Sivers v. R & F Capital Corp.

In 1990, Dennis Sivers (plaintiff) leased a warehouse space to R & F Capital Corporation (R&F) (defendant). Roy Rose (defendant) signed the commercial leasing agreement (the lease) as “chairman” on R&F’s behalf. Though Rose later contended that he signed the lease on a subsequent date, the lease reflected an execution date of January 12, 1990. R&F was not incorporated until February 9, 1990. Sivers sued R&F and Rose for allegedly failing to pay the rent owed under the lease. Sivers requested that the trial court impose personal liability on Rose pursuant to an Oregon statute providing that individuals who act as or on behalf of a corporation while knowing there was no incorporation are jointly and severally liable for liabilities created by their actions. During trial, there was no direct evidence that Rose actually knew that R&F had not been incorporated when the parties executed the lease. However, the evidence showed that Rose was an experienced businessman who trusted his lawyers to handle R&F’s incorporation. Moreover, Rose had not read the articles of incorporation until Sivers filed the lawsuit. Rose testified that he believed R&F had been incorporated when he signed the lease. The trial court denied Rose’s motion for directed verdict. The jury returned a verdict against Rose. Rose appealed the trial court’s denial of the motion. On appeal, Sivers maintained that despite the lack of direct evidence, Rose’s business experience, failure to read the articles of incorporation, and lack of responsibility for filing the necessary corporate documents constituted circumstantial evidence upon which the jury could have found that Rose knew that the corporation had not been incorporated when he signed the lease. Sivers further argued that the jury could have disbelieved Rose’s testimony and found that he had actual knowledge of the same.