Court Opinion

ID: 9452774
Source: CourtListenerOpinion
Date Created: 2023-08-04 17:51:36.06021+00
Date Added: 2024-06-11T17:33:21.175864
License: Public Domain

HEANEY, Circuit Judge
(dissenting).
The Arkansas Supreme Court has not specifically ruled on the question of whether it is proper to permit a plaintiff to plead and attempt to prove the facts necessary to establish liability under both respondeat superior and negligent entrustment. The Court has, however, indicated in Ozan Lumber Co. v. McNeely, 214 Ark. 657, 217 S.W.2d 341 (1949), that a plaintiff has a right to proceed under both theories when the defendant denies that the employee is acting within the scope of his employment and also denies the negligent entrustment. See also R. J. Reynolds Tobacco Co. v. Newby, 145 F.2d 768 (9th Cir. 1944); Crowell v. Duncan, 145 Va. 489, 134 S.E. 576, 50 A.L.R. 1425 (1926); 8 Am.Jur.2d Automobiles and Highway Traffic § 573 (1963); 20 Ark.L.Rev. 101, 106, n. 37 (1966)!
Arkansas law makes-it clear that when the driver is the sole defendant, evidence of his incompetence is inadmissible. See Garver v. Utyesonich, 235 Ark. 33, 356 S.W.2d 744, 747 (1962); Dixie Culvert Mfg. Co. v. Richardson, 218 Ark. 427, 236 S.W.2d 713, 714 (1951). It also makes clear that when a plaintiff elects to proceed under the theory of respondeat superior against the driver and the owner, evidence of the driver’s incompetence is inadmissible, for the Company is liable irrespective to the competence of its employee. See Miller v. Blanton, 213 Ark. 246, 210 S.W.2d 293-(1948); St. Louis, I. M. & S. Ry. Co. v. Stroud, 67 Ark. 112, 56 S.W. 870' (1899). Evidence of the driver’s incom-.. petence is admissible, however, if the ac*182tion is brought against the Company only under the theory of negligent entrustment. See Arkansas-Louisiana Lumber Co. v. Causey, 228 Ark. 1130, 312 S.W. 2d 909 (1958); Chaney v. Duncan, 194 Ark. 1076, 110 S.W.2d 21 (1937).
The difficulty with permitting a plaintiff to proceed under both theories against both the driver and the owner of the vehicle is that evidence of the employee’s incompetence is susceptible to being considered by the jury for purposes other than for which it was received. Thus it may, despite instructions to the contrary, be used by the jury to determine the driver’s negligence or the amount of the compensatory damages to be awarded. See 51 Minn.L.Rev. 264 (1966); 44 Harv.L.Rev. 1173, 1207 (1931).
As a result of the problems raised, a few courts have expressed reluctance to receive evidence of prior acts, even in a negligent entrustment case. See Lix v. Gastian, 261 S.W.2d 497 (Mo.App. 1953); Fambro v. Sparks, 86 Ga.App. 726, 72 S.W.2d 473 (1952); Houlihan v. McCall, 197 Md. 130, 78 A.2d 661, 665 (1951).
While one cannot predict with certainty whether the Arkansas Supreme Court would permit plaintiffs to proceed as they did in this case, there are indications that they would. While I concur with my colleagues that logic supports the view that they should be permitted to so proceed, it, in my judgment, is equally logical that once the issue is submitted to the jury, it must be instructed that if it finds for the plaintiffs on the issue of respondeat superior, it should not make any findings on the issue of negligent entrustment. This was not done here. While under ordinary circumstances such error might not be prejudicial, I believe that it was in the instant case.
If the plaintiffs are permitted to proceed in the alternative, it is essential that when evidence of incompetence is received, the jury be instructed that it is to use such evidence only for the purpose of establishing the employee's prior incompetence and the employer’s knowledge thereof; and that it is not to use such evidence in deciding whether the employee is negligent or in determining the extent of compensatory damages. If evidence of incompetence is admitted without the imposition of at least these safeguards, prejudice to the defendants will inevitably result. In this case, the precautionary instructions were not given and, in my judgment, the probabilities of prejudice are too significant to be overlooked.
