Briner v. Hyslop, 68228

CourtUnited States State Supreme Court of Iowa
Citation337 N.W.2d 858
Docket NumberNo. 68228,68228
PartiesNorma J. BRINER, Administrator of the Estate of David L. Briner, Deceased, Appellant, v. Dennis Lee HYSLOP and McLane Livestock Transport, Inc., Appellees.
Decision Date17 August 1983

Edward J. Gallagher, Jr. and David R. Sheridan of Gallagher, Langlas & Gallaher, Waterloo, for appellant.

John T. Nolan and Marc B. Moen of Lucas, Nolan, Bohanan & Moen, Iowa City, for appellee Hyslop.

Max E. Kirk of Ball, Kirk & Holm, P.C., and James E. Walsh, Jr. of Clark, Butler & Walsh, Waterloo, for appellee McLane Livestock Transport, Inc.

Considered en banc.

SCHULTZ, Justice.

This appeal arises out of an automobile-truck accident which claimed the life of the driver of the automobile, David L. Briner. The administrator of Briner's estate brought a wrongful death action against both Dennis Hyslop and McLane Livestock Transport, Inc. (McLane), the driver and the owner of the truck, respectively. The case was tried to a jury which returned verdicts for compensatory and punitive damages against both defendants. The trial court entered judgment in accordance with the jury verdict, except that it entered judgment notwithstanding the verdict for McLane on the punitive damage award.

Plaintiff has appealed from the trial court's grant of judgment notwithstanding the verdict; McLane has cross-appealed on the award of compensatory damages; Hyslop has cross-appealed from the award of punitive damages against him. Of the many issues raised on this appeal we find the most troublesome concerns the test that should be applied to determine when a corporate employer may be held liable for punitive damages for the acts of an employee. Less troublesome issues will be set forth and discussed later in this opinion.

On November 7, 1979, Hyslop left Colorado and drove a McLane truck loaded with cattle to Sioux Center, Iowa. Another of McLane's employees, Leo Scowden, notified McLane at approximately 2:00 p.m. on November 8 that Hyslop had arrived in Sioux Center. McLane told Scowden that he and Hyslop were to begin driving to Waterloo. Later that evening Scowden and Hyslop stopped in Fort Dodge to allow Scowden to call McLane. McLane instructed them to go to Rowley, Iowa, to pick up a load of cattle early in the morning of November 9. While stopped in Fort Dodge Hyslop consumed several double scotches. He then got back in his truck and began driving to Rowley. Unfortunately, he fell asleep while driving and his truck drifted over the center line and collided with the oncoming Briner automobile.

As a result of this collision Hyslop was charged with and pleaded guilty to involuntary manslaughter based on his operating a motor vehicle while under the influence of alcohol or drugs, reckless driving, failure to have control, failure to yield one-half of the highway, failure to keep a log book, and operating a commercial vehicle for more hours than allowed by law.

Before commencement of the trial Hyslop admitted his negligence and removed this issue from the jury deliberation. McLane also admitted Hyslop's negligence, but sought to avoid liability by contending that Hyslop was not driving with McLane's consent because of his consumption of alcohol.

After the trial the jury returned a joint verdict for compensatory damages for $116,846.08 against both defendants and separate verdicts for punitive damages against Hyslop for $100,000 and against McLane for $150,000. The court subsequently granted a judgment notwithstanding the verdict for McLane on the punitive damage award and entered judgment for the plaintiff in conformance with the other verdicts.

I. Punitive damage award against McLane. In sustaining McLane's motion for judgment notwithstanding the verdict the trial court failed to give a reason for its ruling. This failure to comply with the direction contained in Iowa Rule of Civil Procedure 118 that motions involving separate grounds "shall be disposed of by separate rulings on each and not sustained generally" creates uncertainty about both the trial court's reasoning and the issues that should be considered on appeal.

We have admonished trial courts to comply with rule 118, Greenwell v. Meredith Corp., 189 N.W.2d 901, 905 (Iowa 1971), given our reasons for requiring compliance, and indicated that noncompliance may be grounds for a reversal. Oakleaf Country Club, Inc. v. Wilson, 257 N.W.2d 739, 743 (Iowa 1977). We do not believe that a reversal for noncompliance is warranted here, but we shall confine our review to the two grounds urged by McLane in its motion for a directed verdict, as the motion for judgment notwithstanding must stand or fall on grounds urged therein. Watson v. Lewis, 272 N.W.2d 459, 461 (Iowa 1978).

