## Facts

- Dennis Sivers leased warehouse space in Milwaukie, Oregon to R & F Capital Corp. under a commercial lease dated January 12, 1990, with a January 17, 1990 start date.
- Sivers signed as landlord; Roy Rose signed as “chairman” on behalf of R & F.
- R & F was not incorporated until February 9, 1990, after the lease was executed.
- Sivers sued R & F for unpaid rent and sought to hold Rose personally liable under ORS 60.054, which imposes liability on persons acting for a corporation “knowing there was no incorporation.”
- At trial, there was no direct evidence that Rose knew R & F had not been incorporated when he signed the lease.
- Evidence showed Rose was an experienced businessman, relied on lawyers to handle incorporation, did not review incorporation papers until after suit, and testified he believed R & F was incorporated when he signed.

## Issues

1. Whether the evidence permitted a reasonable jury to find that Rose actually knew R & F was not incorporated when he signed the lease, as required for personal liability under ORS 60.054.
2. Whether the trial court erred in denying Rose’s motion for a directed verdict on the statutory personal-liability claim.

## Decision

- The Court of Appeals reversed the judgment imposing personal liability on Rose.
- ORS 60.054 requires proof that the actor had actual knowledge that no corporation existed at the time of the transaction.
- The record supported, at most, an inference that Rose was careless in failing to confirm corporate status, not that he knew incorporation had not occurred.
- The fact-finder’s ability to disbelieve Rose’s denial of knowledge did not supply affirmative proof of the missing knowledge element.
- Because there was no evidence from which a jury could find actual knowledge, Rose was entitled to a directed verdict.

## Legal Principles

- Under ORS 60.054, liability for acting on behalf of a non-existent corporation attaches only if the person acts knowing that no corporation exists.
- Constructive knowledge, negligence, or a “should have known” showing does not satisfy the statute’s knowledge requirement.
- In reviewing denial of a directed verdict, the appellate court views evidence favorably to the prevailing party, but reversal is required when the record contains no evidence supporting an essential element.

## Conclusion

The court held that ORS 60.054 imposes personal liability for pre-incorporation acts only upon proof of actual knowledge of nonincorporation, and it reversed because the evidence did not support that required mental state.


Sivers v. R & F Capital Corp., 858 P.2d 895 (Or. Ct. App. 1993)