John Deere Co. v. Epstein

• Jurisdiction: Oregon
• Parties: JOHN DEERE COMPANY, a Delaware corporation, Plaintiff/Respondent on Review v. Michael P. EPSTEIN, Defendant-Respondent/Cross-Respondent Steven J. Haddix, Petitioner on Review. TC 35203; CA A36833; SC S35390.
• Citation: 307 Or. 348,769 P.2d 766
• Court: Oregon Supreme Court
• Decision Date: 14 February 1989

Page 766

769 P.2d 766

307 Or. 348

JOHN DEERE COMPANY, a Delaware corporationPlaintiff/Respondent on Review v.Michael P. EPSTEIN, Defendant-Respondent/Cross-RespondentSteven J. Haddix, Petitioner on Review.

TC 35203; CA A36833; SC S35390.

Supreme Court of Oregon.

Argued and Submitted Oct. 4, 1988.

Decided Feb. 14, 1989.

Brian J. MacRitchie, MacRitchie, Petersen & Stiegler, Bend, argued the cause and filed the petition for petitioner on review.

Don Carter, McEwen, Gisvold, Rankin & Stewart, Portland, argued the cause and filed the response for respondent on review.

Before PETERSON, C.J., LINDE, CAMPBELL, ^*CARSON, JONES and GILLETTE, JJ., and VAN HOOMISSEN, J. Pro Tem.

VAN HOOMISSEN, Justice.

The issue in this case is whether OEC 513(1)¹ prohibits the finder of fact in a civil action from drawing an inference from a party's assertion of his Fifth Amendment right not to testify against himself.The Court of Appeals held that an inference may be drawn.John Deere Co. v. Epstein, 91 Or.App. 195, 202, 755 P.2d 711(1988).We disagree.We affirm the decision of the Court of Appeals, but do so for a different reason.

Defendant Haddix appeals from a judgment in favor of plaintiffJohn Deere Company(Deere) based on the trial court's finding that Haddix forged the signature of defendant Epstein on a tractor sale contract.Haddix contends that the court erred by inferring that he forged Epstein's signature from Haddix's refusal on Fifth Amendment grounds to testify about the "Epstein" signature.²After trial, the court found that Deere's fraud claim against Haddix had been established by clear and convincing evidence.The Court of Appeals affirmed.

Haddix was a salesman and principal of Bend Turf and Tractor, Inc.He negotiated the sale of a tractor to Epstein.Haddix signed the contract, and it contained a signature purporting to be Epstein's.The contract provided for repossession and sale on default by the buyer and for the buyer to be liable for any deficiency.Epstein took possession of the tractor, made several payments and then defaulted.Deere repossessed the tractor, sold it at a loss and sued Epstein for the deficiency.He defended on the ground that he had not signed the contract.Deere then joined Haddix as a defendant on the theory that, if Epstein had not signed the contract, Haddix had forged Epstein's signature.

At trial, Epstein testified that he had dealt with Haddix in the sale of the tractor and that he had neither signed the contract nor authorized any other person to sign his name.Haddix testified that he had dealt with Epstein but that other salespersons had also been involved in the deal.After acknowledging his own signature on the contract, he refused on Fifth Amendment grounds to answer any further questions.The trial judge stated that he would not draw any inference from Haddix's assertion of the Fifth Amendment.

Deere filed a post-trial memorandum arguing that OEC 513(1) does not bar the finder of fact in a civil action from drawing an inference from a party's assertion of the Fifth Amendment.Subsequently, the trial court issued a memorandum opinion in which it found clear and convincing evidence that Haddix had forged Epstein's signature.The court did not specify the evidence on which it had relied.The judgment which followed states in part: "The Court having considered the evidence introduced, together with arguments made and memoranda submitted by the parties * * *."Neither the memorandum opinion nor the judgment provide any specific evidence that the court drew any inference from Haddix's assertion of the Fifth Amendment.

Haddix appealed, contending that there was not clear and convincing evidence of fraud in the record.He argued that the trial court could only have found fraud by drawing an adverse inference from his assertion of his Fifth Amendment privilege.He relied on the reference in the judgment to the trial court's consideration of "memoranda submitted by the parties" as evidence that the court had accepted and acted on the argument in Deere's post-trial memorandum.³The Court of Appeals held that, "in a civil case, adverse inferences may be drawn from a party's assertion of the Fifth Amendment right not to testify."91 Or.App. at 202, 755 P.2d 711.It did not address Haddix's argument that, absent an adverse inference, there is insufficient evidence in the record to support the trial court's finding that he forged Epstein's signature.