The original Complaint alleged that Bobby Breeding was guilty of willful and wanton negligence for driving the vehicle under the influence of intoxicating liquor. It also alleged that the Company was guilty of negligence in entrusting the vehicle to Bobby Breeding because it knew or ought to have known that he was reckless and incompetent in the operation of motor vehicles because of his habitual intoxication. Punitive damages were demanded from Bobby Breeding and the Company.
The Complaint was amended before trial to add allegations that the Company knew Bobby Breeding was addicted to the use of intoxicating liquors, and that Hugh Breeding, Inc., was guilty of willful and wanton negligence in retaining Bobby Breeding in its employment; and to delete the request for punitive damages against Bobby Breeding.
The amendments were designed to make possible an award of punitive damages against the Company which could not have been recovered under the original Complaint, for under Arkansas law existing at that time, a plaintiff waived his claim to punitive damages by suing two or more defendants. Dunaway v. Troutt, 232 Ark. 615, 339 S.W.2d 613 (1960); see 19 Ark.L.Rev. 190 (1965); 15 Ark.L.Rev. 208 (1961).
After appeal was perfected in this case, the Arkansas Supreme Court overruled Dunaway, and held that punitive damages could be awarded when a plaintiff sued two or more defendants for such damages, but that by doing so, a plaintiff waived his right to prove the financial condition of any of them. Life & *183Cas. Ins. Co. of Tennessee v. Padgett, 407 S.W.2d 728 (1966). In so holding, it conformed the Arkansas rule to that laid down by the United States Supreme Court in Washington Gas Light Co. v. Lansden, 172 U.S. 534, 19 S.Ct. 296, 43 L.Ed. 543 (1898). See Annot. 63 A.L.R. 1405 (1929); 25 C.J.S. Damages § 123 (3) (1966).
In the present case, the trial court permitted testimony on the net worth of the Company to be introduced. The appellants objected to its introduction on two grounds: first, that there was not sufficient evidence to justify the submission of the issue of punitive damages; and, second, that punitive damages are not allowable when more than one defendant is joined in the action.
Under Arkansas law, the appellees could have recovered punitive damages against both the appellants by proving that Bobby Breeding was guilty of willful and wanton negligence, even though the Company had no knowledge of Bobby Breeding’s incompetence. Miller v. Blanton, supra; Pine Bluff & A. R. Ry. Co. v. Washington, 116 Ark. 179, 172 S.W. 872 (1915). See also 44 Harv.L.Rev., supra; Prosser & Smith, Torts p. 631 (3d ed. 1962); 35 Am.Jur. Master and Servant § 591 (1941).
In Pine Bluff, the Court stated:
“ * * * This court has adopted what is usually called the rule of general liability, which has been defined as follows: ‘A corporation may be held liable to exemplary or punitive damages for such acts done by its agents or servants acting within the scope of their employment as would, if done by an individual acting for himself, render him liable for such damages.’ See case note to 48 L.R.A. (N.S.), page 38.” 172 S.W. at 873.
In Miller v. Blanton, supra, the Arkansas Supreme Court, with two Justices dissenting, stated:
“The evidence showed that Miller, after drinking intoxicating liquor to the extent that his talk and his walk were noticeably affected, and to the extent that, according to his own statement, he was ‘half drunk’, entered his car and sought to drivé it over an improved state highway. * * *
“When Miller imbibed alcoholic liquor he knew that he was taking into his stomach a substance that would stupefy his senses, retard his muscular and nervous reaction, and impair, if not destroy, the perfect coordination of eye, brain and muscles that is essential to safe driving. After Miller voluntarily rendered himself unfit to operate a car properly he undertook to drive his automobile, a potentially lethal machine, down a well traveled highway. * * *
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“It is argued by appellant, Columbia Pictures Corporation, that punitive damages against it were not recoverable because there was no proof that it participated in, authorized or ratified, Miller’s wrongful conduct.
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“But in most jurisdictions, ‘exemplary or punitive damages may be recovered from an employer for acts or omissions of his employee done or omitted to be done in the scope and course of his employment whenever the employee’s acts are of such character as to form the basis for an allowance of exemplary damages, even though these acts were done without the employee’s [employer’s] knowledge or authorization and were not subsequently ratified by him, regardless of whether he did or did not know the servant to be incompetent or disqualified for the service in which he was engaged.’ ” 210 S.W.2d at 294-296.
