Vowles v. Yakish , 191 Iowa 368 ( 1920 )

Stevens, J.

liability for slander by agent, On and for a few months prior to June 3, 1916, plaintiff conducted a grocery store in a building owned by him in Kenwood, Iowa. On the date above mentioned, the whole was totally destroyed by fire. At the time of the loss, he held a policy, issued by the Security Fire Insurance Company of Davenport, Iowa, upon the building and stock of groceries. On the day of the fire, the defendant Yakish, one of the state agents of the defendant insurance company, went to the home of plaintiff, and made some inquiry as to the origin of the fire and the extent of the loss. During the conversation, the defendant informed plaintiff that it would be necessary for him to produce his invoices. It developed, however, that the invoices were all destroyed by the fire, and plaintiff' had to procure duplicates from the dealers of whom he had purchased merchandise. -After several attempts to adjust the loss, plaintiff, on June 29th, went with Mr. Steenberg, who was assisting him, to the office of Yakish in Cedar Rapids, in a further effort to effect a final settlement. According to the testimony of plaintiff, -the conversation, which lasted for about an hour, was carried on largely between Steenberg and Yakish, and related principally to certain items of freight, which formed at that time the principal matter in controversy between them.

The plaintiff, who is corroborated by Steenberg, testified that Yakish, at the conclusion of the above negotiations, said:

“I don’t want to hear nothing about it. I ain’t going to have nothing to do about it. I will make him go some. We have the goods on him.”

He further testified that Steenberg then said: “You don’t mean to say Mr. Yowles burned his store out, do you?” To which the defendant replied: “Yes, I do.”

He also testified that, on a subsequent occasion, plaintiff and Yakish, at the request of the latter, went to a bank in Cedar Kapids, where he informed plaintiff that he was going to swear him, and put him through a test. Concerning this transaction, plaintiff testified in part:

“I says: ‘I don’t know. I don’t see no judge nor jury. I don’t see that I am in nobody’s courtroom.’ He says: ‘That don’t make no difference. I have the power to swear you.’ I says: ‘You can go to hell, too.’ I turned around and started out of the bank. He followed me right out of the bank. He says: ‘We will make you go some.’ Isays: ‘You can go plumb to hell;’ and I started up the sidewalk. He stepped down off the step and shook his finger, and says: ‘I will make you go some. I have the goods on you for burning it up.’ ”

The foregoing are the slanderous words complained of. In his petition, which is in two counts, plaintiff alleged that, at the time the slanderous words were uttered, Yakish was the adjusting agent of the defendant insurance company, and acting for and on its behalf; that all of the statements were false, and made maliciously, and with the intent to injure and destroy the confidence of the public in plaintiff. He asks damages in the sum of $10,000. The answer of the defendant consisted of a general and specific denial, and a special plea in mitigation of damages, which, in view of the conclusion reached, is given no consideration herein. ■ There was a verdict and judgment for plaintiff against both defendants in the sum of $5,000.

I. At the conclusion of plaintiff’s testimony, the defendant moved the court for a directed verdict, upon the ground, among others, that the evidence wholly failed to show that, if the slanderous words were in fact uttered by the defendant Yakish, he was, at the time, acting within the scope of his authority as an adjusting agent for the insurance company. This presents the first question for our consideration.

