{"id":948,"date":"2015-05-26T16:29:49","date_gmt":"2015-05-26T16:29:49","guid":{"rendered":"https:\/\/courses.candelalearning.com\/masterybusinesslaw1x6xmaster\/?post_type=chapter&p=948"},"modified":"2017-01-09T19:42:41","modified_gmt":"2017-01-09T19:42:41","slug":"principals-tort-and-criminal-liability","status":"publish","type":"chapter","link":"https:\/\/courses.lumenlearning.com\/montgomerycollege-masterybusinesslaw2\/chapter\/principals-tort-and-criminal-liability\/","title":{"raw":"Reading: Principal\u2019s Tort and Criminal Liability","rendered":"Reading: Principal\u2019s Tort and Criminal Liability"},"content":{"raw":"

LEARNING OBJECTIVES<\/h3>\r\n
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    \r\n\t
  1. Understand in what circumstances a principal will be vicariously liable for torts committed by employees.<\/li>\r\n\t
  2. Recognize the difference between agents whose tort and criminal liability may be imputed to the employer and those whose liability will not be so imputed.<\/li>\r\n\t
  3. Know when the principal will be vicariously liable for intentional torts committed by the agent.<\/li>\r\n\t
  4. Explain what is meant by \u201cthe scope of employment,\u201d within which the agent\u2019s actions may be attributed to the principal and without which they will not.<\/li>\r\n\t
  5. Name special cases of vicarious liability.<\/li>\r\n\t
  6. Describe the principal\u2019s liability for crimes committed by the agent.<\/li>\r\n<\/ol>\r\n<\/div>\r\n
    \r\n

    Principal\u2019s Tort Liability<\/h2>\r\n
    \r\n

    The Distinction between Direct and Vicarious Liability<\/h2>\r\n

    When is the principal liable for injuries that the agent causes another to suffer?<\/p>\r\n\r\n

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    Direct Liability<\/h2>\r\n

    There is a distinction between torts prompted by the principal himself and torts of which the principal was innocent. If the principal directed the agent to commit a tort or knew that the consequences of the agent\u2019s carrying out his instructions would bring harm to someone, the principal is liable. This is an application of the general common-law principle that one cannot escape liability by delegating an unlawful act to another. The syndicate that hires a hitman is as culpable of murder as the man who pulls the trigger. Similarly, a principal who is negligent in his use of agents will be held liable for their negligence. This rule comes into play when the principal fails to supervise employees adequately, gives faulty directions, or hires incompetent or unsuitable people for a particular job. Imposing liability on the principal in these cases is readily justifiable since it is the principal\u2019s own conduct that is the underlying fault; the principal here is directly liable.<\/p>\r\n\r\n<\/div>\r\n

    \r\n

    Vicarious Liability<\/h2>\r\n

    But the principle of liability for one\u2019s agent is much broader, extending to acts of which the principal had no knowledge, that he had no intention to commit nor involvement in, and that he may in fact have expressly prohibited the agent from engaging in. This is the principle of respondeat superior(\u201clet the master answer\u201d) or the master-servant doctrine, which imposes on the principal\u00a0vicarious liability (vicarious<\/em> means \u201cindirectly, as, by, or through a substitute\u201d) under which the principal is responsible for acts committed by the agent within the scope of the employment (see\u00a0Figure 12.2 \"Principal\u2019s Tort Liability\"<\/a>).<\/p>\r\n\r\n

    \r\n\r\n[caption id=\"\" align=\"alignnone\" width=\"969\"]\"Image Figure 12.2 Principal\u2019s Tort Liability.[\/caption]\r\n\r\n<\/div>\r\n

    The modern basis for vicarious liability is sometimes termed the \u201cdeep pocket\u201d theory: the principal (usually a corporation) has deeper pockets than the agent, meaning that it has the wherewithal to pay for the injuries traceable one way or another to events it set in motion. A million-dollar industrial accident is within the means of a company or its insurer; it is usually not within the means of the agent\u2014employee\u2014who caused it.<\/p>\r\n

    The \u201cdeep pocket\u201d of the defendant-company is not always very deep, however. For many small businesses, in fact, the principle of respondeat superior is one of life or death. One example was the closing in San Francisco of the much-beloved Larraburu Brothers Bakery\u2014at the time, the world\u2019s second largest sourdough bread maker. The bakery was held liable for $2 million in damages after one of its delivery trucks injured a six-year-old boy. The bakery\u2019s insurance policy had a limit of $1.25 million, and the bakery could not absorb the excess. The Larraburus had no choice but to cease operations. (See http:\/\/www.outsidelands.org\/larraburu.php<\/a>.)<\/p>\r\n

