Gentemann v. Sunaire Systems, Inc.

665 P.2d 875, 63 Or. App. 654, 1983 Ore. App. LEXIS 3022
CourtCourt of Appeals of Oregon
DecidedJune 22, 1983
DocketA8105-02796; A24520
StatusPublished

This text of 665 P.2d 875 (Gentemann v. Sunaire Systems, Inc.) is published on Counsel Stack Legal Research, covering Court of Appeals of Oregon primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Gentemann v. Sunaire Systems, Inc., 665 P.2d 875, 63 Or. App. 654, 1983 Ore. App. LEXIS 3022 (Or. Ct. App. 1983).

Opinion

NEWMAN, J.

Defendant Rosbach appeals from a fraud judgment entered against him following a jury verdict for plaintiff. He assigns as error denial of his motion for a directed verdict, asserting that plaintiffs claim was barred by an election of remedies,1 and also denial of his motion for a change of venue. We affirm.

Plaintiff sued (1) defendant Sunaire Systems, Inc, (“corporation”) for rescission; (2) both the corporation and its president, Rosbach, for fraud; and (3) the corporation for unpaid wages and attorney fees. The rescission and fraud claims were pleaded as separate counts of a “first cause of action,” and the wage claim was pleaded as a “second cause of action.”

In count I, for rescission against the corporation only, plaintiff alleged that he had agreed to lend the corporation $20,000 on a promissory note; that under the note plaintiff loaned to corporation $10,000 on December 5, 1980, and $10,000 on- January 5,1981; that the note was to be repaid in full on or before June 20, 1982; that interest was to be paid commencing June 15,1981, at the rate of 10 percent per annum on $10,000 from December 5, 1980, and on the other $10,000 from January 5, 1981; that the corporation never intended to repay the loan; that the representation that it would repay the loan was false; that the representation was made by Rosbach as the corporation’s agent and president; that plaintiff had notified the corporation that he had rescinded the agreement; and that plaintiff was entitled to repayment from the corporation of the loan with interest at 10 percent per annum.

In count II, for fraud against both defendants, plaintiff realleged the loan agreement; that the false representation was made with malice; that plaintiff made his loan to the corporation in reliance on the representation; and that plaintiff suffered damage “in the sum of $20,000 plus interest at the rate of ten (10) percent per annum on $10,000 from December 5, [657]*6571980, until paid and ten (10) percent annum on $10,000 from January 5,1981 until paid” and was entitled to $5,000 punitive damages.

Plaintiff prayed for a “Decree and Judgment” on the first cause of action “rescinding the above alleged Agreement and declaring the transaction to be void” and for judgment “against Defendants in the amount of $20,000, plus interest in the amount of ten (10%) percent per annum on $10,000 from December 5, 1981, until paid, and ten (10%) percent per annum on $10,000 from January 5,1981, until paid, $5,000 as and for punitive damages and for such further relief and additional relief as the Court deems equitable,” and on the second cause of action for unpaid wages and reasonable attorneys fees.

In his answer Rosbach admitted that plaintiff gave notice of rescission to the corporation and that he was the authorized agent and president of the corporation. The corporation did not appear, and plaintiff obtained a default judgment against it. The default “judgment order” provided:

“NOW, THEREFORE, IT IS HEREBY ORDERED AND ADJUDGED, that Judgment be and the same hereby is entered in favor of the Plaintiff against the Defendant, Sunaire Systems, Inc., in the sum of $20,000 plus interest at the rate of ten (10%) percent per annum on $10,000 from December 5,1980, until the date of the Judgment herein, plus ten (10%) percent per annum on $10,000 from January 5, 1981, until the date of the Judgment herein, plus interest at the rate of ten (10%) per annum on $20,000 from the date of the Judgment herein, until paid, the further sum of $1,375 unpaid wages, plus reasonable attorney’s fees in the amount of $500, together with costs and disbursements incurred herein in the sum of $_, and that execution issue therefor.”