It is not claimed by counsel that a corporation is never liable for damages on account of slanderous utterances of its agent, but that liability is imposed only when the slander charged was uttered by the agent within the scope of his authority, express or implied. This question has been frequently discussed and passed upon by the courts of other jurisdictions, but with considerable diversity of holding. While a few courts and text-writers have announced the doctrine that a corporation is never liable for slanderous words uttered by its agent, the overwhelming weight of authority is to the contrary. The majority rule seems to be that, if the agent, acting within the scope of his employment and in the actual performance of the duties thereof, touching the matter in question, utter a slander, though without the knowledge of the corporation or with its approval, liability attaches. Fensky v. Maryland Cas. Co., 264 Mo. 154 (174 S. W. 416); Rivers v. Yazoo & M. R. Co., 90 Miss. 196 (43 So. 471); Sawyer v. Norfolk So. R. Co., 142 N. C. 1 (9 Ann. Cas. 440); Republic I. & S. Co. v. Self, 192 Ala. 403 (68 So. 328); International Textbook Co. v. Heartt. 136 Fed. 129; Case v. Steele Coal Co., 162 Ky. 68 (171 S. W. 993); Kane v. Boston M. L. Ins. Co., 200 Mass. 265 (86 N. E. 302); Crelly v. Missouri & K. Tel. Co., 84 Kan. 19 (113 Pac. 386); Hypes v. Southern R. Co., 82 S. C. 315 (17 Ann. Cas. 620); Redditt v. Singer Mfg. Co., 124 N. C. 100 (32 S. E. 392); Palmeri v. Manhattan R. Co., 133 N. Y. 261 (30 N. E. 1001); Waters-Pierce Oil Co. v. Bridwell, 103 Ark. 345 (147 S. W. 64).

The test generally applied by the eases is: (a) Was the person who uttered the slanderous words an authorized agent of the corporation 1 (b) If so, was he at the time acting within the scope of his employment? (c) Was the language charged used in the actual performance of his duties touching the matter in question? Other courts have, however, held that a corporation is not liable for slander uttered by its agent, unless it affirmatively appears that the agent was expressly authorized thereby to speak the slanderous words complained of, or that the company subsequently approved or ratified the same. Behre v. National C. R. Co., 100 Ga. 213 (27 S. E. 986); Lindsey v. St. Louis, I. M. & S. R. Co., 95 Ark. 534 (129 S. W. 807); Jackson v. Atlantic C. L. R. Co., 8 Ga. App. 495 (69 S. E. 919); Duquesne Dist. Co. v. Greenbaum, 135 Ky. 182 (24 L. R. A. [N. S.] 955); McIntyre v. Cudahy Pkg. Co., 179 Ala. 404 (60 So. 848); Flaherty v. Maxwell Motor Co., 187 Mich. 62 (153 N. W. 45); Singer Mfg. Co. v. Taylor, 150 Ala. 574 (43 So. 210).

The agency of the defendant Yakish to adjust the loss for his codefendant is admitted; and, while there is direct conflict in the evidence as to whether any of the language complained of was used upon either of the occasions mentioned, the finding of the jury upon this question has support in the evidence.

The real question here to be determined is: Was the defendant, at the time he uttered the words complained of, acting within the scope of his employment, and in the actual performance of his duties touching the subject-matter of the negotiations or transaction? The mere fact that the defendant Yakish was, at the time, the agent of the insurance company to adjust the loss, and that the defamatory words were used during the negotiations, does not establish liability on the part of the company. Kane v. Boston M. L. Ins. Co., supra; Crelly v. Missouri & K. Tel. Co., supra; Dolan v. Hubinger, 109 Iowa 408; Sawyer v. Norfolk R. Co., supra; Waters-Pierce Oil Co. v. Bridwell, supra; Singer Mfg. Co. v. Reeves Lbr. Co., 95 Ark. 363 (129 S. W. 805).

We find nothing in the record specifically defining the authority of Yakish, or prescribing the scope of his employment.' This is left to inference. It is, however, manifest from the purpose of the agency that Yakish had authority to adjust and agree upon a settlement of the loss that would be binding upon the company. This is conceded; but is it sufficient to establish liability? A brief review of the evidence touching the several transactions from the time of the fire will aid us at this point.

