Court Opinion

ID: 9885193
Source: CourtListenerOpinion
Date Created: 2023-10-06 03:45:17.781297+00
Date Added: 2024-06-11T07:39:42.513150
License: Public Domain

Lowe, J.,
delivered the opinion of the Court. Powers, J., concurs and filed a concurring opinion at page 236 infra. Melvin, J., dissents and filed a dissenting opinion at page 237 infra.
“A large portion of the transactions of the modern business world is carried on by simple and informal means. A word or look or gesture often suffices to give assent to great undertakings or to set in motion the complicated machinery of commerce. Little, often, is said or written, but that little carries with it a train of legal consequences no less certain and definite than if the whole were included in the spoken or written words. This being so good faith is strenuously insisted upon, and one who by his conduct has led an innocent party to rely upon the appearance of another’s authority to act for him, will not be heard to deny the agency to that party’s prejudice. Hence it is that in many cases the existence of an agency is implied or presumed from the words or conduct of the parties, and this, too, although the creation of an agency was not within their immediate contemplation.”
“It may therefore be stated as a general rule that whenever a person has held out another as his agent authorized to act for him in a given capacity; *223or has knowingly and without dissent permitted such other to act as his agent in such capacity; or where his habits and course of dealing have been such as to reasonably warrant the presumption that such other was his agent, authorized to act in that capacity; whether it be in a single transaction or in a series of transactions, his authority to such other to act for him in that capacity will be conclusively presumed, so far as it may be necessary to protect the rights of third persons who have relied thereon in good faith and in the exercise of reasonable prudence, and he will not be permitted to deny that such other was his agent, authorized to do the act that he assumed to do, provided that such act is within the real or apparent scope of the presumed authority.” Mechem on Agency, §§ 83, 84. (1st ed. 1888).
These are the observations of Floyd R. Mechem, expressed in 1888, in his classic work on Agency. He further indicated in a later edition that because of the necessity of proving the element of reliance, the application of the doctrine in tort cases was limited at best.
“Reliance upon appearances, however, does not ordinarily induce to assault, slander, trespass, or negligent injury, and the cases must be rare, if any, in which it could be an element.” Mechem, supra, § 724 (2d ed. 1914).
That observation was perhaps fitting in context of the times over a half century ago, before the conformity demands of national franchise merchandising. There subsequently have developed refinements to the doctrine of “apparent agency” and the related doctrine of “agency by estoppel”, but the basis for liability remains relatively unchanged — that one should be bound by, and responsible for, his assertions.
The line of demarcation between apparent agency and agency by estoppel is not always clear, Reserve Ins. Co. v. Duckett, 240 Md. 591, 600, since both theories require essentially the same elements: outward manifestation by the *224“principal” that an agency relationship exists upon which the one seeking to recover has reasonably relied.1 When invoking agency by estoppel, however, one must also show a change of position by the third person such that it would be unjust for the purported principal to deny his words or manifestations. Restatement, Agency, 2d, § 8, Comment d. While agency by estoppel is generally used in tort actions and apparent agency in actions based on contract, that usage is not mandatory.
Although there is no Maryland case law dealing with the liability for tortious acts of apparent servants, the definition adopted by the Court of Appeals to describe apparent authority or authority by estoppel in cases based on contractual liability is sufficiently comprehensive to include tort liability as well. The general principle was stated by that Court in Hobdey v. Wilkinson, 201 Md. 517, 526.
“One who knowingly permits another to act for him as though authorized, inducing third persons to rely to their disadvantage on the seeming authority, is estopped from later asserting the lack of authority of his apparent agency.”
See also Reserve Ins. Co. v. Duckett, supra, at 600-601. The definition adopted by the American Law Institute in the Second Restatement of Agency is basically the same as Maryland’s definition, but utilizes language associated with the law of torts:
“One who represents that another is his servant or *225other agent and thereby causes a third person justifiably to rely upon the care or skill of such apparent agent is subject to liability to the third person for harm caused by the lack of care or skill of the one appearing to be a servant or other agent as if he were such.” Restatement, Agency, 2d, § 267.
The case before us on appeal presents a classic example of facts giving rise to liability based on apparent authority. It is for this reason that we have briefly reviewed the law — that our recital of those facts may be viewed in its proper context.
The Case Before Us
Claude J. Mabe testified that, while driving with his father and brother in Baltimore City, they noticed that their automobile needed both gas and water.
“Q Now, you say that you needed gasoline and water? You pulled into where?
A Hilton BP filling station.
Q Were there any other gas stations in that same area?
A Yes, sir.
Q Where were they?
A There was an Exxon on the left-hand side and Gulf station up the — just up the street a little farther.
Q Why did you choose the BP station?
A Because I always buy BP gasoline, always deal with BP.
Q Had you dealt with BP before?
A Yes, up on 29th Street and Greenmount Avenue. I[t] was right around the corner from where 1 lived at.
Q How often had you dealt with them?
