Eule v. Eule Motor Sales

• Citation: 34 N.J. 537,170 A.2d 241
• Decision Date: 10 April 1961
• Docket Number: No. A--76,A--76
• Parties: Alice EULE, Plaintiff-Appellant, v. EULE MOTOR SALES and Russell A. Boertzel, Defendants-Respondents.
• Court: United States State Supreme Court (New Jersey)

Page 537

34 N.J. 537

170 A.2d 241

Alice EULE, Plaintiff-Appellant, v. EULE MOTOR SALES and Russell A. Boertzel, Defendants-Respondents.

No. A--76.

Supreme Court of New Jersey.

Argued Feb. 6, 1961.

Decided April 10, 1961.

William V. Breslin, Englewood, for plaintiff-appellant (William J. Scanlon, Englewood, on the brief).

William R. Morrison, Hackensack, for defendant-respondent Eule Motor Sales (Morrison, Lloyd & Griggs, Hackensack, Attorneys; Kevin M. O'Halloran, Hackensack, on the brief).

Edward C. Hillis, Newark, for defendant-respondent Russell A. Boertzel (Marley, Winkelried & Hillis, Newark, Attorneys; Edward C. Hillis, of counsel).

The opinion of the court was delivered by

WEINTRAUB, C.J.

The primary issue is whether a wife may sue a partnership of which her husband is a member for injuries negligently inflicted by him. The partnership obtained a summary judgment which the Appellate Division affirmed. 62 N.J.Super. 250, 162 A.2d 601 (App.Div.1960). We granted certification. 33 N.J. 333, 164 A.2d 383 (1960).

Plaintiff was a passenger in a partnership automobile operated by her husband. Neither the husband nor his copartner is named in the complaint. The action is against the partnership as such, and a judgment for plaintiff accordingly would bind the partnership assets and not the partners individually. Mazzuchelli v. Silberberg, 29 N.J. 15, 21, 148 A.2d 8 (1959). The partnership was formed in New York and plaintiff resides there. The accident occurred in New Jersey. Both parties present the cause on the premise that the law of our State controls.

Starting with the proposition that a wife may not sue her husband for negligence, Koplik v. C.P. Trucking Corp., 27 N.J. 1, 141 A.2d 34 (1958), defendant contends (1) the action is in effect a forbidden suit against the husband because each partner individually rather than the partnership 'entity' is liable for the tort; and (2) even if the partnership is liable, yet a judgment against it would invade the husband's interest in its assets and further the husband would be chargeable fully if his partner sought indemnification. On both grounds, defendant urges the policy considerations which bar an action by a wife against her husband are equally potent here.

Hudson v. Gas Consumers' Association, 123 N.J.L. 252, 8 A.2d 337 (E. & A. 1939), followed the lead of Schubert v. August Schubert Wagon Co., 249 N.Y. 253, 164 N.E. 42, 64 A.L.R. 293 (Ct.App.1928), and sustained a wife's right to sue her husband's employer on the basis of her husband's negligence. The court held that a husband's negligent injury of his wife constitutes a wrong, and the barrier to an action by her against him is solely an immunity personal to him. This distinction between the existence of a wrong and the husband's private immunity from suit was repeated in Koplik, supra, where the court said (27 N.J. at p. 7, 141 A.2d at p. 38) 'our statute simply disables or incapacitates the spouse possessing the cause of action from suing the tortfeasor mate.' The employer, the Hudson opinion continued, is liable because 'The master is liable for the servant's act as though for his own,' citing the maxim, 'He who acts through another acts by himself' (123 N.J.L. at pp. 254-- 255, 8 A.2d at p. 339). Thus the employer is directly chargeable as if he were the immediate actor and may not escape because his employee happened to be the husband of the victim. In the last analysis, as we shall later develop, Respondeat superior rests upon a public policy that the employer bear the burden as an expense of the operation he expands through the employment of others.

In Hudson and Schubert defendant argued further that even though the employer is thus liable without regard to the personal immunity of his employee, yet since the employer may seek indemnity from the employee, the net effect is the same prospect of marital discord which underlies the rule prohibiting a direct suit. Hudson and Schubert answered, in conceptual terms, that the employer's right of indemnity from the employee is not by way of subrogation to the wife's claim against the husband, but rather arises directly from the employee's breach of his duty to the employer to exercise due care. Thus no violence is done to the rule that the wife cannot sue the husband, since her cause of action is not the vehicle of the employer's suit.

