## Facts

- Stone Machinery Company sold Frank Kessler a used D-9 Caterpillar tractor under a conditional sales contract with an unpaid balance payable in installments.
- Kessler’s payments were late and irregular, but the account was brought current after later payments.
- After Stone claimed default, it filed a Washington replevin action but never served Kessler with process and did not obtain judicial authority to seize the tractor.
- Stone later located the tractor in Oregon, where Kessler had taken it for work, and decided to repossess without court process.
- Stone’s agent requested the Wallowa County sheriff to accompany the repossession; the sheriff arrived in uniform in an official vehicle, reviewed the contract, and told Kessler that Stone could take the tractor.
- Kessler objected but did not resist because he believed he was required to comply with the sheriff’s statements.
- Stone took and later sold the tractor.
- Kessler asserted a cross-claim seeking compensatory and punitive damages for wrongful repossession; the trial court awarded both compensatory and punitive damages.

## Issues

1. Which state’s law governs tort liability when the repossession conduct occurred in Oregon but the seller acted from Washington?
2. Whether a self-help repossession becomes a breach of the peace and conversion when the seller secures a sheriff’s participation without judicial process, creating coercion that prevents lawful resistance.
3. Whether the evidence supported the trial court’s findings on the tractor’s condition and fair market value used to compute compensatory damages.
4. Whether the facts satisfied Oregon’s standard for punitive damages for wrongful repossession.

## Decision

- Oregon law applied because the alleged tortious conduct occurred in Oregon.
- The repossession was a breach of the peace and a wrongful conversion under Oregon law because the seller obtained a law officer’s unauthorized participation that amounted to constructive force, intimidation, and oppression.
- The compensatory damages award was affirmed because the valuation findings were supported by substantial evidence and were not subject to reweighing on appeal.
- The punitive damages award was reversed because the record did not show the heightened culpability required under Oregon law.
- Disposition: affirmed in part and reversed in part.

## Legal Principles

- For a tort committed in one state under the direction of a person in another, the law of the state where the tort occurs governs the nature of the claim and liability.
- Self-help repossession is permitted only if accomplished without a breach of the peace.
- A creditor’s use of a law enforcement officer without judicial authority, where the officer’s conduct conveys official compulsion and suppresses the debtor’s ability to resist by lawful and reasonable means, constitutes a breach of the peace and supports conversion liability.
- Appellate courts do not substitute their fact findings for trial court findings supported by substantial evidence, including credibility and valuation determinations.
- Punitive damages under Oregon law require aggravated misconduct beyond the wrongfulness necessary to establish conversion or breach of the peace.

## Conclusion

The court held that Oregon law governed the Oregon repossession and that involving an on-duty sheriff without process transformed the self-help seizure into a breach of the peace and conversion warranting compensatory damages, but the evidence did not justify punitive damages.


Stone Mach. Co. v. Kessler, 463 P.2d 651 (Wash. Ct. App. 1970)