A I had been dealing with them for around about a year at that time.
*226Q Was there anything in particular you — attracted you to the BP station on Hilton Street?
A Nothing except for the BP station, had BP signs, BP gas, BP pumps.
Q Was there any sign up that said anything about being operated by anybody other than BP?
A No, sir.
Q Now, when you drove into the station, what was the first thing that happened?
A Well, the car was on hot so I asked the man for, you know, water to put in the radiator and he handed me a container which I thought was water and so did he, apparently.
Q Can you describe the container?
A It was a regular water can with a spout on it.
Q And what did you do then?
A I raised the hood, put it in the radiator and it went down in the radiator and came back up and went on the motor and then it exploded.”
The can was presumably filled with gasoline or some equally volatile liquid. As a result of an injury sustained, Claude J. Mabe sued the B.P. Oil Corporation (B.P.). A jury of the Superior Court of Baltimore City returned a verdict in his favor and awarded $2800 in damages. The trial judge subsequently granted B.P.’s motion for judgment n.o.v. and denied Mabe’s motion for a new trial which he had filed because of dissatisfaction with the size of the monetary award. Mabe brought the present appeal from the final judgment (n.o.v.), arguing that there was sufficient evidence to provide a jury question, either of the existence of an actual agency relationship between B.P. and the station operator, or of an apparent agency based on manifestations thereof by B.P., upon which appellant relied.
As the granting of appellee’s motion for a judgment n.o.v. was, in effect, a granting of its previous motion for a directed verdict, we must determine whether the evidence and the reasonable and proper inferences to be drawn *227therefrom were sufficient to require the submission of the issue to the jury. Lewis v. Accelerated Express, 219 Md. 252, 255. In doing so, we must “resolve all conflicts in the evidence in favor of the plaintiff and must assume the truth of all evidence and inferences as may naturally and legitimately be deduced therefrom which tend to support the plaintiff’s right to recover — that is, the evidence must be viewed in the light most favorable to [appellant Mabe].” Smith v. Bernfeld, 226 Md. 400, 405; Hagan v. Wash. Sub. San. Comm’n, 20 Md. App. 192.
Neither side disputes the negligence of the station attendant who handed Mr. Mabe the water can. Thus, we will treat here only the question of whether there was sufficient evidence to provide a jury question as to the existence of an agency relationship between B.P. and the operator of the station.
Manifestations by the Principal
To hold an apparent principal responsible for acts of an apparent agent, it is necessary to show something more than a mere holding out by the apparent agent of an appearance of such a relationship. It must be shown that the principal knew, or should have known, that the agency relationship was being so espoused and, having such knowledge, that the putative principal condoned, permitted, encouraged, constrained or compelled its continuance. There was evidence in the case at bar that B.P. retained, through a convoluted lease arrangement, substantial, overt and subtle controls over the advertising and physical appearance of the Hilton Street station. In addition to the leases, which were admitted into evidence, the testimony of a B.P. representative explained how, and the extent to which, the rights retained by B.P. in the leases were exercised. The evidence so produced showed, not only knowledge, but encouragement of the prominent display of the B.P. trademark and other manifestations of control over the station. The various leases and the dealer agreement2 which *228were introduced into evidence further demonstrated that B.P. assumed tight control of the business activities of appellant. See, e.g., Singleton v. International Dairy Queen, Inc., 332 A. 2d 160 (Del.).
Benkert Realty Company was the owner of the gasoline station property. It had originally leased the property to one of B.P.’s predecessors in interest (all of whom we shall hereafter refer to collectively as the oil company) for whom Lonnie Faison worked as a station attendant. Upon the expiration of that lease to the oil company, an arrangement developed whereby Faison leased the premises from Benkert. As part of the same transaction, Faison then leased the premises to the oil company who immediately leased it back to Faison. At the time of these simultaneous transactions, Faison also entered into a “Dealer’s Agreement” with the oil company which was a franchise agreement to sell tires, batteries and accessories. The rental for both lease agreements was determined and paid through the purchase and sale of gasoline, which was controlled by a minimum purchase requirement in the “Dealer’s Agreement.” For each gallon of gasoline purchased by Faison from the oil company, it would pay him two cents as its rental for the lease from Faison. Faison would pay to the oil company one-half cent per gallon as rent under its lease to Faison.
The leases and the agreements contain myriad clauses, among which are some relevant to the issue of appellee’s representations that Faison was its agent. A lease covenant required Faison as lessee:
“ ... to promote diligently the sale of gasoline, other petroleum products, tires, batteries, accessories and merchandise, and to keep the station open for business and properly illuminated. . . .”
The promotion of B.P products was accomplished by use of a B.P. trademark consisting of those letters colored green and yellow and which, according to testimony, was exhibited on a “great big beautiful lit sign at night,” hung at the *229station but owned by B.P. Corporation. No signs except B.P. signs were on the premises.3 Moreover, the B.P. trademark was also emblazened “ ... on the oil cans and on the pumps [which appellee also owned] and everything . . .”, including the attendant’s uniform. The lessee was permitted, if not encouraged, to adapt that trademark to all of his equipment including vehicles used at the station.