The grounds raised in both motions are that (1) the trial court erred in adopting as the law of the case the rule which permits the assessment of punitive damages against a corporation for acts done by an employee in the course of his employment, rather than the rule set forth in the Restatement (Second) of Torts § 909 which permits such damages under more limited circumstances; and (2) there was insufficient evidence under either of these rules to present a sufficient factual issue to allow the issue of punitive damages against McLane to go to the jury. We shall address both issues, but we begin with an examination of the proper rule for allowance of punitive damages.

A. Proper rule. It is well established in Iowa under the doctrine of respondeat superior that a corporate employer may be liable for compensatory damages resulting from the negligent acts of employees committed within the scope of their employment even though the employer is without fault. Frost v. Des Moines Still College of Osteopathy and Surgery, 248 Iowa 294, 304-06, 79 N.W.2d 306, 314 (1957). It is less certain, however, under what circumstances an employer is liable for punitive damages for the willful acts of employees committed within the scope of employment.

Those authorities that have considered the issue are divided into two groups. One group holds the corporate employer liable for punitive damages whenever the employee's actions within the scope of employment make the employee liable. See, e.g., Stroud v. Denny's Restaurant, Inc., 271 Or. 430, 532 P.2d 790 (1975). These authorities generally term their analysis as the liberal approach or the course of employment rule. J. Ghiardi and J. Kircher, Punitive Damages Law and Practice § 5.06 (1981). The other group of authorities finds the corporate employer liable for punitive damages only when the corporate employer wrongfully authorized, contributed to, or ratified the outrageous conduct which caused plaintiff's injury. See, e.g., Mercury Motors Express, Inc. v. Smith, 393 So.2d 545 (Fla.1981). This rule is termed the complicity rule. Morris, Punitive Damage in Personal Injury Cases, 21 Ohio St.L.J. 216, 221 (1960). It is expressed by the Restatement (Second) of Agency § 217C and the nearly identical Restatement (Second) of Torts § 909, which states:

Punitive damages can properly be awarded against a master or other principal because of an act by an agent if, but only if:

(a) the principal authorized the doing and the manner of the act, or

(b) the agent was unfit and the principal was reckless in employing him, or

(c) the agent was employed in a managerial capacity and was acting in the scope of employment, or

(d) the principal or the managerial agent of the principal ratified or approved the act.

Restatement (Second) of Torts § 909 (1979).

We have addressed this problem on previous occasions. Initially, we took a position consistent with the Restatement rule and required corporate complicity. Dunshee v. Standard Oil Co., 165 Iowa 625, 146 N.W. 830 (1914). We expressed the view that "the principal cannot be held liable in exemplary damages for the wanton acts of the agent, unless it participated, either expressly or impliedly, or by conduct authorizing or approving the act, whether before or after it was committed." Id. at 630, 146 N.W. at 833. This rule was approved in White v. International Textbook Co., 173 Iowa 192, 194, 155 N.W. 298, 299 (1915), and Ashland v. Lapiner Motor Co., 247 Iowa 596, 602, 75 N.W.2d 357, 360 (1956).

Our next reference to the issue appeared in Claude v. Weaver Construction Co., 261 Iowa 1225, 158 N.W.2d 139 (1968). In that case the president of the corporation was actively involved in business operations and had authorized the controverted activity. Although the issue of corporate liability for exemplary damages was not disputed, the court stated:

Error asserted in the case at bar is broad, but liability of a corporate entity, for punitive damages, is neither urged nor discussed by defendant. As a result we are not here called upon to consider or resolve that issue and do not do so. Stated otherwise, the question as to liability of a corporation for exemplary damages is not involved in this appeal. However, with regard to the foregoing see Baltimore & P.R. Co. v. Fifth Baptist Church, 108 U.S. 317, 2 S.Ct. 719, 726-727, 27 L.Ed. 739; Kelite Products v. Binzel (5 Cir.), 224 F.2d 131, 144; Amos v. Prom, Inc., 115 F.Supp. 127, 137; Toole v. Richardson-Merrell, Inc., 251 Cal.App.2d 689, 60 Cal.Rptr. 398, 414-415; Algozino v. Welch Fruit Products Co., 345 Ill.App. 135, 102 N.E.2d 555, 560; 25 C.J.S. Damages § 125(4), page 1153; 19 C.J.S. Corporations § 1263, page 948; 39 Am.Jur., Nuisances, Section 32, page 313; 13 Am.Jur., Corporations, section 1130, page 1056; and Prosser, Law of Torts, Third Ed., Hornbook Series, page 12.

Id. at 1233, 158 N.W.2d at 145.

We returned to this issue in Northrup v. Miles Homes, Inc., 204 N.W.2d 850 (Iowa 1973). The parties sharply disagree about the intention of the Northrup court. Plaintiff argues that in Northrup we discarded the "complicity" rule and adopted the "course of employment" rule. In that case the defendant corporation argued that punitive damages could not be...

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