate Brewery Company, formerly Star Brewery Company, and George H. Gage to recover general damages and exemplary damages. From a judgment in favor of the plaintiff, the defendants appeal.

AFFIRMED.

James C. Dezendorf, of Portland (Dey, Hampson & Nelson and Leon W. Behrman, all of Portland, on the brief), for appellants.

Hugh L. Biggs, of Portland (Maguire, Shields & Morrison, of Portland, Biggs & Yturri, of Ontario, and Don...