Except some general inquiry by Yakish of plaintiff, on the day of the fire, as to the possible origin thereof, the subsequent negotiations for the settlement proceeded without reference thereto, until the morning of June 29th, when plaintiff claims the defamatory words were first used. The loss on the building and fixtures was adjusted about a week after the fire. The insurance on the building was $2,500; the amount agreed upon and paid, $2,350. The walls of the building were left standing, and were used in its reconstruction. The fixtures were a total loss, and the full amount of the insurance thereon was paid. As already stated, plaintiff’s invoices were destroyed by the fire, and there was some delay in procuring duplicates. A controversy arose, at the meeting on June 29th, over an item of $168 for freight. The adjusters contended that the trade discounts, which were not otherwise taken into consideration in fixing the value of the stock, should offset this item. It was-found, however, that the freight exceeded the discounts by $108. The amount finally agreed upon and paid.in settlement of the loss on stock was $2,000. The exact proportion paid by the defendant is not material. While a final agreement settling the loss was not arrived at between the parties until after it is claimed the defamatory language was used, the plaintiff, in his testimony, said that the sticking point between them at the June meeting was the item of .freight, “and things like that.” Other companies had insurance on the property, whose representatives took part in some of the conversations.

It will be observed from the foregoing statement that the subject-matter of the negotiations was the extent of the loss, and not the origin of the fire. The latter question does not appear to have entered into the controversy at all. The defendant corporation was evidently making an effort to adjust the loss, upon the theory that it was liable therefor, under the terms of plaintiff’s policy. The record contains no evidence from which it could be inferred that the company was claiming that plaintiff had set fire to the building for the purpose of obtaining the insurance. The whole controversy, so far as there was any, was over the value of the stock. As stated, an agreement eliminating the building and fixtures from controversy was early arrived at. There were numerous meetings between the parties, or their representatives, and doubtless considerable discussion as to the value of the stock; but this constituted the subject-matter of the discussion, and would seem to indicate something as to the probable scope of the defendant’s employment. Authority to adjust and settle the loss was all that the business in hand required. Nothing else was involved. Liability was admitted. A settlement to be arrived at upon the basis of admitted liability involved no question as to the origin of the fire. If the fire was. set by plaintiff, or at Ms instigation, for tbe purpose of obtaining tbe insurance, it would be a complete defense to plaintiff’s claim, but would probably not be otherwise material.

If tbe defamatory words bad been uttered by Yakish while making an investigation as to tbe origin of tbe fire, as tbe agent of defendant, a different question might arise. To bold a corporation liable for tbe torts of its agent, the act complained of must have been performed in the course and within tbe scope of tbe agent’s employment. If be exceeds bis authority, and goes outside of tbe scope thereof to commit an unlawful act, tbe principal is not liable.

There is nothing in tbe record before us from which it can be inferred that tbe defendant corporation was not proceeding in good faith to adjust plaintiff’s loss. It is, of course, true that tbe offensive language was used during tbe negotiations for a settlement; but, unless it was used within tbe scope of tbe agent’s employment, and while be was in tbe actual performance of bis duties touching tbe matter in question, tbe defendant company is not liable therefor. A single case selected from others cited supra will serve to illustrate tbe distinction suggested, which, after all, is a familiar, general rule. In Crelly v. Missouri & K. Tel. Co., 84 Kan. 19 (113 Pac. 386), tbe Supreme Court of Kansas bad before it an action for damages, based upon plaintiff’s claim that she was assaulted and severely injured by one of its employees. Tbe evidence disclosed that a local manager of tbe telephone company demanded of plaintiff, who was an operator in its employ, that she sign a voucher for compensation due her, and that, upon her refusal to do so, be made a violent assault upon her. Tbe court held that tbe company was not liable, upon tbe ground that, in assaulting plaintiff, tbe agent was not acting within tbe scope of'bis authority, or in tbe actual performance of bis duties. It may be that it was the duty of tbe operator to sign tbe voucher; but her refusal to do so, of course, did not 'justify tbe assault, nor should an inference, in tbe absence of other testimony that be was acting at tbe time within tbe scope of bis employment, be permitted.

