Perzinski v. Chevron Chemical Co., 73-1490

• Decision Date: 15 November 1974
• Docket Number: No. 73-1490,73-1490
• Citation: 503 F.2d 654
• Parties: Emil PERZINSKI, Plaintiff-Appellee, v. CHEVRON CHEMICAL COMPANY, Defendant-Appellant.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 654

503 F.2d 654

Emil PERZINSKI, Plaintiff-Appellee, v. CHEVRON CHEMICAL COMPANY, Defendant-Appellant.

No. 73-1490.

United States Court of Appeals, Seventh Circuit.

Argued April 12, 1974.

Decided Sept. 19, 1974, Rehearing Denied Nov. 15, 1974.

Bradway A. Liddle, Jr. and James F. Lorimer, Madison, Wis., for defendant-appellant.

Hiram D. Anderson, Jr., Stevens Point, Wis., for plaintiff-appellee.

Before CUMMINGS, PELL and STEVENS, Circuit Judges.

PELL, Circuit Judge.

Plaintiff-appellee Emil Perzinski brought this action to recover damages resulting from a reduction in yield of his 1968 potato crop. Perzinski claimed that the damage to his crop was caused by the application of Paraquat, a herbicide distributed by the defendant Chevron Chemical Company. The jury returned a verdict in favor of the plaintiff and Chevron appeals.

Although the issues raised by Chevron are multi-faceted, they are essentially three: (1) whether the district court erred in admitting certain evidence as admissions by Chevron; (2) whether the district court erred in finding Chevron negligent as a matter of law; and (3) whether the district court erred in failing to submit to the jury a special verdict question and an instruction concerning contributory negligence on Perzinski's part.

I

The district court admitted into evidence, over Chevron's objection, testimony concerning three conversations between Chevron's salesman, Robert Sosnovske, and Perzinski. During the first conversation, which allegedly occurred shortly after the application of Paraquat, Sosnovske told Perzinski that Chevron 'would back up their recommendation of the product.' The second conversation, according to Perzinski, took place at what ordinarily would have been harvest time. Perzinski testified that, at that time Sosnovske tole him, 'Don't worry. We'll take care of you.' A third discussion occurred in Perzinski's office at which time Sosnovske is said to have asked Perzinski what damages he was claiming and to have told Perzinski, in effect, to bill Chevron for them. ¹

The district court admitted this evidence on the ground that these statements were admissions by Chevron and admissible under Wisconsin law. ²

Chevron relies on Wisconsin case law which, at the time of the trial, required that in order for the statement of an agent to be admissible as an admission by the principal, there had to be evidence indicating that the agent had authority to speak (as distinguished from authority to act) on the particular subject matter. Shoemaker v. Marc's Big Boy, 51 Wis.2d 611, 617, 187 N.W.2d 815, 818 (1971); Rudzinski v. Warner Theaters, Inc., 16 Wis.2d 241, 245-246, 114 N.W.2d 466, 468-469 (1962). Chevron argues that the district court erred in finding that the evidence indicated that Sosnovske had authority to speak for Chevron on matters of liability.

This court, however, need not decide whether the district court ruled correctly on this issue under the Wisconsin case law cited. The Wisconsin Supreme Court adopted new rules of evidence while the instant case was on appeal. The new rules took effect on January 1, 1974 and apply 'to actions and proceedings brought thereafter and also to actions and proceedings then pending.' In the Matter of Promulgation of Rules of Evidence for the State of Wisconsin, 59 Wis.2d Rl. An action is still 'pending,' according to the Wisconsin Supreme Court, until there is an 'exhaustion of rights of appeal.' Larson v. Fetherston, 44 Wis.2d 712, 718, 172 N.W.2d 20, 23 (1969). Since the present case was on appeal, and, therefore, 'pending,' when the new rules became effective, we deem it appropriate within the spirt of Rule 43(a) to apply these rules in determining whether the evidence in question was properly admitted.

The new rules provide, in pertinent part:

'(4) Statements which are not hearsay. A statement is not hearsay if:

'(b) Admission by party opponent. The statement is offered against a party and is:

'(4) a statement by his agent or servant concerning a matter within the scope of his agency or employment, made during the existence of the relationship . . ..' Wis.Rules of Evidence 908.01(4)(b)4.

The advisory committee's notes specify that 'this provision is a change in Wisconsin law.' 59 Wis.2d R243. A party introducing the statement of an agent as the admission of the principal need not show that the agent had authority to speak for the principal; rather, the present rule only requires that the agent's statement concern 'a matter within the scope of his agency or employment.'

The evidence in the present case indicated that Sosnovske had been a salesman for Chevron for at least 13 years, at the time of the discussions with Perzinski. Sosnovske had a degree in agronomy, and, as part of his job, he advised farmers on the use of various chemicals made by Chevron. Moreover, Sosnovske personally inspected Perzinski's fields both before and after the application of Paraquat and was present during the actual application of the herbicide. Sosnovske also indicated that he filled out 'product-complaint forms' when customers had complaints about the Chevron products and that he then sent the completed forms to Chevron.

Chevron, by the position it adopted in defending the present claim, is in effect stating that it is placing an experienced and knowledgeable salesman in the field to convince a prospective customer that a particular product would accomplish a particular result, yet repudiating from the protective corporate shield the statements of its agents without which the sale could not have been consummated. Here, the impact of the use of a product in the manner and for the very purpose for which it was sold could be disastrous, as the jury obviously found it to be. In our opinion, Sosnovske was acting within the scope of his authority in stating in effect that the company would stand in back of the product for the specialized purpose and use for which it was sold by him. We also note that other superior representatives of the company did participate in the selling process. The statements were, therefore, properly admitted as admissions of Chevron.

Chevron also contends that even if Sosnovske's statements were admissions by the company, the statements were, nonetheless, privileged because they were made as part of settlement negotiations. The policy rationale which excludes an offer of settlement arises from the fact that the law favors settlements of controversies and if an offer of a dollar amount by way of compromise were to be taken as an admission of liability, voluntary efforts at settlement would be chilled. That, however, is not the situation we find in the language used by Sosnovske. Instead, he was in effect stating that the herbicide was sold to you on the basis that it would aid, not substantially destroy, your crop and the company is prepared to stand in back of the basis of the sale. The dollar amount was, of course, left open but that did not make the statements of the company's position with regard to backing up its product an offer of compromise and settlement.

II

Chevron next argues that the district court erred in finding the defendant negligent as a matter of law.

The rule in the Seventh Circuit is that, in diversity cases, state law controls as to when a verdict can be directed. Etling v. Sander, 447 F.2d 593, 594 (7th Cir. 1971). In Wisconsin, 'an issue should be taken from the jury and a verdict directed against a party only when the evidence gives rise to no dispute or is so clear and convincing as reasonably to permit unbiased and impartial minds to come to but...