Court Opinion

ID: 9627400
Source: CourtListenerOpinion
Date Created: 2023-08-22 08:43:06.93009+00
Date Added: 2024-06-11T18:06:45.442792
License: Public Domain

JACOBSON, Chief Judge,
dissenting:
The majority opinion has attempted to fasten liability for Pavelin’s fraudulent acts upon her employer, C & A Realty Co., (C & A) under a theory of “negligent hiring.” While the law recognizes that an employer may, under appropriate circumstances, be independently liable for criminal acts of its agent which fall outside the course and scope of the employment, the basis for imposing such liability is not met in this case. This liability is aptly set forth in Restatement (Second) of Agency § 213 (1958) which provides: ;
A person conducting an activity through servants or other agents is subject to liability for harm resulting from his conduct if he is negligent or reckless:
* * * * * *
(b) in the employment of improper persons ... in work involving risk of harm to others.
As comment a to this section points out: The rule stated in this Section is not based upon any rule of the law of principal and agent or of master and servant. It is a special application of the general rules stated in the Restatement of Torts____ Liability exists only if all the requirements of an action of tort for negligence exist.
Thus, there must be a duty, a breach of that duty and an injury which is the proximate cause of the breach. Taking the facts of this case, if we assume that C & A had a duty to employ only trustworthy real estate agents and that C & A negligently breached that duty by hiring Pavelin when it knew or should have known that she was a dishonest individual, the question still remains whether the breach of that duty was the proximate cause of the plaintiff’s loss. Something in the employment must be the proximate cause of the loss. Linden v. City Car Co., 239 Wis. 236, 300 N.W. 925 (1941).
This requirement of “proximate cause” is echoed in the companion section of Restatement (Second) of Torts § 307 (1965):
It is negligence to use an instrumentality, whether a human being or a thing, which the actor knows or should know to be so incompetent, inappropriate, or defective, that its use involves an unreasonable risk of harm to others. (Emphasis added.)
Since there must be some nexus between the “conducting of the activity” {Restatement (Second) of Agency), or the “use” of {Restatement (Second) of Torts), it is apparent that simply because a principal employs a known thief, he will not be liable *209for all thefts committed by his agent, regardless of their connection with the employment.
With these observations in mind, I turn to the facts in this case. The majority has properly concluded that “[tjhere is no substantial evidence from which the trial court could have reasonably concluded that Pave-lin was doing anything but pursuing her own interests in an illegal manner.” While this conclusion is addressed in the context of scope of employment, which may not be applicable when viewing the employer’s own negligénce, it is pertinent as a starting point in analyzing whether Pavelin’s employment was a proximate cause of plaintiffs’ loss.
From this starting point, the only possible connection between Pavelin’s employment and the plaintiff’s loss was that solely because she was a real estate agent, she was either entrusted by plaintiffs or authorized by plaintiffs to obtain the necessary signatures upon the pertinent documents. On this evidentiary issue, the only person who gave documents to or received documents from Pavelin, was Pruitt’s attorney, Esch.
It is important to note that there is no evidence that Esch knew or was familiar with Pavelin’s broker, C & A Realty, or that he in any manner relied upon C & A’s reputation in any dealing with Pavelin. We are then left only with a status conferred upon Pavelin of being a real estate person as the result of the assumed negligent1 assistance of C & A.
The majority has correctly set forth the evidence as to the role this status played in this transaction:
Esch would not categorically say that he would not have turned over documentation to Pavelin to procure signatures if he had known she was not a licensed salesperson.
The majority notes that Pavelin’s status as a real estate salesperson may have played some subjective role in Esch’s and Pruitt’s dealings with Pavelin. However, here we are dealing with proximate cause — was Pruitt injured because C & A employed Pavelin? In absence of any evidence that “but for” Pavelin’s status as a real estate agent, Pruitt would not have suffered a loss, I am compelled to the conclusion that Esch’s and Pruitt’s subjective motives are too attenuated to impose liability upon Pavelin’s employer for “conducting an activity” through Pavelin, or “using” Pavelin in carrying out C & A’s business of selling real estate.
I would therefore reverse any judgment against C & A.

. The only possible negligence I can perceive from the record is that C & A vouched for Pavelin before the State Real Estate Department, the agency which had the ultimate responsibility for issuing the real estate license, and which had more information adverse to Pavelin than that possessed by C & A.