The lessee, Faison, was not permitted to use the premises for any major repairs or maintenance of motor vehicles without express written permission from B.P., nor was he permitted to affix any sign, fixture or device to the station without prior consent. The dealer’s agreement required Faison to purchase annual minimum quantities of gasoline (both regular and high test), kerosene, heating oils, motor oils and anti-freeze. The purchase of tires, batteries and other accessories was provided for, but not required, under another agreement.
The lease reserved a right of entry for B.P. representatives, agents and employees for the purpose of examination and inspection. It was testified that this was carried out by a sales representative who would periodically check the stock,
“Also, to help the dealer as far as the — if he is having problems of making a go of it, give him suggestions as to what he should do, to perhaps improve the business and check to see what if anything is in repair work, like a pump may not be working. It may be necessary to call me [an administrative assistant] or a mechanic or something of that nature.”
The means of enforcing the lease provisions was termination for breach. Presumably the “suggestions” of the company *230representative could be enforced by the ever-present threat of non-renewal of the lease from B.P. to the operator at its termination.4
In addition to the representations by sign, emblem, etc., at the station proper, the B.P. trademark was used in national and regional sales campaigns and in advertising on television and in periodicals. There was also in the yellow pages of the Baltimore telephone book a “BP column and under it were all these [station] addresses.” Promotional gimmicks such as the sale of certain types of flags and glasses were also carried on at some B.P. stations.
We think that the cumulative effect of this evidence of the imprimatur of ownership, intentionally and purposefully exhibited to attract the public’s patronage, was sufficient to generate a jury issue as to the “outward manifestations” element of apparent agency.
In the language of the Restatement, Agency, 2d, §27:
“ . . . apparent authority to do an act is created as to a third person by written or spoken words or any other conduct of the principal which, reasonably interpreted, causes the third person to believe that the principal consents to have the act done on his behalf by the person purporting to act for him.”
Courts of other jurisdictions have found similar manifestations indicative of an apparent agency relationship. In Standard Oil Co. v. Gentry, 1 So. 2d 29 (Ala.), it was held that such manifestations as “[t]he sign exhibited to the public, the license exhibited in the office, both the telephone and city directory,” were sufficient for a jury question. Union Oil Company of California v. Crane, 258 So. 2d 882, 887 (Ala.) found “even stronger” facts than “thq facts in [Gentry] pertaining to a holding out that this was the oil company station,” in the facts that there was a *231large sign indicating that the station was a Pure Oil station, the station sold many Pure Oil products, and the service station operator wore a Pure Oil Company uniform. See also Chevron Oil Company v. Sutton, 515 P. 2d 1283 (N.M.); Gizzi v. Texaco, Inc., 437 F. 2d 308; Clark v. Texaco, Inc., 222 N.W.2d 52 (Mich. App. 1974).
It is of no consequence that the one holding the apparent authority (Faison) may not know he has it. Restatement, Agency, 2d, §8, Comment a. Nor is it of consequence that the representations of the principal were not made directly to Mabe alone.
“The manifestation of the principal may be made directly to a third person, or may be made to the community, by signs, by advertising, by authorizing the agent to state that he is authorized, or by continuously employing the agent.” Restatement, Agency, 2d, §8, Comment b.
Here, there was ample evidence that Faison, as an individual business person, was so obscured by the ostentation of advertising B.P.’s trademark that he appeared to be nothing more than B.P.’s servant.
Reliance
The testimony of Claude J. Mabe heretofore set forth exhibits evidence of sufficient reliance upon the B.P. representations to indicate that, but for those representations, he would have patronized another more convenient station. Thus, there is evidence that he acted to his detriment by bypassing a station, where we must assume no negligent act would have occurred, in reliance on the manifestations of agency held out by appellee. But the testimony went even farther. Presumably to meet the prerequisite of proof that it was reasonable for the third person (Claude J. Mabe) to rely on the representations, Restatement, Agency, 2d, §8, Comment c, appellant’s brother testified without objection:
“Q How did you ascertain that this was a BP station?
*232A Well, like I said before, as we normally deal with BP. My brother deals at it because he lives right around the corner. There was a large BP sign on the pole hanging right over the gas station. There was a numerous amount of BP signs, BP cans. The service attendant was dressed in BP clothes, hat, green jacket, with BP signs on it — him. And you know, we had no idea of nothing, that it wasn’t a BP station because like we normally deal at BP and if we know that it wasn’t owned and operated by BP management, probably wouldn’t even have went there because we like their service and things of that sort.
Q Was there a display of BP oil?
A Yes, there was. On the island where the gas is, there is a display of BP cans of oil and stuff like that.
Q Did you see another gas station nearby?
A Yes, there was a Exxon directly across the street which would have been more convenient for us to pull into than the BP because we did have to cross traffic and at that time our car was on hot and it would have been more logical for us to go to Exxon since our car was on hot, but knowing that we deal at BP and we normally get the service that we go in and ask for, we wait until traffic cleared for us to go across the street to the BP gas station.”