But here, the appellees do not posit their right to recover punitive damages from the Company on the theory of respondeat superior. They seek to impose punitive damages on the Company on the theory that it was guilty of willful and wanton negligence in permitting an employee whom they knew to be incompetent to drive its truck on the public highways of Arkansas, and to do this without a determination that the em*184ployee was also guilty of willful and wanton negligence.
Neither party to this appeal has cited an Arkansas case authorizing recovery of punitive damages against an employer on the above theory. I have examined the leading cases under which the Arkansas Supreme Court has awarded relief to a plaintiff on the theory of negligent entrustment, and have been unable to find any which assessed an employer for punitive damages for entrusting a vehicle to an incompetent driver. The simple explanation may be that no other plaintiff has proceeded on this theory because of the relative ease of recovering punitive damages from an employer without proof of wrongdoing on his part.
In support of their position, the appellees cite a sentence (italicized below) in 22 Am.Jur.2d Damages § 257 (1965). A reading of the complete paragraph indicates that it does not support their contention that an employer can be found guilty of willful and wanton negligence without a finding of such negligence on the part of the employee. The full statement, as set forth in 22 Am.Jur.2d Damages § 257 (1965), is:
“It is elementary that a master or principal, as the case may be, is responsible in damages for the wrongful act of a servant or agent done within the scope of his employment. The question arises whether the damages recoverable may include exemplary or punitive damages as in cases of individuals acting for themselves. While there are a few early cases holding that the principal or master is never liable for exemplary damages, it is now generally conceded by all courts which permit the recovery of such damages may be imposed upon an employer for acts of his agents or servants when those acts are of a character to warrant the imposition of such damages. This principle applies both to natural persons and to corporations in the capacities of master or principal. Although many courts qualify the rule by taking the position that the master or principal is liable for exemplary damages only if he has authorized or ratified the act of the agent or servant, others take the view that he is liable for such damages regardless of whether he has authorized or ratified the act of his agent or servant. Under either view the employer may be held liable for such damages when he is chargeable with gross neglect in the employment or retention in his service of an incompetent employee, knowing at the time of his unsuitability.”
It is clear, from a reading of the entire paragraph, that the writer is discussing employer liability under the theory of respondeat superior. He concludes the section with the following paragraph:
“In most instances, exemplary damages will not be imposed against the employer unless they might also be imposed against the employee in a suit against him; however, an innocent or negligent act of the employee may involve misconduct of the employer, so that the latter will then incur liability for exemplary damages for his own wrong.”
Miller v. Blanton, supra, and American Fidelity & Casualty Co. v. Farmer, 77 Ga.App. 166, 48 S.E.2d 122 (1948), are cited to support the above American Jurisprudence analysis. These cases do not support the appellees’ contention, for, in each, there had been a finding of willful and wanton negligence on the part of the employee and the court imputed liability to the employer.
It would appear, then, that the issue which we are called upon to decide was not clearly raised by either party before the lower court.
The United States Supreme Court, while showing a reluctance to impose punitive damages on an employer who is without fault, has indicated that if the employer is at fault, it ought to be amenable to the severest rule of damages. See Lake Shore & Mich. So. Ry. Co. v. Prentice, 147 U.S. 101, 13 S.Ct. 261, 37 L.Ed. 97 (1893); Milwaukee & St. Paul Ry. Co. v. Arms, 91 U.S. 489, 23 L.Ed. 374 (1876); Northwestern Na*185tional Casualty Co. v. McNulty, 807 F.2d 432 (5th Cir. 1962). The Supreme Court said, 147 U.S. at page 107, 13 S.Ct. at page 263, in Prentice:
“Exemplary or punitive damages, being awarded, not by way of compensation to the sufferer, but by way of punishment of the offender, and as a warning to others, can only be awarded against one who has participated in the offense. A principal, therefore, though of course liable to make compensation for injuries done by his agent within the scope of his employment, cannot be held liable for exemplary or punitive damages, merely by reason of wanton, oppressive, or malicious intent on the part of the agent”.