We granted review to consider whether OEC 513(1) prohibits the finder of fact in a civil action from drawing an inference from a party's assertion of his Fifth Amendment privilege not to testify.This is a case of first impression in this court.

Haddix concedes that the United States Constitution does not prohibit an inference being drawn in a civil action from a party's assertion of the Fifth Amendment.⁴The issue here, however, is not whether the federal constitution bars drawing an inference but, whether OEC 513(1) does so.The question is whether the word "privilege" in OEC 513(1) includes constitutional privilege.If it does, then OEC 513(1) requires that no inference may be drawn from assertion of a constitutional privilege in any action subject to the Oregon Evidence Code.⁵

OEC 101(3) establishes the general applicability of the OEC privilege rules, including OEC 513.OEC 513 is identical to proposed Rule 513 of the Federal Rules of Evidence(FRE).⁶The OEC drafters adopted some of the privileges specifically enumerated in proposed FRE 502-510 and they added several additional privileges.⁷They adopted proposed FRE 511-513 as OEC 511-513.Those three rules apply to "privileges" in general.The drafters did not, however, adopt proposed FRE 501, a general rule which excluded privileges not enumerated in the proposed Federal Rules of Evidence, federal statutes or the Constitution.Instead, the drafters adopted a different general rule, OEC 514, which states:

"Unless expressly repealed by [this legislation creating the Oregon Evidence Code], all existing privileges either created under the Constitution or statutes of the State of Oregon or developed by the courts of Oregon are recognized and shall continue to exist until changed or repealed according to law."

OEC 514 recognizes the validity of privileges other than those enumerated in OEC 503-510, specifically privileges created under state authority.Unlike proposed FRE 501, OEC 514 is a rule of inclusion which recognizes existing and future state privileges, including judicially developed privileges.⁸

The word "privilege" in OEC 513 is not modified by any qualifying language.No express language indicates whether OEC 513"privileges" include all privileges, all privileges under state authority or only those privileges enumerated in the code (OEC 503-510).Absent convincing evidence to the contrary, we conclude that the unqualified term "privilege" in OEC 513 must be interpreted to encompass all privileges, including privileges not enumerated within the code.⁹

We look to the OEC drafters' commentary to OEC 513 for evidence of their intent:

"Oregon Rule of Evidence 513 prohibits any comment upon a claim of privilege, and mandates procedures to avoid any inference by a jury based on such a claim.The rule is identical to proposed Rule 513 of the Federal Rules of Evidence.The Legislative Assembly approves the following note of the federal advisory committee:

" '[Subsection (1).]In Griffin v. California, 380 U.S. 609, 614, 85 S.Ct. 1229, [1232]14 L.Ed.2d 106(1965), the Court pointed out that allowing comment upon the claim of a privilege "cuts down on the privilege by making its assertion costly."Consequently, it was held that comment upon the election of an accused not to take the stand infringed upon [the accused's] privilege against self-incrimination so substantially as to constitute a constitutional violation.While the privileges governed by these rules are not constitutionally based, they are nevertheless founded upon important policies and are entitled to maximum effect.Hence, [this subsection] forbids comment upon the exercise of a privilege in accord with the weight of authority.8 Wigmore, Evidence sections 2243, 2322, 2386(McNaughten rev. 1961);McCormack, Evidencesection 76 at 156 (2d ed. 1972)[citations omitted].' "Kirkpatrick,Oregon Evidence 199 (1982).

With respect to subsection (3), the commentary states:

"This rule changes Oregon law relating to comments upon and inferences from a claim of privilege that is not constitutionally guaranteed.Nearly all the cases involve the husband-wife privilege in a criminal trial."Kirkpatrick, supra, at 200.

We emphasize that this commentary, while useful in interpreting the code, was not adopted by the legislature.

We do not interpret this commentary as excluding constitutional privilege from the scope of OEC 513(1).The federal drafters' clause, "the privileges governed by these rules are not constitutionally based," was correct in conjunction with proposed FRE 501.However, Oregon did not adopt proposed FRE 501, and Oregon's rules of evidentiary privilege differs significantly from the proposed federal rules.Accordingly, we find that the language of the federal advisory committee comment quoted in this paragraph must be considered surplusage in the context of the OEC.

The OEC drafters' comment that "[t]his rule changes Oregon law relating to comments upon and inferences from a claim of privilege that is not constitutionally guaranteed" merely focuses on OEC 513(1)'s effect on non-constitutional privileges.We do not interpret it as excluding constitutional privileges from OEC's coverage just because it did not address the effect of OEC 513(1) on constitutional privilege.We decline to interpret the comment in a manner contradictory to OEC 513(1)'s clear and unambiguous terms.¹⁰

We find no convincing evidence that the legislature intended to exclude constitutional...