Tennessee Farmers Mut. Ins. Co. v. American Mut. Liability Ins. Co.

• Decision Date: 24 July 1992
• Parties: TENNESSEE FARMERS MUTUAL INSURANCE COMPANY and Northland Insurance Company, Plaintiff/Appellee, v. AMERICAN MUTUAL LIABILITY INSURANCE COMPANY, Defendant/Appellant.
• Court: Tennessee Court of Appeals

Page 933

840 S.W.2d 933

TENNESSEE FARMERS MUTUAL INSURANCE COMPANY and Northland

Insurance Company, Plaintiff/Appellee, v. AMERICAN MUTUAL LIABILITY INSURANCE COMPANY, Defendant/Appellant.

Court of Appeals of Tennessee,

Middle Section, at Nashville.

July 24, 1992.

Permission to Appeal Denied by

Supreme Court Oct. 26, 1992.

Darrell G. Townsend, Mary M. Bers, Howell, Fisher & Branham, Nashville, for defendant-appellant.

Gary Vandever and R. David Allen, Lebanon, for Tennessee Farmers Mut. Ins. Co.

Richard L. Colbert, Cornelius & Collins, Nashville, for Northland Ins. Co.

OPINION

KOCH, Judge.

This appeal involves three insurance companies' obligations to provide coverage for a driver involved in an accident while driving a loaned automobile. After the insuror of the driver's employer denied coverage, the driver's insuror and the insuror that issued the automobile owner's garage policy filed suit in the Circuit Court for Wilson County seeking a declaratory judgment concerning their respective obligations. The trial court, sitting without a jury, found that the driver was acting within the scope of his employment when the accident occurred and that the employer's insuror was required to provide the driver representation and coverage. On this appeal, the employer's insuror takes issue with the trial court's conclusions that the driver was acting within the scope of his employment and that it was obligated to provide the driver primary coverage. We have determined that the driver was not acting within the scope of his employment when the accident occurred and, therefore, reverse the trial court.

I.

Bobby Clay Thomas worked as a foreman for Macon Hardwood Lumber Company ("Macon"), a logging business owned by his father. He supervised approximately ten employees who performed logging and maintenance work. On occasion, he also performed other duties for Macon such as purchasing equipment and vehicles.

In January 1988, Mr. Thomas and his father decided to replace one of Macon's older pickup trucks. They also decided that Mr. Thomas should arrange to go to the Nashville Auto Auction with a friend's father who was a used car dealer. Mr. Thomas' father gave him complete authority to purchase a truck for the business if he found a suitable one. Mr. Thomas also told his father that he intended to look for an automobile for himself while he was at the auction.

Lowell Smith operated a used car lot in Red Boiling Springs and attended the Nashville Auto Auction every Wednesday in search of vehicles for his business. He frequently invited friends along to look for vehicles for themselves or to help him drive the vehicles he purchased back to his used car lot. Mr. Smith agreed to permit Mr. Thomas to accompany him to the auction. Mr. Thomas' father knew that his son would be accompanying Mr. Smith to the auction.

Instead of reporting for work at Macon's office on the morning of January 20, 1988, Mr. Thomas met Mr. Smith and two others at Mr. Smith's used car lot. The four men drove to Nashville in Mr. Smith's automobile. Mr. Thomas did not find a pickup truck for the business or an automobile for himself and, by midday, was eager to return to Red Boiling Springs because he was expecting to celebrate his birthday later in the day. Mr. Smith was not ready to leave, and so he permitted Mr. Thomas to drive a 1985 Buick he had just purchased back to his used car lot.

While returning to Red Boiling Springs over a different route selected by Mr. Smith, Mr. Thomas was involved in a head-on collision with an automobile driven by Linda Roddy. Mrs. Roddy and her son sustained serious injuries and eventually filed two suits against Mr. Thomas and Mr. Smith in the Circuit Court for Wilson County seeking damages totalling $260,000. These lawsuits, as well as Mrs. Roddy's later offer to settle all claims for $78,000, crystallized this dispute between the insurance companies.

When the accident occurred, Mr. Thomas had a personal automobile policy issued by Tennessee Farmers Mutual Insurance Company ("Tennessee Farmers") providing $25,000 in coverage. Mr. Smith had a garage policy for his business issued by Northland Insurance Companies ("Northland") providing $50,000 in coverage. Macon also had a liability policy issued by American Mutual Liability Insurance Company ("American Mutual") providing $500,000 in coverage.

American Mutual denied coverage to Mr. Thomas on the ground that he was not acting within the scope of his employment when the accident occurred. Tennessee Farmers and Northland joined together in filing suit against American Mutual seeking a declaratory judgment concerning the three insurance companies' rights and obligations to Mr. Thomas. The trial court determined that Mr. Thomas was acting in the scope of Macon's business when the accident occurred and that American Mutual "must provide representation and coverage" to Mr. Thomas in the suits filed by Mrs. Roddy and her son.

II.