He also indicated that he associated certain colors with the B.P. Corporation:
“Green and yellow is the colors BP has.”
Appellant’s father’s testimony also went to the reasonableness of appellant’s reliance on the apparent operation of the station by B.P.:
“Q And there wasn’t any question in your mind, was there, that it was a BP station?
A No, sir, there’s no question in the world *233because they had their signs out and I deal right today with BP, Brooklyn BP, because they give me good service and I go there, Brooklyn, right now and do my — I trade with them.”
Thus, sufficient evidence was generated of Mabe’s reliance on B.P.’s manifestations of agency for that element to be presented to the jury and it was for the jury to decide whether such reliance was reasonable.
Conclusion
Recognizing that much of the testimony was contradicted by appellee, we can hardly conceive a more elementary showing of sufficient evidence of representation and reliance to provide a jury question. It is not our role to believe or disbelieve the evidence. We find only that there was clearly enough evidence for a jury to consider, and if believed, to decide that B.P. Corporation represented that the operator of the station was its servant or agent, thereby causing Claude J. Mabe justifiably to rely upon the care and skill of such apparent agent, subjecting it to liability to Mabe for harm caused by the lack of care or skill of the one appearing to be a servant or other agent as if he were such. Restatement, Agency, 2d, §267, supra.
We well recognize the significance of this result. We are aware also that traditionally oil companies have been protected from liability by reciprocal leases and simultaneous dealer agreements which have provided a moat between the company and its “independent” operator which could not be bridged by actual agency, express or implied.5 The use of apparent agency to ford that moat is at best an “emerging doctrine”, Comment, Liability of Oil Company for Its Lessee's Torts, 1965 Ill.L.F. 915, and is not always accepted by courts when it has been offered. See, e.g., Sherman v. Texas Company, 165 N.E.2d 916, 917 (Mass.); Reynolds v. Skelly Oil Co., 287 N.W. 823 (Iowa) and *234Coe v. Esau, 377 P. 2d 815, 818 (Okla.). If the facts of this case warrant consideration by a jury of B.P.’s liability under the doctrine of apparent agency, it is of no consequence that some of the facts may have been presented by appellant to prove an actual agency. It is sufficient that there were facts before the jury from which they could have found an apparent agency pursuant to the instructions of the court.6
Upon deciding to grant the motion for judgment n.o.v., the trial judge noted there was insufficient evidence of actual agency to provide a jury question. However, the insufficiency of the evidence of an apparent agency was not the reason for his decision in that regard. He explained his decision to enter judgment n.o.v. because he did not “find this case as one of apparent authority or agency by estoppel” because:
“To hold so, it would mean anytime any franchise dealer would allow his product to remain on the premises of an individual, let the individual use his *235national advertising, emblems, et cetera, that this act in itself would create an agency by estoppel, which would mean that every nationwide dealer, the minute they put their advertising paraphernalia in a mercantile business would be subjecting himself to suit. I don’t think this is the intention of the law.”
That, of course, is a misleading oversimplification. There is a vast difference in advertising as a franchise dealer that certain products are available on the premises, and advertising by the producer as if the national corporation under whose name the product is retailed is responsible for the safe operation of its retail outlets.7 The facts of this case show that B.P. overtly represented itself as the principal of the operator of the station by almost every known advertising technique to the total exclusion of any indication of control by anyone else. Not only did it see to it that their uniformly recognizable colors and trademark were visible throughout the station, it made no effort during periodic inspections of the station to make sure that the actual independent operator relationship was made public. All of this was done to enhance the sales of its product, and, having profited thereby, B.P. can hardly decry responsibility therefor. Where a corporation ostensibly has held itself out to the public as the operator of a service station, public policy requires that it bear the responsibility not simply for the quality of its product, but for its proper and safe delivery as well.
Insufficient Damage Award
The appellant also argues that the trial judge erred in not granting a new trial on the ground that the $2800.00 was substantially less than the damages proven by appellant. In White v. Parks, 154 Md. 195, 203, it was explained that:
“The size of a verdict can only be given weight in *236this court in a comparatively restricted class of cases, where, if legal error is found in the rulings of the trial court, it becomes necessary to consider if the amount of the judgment is indicative of injury to appellant.”
Such is not the case here. In the absence of legal error, we may not guess what a jury chooses to believe or disbelieve. The Court of Appeals in Rephann v. Armstrong, 217 Md. 90, 93, made it clear that:
“Almost never is the size of a verdict a matter for review by this Court.... The trial court refused a new trial sought on the ground that the verdicts were excessive, and it is not our function or right, even were we disposed to do so, to pass on his action in this respect. ” (Emphasis added).
The discretion of the trial court was not abused in denying a new trial. Safeway Trails, Inc. v. Smith, 222 Md. 206; Sauer v. Schulenberg, 33 Md. 288, 289
Under Md. Rule 1075 a, we shall enter the judgment that ought to have been entered by the court below.

