Opinion ID: 321868
Heading Depth: 1
Heading Rank: 3

Heading: Vicarious Liability of Doug Rife.

Text: 28 There was no evidence that Doug Rife, the owner of the Doug Rife Realtor Agency, had personally joined in any discriminatory acts against appellants. Appellee Joseph Arntz, against whom judgment was entered, was an employee and agent of the Rife Agency, and the evidence indicated that Doug Rife, as proprietor of the agency, received some portion of the commissions earned by his agents. The District Judge, however, denied appellants' contention that Doug Rife, as proprietor of the agency, should be charged with Arntz' misconduct under the rule of respondeat superior. In making this ruling, the District Judge relied on the law of Ohio. We hold that this was error. 29 Although this Court has not decided the extent to which state law is to guide a principal's liability under the Fair Housing Act, we believe prior decisions in other areas of civil rights direct us to use federal-- not state-- law. 30 In Nelson v. Knox, 256 F.2d 312 (6th Cir. 1958), appellant brought suit under 42 U.S.C. 1983, alleging that various city officials of Huntington Woods, Michigan, had passed and enforced discriminatory ordinances thereby destroying his garage business. As one ground for dismissing the complaint, the District Judge determined that the defendant officials were immune from suit under Michigan law. Justice Stewart, then a member of this Court, stated: 31 'We hold at the outset that the extent of the defendants' insulation from liability under the Civil Rights Act cannot properly be determined by reference to the local rule in Michigan. Surely each state cannot be left to decide for itself which of its officials are completely immune from liability for depriving a citizen of rights granted by the Federal Constitution. The question must be decided as a matter of general law.' 256 F.2d at 314. 32 See also Lynch v. Johnson, 420 F.2d 818, 820-821 (6th Cir. 1970); 1A J.Moore, Federal Practice, P0.323(3), at 3732 (1965). In addition, this Court has said that 'where a decision is likely to have a substantial effect on the implementation of a federal program, then a federal court should declare a rule consistent with the program's demands.' United States v. Carson, 372 F.2d 429, 432 (6th Cir. 1967). 33 An examination of the Act, 42 U.S.C. 3601-3612, reveals a broad legislative plan to eliminate all traces of discrimination within the housing field. To allow such a purpose to be controlled by state law might well defeat this objective. We believe that in such a situation this Court is not restricted by the law of the various states, and that it should apply federal law. 34 The law which is to control enforcement of the Congressional Acts in the area of housing discrimination is still in the developmental state. We consider, however, that some decided cases are sufficiently analogous to the present case to warrant our discussion of them. 35 In United States v. Northside Realty Associates, Inc., 474 F.2d 1164 (5th Cir. 1973), the Fifth Circuit made findings of fact relevant to the rule we consider. Appellant Northside was located in Atlanta and had various branch agencies, one of which was managed by its Vice President, Isakson. All salesmen worked on a commission basis, and it was found that of the 3000 homes sold since passage of the Act in 1968, none had been sold to blacks. The District Court determined that Isakson had violated the Act by 'denying to a prospective black buyer that he, Isakson, sold real estate-- without explaining that Northside Realty, of which he was Executive Vice-President, did, and then referring him to a black real estate agency; by showing an intention not to cooperate with a black realtor; and by various other acts.' In affirming the District Court's finding of liability on the part of the corporate defendant, the Court of Appeals said: 36 'In light of the fact that Ed Isakson (1) is the Executive Vice President of Northside Realty, (2) is the broker whose license inures to the benefit of the corporation and enables it to engage in the business of selling real estate, and (3) directly supervises one sales office of Northside Realty and is in charge of hiring or selecting the sales managers for the other Northside offices, we do not think it clearly erroneous for the District Court to conclude that appellant Isakson acted within the scope of his duties when he spoke to customers at the office that he supervised and when he discussed sales policy with other people in the real estate business. Nor do we think the District Court was clearly erroneous in finding that these activities were conducted with the intention of benefiting the corporation for which Isakson served as executive vice president. See Standard Oil Co. of Texas v. United States, supra, 307 F.2d 120, 5 Cir.' 474 F.2d at 1168. 37 United States v. Youritan Construction Co., 370 F.Supp. 643 (N.D.Cal.1973) involved discrimination in the renting of apartments, with the government seeking to enjoin the company owner T. S. Tan, from further discrimination. In holding that the owner was vicariously liable, the District Judge said: 38 'The discriminatory conduct of an apartment manager or rental agent, is as a general rule, attributable to the owner and property manager of the apartment complex, both under the doctrine of respondeat superior and because the duty to obey the law is non-delegable. United States v. Real Estate Development Corp., supra (D.C., 347 F.Supp. 776); United States v. Reddoch, supra; Williamson v. Hampton Mgt. Co., 339 F.Supp. 1146 (N.D.Ill.1972); and United States v. Mitchell, 335 F.Supp. 1004, 1006 (N.D.Ga.1971). As the court stated in United States v. Real Estate Development Corp., supra, 347 F.Supp. at 785 (apartment case); The resident managers and managers of the defendants, as agents of the defendants, are authorized to represent the defendants and can rent in no other capacity. Their acts and statements, made within the scope of their agency, are attributable to the defendants, whose duty to comply with the law is non-delegable. United States v. Reddoch, supra, slip opinion at 28; Williamson v. Hampton Mgt. Co., 339 F.Supp. 1146 (N.D.Ill.1972).' 39 370 F.Supp. at 649. See also United States v. Real Estate Development Corp., 347 F.Supp. 776 (N.D.Miss.1972). 40 At trial, appellee Arntz testified that the salesmen at the Rife Agency worked on a commission basis, and that except for floor time-- time spent at the agency-- they selected their own working hours. He also testified that Rife did have certain controls over salesmen, though most rules established by Rife were due to the broker-salesman relationship. 'These are the things that when you take the real estate license commission examination pretty much establish the results.' No contracts were signed by salesmen, for example, because their license was 'through the broker.' Appellee Simmons' testimony was similar to Arntz' in that the only control which Rife exercised over the salesmen, other than that provided by law, was the requirement of spending time on the floor. We also note the following from appellee Rife's testimony: 41 '(Question) In what capacity are they (the salesmen) engaged in the sale of real estate of Douglas Rife? ' (Answer) They list homes, make appointments, sell homes. They are real estate sales people. 'Question: Are they under your general supervision? 'Answer: Yes. 'Question: Do you give your final approval on contracts or are you consulted in regard to various purchase contracts or offers that are made through Doug Rife Realty through one of your agents; Mr. Arntz, Mr. Simmons, or Mrs. Barkley? 'Answer: If there is an unusual circumstance, I would be consulted. 'Is that basically correct, the latter part, that if there is an unusual circumstance in a transaction, you would be contacted? 'A. I believe so. If something was different I think they would consult me.' 42 While this evidence does not indicate that Arntz acted with the approval or at the direction of appellee Rife, we do not believe that such a finding is necessary in order to hold Rife liable. As owner of the agency, Rife had at least the power to control the acts of his salesmen. Rife would, therefore, be liable for compensatory damages resulting to the Marrs. 43