We must first resolve the parties' disagreement concerning the standard by which this court should review the trial court's conclusion that Mr. Thomas was on Macon's business and was acting within the scope of his employment when the accident occurred. While all the parties agree that Tenn.R.App.P. 13(d) applies, they disagree concerning whether this court should presume that the trial court's factual conclusions are correct. Not surprisingly, American Mutual argues against, while Tennessee Farmers and Northland, having prevailed below, argue in favor of the presumption.

Tenn.R.App.P. 13(d) provides, in part, that:

Unless otherwise required by statute, review of findings of fact by the trial court in civil actions shall be de novo upon the record of the trial court, accompanied by a presumption of the correctness of the finding.

The presumption of correctness in Tenn.R.App.P. 13(d) applies only to findings of fact, not to conclusions of law. Walker v. Nationwide Ins. Co., 813 S.W.2d 135, 140-41 (Tenn.Ct.App.1991); Barnett v. Watco, Inc., 682 S.W.2d 212, 218 (Tenn.Ct.App.1984). Factual findings can, however, lose the benefit of the presumption when they are based on undisputed evidence that reasonably can support only one conclusion. When no conflict in the evidence exists, the issue on appeal becomes a question of law upon which no presumption of correctness attaches. Estate of Adkins v. White Consol. Indus., Inc., 788 S.W.2d 815, 817 (Tenn.Ct.App.1989).

The general rule applies to findings concerning whether an employee was acting within the scope of his or her employment for the purpose of the respondeat superior doctrine. Generally, whether an employee is acting within the scope of his or her employment is a question of fact. Craig v. Gentry, 792 S.W.2d 77, 80 (Tenn.Ct.App.1990). However, it becomes a question of law when the facts are undisputed and cannot support conflicting conclusions. Blackman v. Great Am. First Sav. Bank, 233 Cal.App.3d 598, 284 Cal.Rptr. 491, 493 (1991); Henderson v. Professional Coatings Corp., 72 Haw. 387, 819 P.2d 84, 89 (1991); Sedalia Mercantile Bank & Trust Co. v. Loges Farms, Inc., 740 S.W.2d 188, 202 (Mo.Ct.App.1987).

Thus, whether an employee is acting within the scope of his employment can be reviewed as a question of law when the employee's acts are clearly beyond the scope of his authority. Brown v. Housing Auth., 23 Conn.App. 624, 583 A.2d 643, 646 (1991); Home Stores, Inc. v. Parker, 179 Tenn. 372, 379, 166 S.W.2d 619, 622 (1942) (the issue is a question of law when an employee's departure from the employer's business is "of marked and decided character").

The evidence concerning the events of January 20, 1988 is largely undisputed. However, the conclusions to be drawn from the evidence are not so clear because of the dual purpose of the original trip to the auto auction, the additional purpose for the return trip, and Mr. Thomas' changing intentions or state of mind during the trip. See Harris v. Oro-Dam Constructors, 269 Cal.App.2d 911, 75 Cal.Rptr. 544, 549 (Ct.App.1969). Mr. Thomas' return trip from the auction was not such a marked and decided departure from Macon's business that it was clearly beyond the scope of his employment.

If follows, therefore, that the trial court's finding that Mr. Thomas was on a "business trip" is a finding of fact entitled to a presumption of correctness. We have, however, reviewed the record de novo in accordance with Tenn.R.App.P. 13(d) and have determined that the evidence preponderates against the trial court's conclusion that Mr. Thomas was on Macon's business when the automobile he was driving collided with Mrs. Roddy.

III.

The doctrine of respondeat superior renders employers vicariously liable for the torts their employees commit while acting within the scope of their employment. Parker v. Vanderbilt Univ., 767 S.W.2d 412, 415 (Tenn.Ct.App.1988); Restatement (Second) of Agency § 219(1) (1957); W. Page Keeton, Prosser and Keeton on The Law of Torts § 70, at 501-02 (5th ed. 1984) ("Prosser & Keeton"); Eugene H. Switzer, Comment, Scope of Employment--Master's Liability to Third Persons, 24 Tenn.L.Rev. 241, 242 (1956).

In order to hold an employer liable, the plaintiff must prove (1) that the person who caused the injury was an employee, (2) that the employee was on the employer's business, and (3) that the employee was acting within the scope of his employment when the injury occurred. Hamrick v. Spring City Motor Co., 708 S.W.2d 383, 386 (Tenn.1986); Midwest Dairy Prods. Co. v. Esso Standard Oil Co., 193 Tenn. 553, 555-56, 246 S.W.2d 974, 975 (1952).

While the principles embodied in the respondeat superior doctrine are relatively easy to articulate, they are not always easy to apply. Deihl & Lord v. Ottenville, 82 Tenn. (14 Lea) 191, 194 (1884). The doctrine does not lend itself to bright line rules, Hall Grocery Co. v. Wall, 13 Tenn.App. 203, 208 (1930), but rather requires the weighing and balancing of the facts and circumstances of each...