Hall v. Miller

• Citation: 143 Vt. 135,465 A.2d 222
• Decision Date: 07 June 1983
• Docket Number: No. 316-81,316-81
• Parties: , 37 UCC Rep.Serv. 139 John HALL and Donna Hall v. Clarence C. MILLER and Clarence C. Miller, Jr.
• Court: United States State Supreme Court of Vermont

Page 222

465 A.2d 222

143 Vt. 135, 37 UCC Rep.Serv. 139

John HALL and Donna Hall v. Clarence C. MILLER and Clarence C. Miller, Jr.

No. 316-81.

Supreme Court of Vermont.

June 7, 1983.

Paterson, Walke & Pratt, P.C., Montpelier, for plaintiffs-appellees.

Richard E. Davis Associates, Inc., Barre, for defendants-appellants.

Before BILLINGS, C.J., and UNDERWOOD, PECK and GIBSON, JJ.

GIBSON, Justice.

Plaintiffs, John and Donna Hall, began operating a dairy farm in East Montpelier in 1965. In December, 1971, plaintiffs purchased three bred heifers, cattle expected shortly to calve, from defendants, who operated the largest cattle dealership in Vermont. Within the next few months defendants sold two other registered Holsteins to plaintiffs, as well as numerous other cattle to Vermont dairy farmers.

Despite the requirements of Department of Agriculture regulations, defendants did not keep complete and accurate records regarding the movement of their herd. In part because of this lack of tag number recording, it became impossible to follow with precision the sale and resale of every cow. However, for the purposes of this appeal, it is enough to note that, by April of 1972, certain cattle purchased by defendants from a Delaware-based cattle dealership and then resold in Vermont carried brucellosis. Brucellosis is a highly contagious venereal disease which causes cows to abort and to become unsuitable for milk production. As a result of this contamination, all of plaintiffs' 107 cows were quarantined by the Department of Agriculture and eventually 40 were sold for slaughter. During the next year and a half, seven other Vermont herds with cows from defendants' Delaware supplier tested positively to the disease. In the view of some experts, Vermont became host to its worst outbreak of brucellosis in a decade.

Plaintiffs brought suit to recover for their losses caused by selling dairy cattle for slaughter and for expenses associated with the quarantine of their herd. The liability issue was tried separately, and the action went to the jury on the theory of a breach of the implied warranty of merchantability under 9A V.S.A. § 2-314. After a jury verdict in plaintiffs' favor, the damages issue was tried by court, with the consent of the parties, and defendants were ultimately found liable for losses of $62,510.59 and interest of $42,285.27.

I. Liability Issue

On appeal, defendants have preserved two claims related to the liability issue. Other theories advanced on appeal were not raised below and thus will not be considered. Howard Bank v. Iron Kettle Restaurant of Bolton, Inc., 139 Vt. 374, 375-76, 428 A.2d 1138, 1139 (1981). Defendants argue (1) that expert testimony and other evidence of the transmission of brucellosis by their cows is too speculative to be legally competent; and (2) that defendants, father and son, are mere agents of the "Miller Corporation" and, as such, are improper parties to this suit and not personally liable.

The second issue is quickly disposed of. Defendants cite us to case law relevant to contracts signed by a known agent acting within the scope of his authority for a disclosed principal, which hold that under such circumstances the agent is not liable thereon. Cf. Hall v. Huntoon, 17 Vt. 244 (1845). Although a "Miller Corporation" was in existence until May, 1972, this fact was never made known to plaintiffs, and the record of the parties' transactions is devoid of evidence of a corporate entity. The plaintiffs' checks were payable to and endorsed by C.C. Miller personally; health and import documentation relating to the cattle uniformly listed Mr. Miller and did not suggest a corporate identity. Miller, Jr. also represented that he worked "for his father," and never revealed the existence of a corporation. We find no error in the trial court's refusal to dismiss the action against defendants as individuals.

The gravamen of defendants' appeal is their allegation that plaintiffs base their case on speculation and compound inferences. They cite Wellman v. Wales, 97 Vt. 245, 122 A. 659 (1923), for the proposition that one inference may not be based on another in reaching a verdict. Such is not the case here. Plaintiffs relied on the testimony of two experts who, although unable to identify the precise method of transmittal, both agreed that defendants' Delaware imports were the source for the disease in plaintiffs' herd, basing their inference of causation on circumstantial evidence.