    Respondeat superior raises three difficult questions: (1) What type of agents can create tort liability for the principal? (2) Is the principal liable for the agent\u2019s intentional torts? (3) Was the agent acting within the scope of his employment? We will consider these questions in turn.<\/p>\r\n\r\n<\/div>\r\n<\/div>\r\n

    \r\n

    Agents for Whom Principals Are Vicariously Liable<\/h2>\r\n

    In general, the broadest liability is imposed on the master in the case of tortious physical conduct by a servant, as discussed in Chapter 11 \"Relationships between Principal and Agent\"<\/a>. If the servant acted within the scope of his employment\u2014that is, if the servant\u2019s wrongful conduct occurred while performing his job\u2014the master will be liable to the victim for damages unless, as we have seen, the victim was another employee, in which event the workers\u2019 compensation system will be invoked. Vicarious tort liability is primarily a function of the employment relationship and not agency status.<\/p>\r\n

    Ordinarily, an individual or a company is not vicariously liable for the tortious acts of independent contractors. The plumber who rushes to a client\u2019s house to repair a leak and causes a traffic accident does not subject the homeowner to liability. But there are exceptions to the rule. Generally, these exceptions fall into a category of duties that the law deems nondelegable. In some situations, one person is obligated to provide protection to or care for another. The failure to do so results in liability whether or not the harm befell the other because of an independent contractor\u2019s wrongdoing. Thus a homeowner has a duty to ensure that physical conditions in and around the home are not unreasonably dangerous. If the owner hires an independent contracting firm to dig a sewer line and the contractor negligently fails to guard passersby against the danger of falling into an open trench, the homeowner is liable because the duty of care in this instance cannot be delegated. (The contractor is, of course, liable to the homeowner for any damages paid to an injured passerby.)<\/p>\r\n\r\n<\/div>\r\n

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    Liability for Agent\u2019s Intentional Torts<\/h2>\r\n

    In the nineteenth century, a principal was rarely held liable for intentional wrongdoing by the agent if the principal did not command the act complained of. The thought was that one could never infer authority to commit a willfully wrongful act. Today, liability for intentional torts is imputed to the principal if the agent is acting to further the principal\u2019s business. See the very disturbing Lyon v. Carey<\/em> in Section 12.4.2 \"Employer\u2019s Liability for Employee\u2019s Intentional Torts: Scope of Employment\"<\/a>.<\/p>\r\n\r\n<\/div>\r\n

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    Deviations from Employment<\/h2>\r\n

    The general rule is that a principal is liable for torts only if the servant committed them \u201cin the scope of employment.\u201d But determining what this means is not easy.<\/p>\r\n\r\n

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    The \u201cScope of Employment\u201d Problem<\/h2>\r\n

    It may be clear that the person causing an injury is the agent of another. But a principal cannot be responsible for every act of an agent. If an employee is following the letter of his instructions, it will be easy to determine liability. But suppose an agent deviates in some way from his job. The classic test of liability was set forth in an 1833 English case, Joel v. Morrison<\/em>.Joel v. Morrison<\/em>, 6 Carrington & Payne 501.<\/span> The plaintiff was run over on a highway by a speeding cart and horse. The driver was the employee of another, and inside was a fellow employee. There was no question that the driver had acted carelessly, but what he and his fellow employee were doing on the road where the plaintiff was injured was disputed. For weeks before and after the accident, the cart had never been driven in the vicinity in which the plaintiff was walking, nor did it have any business there. The suggestion was that the employees might have gone out of their way for their own purposes. As the great English jurist Baron Parke put it, \u201cIf the servants, being on their master\u2019s business, took a detour to call upon a friend, the master will be responsible.\u2026But if he was going on a frolic of his own, without being at all on his master\u2019s business, the master will not be liable.\u201d In applying this test, the court held the employer liable.<\/p>\r\n