Rosbach then moved for summary judgment, asserting that plaintiff had made an election of remedies by obtaining a default judgment against corporation for rescission and that, therefore, the action for fraud against Rosbach was barred. He also moved for a change of Venue from Multnomah County. The court denied both motions. Before the jury was empaneled to try the fraud claim, Rosbach renewed his summary judgment motion. He also moved at the trial for a directed verdict and after the trial for judgment notwithstanding the verdict. Each time he asserted that plaintiffs fraud claim against him was barred by an election of remedies.

[658]*658The jury verdict against Rosbach on the fraud claim was for $20,000 general damages plus interest at the rate of 10 percent per annum on $10,000 from December 5,1980, and 10 percent per annum on $10,000 from January 5,1981, and also $5,000 punitive damages.

The remedies of rescission and damages for fraud are inconsistent. See McAllister v. Charter First Mortgage, Inc., 279 Or 279, 567 P2d 539 (1977); Helmer v. Transamerica Title Ins. Co., 279 Or 457, 569 P2d 10 (1977). By obtaining the default judgment against the corporation, plaintiff made an election of remedies. Federici et ux v. Lehman et al, 230 Or 70, 368 P2d 611 (1962); Earn et ux v. Pidcock et ux, 225 Or 406, 357 P2d 509 (1960). Plaintiff, however, argues that his fraud claim against defendant Rosbach was not barred, because the rescission claim was asserted only against the corporation, which alone signed the loan agreement, and therefore only the corporation could raise the bar of election of remedies.

Although plaintiff had a fraud claim against Rosbach and a claim for fraud and rescission against the corporation, a judgment of rescission against the corporation would bar the claim against Rosbach for fraud. See Johnson v. Dave’s Auto Center, 257 Or 34, 36, 476 P2d 190 (1970); Annot., 116 ALR 601 (1938); 25 Am Jur2d 25 (1966). Rosbach could and did raise the issue.

Plaintiff also argues that no election was made, because the default judgment against the corporation does not state whether it is for rescission or fraud. He argues that the judgment is for “rescission and/or damages” for fraud, although at the argument below on the motion for summary judgment several months after the default judgment was entered plaintiff’s counsel told the trial court that “we obtained a default judgment against the corporation on the first cause of action, count I,” the rescission count, and “we have elected to rescind against the corporation.”

The interpretations plaintiff’s counsel gave the default judgment against corporation after it was entered do not govern here.2 Although plaintiff prayed for a judgment on [659]*659his first cause of action “rescinding the above alleged agreement and declaring the transaction to be void,” the motion for and order of default are silent respecting rescission. There is no record of what exchange took place between counsel and the court before the default order or judgment were entered. The default judgment does not recite that the agreement is rescinded or void. It contains no language of rescission. On the contrary, it is, on its face, an affirmance of the loan agreement. The default judgment provides that the corporation pay to plaintiff without specifying whether on count I or II of the first cause of action the sums provided to be paid in the promissory note: that is, $20,000 with interest at ten percent per annum on $10,000 from December 5,1980, and ten percent per annum on $10,000 from January 5,1981. The default judgment does not provide for punitive damages, but plaintiff could not obtain punitive damages on a default judgment without an evidentiary showing. ORCP 69B(2).

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Related

Karn Et Ux v. Pidcock Et Ux
357 P.2d 509 (Oregon Supreme Court, 1960)
McAllister v. Charter First Mortgage, Inc.
567 P.2d 539 (Oregon Supreme Court, 1977)
Helmer v. Transamerica Title Insurance
569 P.2d 10 (Oregon Supreme Court, 1977)
Federici Et Ux v. Lehman
368 P.2d 611 (Oregon Supreme Court, 1962)
Johnson v. Dave's Auto Center, Inc.
476 P.2d 190 (Oregon Supreme Court, 1970)

Cite This Page — Counsel Stack

Bluebook (online)
665 P.2d 875, 63 Or. App. 654, 1983 Ore. App. LEXIS 3022, Counsel Stack Legal Research, https://law.counselstack.com/opinion/gentemann-v-sunaire-systems-inc-orctapp-1983.