Brucellosis may be transmitted either directly between infected and uninfected cows, or indirectly through a carrier animal. Viewing the evidence, as we must, in the light most favorable to the plaintiffs, Quechee Lakes Corp. v. Terrosi, 141 Vt. 547, 552, 451 A.2d 1080, 1083 (1982), the evidence showed that the state had been virtually free of brucellosis for nearly seven years prior to the introduction of the Miller cattle from Delaware, that in April of 1972 two of the cows defendants had imported from Delaware showed positive reactions to the brucellosis blood test, that farmers who purchased Delaware imports from defendants developed brucellosis in their herds shortly thereafter, that plaintiffs purchased five cows from defendants which had come from Delaware, that plaintiffs discovered brucellosis in their herd in October of 1972, and that other possible sources of infection were either impossible or improbable.

Circumstantial evidence provides an appropriate basis from which to draw reasonable inferences. Vermont Food Industries, Inc. v. Ralston Purina Co., 514 F.2d 456, 462-63 (2d Cir.1975). As we have said, absolutely irrefutable inferences are not required by law.

In the very nature of things no direct proof of the cause of the trouble can be given. Direct proof is not necessary. Circumstantial evidence may be resorted to, and such evidence will be sufficient to justify the verdict below, if there can be drawn therefrom a rational inference that the [defendants' product] was the source of the trouble.

Patton v. Ballam & Knights, 115 Vt. 308, 314, 58 A.2d 817, 821 (1948). See also Boguski v. City of Winooski, 108 Vt. 380, 386-87, 187 A. 808, 811 (1936). There was no error in plaintiffs' proof of causation of the brucellosis infection based in part on well-supported inferences, and the jury was justified in deciding for the plaintiffs on the evidence before it.

Defendants attack not only the propriety of inferential evidence, but also the ability of the plaintiffs' experts to give opinions, notwithstanding the provisions of 12 V.S.A. § 1643. However, defendants made no motion to strike the expert testimony, and it therefore was properly before the jury. See generally Lambert v. Fuller, 131 Vt. 181, 303 A.2d 471 (1973). Both experts were well qualified to give opinions based on their personal knowledge and skill, and on the facts already in evidence. Certainly defendants' cross-examinations of the witnesses were thorough, even though ultimately unsuccessful. "The question of competency of an expert witness is a preliminary one for the trial court to determine in its sound discretion, and the court's action is not revisable on appeal unless it appears from the evidence to be erroneous or founded upon an error of law." Northern Terminals, Inc. v. Smith Grocery & Variety, Inc., 138 Vt. 389, 392, 418 A.2d 22, 24 (1980); see also O'Bryan Construction Co. v. Boise Cascade Corp., 139 Vt. 81, 89-90, 424 A.2d 244, 248 (1980). Our review of the evidence indicates that there was no such error.

II. Damage Issues

Defendants also advance three reasons why the damage award should not stand, which we address in turn.

A. The Collateral Source Doctrine

For more than a century, Vermont courts have applied the collateral source doctrine to deny to a defendant a setoff for payment the plaintiff receives from a third, or collateral, source. See, e.g., Harding v. Town of Townshend, 43 Vt. 536 (1870). Most commonly applied in cases where an insurance company has made a payment to plaintiff to compensate for a loss, the collateral source rule prevents the defendant wrongdoer from benefiting from the plaintiff's foresight in acquiring the insurance through any offsetting procedure. Opponents of this doctrine point out that the plaintiff unfairly receives a double recovery once from the insurer and once from the defendant. Proponents counter that the defendant should not be relieved from all financial obligation because of the existence of a source completely remote from defendant's action. Moreover, to hold otherwise would inject into a liability trial litigation regarding the recovery prospects from this third source--raising issues clearly tangential to the original cause of action. As this Court said in the oft-quoted Northeastern Nash Automobile Co. v. Bartlett, 100 Vt. 246, 258, 136 A. 697, 701 (1927):

It is not of the slightest consequence who reimbursed plaintiff, or under what circumstances, if defendant was not connected therewith, and there was no evidence to warrant an inference that he was. The thief who takes my property cannot escape liability to me simply because some insurance company, or my friends, or neighbors, have compensated me for my loss.... "A person committing a tort cannot set up in mitigation of damages that somebody else, with whom he has no connection, has either in whole or in part indemnified the injured party."

Id. (citations omitted) (quoting Weber v. Morris & Essex R.R., 36 N.J.L. 213, 215 (1873)).

This Court has not, however, previously faced the issue of the applicability of the collateral source doctrine in breach of warranty actions. We do so now because of the particular circumstances of this case. Forty of plaintiffs' cows were "branded" by the state veterinarian to indicate a positive reaction to the brucellosis tests. The branded animals were required by law to be slaughtered and sold at the prevailing beef price. Under state and federal indemnification programs,...