Court Opinion

ID: 9671744
Source: CourtListenerOpinion
Date Created: 2023-08-24 03:42:49.784681+00
Date Added: 2024-06-11T18:16:11.802484
License: Public Domain

HENDERSON, Justice
(dissenting).
This was a tortious securing of money/property from the victims’ home. It resulted from the insurance company placing the insurance agent, Arndt (the tort-feasor), into the Leafgreens’ home while he was acting within his authority; so acting, he facilitated the fraud upon the Leaf-greens. Plaintiffs’ complaint sounds in vicarious liability under the theory of respon-deat superior. Restatement (Second) of Agency § 261, at 570 (1958) provides: “A principal who puts a servant or other agent in a position which enables the agent, while apparently acting within his authority, to commit a fraud upon third persons is subject to liability to such third persons for the fraud.” See also, Phillips Petroleum Co. v. Royster, 256 So.2d 559, 560-61 (Fla.1972). And numerous cases exist, which recognize a principal’s liability for its agent’s acts of extorting or defrauding customers of money. See, e.g., Berkovitz v. Morton-Gregson Co., 112 Neb. 154, 198 N.W. 868, 33 A.L.R. 85 (1924); Wilmerding v. Postal Telegraph Cable Co., 118 A.D. 685, 103 N.Y.S. 594 (1907); Birkett v. Postal Telegraph Cable Co., 107 A.D. 115, 94 N.Y.S. 918 (1905); Billups Petroleum Co. v. Hardin’s Bakeries Corp., 217 Miss. 24, 63 So.2d 543 (1953); and Cleaney v. Parker, 167 Ala. 134, 51 So. 951, 140 Am.St.Rep. 21 (1910).
Enter SDCL 58-30-23. An agent, in South Dakota, shall be “trustworthy, of good character and reputation as to morals, integrity, and financial responsibility....” When zeroing in on the bottom rationale of the majority opinion, it becomes apparent that the majority opinion relies upon “foreseeability” and then pegs a definition of foreseeability to an “unfair” concept, i.e., that a loss to an insurance company caused by the injury of its agent should not be borne as costs of the employer’s business. Who put the fox in the hen house? State law requires these agents to be honest. Would it be such a leap of unreasonable logic to assume that an insurance company would monitor the conduct and honesty of its agent? And from a standpoint of fairness, would it not be more fair for the insurance company to bear the loss than the innocent victim?
*282That the Leafgreens were friends of the agent is totally immaterial. Is the majority suggesting that this is some type of contributory negligence? Likewise, that Arndt was a capital fellow with only a speeding offense, as the majority opinion suggests, has no probative force.1 Leaf-greens were deceived, burglarized, taken advantage of, but this hint of friendship in the majority opinion is not a contributory negligence defense.
Contributory negligence on the part of the deceived person is not generally recognized as a defense. However, if a third person should know or otherwise has notice that an agent is acting for his own purposes or is otherwise violating his authority, the principal is not liable.
Restatement (Second) of Agency § 262 comment c, at 573 (1958). Contributory negligence is a defense to an action for negligence, not a willful tort. Carroll v. First Nat’l Bank of Lincolnwood, 413 F.2d 353, 356 (7th Cir.1969), cert. denied, 396 U.S. 1003, 90 S.Ct. 552, 24 L.Ed.2d 494 (1970). See also, Omaha Nat’l Bank v. Mfrs. Life Ins. Co., 213 Neb. 873, 332 N.W.2d 196 (1983); and W. Keeton, D. Dobbs, R. Keeton & D. Owen, Prosser and Keeton on the Law of Torts § 65 (5th ed. 1984).
Contracts of insurance result from personal calls by agents upon prospects at their home. Insurance companies know this is a part of the salesmanship game. Unquestionably, insurance companies would not fare well if agents did not enter the privacy of homes. Were this salesmanship closed down, sales would drop. When an insurance agent goes to the home of a prospective customer, he has an insignia of approval by his insurance company; if he goes sour and cheats, deceives, or even burglarizes that home based upon knowledge he gained by getting into the front door, the insurance company wants to say: “He’s not our boy. We claim him not.” I say: “It's too late for that Pontius Pilate attitude.” The insurance company cannot wash its hands. It clothed him with an aura of honesty and respectability. Arndt was its agent when he was hired, its agent when he tried to sell insurance, its agent when he went into the home to obtain a sale, its agent when he obtained money for them, its agent when he surveilled the home for his burglar-friends, its agent when he learned of the steel lockbox and its contents,2 and was still acting as its agent when he conspired to have the insurance company’s customer burglarized. American Family Insurance does not advocate that Arndt was not its agent when he called on the Leafgreens on May 22, 1981. The Leafgreens trusted this insurance agent. After all, with a name like American Family Insurance Company, surely that insurance company would want any American family to know that it can trust it and also its agents in the field, right? Choosing such a name was surely no perchance happenstance.
Let us take off our judicial blinders. We are not deciding if American Family Insurance Company is liable; we are deciding if a question of fact exists so that a jury can *283decide whether American Family is liable. Negligent hiring has been abandoned. In my opinion, fraud is alleged and fraud is alive. Is there a fact question on fraud— that is the issue. American Family Insurance is obviously chargeable with knowledge of the conduct of its agent in factual situations that apparently outraged them. This buttresses the early cases which I have collected and cited, infra. Further, as I review the majority opinion, the authorities appear to sustain this dissent as much as the majority opinion. That is, until as academicians we reach “foreseeability” and the affixation of responsibility based upon “unfairness.” It is in the application of these authorities to the facts at hand wherein we differ. The fox in the hen house was placed there by the insurance company — not an American family. Bottomed in fairness, it is a question of fact if the party who put the fox in the hen house should be held responsible for what the fox does. Accordingly, under the facts of this case, and authorities cited herein, this family is entitled to a jury trial. I would therefore reverse.

. The settled record indicates that Arndt was not a capital fellow, that Arndt’s conduct was not exemplary, and that American Family Insurance knew it; further, that American Family expressed written displeasure unto Arndt. As concerns Arndt’s business practices, the settled record contains letters from Arndt’s superiors which express American Family’s disappointment with how Arndt was conducting his agency. This disappointment concerned Arndt’s ownership of a beer tavern; his failure to attend insurance meetings; and a non-sufficient funds check problem. As concerns Arndt’s exemplary conduct prior to the burglary on June 27, 1981, the record also reveals that Arndt was arrested for assault and battery, simple assault, disorderly conduct, and an open container violation.

. When Leafgreens produced their documents to Arndt for correct legal descriptions of property which the insurance company had issued liability coverage upon, Arndt was acting as an agent for American Family Insurance. Should we not allocate the risk of the servant’s misbehavior under these circumstances? Surely, a question of fact exists once the vicarious liability question is hurdled. See Ira S. Bushey & Sons, Inc. v. United States, 398 F.2d 167 (2nd Cir.1968).