Heise v. Pilot Rock Lumber Co.

Decision Date25 May 1960
Citation352 P.2d 1072,222 Or. 78
PartiesA. C. HEISE and Estelle Helse, Respondents, v. PILOT ROCK LUMBER CO., an Oregon corporation, Appellant.
CourtOregon Supreme Court

Edward J. Clark, Pendleton, argued the cause (Peterson, Clark, Clark & Peterson, Pendleton, on the brief), for appellant.

Thomas H. Tongue, Portland, argued the cause (Roy Kilpatrick, Canyon City, on the brief), for respondents.

Before McALLISTER, C. J., and WARNER, SLOAN, O'CONNELL, GOODWIN and MILLARD, JJ.

MILLARD, Justice pro tem.

This is an appeal by defendant from a judgment in favor of plaintiffs for $3,122 and costs and disbursements, based upon a jury verdict entered in the circuit court of Grant county in an action based upon alleged fraudulent misrepresentation and concealment by the defendant as to the quantity of timber sold by plaintiffs to defendant. In addition defendant appeals from the orders of the trial court denying defendant's motions for judgment n. o. v. and for a new trial.

In its first assignment of error defendant claims the court erred in not sustaining its demurrer to plaintiffs' second amended complaint based principally upon failure to state a cause of action or suit and upon the further ground that the claimed cause of action was barred by ORS 12.110, which is the two-year statute of limitations applying upon the discovery of fraud or deceit. Omitting the allegations as to the marital relationship of the plaintiffs and the corporate existence of defendant, said complaint, apart from the prayer and exhibits, alleges as follows:

'III

'That in 1947, plaintiffs were the owners of the following described real property situated in Grant County, Oregon to-wit:

'SE 1/4 NW 1/4, E 1/2 SW 1/4 Sec. 8; SW 1/4 SW 1/4 Sec. 9; NE 1/4, E 1/2, NW 1/4, NE 1/4 SW 1/4, NW 1/4 SE 1/4 Sec. 17 Twp. 7 S., R. 30 E., W. M.

'That in 1947 plaintiffs approached defendant and asked defendant to buy the timber upon said premises and defendant agreed to purchase all of the then merchantable timber upon said premises and agreed to pay therefore [sic] $4 per thousand feet board measure log scale for all of the merchantable Ponderosa Pine timber standing, lying or being upon said premises and defendant also agreed to cruise said timber for the purpose of fixing the price to be paid to plaintiffs and that said price would then be computed at the rate of $4 per thousand board feet as determined by said cruise.

'IV

'That defendant did cruise said timber in 1947 and determined that there was then upon said land in excess of 2,300,000 feet board measure log scale of merchantable Ponderosa Pine timber. That defendant thereupon willfully, falsely and fraudulently represented to the plaintiffs in 1947 that its cruise disclosed that there was 1,537,500 feet of merchantable Ponderosa Pine timber and that at the rate of $4 per thousand board feet said timber would come to $6,150.00 (and concealed the true results of its cruise as aforesaid).

'V

'That defendant made the aforesaid representation with full knowledge of the falsity of said representation and that plaintiffs would rely thereon to their damage, as hereinafter alleged, and with the intention to mislead plaintiffs and that plaintiffs would rely thereon.

'VI

'That plaintiffs at said time did not know how much timber there was upon said land and were not able to estimate the quantity of said timber by reason of their lack of experience, education and training and relied entirely upon defendant's representation. That plaintiffs relied upon said misrepresentations and believed the same to be true and in reliance thereon, and not otherwise, plaintiffs were induced by defendant to execute a contract, a copy of which is attached hereto and marked Exhibit 'A' and made a part hereof the same as if set out haec verba, and a deed, a copy of which is attached hereto and marked Exhibit B and made a part hereof the same as if set out herein haec verba, selling to defendant all of the then merchantable timber upon said land, receiving therefor $6,150.00, in cash and granting unto the defendant the right to remove said timber for twenty years.

'VII

'That neither party did anything in respect to said timber until the latter part of April, 1958 when defendant began to log the timber upon said land.

