Doody v. John Sexton & Company, 7233.

• Decision Date: 27 May 1969
• Docket Number: No. 7233.,7233.
• Citation: 411 F.2d 1119
• Parties: Daniel A. DOODY, Plaintiff, Appellee, v. JOHN SEXTON & COMPANY, Defendant, Appellant.
• Court: U.S. Court of Appeals — First Circuit

411 F.2d 1119 (1969)

Daniel A. DOODY, Plaintiff, Appellee, v. JOHN SEXTON & COMPANY, Defendant, Appellant.

No. 7233.

United States Court of Appeals First Circuit.

May 27, 1969.

Franklin N. Cunningham, Boston, Mass., with whom Samuel Adams, Warner & Stackpole, Boston, Mass., and Sidley & Austin, Chicago, Ill., were on brief, for appellant.

Joseph J. Hurley, Boston, Mass., with whom Thomas E. Cargill, Jr., Boston, Mass., was on brief, for appellee.

Before ALDRICH, Chief Judge, McENTEE and COFFIN, Circuit Judges.

COFFIN, Circuit Judge.

The defendant, John Sexton & Co., a merchandising company having head offices in Chicago, and doing business in a number of states, employed plaintiff Doody in its Boston office. Taking the evidence as it developed in the district court most favorable to the plaintiff, at a conference in Chicago two of defendant's officers promised plaintiff lifetime employment in defendant's Los Angeles office if he would move to California. Plaintiff did move, but found himself out of phase with the manager there, who placed substantially different conditions upon his employment than, allegedly, he had been promised. When plaintiff complained, one of defendant's officers told him that he would have to like it or quit. Plaintiff reminded the officer of his Chicago promise and asked if he had been "kidding". The officer replied in the affirmative. Plaintiff quit and returned to Boston. There was evidence that his out-of-pocket loss as a result of this venture was $15,000.

Plaintiff's suit in the district court was in three counts. Count 1 was for breach of contract; Count 2 for the fair value of his services; Count 3 for fraudulent misrepresentation. The court directed a verdict for the defendant on Count 1 on the ground that the officers had no real or apparent authority to promise lifetime employment, a decision which plaintiff accepts for this appeal as correct. It also directed a verdict on Count 2, also without objection by the plaintiff. It refused to direct on Count 3, and the jury found for the plaintiff in the amount of $15,000. Defendant appeals.

The appeal presents only two questions which give us concern. The first is what law governs the question whether the officers' promise with, as could be found, no intent to perform, was actionable. This question arises because, allegedly, what, in Massachusetts is regarded as an actionable misrepresentation of a present intention,¹ is not actionable in Illinois.²

We look at the Massachusetts conflict rule, Massachusetts being the present forum. Klaxon Co. v. Stentor Electric Mfg. Co., Inc., 313 U.S. 487, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941); Sampson v. Channell, 110 F.2d 754, 128 A.L.R. 394 (1st Cir. 1940). Under Massachusetts law the doctrine of lex loci delicti ordinarily governs actions of tort. Reed & Barton Corp. v. Maas, 73 F.2d 359 (1st Cir. 1934). In applying the lex loci doctrine, Massachusetts follows the rule of the Restatement that "the place of the wrong is the state where the last event necessary to make an actor liable for an alleged tort takes place." Restatement of the Law, Conflict of Laws § 377 (1934). Strogoff v. Motor Sales Co., Inc., 302 Mass. 345, 347, 18 N.E.2d 1016 (1939). Since reliance is necessary to the imposition of liability for misrepresentation, Brockton Olympia Realty Co. v. Lee, 266 Mass. 550, 165 N.E. 873 (1929); Butler v. Martin, 247 Mass. 169, 142 N.E. 42 (1923), it is apparent that the alleged tort was completed in Massachusetts where the plaintiff as contemplated by the statements, gave up his Massachusetts employment and suffered his original loss. We believe, therefore, that a Massachusetts court could apply its own law.³

This frees us of the obligation to pursue a question of Illinois law, namely, whether by its own conflict rules it, too, would look to the place of principal impact and apply the Massachusetts substantive law even though, under the Illinois cases cited by defendant, there would have been no Illinois recovery for misrepresentation had the activity been confined exclusively to that state. We accordingly hold that there was, or could be found to be, an actionable misrepresentation.

The remaining question is whether, assuming that defendant cannot be liable in contract for the unauthorized undertaking of its agents, it can be held liable in tort. Defendant says, with some appearance of plausibility, that tort liability would be illogical, and merely open the back door when the front door was closed.

We note first, however, that the liability that plaintiff is attempting to impose upon the defendant is not responsibility for the loss of the contract, but only for the proximate consequences of the officers' wrongful act. The officers were hiring agents, within limits, and it is common experience for a principal to be held accountable in tort for unauthorized acts of an agent not too far removed from the scope of his authority, even though, strictly, they were not authorized. In this case plaintiff does not need to rely simply on the general principle; there is a Massachusetts case closely in point. In Robichaud v. Athol Credit Union, 352 Mass. 351, 225 N.E.2d 347 (1967), a representative of the defendant lender who had authority to deal with such matters, told the borrower that his loan was covered by life insurance under defendant's group policy. In point of fact the loan was for 15 years and a Massachusetts statute did not permit insurance on loans over 10. The court held defendant liable for misrepresentation (in that case the full amount of the insurance) "even if furnishing insurance would have been beyond the defendant's power." 352 Mass. at 355, 225 N.E.2d at 350. The only question appeared...