Upon both occasions when it is claimed tbe defamatory words were spoken, tbe conversation bad become somewhat animated, and, upon tbe last occasion, tbe use of tbe slanderous words followed tbe offensive language of plaintiff above set out. While it is true that the meeting of the parties to adjust the loss provided the occasion for the utterance of the slander, we see no more reason for holding that Yakish was acting within the apparent scope of his employment, when he accused the plaintiff of setting fire to his building and stock of groceries, than was the manager of the telephone company when he attempted, by the use of violence, to compel an employee to sign the voucher. We think it manifest that, in doing so, he was not acting within the scope of his employment. Corporations can only transact business through agents; and, in the absence of some testimony in the case at bar tending to show that the defendant company questioned its liability upon the ground that plaintiff set fire to his building or stock, of that Yakish was authorized and engaged in the investigation of the origin of a fire, or that its origin was in some way involved in the subject-matter of the negotiations, there is nothing to support an inference that, at the time the objectionable language was used, he was acting within "the scope of his employment or authority as the agent of the defendant corporation.

2 corporation's * agent’^unauthor-wed act. II. But it is also claimed by counsel for appellee that the defendant corporation ratified the act of its agent in uttering the slander charge. This claim rests upon the approval and ac-ceptanee by the company of the settlement a8'ree(i upon between plaintiff and Yakish. It is not contended by appellee, either in his pleading or proof, that he was in any way induced by the alleged misconduct of the agent to enter into the settlement approved by defendant. The case is not one where the agent exceeded his authority in procuring a settlement or obtaining property which the principal seeks to take advantage of or retain. There is no question as*to the authority of the agent to make the settlement; therefore, as to this matter, ratification of the principal could have been no more binding than the agreement entered into on its behalf by the agent. No money or property was received by the company. It was benefited only by its release from liability, and whatever advantage resulted from the settlement. The amount paid substantially covered plaintiff’s loss, and he appears to have been satisfied therewith. We find nothing in the record to sustain appellee’s contention upon this point.

‘ verdict: exc'es-srveness III. The jury returned a verdict in favor of the plaintiff against both defendants for $5,000. It is urged by appellants that this verdict is excessive, and the result of passion and prejudice. The evidence wholly fails to show other actual damages than such as would presumptively arise from the speaking of the slanderous words. Upon the'first occasion, plaintiff and Steenberg were the only persons present who claimed to have heard the charges complained of, and upon the second occasion, but one person testified to hearing what was said. The record does not disclose a general circulation of the slander, or that it was known to anyone except the parties above indicated. Upon both occasions, it is claimed that Yakish spoke in anger, and upon the last occasion, after plaintiff had refused to be sworn, as requested by the agent and as authorized by the policy, and after he had told Yakish <cto go to hell.” As the jury was authorized, under the instructions, to return a verdict for both actual and exemplary damages, we may assume that at least the larger part of the verdict is made up of exemplary damages. Unless this is true, it is so grossly excessive as to indicate passion and prejudice upon the part of the jury. We think the verdict is excessive; and, as the instructions of the court authorized the allowance of both actual and exemplary damages, it cannot be sustained. Wildeboer v. Petersen, 182 Iowa 1185; Cain v. Osler, 168 Iowa 59; Ahrens v. Fenton, 138 Iowa 559; Waltham Piano Co. v. Freeman, 159 Iowa 567; Jolly v. Doolittle, 169 Iowa 658; Andreas v. Hinson, 157 Iowa 43, and cases cited; Dahl v. Hansen, 152 Iowa 555, 556.

It is our conclusion, therefore, that the evidence, as shown by the record before us, did not justify the court in giving Instruction No. 1, which, in substance, advised the jury that the defendants were equally liable, if it found that the defamatory words were spoken, and that, instead, the motion of the defendant company for a directed verdict, upon the ground that, if Yakish uttered the slander charged, he was manifestly acting beyond the scope of his employment, should have been sustained. Numerous other important questions are discussed by counsel; but in view of tlie conclusion reached, that the judgment below must be reversed as to both defendants, we find no occasion to discuss or decide the same. For reasons indicated, the judgment below is — Reversed.

Ladd, EvaNS, and Salinger, JJ., concur.