Court Opinion

ID: 9688826
Source: CourtListenerOpinion
Date Created: 2023-08-24 18:07:36.263745+00
Date Added: 2024-06-11T18:18:41.544014
License: Public Domain

YETKA, Justice
(dissenting).
I would reverse the court of appeals and remand to the trial court for determination of the question of whether Marsh had authority to conduct the activities in question here.
*536The trial court found no liability under Restatement 317 because the investment transactions did not occur on Edina Realty’s premises or with their property. In so finding, the trial court applied Restatement 317(a) to its findings of fact. This is a mixed question of law and fact and is subject to our independent review. Meyering v. Wessels, 383 N.W.2d 670, 672 (Minn.1986). I believe that the record contains ample evidence to dictate the conclusion that, for purposes of Restatement 317(a), Marsh conducted his investment activities on Edina Realty’s premises and with their property. Marsh often gave his investors Edina Realty business cards, newsletters, and envelopes. The investors frequently called Marsh at his Edina Realty office— indeed, before Marsh moved his personal business activities out of the Edina Realty building, the switchboard was having difficulty handling the volume of calls for Marsh. This use of Edina Realty’s premises and property is substantially greater than the brokers’ use of their employer’s premises and property in Harrison v. Dean Witter Reynolds, Inc., 715 F.Supp. 1425 (N.D.Ill.1989), and I believe this use satisfies Restatement 317(a).
Because the trial court found that Restatement 317(a) had not been satisfied, it did not apply Restatement 317(b). Accordingly, I would remand to the trial court the question of whether the requirements of Restatement 317(b) are met (ie., did Edina Realty have reason to know of its ability to control Marsh and should it have known of the necessity and opportunity to exercise such control).
As to the issue of actual authority, the trial court held that Marsh’s investment activities were outside the scope of his actual authority because the activities did not benefit Edina Realty. The court of appeals held that the trial court committed a legal error by requiring an act be for the principal’s benefit for it to be actually authorized. Semrad v. Edina Realty, Inc., 470 N.W.2d at 143. As the court of appeals stated, an employee’s motivation to serve the employer is irrelevant when determining an employer’s vicarious liability for an employee’s intentional tort. Id. (citing Marston v. Minneapolis Clinic of Psychiatry & Neurology, Ltd., 329 N.W.2d 306, 310 (Minn.1982)).
After pointing out this legal error, the court of appeals went on to determine whether Marsh had actual authority to sell the investments. The court applied the Marston test, which requires that the acts be “foreseeable, related to and connected with acts otherwise within the scope of employment.” Id. at 144 (quoting Marston, 329 N.W.2d at 311). The court found that the evidence would not support the finding that Marsh’s investment sales were foreseeable. Id.
Whether an employee’s actions were foreseeable is a factual issue. Marston, 329 N.W.2d at 311. The court of appeals inappropriately acted as a trier of fact when it concluded that Marsh’s conduct was not foreseeable. “An appellate court exceeds its proper scope of review when it bases its conclusions on its own interpretation of the evidence and, in effect tries the issues anew and substitutes its own findings for those of the trial judge.” Stiff v. Associated Sewing Supply Co., 436 N.W.2d 777, 779 (Minn.1989) (citation omitted).
I note that the record contains several indications that Marsh’s investment sales were not all that unrelated to some of Edina Realty’s business activities. Edina Realty authorized its sales associates to place vendor’s interests in contracts for deed with third-party investors. One of Edina Realty’s wholly-owned subsidiaries conducts a mortgage banking business. The Semrads invested in Marsh’s limited partnerships; Edina Realty also has engaged in the business of syndicating limited partnerships for apartment buildings and land development. The facts supporting a finding that Marsh’s activities were not foreseeable are not as sparse as the court of appeals’ conclusion suggests. When the record is looked at as a whole, there is a glaring lack of supervision on the part of the officers of Edina Realty in controlling the actions of this agent. Rather than say that Edina Realty was unaware of Marsh’s outside dealings, it actually ap*537peared to have encouraged them. Such total lack of supervision on the part of management when many of the employees seemed to be more fully aware of Marsh’s activities makes it difficult to see how the principal here can avoid responsibility. The trial court should decide the factual question of foreseeability.
The majority opinion implicitly assumes that various statutory or common law actions would lie against Marsh for his tor-tious acts. Under the common law doctrine of respondeat superior, plaintiffs may hold Edina Realty vicariously liable — liable without fault — for its employees’ violations of law, provided plaintiffs can show that Marsh had actual authority to do what he did or had apparent authority. “Principals are strictly liable for their agents’ acts— even if the agents are not employees — if the principals authorize or ratify the acts or even just create an appearance that the acts are authorized.” Rosenthal & Co. v. Commodity Futures Trading Comm’n, 802 F.2d 968, 966 (7th Cir.1986) (commodity brokerage vicariously liable for fraud of salesperson).
Actual authority should be given a broad reading: An employer is liable not only for acts it specifically authorizes its employee to do, but also for acts within the scope of employment. Restatement (Second) of Agency §§ 216, 219(1). The trial court erred by only applying Restatement (Second) of Torts § 317 in its analysis of scope of employment. To limit scope of employment to acts occurring on the employer’s premises or property and to require some form of physical injury in order for plaintiffs to recover, as occurs in section 317, is too limited a view of common law responde-at superior. “In cases involving intentional wrongdoing, the scope of employment doctrine acquires something of an abstract quality, for such wrongdoing is never really within the scope of an employee’s employment: if it were, then the employer’s liability would be direct, not vicarious.” Harrison v. Dean Witter Reynolds, Inc., 715 F.Supp. at 1430; see Restatement (Second) of Agency, § 212 & Comment a; see generally Carol M. Lynch, Note, Rule 10b-5 — The Equivalent Scope of Liability TJn-der Respondeat Superior and Section 20(a) — Imposing a Benefit Requirement on Apparent Authority, 35 Vand.L.Rev. 1383 (1982).
As for the issue of apparent authority, although an employer is generally not liable in respondeat superior for the tortious acts of an employee acting solely for the employee’s own purposes, an employer is liable in such situations when it is the existence of the employer-employee relationship that gives the employee the opportunity to accomplish the tort. Restatement (Second) of Agency, § 216 & Comment a. As the majority opinion states, most of the investors in Marsh’s financial enterprises claim they relied on his association with Edina Realty when investing.
Several facts suggest that such a claim is not baseless. For example, for several years, Marsh conducted his activities at Edina Realty’s offices and used the company mails and telephones. Also, his newsletter carried the address of Edina Realty’s offices. Even after Marsh moved his activities out of Edina Realty’s offices, his newsletter continued to carry the Edina Realty address. Moreover, not only Marsh’s clients, but also officers of Edina Realty received his newsletter at their homes.
I would reverse the court of appeals and hold Edina Realty liable on the basis of respondeat superior. As an alternative, I would remand on the question of foreseeability under Restatement 317(b).