But, of course, such legal niceties do not meet the point that a claim-over against the husband will promote the discord which the ban against a direct interspousal suit was intended to prevent. The answer, however, is readily found in realities. The theoretical liability of an employee to reimburse the employer is quite anachronistic. The rule would surprise the modern employer no less than his employee. Both expect the employer to save harmless the employee rather than the other way round, the employer routinely purchasing insurance which protects the employee as well. Except for the rare case in which the liability of the employee may serve as a stepping stone to reach someone else, see Maryland Cas. Co. v. New Jersey Mfrs. Ins. Co., 48 N.J.Super. 314, 137 A.2d 577 (App.Div.1958), affirmed 28 N.J. 17, 145 A.2d 15 (1958), the prospect of a claim for indemnity is only of academic significance. 2 Harper & James, Torts § 26.1 p. 1363 (1956).

We should remember we are dealing with negligence which often is but a matter of split-second inadvertence. The concentration of people and machines means inevitably a substantial and predictable incidence of negligent injury. The employee can hardly carry that burden. Reflecting the commonly-held view that the enterprise should be the final repository of the inevitable risk of loss, the Legislature recently provided that an employee shall not be liable for negligent injury a co-employee entitled to workmen's compensation benefits, L. 1961, c. 2, amending R.S. 34:15--8 N.J.S.A. We note also that the United States Supreme Court would not find the federal government could seek indemnity from its employee. United States v. Gilman, 347 U.S. 507, 74 S.Ct. 695, 98 L.Ed. 898 (1954).

As we have said, employers do not in fact seek to pass the burden to their employees. It would hardly be realistic to assume that employers would alter that policy merely because the victim of the business activity happens to be the spouse of the employee. And finally, if the prospect of a suit for indemnity were a lively one, there is the possibility that upon a balancing of considerations the right to indemnity would yield to the right of the injured spouse, that is to say, that indemnity from the negligent spouse would be denied. Prosser, Torts § 101, pp. 678--679 (2d ed. 1955); Note, 21 Cornell L.Q. 157, 164 (1935). Cf. Kennedy v. Camp, 14 N.J. 390, 102 A.2d 595 (1954), in which it was held that a tortfeasor could not seek contribution against the co-negligent husband of the plaintiff.

For these reasons the rule of Schubert is well entrenched in good sense. The lead of Schubert has been widely followed and today it represents the general rule, 2 Harper & James, Torts § 26.17, p. 1427 (1956); Prosser, Torts § 101, p. 679 (2d ed. 1955), and is accepted in Restatement of Agency § 217(2), comment b (1933).

With the foregoing in mind, we turn to the immediate problem whether a wife may sue her husband's partnership. There are two facets. One is substantive, i.e., whether liability exists. The other is procedural, whether the husband must be joined as a party defendant and whether such joinder, if required, should prevent the result which ought to be reached as a matter of justice.

As to the substantive side, it is elementary that each partner is the agent of the other and of the partnership. This common law principle was adopted by the uniform partnership act. R.S. 42:1--9, N.J.S.A., provides, for present purposes, that 'Every partner is an agent of the partnership for the purpose of its business.' R.S. 42:1--13, N.J.S.A., provides with respect to any wrongful act or omission of 'any partner acting in the ordinary course of the business of the partnership or with the authority of his copartners * * * the partnership is liable therefor to the same extent as the partner so acting or omitting to act.' We shall in a moment comment upon the quoted language. R.S. 42:1--15, N.J.S.A., provides that all partners are liable jointly and severally for everything chargeable to the partnership under R.S. 42:1--13, N.J.S.A.

With respect to the liability of the husband's partner and of the partnership, there is no reason to reject the distinction drawn in Schubert and Hudson between liability of the principal and the personal privilege or immunity of the husband-agent. The same considerations which deny the ordinary principal or employer the right to hide behind the familial relationship between its representative and the victim are equally pertinent. Indeed R.S. 42:1--4(3), N.J.S.A., provides without qualification that 'The law of agency shall apply under this chapter.' The language we quoted from R.S. 42:1--13, N.J.S.A., that the partnership is liable 'to the same extent as the partner' for any act or omission of a partner 'acting in the ordinary course of the business of the partnership Or with the authority of his copartners' (emphasis added) may well, by reason of the disjunctive phrasing, have been intended to enlarge the liability. See Note, 5 Brooklyn L.Rev. 174 (1936). We need not now decide. But it is difficult to believe the draftsman had in mind the special situation before us and intended to give the partnership or the copartner the personal immunity of the spouse.

Two circumstances here present do not appear in the Schubert scene. One is that if the partnership assets are reached, something of value belonging to the husband is directly implicated. As an aside we note that in practical effect this would be equally true if the partners had chosen to do business in corporate form, for the...