Sandvik, Inc. v. Statewide Sec. Systems, Div. of Statewide Guard Services, Inc.

• Decision Date: 13 December 1983
• Citation: 192 N.J.Super. 272,469 A.2d 955
• Parties: SANDVIK, INC., Plaintiff-Appellant, Cross-Respondent, v. STATEWIDE SECURITY SYSTEMS, DIV. OF STATEWIDE GUARD SERVICES, INC., Defendant- Respondent, Cross-Appellant.
• Court: New Jersey Superior Court — Appellate Division

Page 272

192 N.J.Super. 272

469 A.2d 955

SANDVIK, INC., Plaintiff-Appellant, Cross-Respondent, v. STATEWIDE SECURITY SYSTEMS, DIV. OF STATEWIDE GUARD SERVICES, INC., Defendant- Respondent, Cross-Appellant.

Superior Court of New Jersey Appellate Division.

Submitted Sept. 20, 1983.

Decided Dec. 13, 1983.

Moser, Roveto, McGough & von Schaumburg, Union City, for plaintiff-appellant (Doreen M. Goldbronn, Union City, on the brief).

Hogan & Palace, Hackensack, for respondent (Thomas A. Hogan, Hackensack, on the brief).

Gorrin, Whitken & Crowley, Livingston, for defendant-respondent (Clark L. McFadden, Livingston, on the brief).

Before Judges ANTELL, JOELSON and McELROY.

The Opinion of the Court was delivered by

ANTELL, P.J.A.D.

Defendant, a licensed private detective agency, contracted June 28, 1974 with plaintiff, a manufacturer of tungsten carbide inserts, to provide security guard service. On January 22, 1977 the employee assigned by defendant to guard the plant on the 12:30 a.m. to 8:00 a.m. shift, William Milnes, was bribed to leave his post at 4:00 a.m. for 30 minutes. During his absence 4205 kilograms of tungsten carbide powder worth $118,000 was stolen.

The complaint herein filed alleged liability for breach of contract, two theories of negligence, and liability based on the claim that as a licensee under The Private Detective Act of 1939, N.J.S.A. 45:19-8 et seq., defendant is "accountable" for the good conduct of its employees. See N.J.S.A. 45:19-15. The trial judge, who heard the case without a jury, found a breach of contract by defendant and awarded damages of $1,994.33, being one-twelfth of the annual contract price of $23,932. On this appeal plaintiff contends that the judge applied the incorrect measure of damages, arguing that he should have allowed full recovery of all consequential losses, that is, $118,000, the value of the stolen inventory. Plaintiff also appeals from an order for summary judgment dated December 21, 1981 dismissing its demands asserted in the second and third counts of the complaint for recovery grounded in negligence. On its cross-appeal defendant maintains that the trial judge erred in his finding of contractual liability.

We deal first with plaintiff's appeal from the order for summary judgment dismissing the second and third counts of the complaint. The second count alleged that plaintiff's loss resulted from the negligence of defendant through its agents, servants and employees. The third count asserted negligence in defendant's hiring and training of employees. Defendant's motion, accompanied only by a brief and without supporting certifications or affidavits, relied entirely upon the deposition testimony of its executive vice president to the effect that the employment application of William Milnes, the errant guard, was "as clean as any application I've ever seen" and that there was "no way in the world that we could have found anything wrong with this guy." As against this, plaintiff described its claim of hiring negligence in the following answer to one of defendant's interrogatories:

Defendant hired employees without investigating same for predisposition hence [sic] to criminal activities. No psychological evaluation to determine same and no program to encourage honesty or to alert employees to potential embezzlers.

Apart from the fact that a material issue was raised by the foregoing answer, counsel for plaintiff explained on the motion that she was still engaged in a search for Milnes' personnel file which, as the judge found, had been misplaced through defendant's negligence. Although plaintiff's 150 day discovery period had expired, the circumstance of the missing file should have been weighed heavily in favor of denying the motion, particularly since the facts upon which liability was predicated lay peculiarly within defendant's knowledge. Auster v. Kinoian, 153 N.J.Super. 52, 56, 378 A.2d 1171 (App.Div.1977).

On a motion for summary judgment it rests with the moving party to "exclude any reasonable doubt as to the existence of a factual issue," Costa v. Josey, 83 N.J. 49, 53, 415 A.2d 337 (1980), and "[a]ll doubts are to be resolved against the movant," Ruvolo v American Cas. Co., 39 N.J. 490, 499, 189 A.2d 204 (1963). Especially where a case involves significant policy considerations maximum caution must be exercised before granting summary judgment and the issue should not be resolved until a full record is developed at trial. Jackson v. Muhlenberg Hospital, 53 N.J. 138, 142, 249 A.2d 65 (1969). The tort of negligent hiring was formally recognized in New Jersey in Di Cosala v. Kay, 91 N.J. 159, 174, 450 A.2d 508 (1982), as a redressible wrong not dependent on principles of respondeat superior. Although that case was decided after summary judgment herein, the highly significant policy considerations inherent to the recognition of such a tort were carefully projected in Bennett v. T & F Distributing Co., 117 N.J.Super. 439, 285 A.2d 59 (App.Div.1971), and the denial of a summary judgment based thereon was accordingly affirmed.

Finally, as to this issue, we are unable to discern the basis on which the result below was reached. R. 4:46-2 obliges the trial court on such motions to "find the facts and state its conclusions." Unfortunately, the judge below simply stated: "The motion for summary judgment is granted on both counts. Submit an order."

Under all the circumstances the motion for summary judgment should not have been granted. For reasons which will become evident from our disposition of the contract aspect of the case, the summary judgment as to tort the claims is no longer of any practical significance, but the granting thereof must nevertheless be reversed.

We agree with the trial court's finding that defendant had breached its contract with plaintiff. Defendant's argument before us is that this result conflicts with the rule that an employer is not answerable for the acts of an employee outside the scope of his employment. It maintains that Milnes' behavior, for which he was indicted and convicted on charges of embezzlement, was not in furtherance of defendant's business and therefore could not support a finding of civil liability against defendant. The argument, however, confuses an agency principle applicable to tort cases with the elements of contractual liability.

The judgment under review does not impose vicarious liability arising from Milnes' wrongful conduct. It results only from defendant's failure to meet its obligation of guarding the plant. Obviously, there was no other way that defendant could perform this contract except through its employees. Whether defendant performed or failed to perform can therefore only be determined by the conduct of the employee it chose for this purpose, and Milnes' deliberate 30 minute absence from the premises supports the trial judge's finding that defendant's contractual obligation had been breached.

We find, however, that the trial judge erred in limiting recovery to the amount of defendant's fees for the month in which the theft occurred. He reasoned that because defendant had not been fully informed as to the value of the tungsten carbide powder being guarded the parties could not reasonably have intended that defendant's liability for loss resulting from breach of contract should extend to the value of stolen inventory.

The applicable rule is that generally "the prima facie measure of damages for the breach of a contract is the quantum of loss consequent thereon. The injured party is entitled to the value of the contract to him," Weiss v. Revenue B. & L. Assn., 116 N.J.L. 208, 210, 182 A. 891 (E. & A.1936), subject to the following limitations:

First, the damages shall be those arising naturally, i.e., according to the usual course of things, from the breach of the contract, or such as may fairly and reasonably be supposed to have been in the contemplation of the parties to the contract at the time it was made, as the probable result of the breach;...