United Finance Co. v. Kliks

• Decision Date: 01 May 1957
• Citation: 310 P.2d 1103,210 Or. 288
• Parties: UNITED FINANCE CO., Appellant, v. Margaret KLIKS, Respondent.
• Court: Oregon Supreme Court

Page 1103

310 P.2d 1103

210 Or. 288

UNITED FINANCE CO., Appellant, v. Margaret KLIKS, Respondent.

Supreme Court of Oregon, In Banc.

Submitted on briefs Jan. 7, 1957.

Decided May 1, 1957.

Hutchinson, Schwab & Burdick, Portland, filed briefs for appellant.

Leo Levenson, Norman B. Kobin and Robert Lohman, Portland, filed a brief for respondent.

WARNER, Justice.

This is an action to recover a judgment for $2,130.87. It is alleged to be the balance due upon a conditional sales contract for a Pontiac automobile accruing after the car had been repossessed and sold because of the default of the defendant buyer, Margaret Kliks. After the jury had returned a verdict in favor of defendant, plaintiff, United Finance Co., moved for a judgment notwithstanding the verdict. From the adverse judgment, the Finance Co. appeals.

The automobile was purchased by Mrs. Kliks through Ed McCaffrey, an auto dealer and mutual friend of the Kliks. The purchase contract executed by Mrs. Kliks in favor of McCaffrey was thereafter promptly assigned by him to the Finance Co.

At the time of this transaction, Mrs. Kliks was suing for a divorce and was living with her four minor children apart from her husband. From this circumstance springs the defendant's affirmative defense. Briefly stated, it is: That her husband and McCaffrey entered into a conspiracy with intent to place defendant in an extremely difficult financial position and cause her embarrassment in relation to her pending divorce suit, soon to be tried, and to that end McCaffrey persuaded and induced her to buy the Pontiac, although he well knew of her impecunious circumstances. This, she alleged, he accomplished by representing to her that he, McCaffrey, had been informed by defendant's husband (whom we will hereinafter refer to as 'Barney' because of its frequent use during the trial) that Barney would provide a substantial property settlement for her in connection with the divorce suit and sufficient to enable her to comply with all of the terms of the contract.

The sole question presented by the appeal is whether or not there was sufficient evidence from which the jury could find that Mrs. Kliks had a defense of fraud to the Finance Co.'s claim. This was initially presented by plaintiff's motion for a directed verdict, which the court denied, and again raised by appellant's motion n. o. v. Both rulings were excepted to as error.

When a motion for a judgment n. o. v. is made following a denial of a motion for a directed verdict, as here, the record must be viewed and interpreted in a light most favorable to the party obtaining the challenged judgment. Such motion, like a motion for a directed verdict, admits the truth of the prevailing party's evidence and every favorable inference that may be drawn therefrom, as well as every inference favorable to the prevailing party as may be drawn from the evidence of the party who by his motion seeks a judgment n. o. v. Stroh v. Rhoads, 188 Or. 563, 569, 217 P.2d 245; Edvalson v. Swick, 190 Or. 473, 478, 227 P.2d 183; Smith v. Industrial Hosp. Ass'n, 194 Or. 525, 532, 242 P.2d 592. Our duty in the premises is, therefore, to ascertain whether there is substantial evidence to support the verdict of the jury. Allister v. Knaupp, 168 Or. 630, 643, 126 P.2d 317.

Plaintiff's motion pointed to three deficiencies in respect to the evidence:

(1) That it affirmatively shows that the statements attributed to McCaffrey do not constitute representations of fact sufficient for a defense of fraud and deceit, but, on the contrary, are promissory in character relating to the prediction of future conduct of independent third parties;

(2) That the evidence shows that Mrs. Kliks executed the automobile contract in reliance upon her own opinion concerning a prospective settlement with her husband and did not depend upon the statements of McCaffrey; and

(3) That Mrs. Kliks had not shown a right to rely upon the statements of McCaffrey.

The elements necessary to constitute actionable fraud are clearly set forth as nine in number in Conzelmann v. Northwest Poultry & Dairy Products Co., 190 Or. 332, 350, 225 P.2d 757; 37 C.J.S. Fraud § 3, p. 215; Musgrave v. Lucas, 193 Or. 401, 410, 238 P.2d 780. Failure to prove any one of these essential elements is fatal to pleader's cause. Conzelmann v. Northwest Poultry & Dairy Products Co., supra; Condit v. Bodding, 147 Or. 299, 328, 33 P.2d 240; 37 C.J.S. Fraud § 94, p. 400.

