Balsiger v. American Steel & Supply Co.

451 P.2d 868, 254 Or. 204, 40 A.L.R. 3d 289, 1969 Ore. LEXIS 358
CourtOregon Supreme Court
DecidedMarch 12, 1969
StatusPublished
Cited by19 cases

This text of 451 P.2d 868 (Balsiger v. American Steel & Supply Co.) is published on Counsel Stack Legal Research, covering Oregon Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Balsiger v. American Steel & Supply Co., 451 P.2d 868, 254 Or. 204, 40 A.L.R. 3d 289, 1969 Ore. LEXIS 358 (Or. 1969).

Opinions

LANGTRY, J.

(Pro Tempore).

The only question presented in this appeal is whether a cause of action for malicious prosecution is stated in a complaint which alleges that defendants maliciously filed an involuntary bankruptcy petition against plaintiff without probable cause, that defendants later caused the petition to be dismissed, that the filing became generally known and damaged plaintiff’s general and business reputation, and “That plaintiff suffered special damage as a result of [defendants’] * * * acts * * * by way of loss of income in excess of $1,000,000.00,” and other special damages by way of accounting and legal fees exceeding $500 in connection with defending himself in the bankruptcy proceeding.

Demurrers by respective defendants to the complaint for failure to state a cause of action were sustained in the circuit court and the case was dismissed. [206]*206The facts alleged were that three of the defendants “aided and abetted” by the other defendants, who were their lawyers, maliciously and without probable cause, instituted involuntary bankruptcy proceedings against plaintiff which were dismissed on defendants’ motion several months later. We do not take, the allegation that the defendants other than the lawyers were “aided and abetted” by their lawyers to be an allegation of a conspiracy among all the defendants.

The general rule, followed in most states, is that a civil action, although commenced with malice and without probable cause, does not give rise to a cause of action for malicious prosecution unless there has been arrest of the person, seizure of property, or other special injury to the defendant in that action which would not ordinarily result in all similar causes seeking recovery of damages. Carnation Lbr. Co. v. McKenney et al, 224 Or 541, 356 P2d 932 (1960); Mitchell v. Silver Lake Lodge, 29 Or 294, 45 P 798 (1896). The rule has been applied to insolvency proceedings. Vancouver B. & S. Co. v. L. C. Smith & Corona Typewriters, 138 F2d 635 (9th Cir), cert den 321 US 786, 64 S Ct 780, 88 L ed 1077 (1943) (applying state of Washington law), and Mayflower Industries v. Thor Corp., 15 NJ Super 139 (Ch 1951), 83 A2d 246. The latter case contains a comprehensive discussion of the general rule.

In Patapoff v. Vollstedt’s, Inc. et al, 230 Or 266, 369 P2d 691 (1962), where bankruptcy was adjudicated, property taken from the alleged bankrupt’s possession, and later the adjudication was reversed, we agreed with the proposition that an action for malicious prosecution would lie if there was maliciousness and lack of probable cause. In Hill v. Carlstrom, 216 Or 300, 338 P2d 645 (1959), which involved a malici[207]*207ous prosecution case against a defendant who had petitioned to have the plaintiff adjudged insane, we quoted with approval from Restatement, 3 Torts 455, § 678 (1960):

“One who initiates civil proceedings against another which allege the other’s insanity or insolvency is liable for the harm to the other’s reputation * * * if * * * [the proceeding started with malice and without probable cause, and, except in ex parte proceedings, terminated in favor of the person against whom they are brought].” (Emphasis supplied.)

This rule does not require an allegation of special injury or interference with person or property in the complaint in such a case. In insanity proceedings, the very nature of the proceeding causes interference with the person. But it may be argued that this is not always so with reference to property in insolvency proceedings. Insolvency was not involved in Hill v. Carlstrom, supra, and the inclusion of it in the quoted rule approved there was dictum.

Plaintiff primarily contends that bankruptcy proceedings initiated with malice and without probable cause, standing alone, should be sufficient upon which to base his action. In Section 678 of the Restatement of Torts, quoted above, is found the essence of plaintiff’s contention; namely, that there need be no allegation of special injury in a statement of a cause of action of the nature asserted. In the words of the Restatement, plaintiff contends the liability is “for the harm to the other’s reputation.”

Cases from several jurisdictions indicate that initiation of an insolvency or bankruptcy proceeding by nature so interferes with a person’s property and reputation that it constitutes an injury of such an unusual nature that if if is done maliciously and without prob[208]*208able cause nothing more need be alleged. Some such cases involved situations where there was appointment of a receiver in bankruptcy, a seizure of property, an adjudication of bankruptcy later set aside, or a requirement of examination as to assets tinder threat of contempt of court. Norin v. Scheldt Manf. Co., 297 Ill 521, 130 NE 791 (1921); Nassif v. Goodman, 203 NC 451, 166 SE 308, 86 ALR 215 (1932); Sachs v. Weinstein, 208 App Div 360, 203 NYS 449 (1924); Annotation, 86 ALR 219 (1933). Some were in jurisdictions which do not use the rule we have adopted in Oregon in Carnation, but allow malicious prosecution actions based upon any civil action commenced maliciously and without probable cause. McDonald v. Grocery Co., 184 Mo App 432, 171 SW 650 (1914); Neumann v. Industrial Sound Engineering, Inc., 31 Wis2d 471, 143 NW2d 543 (1966). Three cases have come to the court’s attention wherein the facts appear to have been similar to those in the case at bar, that is, the bankruptcy proceeding was filed and apparently, no other action was taken. Quartz Hill Gold Mining Co. v. Eyre, LR, 11 QBD 674 (1883); Wilkinson v. Goodfellow-Brooks Shoe Co., 141 F 218 (CC Mo 1905); King v. D. Sullivan & Co., 92 SW 51 (Tex Civ App 1906). Three cases have come to the court’s attention which, although not altogether clear, apparently hold contrary to Quartz Hill and King, requiring some allegation and showing of special injury. Vancouver B. & S. Co. v. L. C. Smith & Corona Typewriters, supra; The Cincinnati Daily Tribune Co. v. Bruck, 61 Ohio St 489, 56 NE 198 (1900) ; Luby v. Bennett, 111 Wis 613, 87 NW 804 (1901).

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Balsiger v. American Steel & Supply Co.
451 P.2d 868 (Oregon Supreme Court, 1969)

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451 P.2d 868, 254 Or. 204, 40 A.L.R. 3d 289, 1969 Ore. LEXIS 358, Counsel Stack Legal Research, https://law.counselstack.com/opinion/balsiger-v-american-steel-supply-co-or-1969.