The Supreme Court went on to state:
“ * * * If a railroad company, for instance, knowingly and wantonly employs a drunken engineer or switch-man, or retains one after knowledge of his habits is clearly brought home to the company, or to a superintending agent authorized to employ and discharge him, and injury occurs by reason of such habits, the company may and ought to be amenable to the severest rule of damages; but I am not aware of any principle which permits a jury to award exemplary damages in a case which does not come up to this standard * * * ” 147 U.S. at 116, 13 S.Ct. at 266.
Despite the lack of authority, it would appear that there are stronger public policy reasons to punish an employer whose act indicates a conscious disregard for the rights of others than to punish one who is without fault, on the theory that his servant was guilty of willful and wanton negligence which the employer neither authorized nor ratified. In view of the above decisions of the Arkansas Supreme Court and the general attitude of that Court towards driving while drunk, it is my judgment that the Arkansas Supreme Court would approve the right of appellees to recover punitive damages from an employer who is found to have been guilty of willful and wanton negligence in permitting an employee it knows to be incompetent to operate a vehicle on the public highways when the employee’s incompetence is the cause of the accident.
I come, then, to the question of whether the issue of willful and wanton negligence was properly submitted to the jury.
While the instructions given on willful and wanton negligence would, in the ordinary case, have been sufficient and while they were given in the form approved in the Arkansas Model Jury Instructions, I do not believe that they were sufficient in this case in view of the unique theory on which the appellees proceeded.
In view of the fact that the issue of negligent entrustment and willful and wanton negligence were both submitted to the jury, the jury ought to have been instructed in greater detail as to the difference in the proof required to establish each, and willful and wanton negligence ought to have been more carefully defined. See Ellis v. Ferguson, 238 Ark. 776, 385 S.W.2d 154 (1965); Harkrider v. Cox, 232 Ark. 165, 334 S.W.2d 875 (1960); Edwards v. Jeffers, 204 Ark. 400, 162 S.W.2d 472 (1942); Mathes & Devitt, Federal Jury Practice and Instructions <§ 76.10 (1st ed. 1965); Annot. 98 A.L.R. 267, 271 (1935).
The failure to do so, in my judgment, was prejudicial error.
I turn then to the question of whether evidence as to the Company’s net worth was properly received.
Most courts refused to permit, evidence of net worth in cases where two or more persons are sued for punitive damages because of the danger that wealth or lack of it may prejudice one or more of the defendants. This is clearly the Arkansas law. In Life & Cas. Ins. Co. of Tennessee v. Padgett, supra, 407 S.W.2d at 730, the Court said:
“We think the law was correctly stated in the Lansden case and that we misconstrued that holding in Dunaway v. Troutt. In the court below the *186Padgetts were permitted to prove that Life & Casualty had a net worth of about sixty-one million dollars and that Skinner had a net worth of about one thousand dollars. Under the Lansden case the admission of that evidence was reversible error.
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«* * * The reason for the rule —that one defendant should not be punished on the basis of another defendant’s wealth — applies just as well to employers and employees as to others not standing in that relation. * * Chicago City Ry. Co. v. Henry, 62 Ill. 142 (1871); Dawes v. Starrett, 336 Mo. 897, 82 S.W.2d 43 (1935); McAllister v. Kimberly-Clark Co., 169 Wis. 473, 173 N.W. 216 (1919).”
In Padgett, the Court held also that such evidence may prejudice the verdict for compensatory damages when the issues are so intertwined that the jury may have difficulty in separating them.
“Does the erroneous admission of the testimony about the appellants’ financial means affect the judgment for actual damages as well? In law cases two issues may be so interwoven that an error with respect to one requires a retrial of the whole case. Mowery v. House, 234 Ark. 878, 355 S.W.2d 275 (1962). That is the situation here with reference to the compensatory and exemplary damages. It is hardly possible that the jury did no t take each into consideration in fixing the other. Furthermore, the inadmissible proof of the defendants’ worth may have influenced the jury in its assessment of compensatory damages. The only way in which we can with certainty protect the appellants from the possibility of prejudice is to grant a new trial upon all issues.” 407 S.W.2d at 730. (Emphasis added.)