The Finance Co.'s motion for judgment n. o. v. narrows our consideration to whether or not there is sufficient evidence to prove the three particular elements of actionable fraud which its motion specifies. In the order presented by the motion and in terms of the authorities above cited, they are: Failure to prove: (1) a representation of fact, (2) Mrs. Kliks' reliance upon its truth and (3) her right to rely thereon.

In June, 1954, when Mrs. Kliks was induced to purchase the Pontiac, she had been separated from her husband since January, 1953. A year before the instant transaction, in June, 1953, she had started the divorce suit. Mrs. Kliks' sole income consisted of monthly payments from her husband for the support of herself and their four minor children.

McCaffrey appears in this matter primarily as the agent of Barney Kliks in the implementation of Mr. Kliks' alleged scheme to entrap his wife in an improvident investment to her embarrassment and disadvantage in the pending divorce suit. He also had a personal substantial financial interest of his own in the matter to which we will later refer.

Barney Kliks is a member of the Oregon Bar, engaged in the active practice of his profession in Portland, Oregon. There he is in partnership with his father, B. A. Kliks, and his sister, Dorothy Kliks, as Kliks and Kliks. He apparently has substantial interests aside from the law, for the record indicates that the father and son are the owners of some apartment houses. It is also disclosed that Barney has, in times past, acted as financier to McCaffrey in his operations as a buyer and seller of automobiles.

A Studebaker, purchased a few months earlier through McCaffrey, had given defendant some trouble, causing her in the spring of 1954 to express the belief that she needed a car of different type; one in which she would feel 'more secure about the children.' McCaffrey learned through Barney that Mrs. Kliks was looking for another car and according to McCaffrey had suggested to him it would be a good idea for McCaffrey to try to sell her a car.

McCaffrey, who appears in this matter as a witness for the defendant, then proceeded to make a contact with Mrs. Kliks. Concerning this, he testified:

'Q. What then did you do relative to acquiring a new car for Mrs. Kliks? A. Well, when I first heard about it, I understood she wanted to change cars. I didn't know how deep she wanted to go into the thing and I went out and I called her and I believe I talked to her at the house one time about how much money she wanted to spend and she had wanted to get a station wagon because it would provide more room for the children and everything, and she said for me to see what kind of a car I could get her and what the finance company would finance for her and to let her know. She said she would like to get a new car if I thought she could afford it or if we could get it financed. If we could get it financed, she would take a new car. * * *'

McCaffrey thereupon recalled that defendant had had some trouble in maintaining her payments on the Studebaker. Therefore, before calling Mrs. Kliks again he first went and talked to Barney Kliks about the proposed new car deal and testified that the following took place when he did so: 'He [Barney] and his dad and I got together in the office there and they explained to me that it would help them very much in their divorce suit if I could sell her a new car, and it would show that she had no idea as to the value of money and was a spendthrift and they said for me to go ahead and make the deal and that they would make sure I never lost anything on the deal and they said that she would get a favorable settlement and everything, and they were sure she could pay for it and if she didn't, they would see I didn't lose anything because it would help them a great deal.' After this meeting with the Kliks, McCaffrey reluctantly and, he says, 'against his better judgment' proceeded to induce Mrs. Kliks to execute the contract to buy a new, not a secondhand, Pontiac.

Mrs. Kliks said: 'Ed knew our financial condition. He knew the children and I were on support money and that he knew that we were to go into divorce soon and our financial arrangements on divorce, and he told me that Barney had told him that there would be a good financial arrangement on our divorce and property settlement * * *.' McCaffrey indicated then that he thought she would receive her money in July or August.

We turn to consider the pattern of the contract. When the car dealers learned of the purchase plan proposed for Mrs. Kliks, we are told by McCaffrey, they 'thought he was crazy to do it.' The total contract obligation was $4,650. This amount was computed by adding to the purchase price of the car ($3,300) the following charges: $600 paid to McCaffrey (notwithstanding that Mrs. Kliks understood from him that 'he was going to charge her whatever it cost him'); $503.50 described as a 'discount for carrying charge for the period of the contract,' a period of 12 months; $200 known as 'dealers reserve in account with the dealers'; and $46.50 as a 'credit life insurance premium.' Mrs. Kliks reposing faith and confidence in McCaffrey, signed the contract on June 25, 1954. The entire sum of $4,650 was to be liquidated within a year and on a very unusual schedule. There was no down payment on the new car, by a credit for the Studebaker or otherwise. Her first payment on the Pontiac of $75 began July 27, a month later another one of like amount and a...