Howard v. Sloan

• Decision Date: 29 December 1972
• Parties: John HOWARD, Appellant, v. Donald C. SLOAN, Jr., et al., Respondents.
• Court: Oregon Supreme Court

Page 735

504 P.2d 735

264 Or. 247

John HOWARD, Appellant, v. Donald C. SLOAN, Jr., et al., Respondents.

Supreme Court of Oregon, In Banc.

Argued and Submitted Nov. 2, 1972.

Decided Dec. 29, 1972.

Raymond J. Conboy, Portland, argued the cause for appellant. With him on the brief were Pozzi, Wilson & Atchison, and Brian L. Welch, Portland.

Fred Miller, Portland, argued the cause for respondent Sloan. On the brief were John J. Higgins and Black, Kendall, Tremaine, Boothe & Higgins, Portland.

Frank H. Hilton, Jr., Portland, argued the cause for respondent Hurrle. With him on the brief were Hutchinson, Schwab, Burdick & Hilton, Portland.

L. Guy Marshall, Portland, argued the cause for respondent Bennett. With him on the brief were Marshall & Schwabe and Peter A. Schwabe, Jr., Portland.

Roger Rose, Portland, argued the cause for respondent Herndon. On the brief was Atma Singh Mann, Portland.

TONGUE, Justice.

This is an action for personal injuries suffered by plaintiff as he was driving by defendants' building at the time of an explosion of dynamite in its basement. Plaintiff's complaint alleges that defendants were responsible for the explosion. Plaintiff appeals from a judgment of involuntary nonsuit, based upon a holding by the trial court that plaintiff's evidence was insufficient. We affirm.

The building involved in this case was the Helm Building in Portland. At the time of the explosion it was owned by a joint venture, including defendant Sloan, defendant Bennett and Donald E. Hurrle, who was deceased at the time of trial and whose estate was represented by defendant Dorothy Hurrle as its personal representative. Defendant Herndon, an attorney, was not a member of the original joint venture, but had been a friend of Hurrle for some time and had an oral agreement with him prior to the explosion under which Herndon later received a portion of Hurrle's interest in the building. Herndon was also a tenant in the building.

In 1966 the building was owned by a corporation in which Hurrle and Herndon were the sole stockholders. In that year the building was sold for $200,000 in cash to Henry Pein, with a lease back to the corporation. Most of that money was apparently used to pay off the balance of a former purchase contract, as well as various bills.

The corporation then encountered financial difficulties and became in arrears in its rental payments. Pein then filed F.E.D. proceedings. Shortly before the 'deadline' in those proceedings in February 1968, Hurrle asked Bennett, a 'land developer,' if he could help. Bennett had no funds to invest at that time, but knew Sloan, who owned a substantial business.

An agreement was then made in February 1968 under which Hurrle, Bennett and Sloan, as a joint venture, repurchased the building from Pein on a contract for $225,000, payable in monthly installments. The only cash paid at that time was approximately $6,000, which was provided by Sloan for payment of pending bills and attorney fees.

At that time the building was insured for $200,000. As a result of efforts by Bennett, however, the insurance on the building was increased to $350,000 and a policy in that amount was issued by Safeco Insurance Co. There was also some evidence that Hurrle and Herndon participated with Bennett in arrangements for that insurance.

The insurance agent for Safeco testified that he advised against insurance in that amount, although he felt that the insurance should be increased and recommended an increase to $275,000. Bennett testified that he had a written appraisal at $350,000 by an independent appraisal company. The written appraisal, if any, was never produced and the insurance agent testified that Bennett never told him about such an appraisal.

At about the same time, Herndon also arranged for 'business interruption' and 'valuable documents' insurance for his law practice. He testified that he did so because of the condition of the building and that he had not previously carried such insurance because his previous offices had been in modern fireproof buildings. Herndon also testified that Hurrle had previously agreed verbally to transfer to him either one-fourth or one-third of 'whatever Hurrle salvaged' out of the repurchase of the building.

Upon repurchase of the building Bennett became its manager. He put up no cash to become a member of the joint venture, but testified that he received a one-third interest for 'putting the transaction together' and for agreeing to act as manager for an indefinite period of time, so as to contribute his 'time and talent' to put the building 'back on its feet.'