Judgment reversed.

Judgment entered in favor of Claude J. Mabe for $2800 with interest from date of verdict and costs.

Costs to be paid by appellee.

. Unhappily the overall misuse of the terminology in the development of agency doctrine may lead a researcher down the wrong legal road. The Restatement, Agency, 2d, § 8, Comment e helps clarify some of the terms:
“ . . . apparent authority has an entirely different meaning from inferred or implied authority. The latter terms are merely descriptive of the way in which authority is created, whereas apparent authority is not necessarily coincidental with authority. In fact, apparent authority is generally inferred or implied from manifestations of the principal to third persons, and hence it is correct to speak of implied or inferred apparent authority in most of the situations where apparent authority exists. Ostensible authority is merely a synonym for apparent authority and is so used by many courts.”

. B.P. Corporation was the assignee and purchaser of these agreements from “Arco, Atlantic-Richfield”] who, in turn, had purchased them from the Sinclair Refining Company.

. The lease from the oil company to Faison required Faison to display continuously on the exterior of the station a sign indicating that he was the sole owner of the business. The testimony affirmatively indicates that no such sign was displayed. B.P.’s right of examination and inspection, carried out by its sales representative, afforded them the knowledge, actually or constructively, that no such sign was present, the responsibility for which is chargeable to them.

. This relationship may have provided B.P. with enough control over the operator of the station to create an actual agency between the two. We do not reach that issue, however, since we have concluded that there was sufficient evidence of an apparent agency to support the jury’s verdict.

. See, e.g., Smith v. Cities Service Oil Company, 346 F. 2d 349; Miller v. Sinclair Refining Co., 268 F. 2d 114; Texas Co. v. Wheat, 168 S.W.2d 632 (Tex.).

. The court instructed:
“Now, if you should find from the evidence that the service station in question displayed sufficient signs, implements, products, uniforms, and other items of BP designation such that the plaintiff would wrongfully assume from the appearance of such station that it was under the control of and that the operators were agents or servants of BP Oil Corporation; if you further find from the evidence that the plaintiff dealt with BP designated service station with some frequency in the past, that they were the type of station on which he had come to reasonably rely because of his familiarity and general satisfaction with their operations on prior occasions, and if you find that the plaintiffs entertained a reasonable expectation that there would be general uniformity of quality in respect to products and service in all BP designated stations, and if you further find from the evidence that plaintiff was induced to enter the station in question because BP Corporation held such station out to the general public as — and gave it the outward appearance of a station under its control, and if you further find that plaintiffs reliance upon such holding out and such general appearance was reasonable under the circumstances; taking into consideration all the testimony and all the evidence in this case, then such facts may be sufficient to justify your finding that Lonnie Faison was operating said station as its agent or servant of the defendant, BP Oil Corporation, and you must so find regardless of whether there is evidence tending to show, as between BP and Lonnie Faison, there is not actually a contractual relationship of principal and agent.”

. In fact, it has been held that franchisers of other than petroleum products may be held liable for torts of their franchisees based on apparent authority. See Singleton v. International Dairy Queen, Inc., supra.