Dold v. Outrigger Hotel, 5219

• Decision Date: 29 September 1972
• Docket Number: No. 5219,5219
• Citation: 501 P.2d 368,54 Haw. 18
• Parties: , 58 A.L.R.3d 360 Mr. and Mrs. D. F. DOLD, and Mr. and Mrs. Leo Manthei, Plaintiffs-Appellants, v. OUTRIGGER HOTEL and Hawaii Hotels Operating Company, Limited, Defendants-Appellees.
• Court: Hawaii Supreme Court

Page 368

501 P.2d 368

54 Haw. 18, 58 A.L.R.3d 360

Mr. and Mrs. D. F. DOLD, and Mr. and Mrs. Leo Manthei Plaintiffs-Appellants, v. OUTRIGGER HOTEL and Hawaii Hotels Operating Company Limited, Defendants-Appellees.

No. 5219.

Supreme Court of Hawai'i.

Sept. 29, 1972.

Syllabus by the Court

1. Where a contract is breached in a wanton or reckless manner, resulting in a tortious injury, the aggrieved person is entitled to recover in tort in addition to recovering in contract for out-of-pocket losses.

2. The innkeeper's common law duty to accommodate does not embrace the situation where a hotel dishonors a previously confirmed reservation at a time when accommodations are not available.

Joe Thrasher, Honolulu (Tobias C. Tolzmann, Honolulu, with him on the briefs), for plaintiffs-appellants.

Richard E. Stifel, Honolulu (Lawrence E. Condit, Honolulu, with him on the brief; Jenks, Kidwell, Goodsill & Anderson, Honolulu, of counsel), for defendants-appellees.

Before RICHARDSON, C. J., and MARUMOTO, ABE, LEVINSON and KOBARYASHI, JJ.

KOBAYASHI, Justice.

This is an appeal by the plaintiffs, Mr. and Mrs. D. F. Dold and Mr. and Mrs. Leo Manthei, from a judgment in their favor. Plaintiffs' amended complaint prayed for actual and punitive damages and alleged three counts for recovery, breach of contract, fraud, and breach of an innkeeper's duty ot accommodate guests. (Count II for fraud was voluntarily dismissed at trial.) Though the judgment was favorable to them, the plaintiffs contend that the trial judge erred in not allowing an instruction on the issue of punitive damages. This is the issue before the court.

FACTS

The plaintiffs, mainland residents, arranged for hotel accommodations from February 18 to February 23, 1968, through the American Express Company, the agent of the defendant, Outrigger Hotel, hereinafter referred to as 'Outrigger'. Hawaii Hotels Operating Company, Ltd., managed and operated the Outrigger. Both are Hawaii corporations.

Upon arrival at the Outrigger on February 18, 1968, the plaintiffs were refused accommodations and were transferred by the Outrigger to another hotel of lesser quality because the Outrigger lacked available space. On February 19 and 20 the plaintiffs again demanded that the defendants honor their reservations but they were again refused.

Though the exact nature of the plaintiffs' reservations is in dispute, the defendants claim that since the plaintiffs made no cash deposit, their reservations were not 'confirmed' and for that reason the defendants justifiably dishonored the reservations. Plaintiffs contend that the reservations were 'confirmed' as the American Express Company had guaranteed to Outrigger a first night's payment in the event that the plaintiffs did not show up. Further, the plaintiffs claim that this guarantee was in fact the same thing as a cash deposit. Thus, plaintiffs argue that the defendants were under a duty to honor the confirmed reservations. Although the jury awarded $600 to the Dolds and $400 to the Mantheis, it is not known upon which count the recovery was based.

An examination of the record in the instant case shows the following:

(1) It was the policy of the Outrigger that a reservation was deemed confirmed when either a one night's cash deposit was made or the reservation was made by a booking agent which had established credit with the Outrigger.

(2) The plaintiffs made their reservations through the American Express Company, which had established credit with the Outrigger.

(3) In lieu of a cash deposit, the Outrigger accepted American Express Company's guarantee that it would pay the first night's deposit for the plaintiffs.

(4) On February 18, 1968, the Outrigger referred 29 parties holding reservations at the Outrigger to the Pagoda Hotel which deemed these referrals 'overflows.'

(5) On February 18, 1968, the Outrigger had 16 guests who stayed beyond their scheduled date of departure.

(6) From February 15 to 17 and 19 to 22, 1968, the Outrigger also had more reservations that it could accommodate. Plaintiffs' exhibits Nos. 23 to 29 indicate the number of overflows and referrals of the above-mentioned reservations made by the Outrigger to the Pagoda Hotel on the following dates:

                February  15  20  referrals
                   "      16  20      "
                   "      17  32      "
                   "      19  44      "
                   "      20   9      "
                   "      21   9      "
                   "      22  20      "
                

(7) Evidence was adduced that the Outrigger made a profit from its referrals to the Pagoda Hotel. Upon advance payment for the rooms to American Express who in turn paid Outrigger, the plaintiffs were issued coupons representing the prepayment for the accommodations at the Outrigger. On referral by the Outrigger, the Pagoda Hotel's practice was to accept the coupons and bill the Outrigger for the actual cost of the rooms provided. The difference between the coupon's value and the actual value of the accommodations was retained by the Outrigger.