'(That from the time the original sale contract was executed in 1947 until after cutting operations began in 1958 on the timber, relied upon defendant's representation as to the quantity of the timber, based upon a cruise made by defendant; that plaintiffs' home is situated several miles from the timber land and plaintiffs used said timber land during said period solely for summer grazing and paid no attention to the timber; that during said period no facts were brought to plaintiffs' attention that gave them any reason to doubt defendant's representations as to the quantity of said timber or would have given any prudent person any such reason; that during said period plaintiffs acquired no more knowledge of timber or no more skill or ability to estimate the quantity of standing timber then they had when the original contract was made; that at all times until after the cutting operations had begun and plaintiffs discovered the fraud that had been perpetrated upon them they continued to rely upon defendant and defendant's agents and any prudent person would have so relied, and that during said period preceding the cutting neither defendant nor its agents or employees did anything that caused plaintiffs to suspect them or to doubt their word or would have caused any prudent person to do so.)

'That as defendant logged this land in 1958 plaintiffs from time to time observed defendant's operations, visited with employees of the defendant and observed the logs that were hauled from the property. That as a result of said observation plaintiffs discovered for the first time that more timber was located on said lands and was being removed from the premises than the defendant had represented to be there and thereupon instituted this action and by means of discovery proceedings herein learned the exact amount of timber removed by the defendants from said premises in 1958 and by hiring a cruiser determined the exact amount of timber left standing upon said premises.

'IX

'[This section was deleted as part of amendments.]

'X

'That as a result of defendant's false and fraudulent misrepresentations and plaintiffs' reliance thereon, as aforesaid, defendant purchased 780,500 feet more Ponderosa Pine timber from plaintiffs' land than plaintiffs intended to sell or believed that they were selling to defendant to plaintiffs' loss and damage in the sum of $3,122.00.'

In addition, attached to this complaint as a part thereof is exhibit A which purports to be a timber contract executed by the parties and dated October 11, 1947, and which, omitting the preamble and provisions for warranties, title insurance, and the like, in effect provided that for 'all timber now standing, growing or being on' the premises described in the complaint was sold to defendant for '$6,150.00, one-half thereof or the sum of $3,075.00 has been paid this date'; and further provided for payment of the balance upon a deed showing good unencumbered title. Also attached to the complaint as a part thereof was exhibit B, which is a deed executed April 6, 1948, conveying plaintiffs' timber to defendant and containing other provisions not necessary to a decision in this case.

It should be noted that defendant, as additional grounds of demurrer, once contended that there was a misjoinder of causes, claiming plaintiffs had attempted to combine an action of fraud with an action based upon implied contract, and further that the six-year statute of limitations relating to actions on contract applied. We understand these grounds have now been abandoned. In any event, they are clearly not tenable.

Does the complaint state a cause of suit or action? Since the complaint seeks damages as total relief, it is evident that no appeal was made to the equitable jurisdiction of the court, the remedy at law being adequate; hence the complaint is insufficient as a suit in equity. In Musgrave et ux. v. Lucas et ux., 193 Or. 401, 410, 238 P.2d 780, 784, the necessary elements of an action at law for fraud are clearly set forth. They are: '(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.' See also Conzelmann v. Northwest Poultry & Dairy Products Co., 190 Or. 332, 350, 225 P.2d 757. Further in Musgrave et ux. v. Lucas et ux., supra, recognizing that when there is a duty to speak, fraudulent concealment is in fact a form of fraudulent misrepresentation, it is stated:

'Actionable fraud may be committed by a concealment of material facts as well as by affirmative and positive misrepresentations. In 37 C.J.S., Fraud, p. 244, § 16a, it is said: 'An exception to the rule that mere silence is not fraud exists where the circumstances impose on a person a duty to speak and he deliberately remains silent. It is well settled that the suppression of a material fact which a party is bound in good faith to disclose is equivalent to a false representation. Where the law imposes a duty on one party to diclose all material facts known to him and not known to the other, silence or concealment in violation of this duty with intent to deceive will amount to fraud as being a deliberate suppression of the truth and equivalent to the assertion of a falsehood.'

'See also Palmiter v. Hackett, 95 Or. 12, 17, 185 P. 1105, 186 P. 581.' Supra, 193 Or. at page 410, 238 P.2d at page 784.

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