In St. Louis, I. M. & S. Ry. Co. v. Hall, 53 Ark. 7, 13 S.W. 138 (1890), the Arkansas Court found that the punitive damages had been improperly allowed. The Court, in determining whether it should grant a new trial or a remittitur of the punitive damages, said:
“ * jn this cause the jury had properly before them the plaintiff’s expenses, his loss of time, his diminished capacity for labor, and his pain, anguish, and suffering. The difficulties which would beset a court in determining the justness or excessiveness of a verdict based upon these premises alone would not be inconsiderable. But superadd the element of punitive damages, erroneously allowed, and the process by which the court is to dissect the verdict, eliminate the error, eliminate the excess of compensation, and settle upon the exact sum which plaintiff’s case entitles him to have, ‘passeth all understanding.’ To attempt it, we think would be a violation of the spirit of the constitution, which intends that every litigant shall have a trial of his cause before an impartial jury, upon proper declarations of the law. Reversed and remanded.” 13 S.W. at 140.
See also Thomas v. Durham Motors, Inc., Mo.App., 389 S.W.2d 412 (1965); Mc-Allister v. Kimberly-Clark Co., 169 Wis. 473, 173 N.W. 216 (1919).
In the present ease, the issues were interwoven and difficult to understand. While punitive damages were requested from the Company only, compensatory damages were demanded from both the Company and Bobby Breeding. Under these circumstances, it was essential that there be a thorough understanding on the part of the jury of the issues involved. I do not believe that it had this understanding. It was not instructed when evidence of net worth was received about the purpose for which it was being received, and it was not cautioned in the final instructions about not using evidence of the Company’s net worth in fixing compensatory damages against either of the joint defendants.
Under these circumstances, it was an error to admit testimony about the Company’s net worth, and the error cannot *187be cured by remitting the punitive damages.
Nor does Judge Young’s finding that the verdicts were not excessive resolve the difficulty. A verdict which is not excessive may, nonetheless, have been substantially affected by the receipt of improper evidence. Judge Young’s statement does not go to this probability.
While I concur with my colleagues that the plaintiffs had a right to proceed as they did in this case, this right carried with it the responsibility of assuming some responsibility to make sure that the jury was completely and adequately instructed at every step of the proceedings as the probabilities of confusion and prejudice were great. The jury was not so instructed and, in my judgment, the probabilities of substantial prejudice to the appellants is present.
I am aware that Rule 51 of Federal Rules of Civil Procedure, 28 U.S.C.A., provides that no party may assign as error the giving or failure to give an instruction unless he objects thereto before the jury retires to consider its verdict, and I am also aware of the requirement that such failure be argued before this Court. But, as indicated in Evanston Cab Co. v. City of Chicago, 325 F.2d 907 (8th Cir. 1963), there can be a plain error exception to Rule 51 in the exceptional case where the error has seriously affected the fairness of the judicial proceedings. In my judgment, this is that type of case, and the matter should be remanded for a new trial. See also Freifield v. Hennessy, 353 F.2d 97 (3d Cir. 1965); Moore v. Smith, 343 F.2d 206 (3d Cir. 1965).
In Hennessy, the Court, 353 F.2d at page 99, said:
“The defendant argues that since the plaintiff interposed no objection to the court’s instructions he may not now complain of error therein. This argument is in accord with the general rule which is subject to exception. Hormel v. Helvering, 312 U.S. 552, 557, 558, 61 S.Ct. 719, 85 L.Ed. 1037 (1941); Mazer v. Lipschutz, 327 F.2d 42, 52 (3rd Cir. 1964); McNello v. John B. Kelly, Inc., 283 F.2d 96, 101, 102 (3rd Cir. 1960); Callwood v. Call-wood, 233 F.2d 784, 788 (3rd Cir. 1956). Where it is apparent on the face of the record that counsel failed to Object to a fundamental and highly prejudicial error, and this failure may have resulted in a miscarriage of justice, the error must be noticed and rectified. Ibid. This exception to the general rule is applicable to the instant case.”
This Court has freely expressed its confidence in the jury system. I do so again; but if a jury is to operate effectively, it must be adequately and carefully instructed.
I would reverse and remand for a new trial.