Riley Hill General Contractor, Inc. v. Tandy Corp.

• Decision Date: 19 November 1986
• Citation: 728 P.2d 577,82 Or.App. 458
• Parties: Page 577 728 P.2d 577 82 Or.App. 458 RILEY HILL GENERAL CONTRACTOR, INC., an Oregon corporation, Respondent, v. TANDY CORPORATION, a Delaware corporation, dba Radio Shack, Appellant. 8
• Court: Oregon Court of Appeals

Page 577

728 P.2d 577

82 Or.App. 458

RILEY HILL GENERAL CONTRACTOR, INC., an Oregon corporation, Respondent v TANDY CORPORATION, a Delaware corporation, dba Radio Shack, Appellant.

84-02-19,378-L; CA A35863.

Court of Appeals of Oregon.

Argued and Submitted May 8, 1986.

Decided Nov. 19, 1986.

Reconsideration Denied Jan. 16, 1987.

Frank M. Parisi, Portland, argued the cause for appellant. With him on the briefs were Spears, Lubersky, Campbell, Bledsoe, Anderson & Young, and Larry A. Sullivan and Schroeder, Hutchens & Sullivan, Portland.

Gary J. Ebert, Ontario, argued the cause for respondent. With him on the brief was Yturri, Rose, Burnham, Ebert & Bentz, Ontario.

Before WARDEN, P.J., and ROSSMAN and DEITS, JJ.

WARDEN, Presiding Judge.

Plaintiff sought compensatory and punitive damages on claims of fraud, breach of implied warranties of merchantability and of fitness for a particular purpose and negligence arising out of plaintiff's purchase of a computer system from defendant. Defendant generally denied the claims and raised several affirmative defenses. The jury returned a verdict in favor of plaintiff on all counts, awarding $20,000 general and $60,000 punitive damages. Defendant appeals, assigning 14 errors. Because of errors in instructions on fraud and punitive damages, we reverse and remand.

Defendant took exception to this jury instruction:

"You are instructed that the law recognizes a presumption against fraud and this presumption against fraud must be overcome by clear and convincing evidence.

"The Party alleging fraud must thus bring forth evidence to prove it, and may not rely upon mere suspicious circumstances or equivocal conduct.

"Thus, there must be a certain quality of evidence to overcome the presumption against fraud even though the burden of proof remains in this case as in all civil cases, proof by a preponderance of the evidence."

Fraud must be proved by clear and convincing evidence. Dizick v. Umpqua Community College, 287 Or. 303, 311, 599 P.2d 444 (1979); but cf. Mutual of Enumclaw Ins. v. McBride, 295 Or. 398, 667 P.2d 494 (1983). The court erred by inconsistently instructing the jury that the burden of proof of fraud is by both clear and convincing evidence and a preponderance of the evidence. Giving the instruction is reversible error, because it cannot be determined from the verdict whether the jury used the correct clear and convincing evidence standard or the incorrect preponderance of evidence standard. Taylor v. Lawrence, 229 Or. 259, 366 P.3d 735 (1961); Voight v. Nyberg, 218 Or. 383, 345 P.2d 821 (1959).

Defendant also argues that it was error to use the word "presumption" in the instruction. The instruction was that there is a presumption against fraud, and therefore the error, if any, was harmless, because it favored defendant. Baden v. Sunset Fuel Co., 225 Or. 116, 357 P.2d 410 (19...