McCarthy v. General Electric Co. , 151 Or. 519 ( 1935 )

Punitive damages are not recoverable merely because a conversion took place. The plaintiff must prove, not only that a conversion occurred but also that defendant's wrongful act was attended with aggravating circumstances. Many decisions in support of this statement are collected in 17 C.J., Damages, p. 1026. In the present instance, a debt was owing from the plaintiff to the General Electric Company on consigned merchandise. In fact, it was not really a debt; the sums, long overdue, were trust funds. The plaintiff had derived them from consigned goods. The defendant Young, in his efforts to collect the account, made many calls at the plaintiff's place of business, but payment was not forthcoming except for a small sum paid on account. Upon plaintiff's shelf were several switches and plates which the plaintiff had been unable to sell. They became the subject matter of the conversion mentioned by the majority. Upon one of Young's numerous calls at the plaintiff's store when the plaintiff, as on other occasions, was absent, Young told Shorthill that he would willingly accept these plates and switches in lieu of cash and thus settle the account. He suggested that the plaintiff had been unable to sell these items. When Shorthill replied that he had no authority to part with these items Young requested him to speak to the plaintiff, stating that he would call again. Sometime later Young called again. At first, Shorthill said that this later call occurred the day following the visit when Young made the settlement offer, but later it developed that he was not sure. Young swore that three or four days elapsed between the two calls. Upon the second visit the plaintiff was again absent. Young again expressed his willingness to accept the merchandise in lieu of cash. Shorthill again said that he had no authority to pay the account in that manner and declared that he had not seen the plaintiff since Young's first call. Young then took the articles, made out a complete inventory and, after Shorthill declined to accept it, left it upon the plaintiff's desk. A credit memorandum was promptly mailed to the plaintiff, and a day or two later when Young met the plaintiff on the street Young gave him an account of all that had occurred. In the above occurrences no rough language was used by any one, no force was employed, no customer was embarrassed and no threats were made. We add that everything was done openly and no effort was made to conceal anything which Young had done. Somehow, Young had arrived at the conclusion that he could lawfully take the merchandise. Without a doubt he believed that such a settlement was advantageous to both parties. Here we have a conversion, but no aggravating circumstances. The following is taken from Davis v. Aetna Acceptance Co., 293 U.S. 328 (55 S. Ct. 151,79 L. Ed. 393):

"The respondent contends that the petitioner was liable for a willful and malicious injury to the property of another as the result of the sale and conversion of the car in his possession. There is no doubt that an act of conversion, if willful and malicious, is an injury to property within the scope of this exception. Such a case was McIntyre v. Kavanaugh, 242 U.S. 138,37 S. Ct. 38, 61 L. Ed. 205, where the wrong was unexcused and wanton. But a willful and malicious injury does not follow as of course from every act of conversion, without reference to the circumstances. There may be a conversion which is innocent or technical, an unauthorized assumption of dominion without willfulness or malice. Boyce v. Brockway, 31 N.Y. 490, 493; Laverty v. Snethen, 68 N.Y. 522, 527, 23 Am. Rep. 184; Wood v. Fisk, 215 N.Y. 233, 239, 109 N.E. 177; Stanley v. Gaylord, 1 Cush. (Mass.) 536, 550, 48 Am. Dec. 643; Campau v. Bemis, 35 Ill. App. 37; In re De Lauro (D.C.) 1 F. Supp. 678, 679. There may be an honest but mistaken belief, engendered by a course of dealing, that powers have been enlarged or incapacities removed. In these and like cases, what is done is a tort, but not a willful and malicious one. * * *"

Moreover, this court has repeatedly held that a corporation is not liable in punitive damages for a wanton or malicious act of its agent unless the evidence shows that the corporation authorized the agent to act maliciously, or unless it appears that the corporation, after having acquired knowledge of the wanton or malicious manner in which the act was done, ratified the agent's conduct: Pelton v. General Motors Acceptance Corp.,139 Or. 198 (7 P.2d 263, 9 P.2d 128); Gill v. Selling,125 Or. 587 (262 P. 812, 58 A.L.R. 1556); Sullivan v. Oregon Ry. Nav. Co., 12 Or. 392 (7 P. 508, 53 Am. Rep. 364). The evidence, in my opinion, proves neither authorization nor ratification.

For the reasons above stated, I dissent.