In that capacity Bennett made arrangements for janitorial service, to be performed on Monday, Wednesday and Friday nights. After finding that a janitor worked on a Sunday, Bennett wrote to the janitorial service on April 8, 1968, and requested, among other things, that such services were to be performed 'on Monday, Wednesday, and Friday; NOT Sunday.'

Bennett testified that he decided, as manager, to keep the building vacant on Sundays because on lower Burnside Street, where the building was located, there was a 'security problem' with 'winos' coming in if doors were left unlocked. He also testified that some tenants who worked in the building on Saturdays and Sundays objected to having janitorial work going on at the same time. The tenants named by him, however, denied that they had made such objections.

According to the testimony, after its purchase by the joint venture in February 1968, the building became profitable and was operated at a net profit of between $1,000 and $1,500 per month.

Early in the morning of Sunday, June 23, 1968, a muffled blast was heard by a witness who worked across the street and saw dust coming out of the building. At about midnight of that same Sunday a second explosion occurred. At that time plaintiff was driving by the building and he was injured as a result. Experts who investigated expressed the opinion that the explosion was caused by dynamite and appeared to be the work of an expert in building demolition.

A claim was then made by the joint venture to Safeco Insurance Company. That claim was investigated by it at some length. Its building appraiser testified that the building had a value of $216,300 at that time. The insurance company, however, paid $250,000 to members of the joint venture for destruction of the building and $20,000 for loss of rental insurance. Virtually all of that money was expended to pay off the purchase contract, as well as various bills. As a result, however, members of the joint venture retained the building site free and clear of all encumbrances and have used it since as a commercial parking lot. It was admitted by Sloan, in response to a leading question, that this result was an 'economic bonanza.'

In accordance with the previous oral agreement, Hurrle transferred to Herndon a portion of his interest in the joint venture. The insurance company also paid $1,500 to Herndon in settlement of his claim for the 'business interruption' of his law practice. Herndon had also previously been having financial difficulties.

There was some additional evidence, which we have also examined, but none of great importance, in our opinion. No testimony, however, was offered to directly connect any of the defendants with the explosion itself, either by their presence in or near the building on that day, or on any particular previous day, or by participation in the procurement, storage, or use of dynamite, or by association with any other person who might have been responsible for the explosion.

On the other hand, the testimony was that not only all of the defendants, but all tenants as well as the janitor, had keys so as to have access to the building. Also, at that time, according to the testimony, anyone could purchase dynamite. The only remote evidence on that subject was that Hurrle had an interest in a sand and gravel company with a gravel pit (not a rock quarry).

Plaintiff is correct in stating that arson and related offenses must usually be proved by circumstantial evidence. State v. Paquin, 229 Or. 555, 562, 368 P.2d 85 (1962). It is also true that in reviewing the sufficiency of the evidence in this case we are required to assume the truth of the evidence offered by the plaintiff and he is entitled to the benefit of all reasonable inferences from such evidence. Cronn v. Fisher, 245 Or. 407, 416, 422 P.2d 276 (1966). The question remains whether, assuming the truth of plaintiff's evidence in this case, an inference from that evidence that defendants were responsible for the explosion was a reasonable inference, as a matter of law.

As stated in Ehler et ux. v. Portland Gas & Coke Co., 223 Or. 28, 38--39, 352 P.2d 1102, 353 P.2d 864 (1960):

'Where one relies upon circumstantial evidence from which reasonable deductions may be drawn to establish a fact by inference, the inference 'must also be sufficiently persuasive to negative all rival conclusions suggested by itself and which show nonliability in the opponent. For instance, if at the close of the presentation of the proof, the circumstantial evidence is capable of supporting with equal reason two or more conclusions, one or more of which prove the nonliability of the opponent, the proponent has failed to discharge the burden of proof * * *.'

'It has been previously decided that when there are two possible deductions, the burden is met if the proponent presents evidence showing 'that the favorable inference is the most logical. '' (Citations omitted)

Plaintiff contends that '(e)vidence of financial embarrassment, overinsurance, and opportunity, when added to proof of deliberate...