The plaintiffs prevented a profit from being made by the Outrigger by refusing to use the coupons and paying in cash for the less expensive accommodations.

MAY PLAINTIFFS RECOVER PUNITIVE DAMAGES FOR BREACH OF CONTRACT?

The question of whether punitive damages are properly recoverable in an action for breach of contract has not been resolved in this jurisdiction.

In the instant case, on the evidence adduced, the trial court refused to allow an instruction on the issue of punitive damages but permitted an instruction on the issue of emotional distress and disappointment. ¹

In a case involving a similar pattern of overbooking of reservations the court in Wills v. Trans World Airlines, Inc., 200 F.Supp. 360 (S.D.Cal.1961), stated that the substantial overselling of confirmed reservation for the period in question was a strong indication that the defendant airline had wantonly precipitated the very circumstances which compelled the removal of excess confirmed passengers from its flights.

In Goo v. Continental Casualty Company, 52 Haw. 235, 473 P.2d 563 (1970), we affirmed the public policy considerations behind the doctrine of punitive damages and acknowledged the fact that some jurisdictions allow a recovery of punitive damages where the breach of contract is accompanied by some type of contemporaneous tortious activity. However, the Goo case did not afford the proper factual setting for this court to consider the propriety of an assessment of punitive damages in contract actions.

Various jurisdictions have adopted their own rules regarding the nature of the tortious activity necessary to recover punitive damages in a contract action. Some require that the breach be accompanied by an independent willful tort (Briggs v. Rodriguez, 236 S.W.2d 510 (Tex.Civ.App.1951), Carter Lumber Company v. Saide, 140 Tex. 523, 168 S.W.2d 629 (1943)), or by a fraudulent act (Bradley v. Metropolitan Life Insurance Company, 162 S.C. 303, 160 S.E. 721 (1931)), or by a concurrent breach of a common law duty (Brown v. Coates, 102 U.S.App.D.C. 300, 253 F.2d 36 (1958)).

We are of the opinion that the facts of this case do not warrant punitive damages. However, the plaintiffs are not limited to the narrow traditional contractual remedy of out-of-pocket losses alone. We have recognized the fact that certain situations are so disposed as to present a fusion of the doctrines of tort and contract. Goo, supra, 52 Haw. at 241, 473 P.2d at 567. Though some courts have strained the traditional concept of compensatory damages in contract to include damages for emotional distress and disappointment (Kellogg v. Commodore Hotel, 187 Misc. 319, 4 N.Y.S.2d 131 (1946)), we are of the opinion that where a contract is breached in a wanton or reckless manner as to result in a tortious injury, the aggrieved person is entitled to recover in tort. Thus, in addition to damages for out-of-pocket losses, the jury was properly instructed on the issue of damages for emotional distress and disappointment.

MAY PLAINTIFFS RECOVER PUNITIVE DAMAGES FOR BREACH OF AN INNKEEPER'S DUTY TO ACCOMMODATE?

We now consider count III of plaintiffs' complaint. It has long been recognized that an innkeeper, holding himself out to the public to provide hotel accommodations, is obligated, in the absence of reasonable grounds for refusal, to provide accomodations to all persons upon proper request. Perrine v. Paulos, 100 Cal.App.2d 655, 224 P.2d 41 (1950). This duty traditionally extended to the traveller who presented himself at the inn. However, where the innkeeper's accommodations had been exhausted, the innkeeper could justly refuse to receive an applicant. Do Wolf v. Ford, 193 N.Y. 397, 86 N.E. 527 (1908); Browne v. Brandt, 1 K.B. 696 (1902); Kisten v. Hildebrand, 48 Ky. 72 (1848). It is well recognized that punitive damages are recoverabe for breach of an innkeeper's duty to his guest where the innkeeper's conduct is deliberate or wanton. Milner Hotels v. Brent, 207 Miss. 892, 43 So.2d 654 (1949); Stevenson v. John J. Grier Hotel Company,159 Ark. 44, 251 S.W. 355 (1923); Piluso v. Spencer, 36 Cal.App. 416, 172 P. 412 (1918); McCarthy v. Niskern, 22 Minn. 90 (1875); McCormick, Damages § 81 (1935). We are not aware of any jurisdiction that renders an innkeepter liable on his common law duty to accommodate under the circumstances of this case. Consequently, plaintiffs are not entitled to an instruction on punitive damages on count III of their complaint.

Judgment is affirmed.

MARUMOTO, Justice, concurring in which ABE, Justice, joins.

In concur in the result, but cannot agree with the reasoning in the opinion of the court nor with the statement that the contract here was breached in a wanton or reckless manner so as to result in a tortious injury entitling the plaintiffs to recover in tort.

The plaintiffs in the triall below requested and were refused instructions for punitive damages. They appealed that question and that question alone to this court. The issues presented were two in number:...