    The test is thus one of degree, and it is not always easy to decide when a detour has become so great as to be transformed into a frolic. For a time, a rather mechanical rule was invoked to aid in making the decision. The courts looked to the servant\u2019s purposes in \u201cdetouring.\u201d If the servant\u2019s mind was fixed on accomplishing his own purposes, then the detour was held to be outside the scope of employment; hence the tort was not imputed to the master. But if the servant also intended to accomplish his master\u2019s purposes during his departure from the letter of his assignment, or if he committed the wrong while returning to his master\u2019s task after the completion of his frolic, then the tort was held to be within the scope of employment.<\/p>\r\n

    This test is not always easy to apply. If a hungry deliveryman stops at a restaurant outside the normal lunch hour, intending to continue to his next delivery after eating, he is within the scope of employment. But suppose he decides to take the truck home that evening, in violation of rules, in order to get an early start the next morning. Suppose he decides to stop by the beach, which is far away from his route. Does it make a difference if the employer knows that his deliverymen do this?<\/p>\r\n\r\n<\/div>\r\n

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    The Zone of Risk Test<\/h2>\r\n

    Court decisions in the last forty years have moved toward a different standard, one that looks to the foreseeability of the agent\u2019s conduct. By this standard, an employer may be held liable for his employee\u2019s conduct even when devoted entirely to the employee\u2019s own purposes, as long as it was foreseeable that the agent might act as he did. This is the \u201czone of risk\u201d test. The employer will be within the zone of risk for vicarious liability if the employee is where she is supposed to be, doing\u2014more or less\u2014what she is supposed to be doing, and the incident arose from the employee\u2019s pursuit of the employer\u2019s interest (again, more or less). That is, the employer is within the zone of risk if the servant is in the place within which, if the master were to send out a search party to find a missing employee, it would be reasonable to look. See Section 4, Cockrell v. Pearl River Valley Water Supply Dist.<\/em><\/p>\r\n\r\n<\/div>\r\n<\/div>\r\n

    \r\n

    Special Cases of Vicarious Liability<\/h2>\r\n

    Vicarious liability is not limited to harm caused in the course of an agency relationship. It may also be imposed in other areas, including torts of family members, and other torts governed by statute or regulation. We will examine each in turn.<\/p>\r\n\r\n

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    Use of Automobiles<\/h2>\r\n

    A problem commonly arises when an automobile owner lends his vehicle to a personal friend, someone who is not an agent, and the borrower injures a third person. Is the owner liable? In many states, the owner is not liable; in other states, however, two approaches impose liability on the owner.<\/p>\r\n

    The first approach is legislative: owner\u2019s consent statutes make the owner liable when the automobile is being driven with his consent or knowledge. The second approach to placing liability on the owner is judicial and known as the family purpose doctrine. Under this doctrine, a family member who negligently injures someone with the car subjects the owner to liability if the family member was furthering family purposes. These are loosely defined to include virtually every use to which a child, for example, might put a car. In a Georgia case, Dixon v. Phillips<\/em>, the father allowed his minor son to drive the car but expressly forbade him from letting anyone else do so.Dixon v. Phillips<\/em>, 217 S.E.2d 331 (Ga. 1975).<\/span> Nevertheless, the son gave the wheel to a friend and a collision occurred while both were in the car. The court held the father liable because he made the car available for the pleasure and convenience of his son and other family members.<\/p>\r\n\r\n<\/div>\r\n

    \r\n

    Torts of Family Members<\/h2>\r\n

    At common law, the husband was liable for the torts of his wife, not because she was considered an agent but because she was considered to be an extension of him. \u201cHusband and wife were only one person in law,\u201dO.W. Holmes, Agency<\/em>, 4 Harvard Law Rev. 353 (1890\u201391).<\/span> says Holmes, and any act of the wife was supposed to have been done at the husband\u2019s direction (to which Mr. Dickens\u2019s Mr. Bumble responded, in the memorable line, \u201cIf the law supposes that, the law is a ass\u2014a idiot\u201dCharles Dickens, Oliver Twist<\/em>, (London: 1838), chap 51.<\/span>). This ancient view has been abrogated by statute or by court ruling in all the states, so that now a wife is solely responsible for her own torts unless she in fact serves as her husband\u2019s agent.<\/p>\r\n

    Unlike wives, children are not presumed at common law to be agents or extensions of the father so that normally parents are not vicariously liable for their children\u2019s torts. However, they can be held liable for failing to control children known to be dangerous.<\/p>\r\n

    Most states have statutorily changed the common-law rule, making parents responsible for willful or malicious tortious acts of their children whether or not they are known to be mischief-makers. Thus the Illinois Parental Responsibility Law provides the following: \u201cThe parent or legal guardian of an unemancipated minor who resides with such parent or legal guardian is liable for actual damages for the willful or malicious acts of such minor which cause injury to a person or property.\u201dIll. Rev. Stat. (2005), chapter 70, paragraph 51. http:\/\/law.justia.com\/illinois\/codes\/2005\/chapter57\/2045.html<\/a>.<\/span>Several other states impose a monetary limit on such liability.<\/p>\r\n\r\n<\/div>\r\n

    \r\n

    Other Torts Governed by Statute or Regulation<\/h2>\r\n

    There are certain types of conduct that statutes or regulation attempt to control by placing the burden of liability on those presumably in a position to prevent the unwanted conduct. An example is the \u201cDramshop Act,\u201d which in many states subjects the owner of a bar to liability if the bar continues to serve an intoxicated patron who later is involved in an accident while intoxicated. Another example involves the sale of adulterated or short-weight foodstuffs: the employer of one who sells such may be liable, even if the employer did not know of the sales.<\/p>\r\n\r\n<\/div>\r\n<\/div>\r\n

    \r\n

    Principal\u2019s Criminal Liability<\/h2>\r\n

    As a general proposition, a principal will not be held liable for an agent\u2019s unauthorized criminal acts if the crimes are those requiring specific intent. Thus a department store proprietor who tells his chief buyer to get the \u201cbest deal possible\u201d on next fall\u2019s fashions is not liable if the buyer steals clothes from the manufacturer. A principal will, however, be liable if the principal directed, approved, or participated in the crime. Cases here involve, for example, a corporate principal\u2019s liability for agents\u2019 activity in antitrust violations\u2014price-fixing is one such violation.<\/p>\r\n

    There is a narrow exception to the broad policy of immunity. Courts have ruled that under certain regulatory statutes and regulations, an agent\u2019s criminality may be imputed to the principal, just as civil liability is imputed under Dramshop Acts. These include pure food and drug acts, speeding ordinances, building regulations, child labor rules, and minimum wage and maximum hour legislation. Misdemeanor criminal liability may be imposed upon corporations and individual employees for the sale or shipment of adulterated food in interstate commerce, notwithstanding the fact that the defendant may have had no actual knowledge that the food was adulterated at the time the sale or shipment was made.<\/p>\r\n\r\n

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    KEY TAKEAWAY<\/h3>\r\n

    The principal will be liable for the employee\u2019s torts in two circumstances: first, if the principal was directly responsible, as in hiring a person the principal knew or should have known was incompetent or dangerous; second, if the employee committed the tort in the scope of business for the principal. This is the master-servant doctrine or respondeat superior. It imposes vicarious liability on the employer: the master (employer) will be liable if the employee was in the zone of activity creating a risk for the employer (\u201czone of risk\u201d test), that is\u2014generally\u2014if the employee was where he was supposed to be, when he was supposed to be there, and the incident arose out of the employee\u2019s interest (however perverted) in promoting the employer\u2019s business.<\/p>\r\n

    Special cases of vicarious liability arise in several circumstances. For example, the owner of an automobile may be liable for torts committed by one who borrows it, or if it is\u2014even if indirectly\u2014used for family purposes. Parents are, by statute in many states, liable for their children\u2019s torts. Similarly by statute, the sellers and employers of sellers of alcohol or adulterated or short-weight foodstuffs may be liable. The employer of one who commits a crime is not usually liable unless the employer put the employee up to the crime or knew that a crime was being committed. But some prophylactic statutes impose liability on the employer for the employee\u2019s crime\u2014even if the employee had no intention to commit it\u2014as a means to force the employer to prevent such actions.<\/p>\r\n\r\n<\/div>\r\n

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    PRACTICE EXERCISES<\/h3>\r\n
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    1. What is the difference between direct and vicarious employer tort liability?<\/li>\r\n\t
    2. What is meant by the \u201czone of risk\u201d test?<\/li>\r\n\t
    3. Under what circumstances will an employer be liable for intentional torts of the employee?<\/li>\r\n\t
    4. When will the employer be liable for an employee\u2019s criminal acts?<\/li>\r\n<\/ol>\r\n

      Reflection<\/span> Questions<\/span><\/h2>\r\n