Shaffer v. Maier

• Decision Date: 09 March 1994
• Docket Number: No. 92-198,92-198
• Citation: 627 N.E.2d 986,68 Ohio St.3d 416
• Court: Ohio Supreme Court
• Parties: SHAFFER, Executor of Estate of Hutton, Appellant, v. MAIER, d.b.a. Anthony Maier Enterprises, Inc.; Standard Oil Company, Appellee.

Page 416

68 Ohio St.3d 416

627 N.E.2d 986

SHAFFER, Executor of Estate of Hutton, Appellant, v. MAIER, d.b.a. Anthony Maier Enterprises, Inc.; Standard Oil Company, Appellee.

No. 92-198.

Supreme Court of Ohio.

Submitted Feb. 16, 1993.

Decided March 9, 1994.

Kreindler & Kreindler, Marc S. Moller and David L. Fiol, New York City, for appellant.

Squire, Sanders & Dempsey, Robin G. Weaver and James W. Satola, Cleveland, for appellee.

PFEIFER, Justice.

Before we determine what relation the jury's general verdict had to its responses to the jury interrogatories, we must first determine whether the issue of apparent agency between Maier and Sohio was properly before the jury. To establish liability premised upon apparent agency, a plaintiff must show that (1) the defendant made representations leading the plaintiff to reasonably believe that the wrongdoer was operating as an agent under the defendant's authority, and (2) the plaintiff was thereby induced to rely upon the ostensible agency relationship to his detriment. See Johnson v. Wagner Provision Co. (1943), 141 Ohio St. 584, 26 O.O. 161, 49 N.E.2d 925, paragraph four of the syllabus. Simply stated, there is a "holding out" of the agent as such to the public by the principal and a reliance on that holding out by the plaintiff. The appellate court held that as a matter of law the mere provision of corporate logos or authorization of credit card purchases does not constitute a holding out, and that Sohio was thus entitled to a directed verdict. We disagree.

The court of appeals based its decision on the "common knowledge" rule. Other jurisdictions have held in automotive service station cases that it is a matter of common knowledge that "trademark signs are displayed throughout the country by independent dealers." Reynolds v. Skelly Oil Co. (1939), 227 Iowa 163, 171, 287 N.W. 823, 827. The argument seems to be that since everyone knows that service stations are independently owned and operated that the use of national-brand logos and credit cards cannot constitute a holding out of the agent as such by the principal. That assumed depth of the general public's knowledge of franchise law seems dubious even in automotive service station cases. Still, even if we were to apply the common-knowledge rule to automotive cases, we do not agree with the appellate court that automobile fuel distribution and airplane fuel distribution are sufficiently related to merit the application of the common-knowledge rule regarding trademark signs to the aviation fuel sales industry.

For the vast majority of Americans, automobiles are an everyday part of life. Those of us who do not drive at least encounter automobiles daily, and most people know the location of the nearest gas station to their home. On the other hand, most people will never be exposed to their local aviation fuel dealer. A small percentage of persons own an airplane or have a pilot's license. Concomitantly, there are comparatively very few aviation fuel dealers. The low level of contact between the general public and aviation fuel dealers does not support the claim that it is a matter of common knowledge that they are independently operated.

Therefore, the appellate court erred in finding that Shaffer's claim of apparent agency was insufficient as a matter of law. The question was properly before the jury.

We must now determine whether the trial court's conforming of the jury's general verdict to its interrogatory answer was proper. Neither party disputes as improper the charge to the jury on apparent agency:

"Now, on the apparent agency theory of recovery, an apparent agency arises in the absence of express or implied authority, where one person, by his acts, words or conduct, causes another party to believe that authority has been given to an agent to act on his behalf.

"Such authority cannot be proven or shown solely by the acts of the agent, but must be based on acts, words, conduct or knowledge by the employer. The employer is responsible only for such appearance of authority as was caused or permitted by the employer itself.

"To hold the employer responsible because of apparent authority, it is necessary that the injured party use the care of a reasonably prudent person.

"He must prove that the acts or the conduct of the employer gave him reason to believe that the agent had been given authority by the employer and that he relied on such authority in good faith.

"Apparent authority does not arise if the injured party suspects or has reason to suspect a lack of authority or the existence of some mistake.

"In order for you to find that Maier was the apparent agen[t] of Sohio, it will be necessary for you to find that:

"(1) There were acts or omissions by Sohio "(2) James Hutton, knowing the facts and acting in good faith and as a reasonably prudent man, believed such authority existed in Maier, and

"(3) James Hutton acted in reliance on this apparent agency to his detriment."

The key question in this case is whether the second interrogatory, referring to apparent agency, concerned only one part of the court-enunciated test, or whether it answered the entire question of whether Maier was the apparent agent of Sohio. Looking at the interrogatory semantically and considering its context in the trial, we are convinced that the jury meant to treat the entire apparent-agency issue in responding to the second interrogatory.

Again, the second interrogatory reads:

"Did Sohio allow Maier to act as its apparent agent for the purpose of selling and dispensing Sohio aviation fuels?"

The interrogatory is imperfect. The interrogatory simply should have asked whether Maier was Sohio's apparent agent. Still, that shorter question is contained in the longer one. Also, the most important thing is the implications that go along with the jury's interrogatory answer.

The jury found that Sohio did allow Maier to act as its apparent agent. The jury did not say that Sohio had simply allowed Maier to use its logo or its credit card receipts. The jury said that Sohio allowed Maier to act as its "apparent agent," which was defined in the jury instructions as including acts by Sohio and reliance and injury by Hutton. If the jury did not believe that Maier was the apparent agent of Sohio, the jury could not have responded "yes" to the second interrogatory. The question is phrased such that one must first accept the premise that Maier was an apparent agent before finding that Sohio allowed that apparent agency. The issue of allowance is superfluous, but the question as phrased does show that the jury accepted the fact that Maier was Sohio's apparent agent.

If the jury had answered negatively, then there could have been some confusion as to whether they were responding to the "allow" portion of the interrogatory or the apparent agency question. The "yes" response can mean only one thing--that the jury believed that Maier was Sohio's apparent agent.

That "yes" response is indeed irreconcilable and inconsistent with the jury's general verdict in Sohio's favor. Sohio cannot be Maier's apparent principal and yet not be liable. However, while inconsistent, the jury's actions are understandable. The misunderstanding is traceable to the jury instructions, specifically the portion of the instructions setting forth Shaffer's theories of recovery. The court gave the following instructions:

"Now, ladies and gentlemen, recovery by the plaintiffs is sought on one of several theories.

"One: On the theory that Maier, while acting as the apparent agent for Sohio, was negligent.

"Two: On the theory that Sohio, in employing Maier, was negligent in failing to select or employ a competent and careful independent contractor to sell its aviation fuel.

"Three: On the theory that Sohio, in employing Maier as an independent contractor, was negligent in failing to recognize that the sale and resale of aviation fuel was likely to create a peculiar, unreasonable risk of physical harm unless special precautions were taken, and further, was negligent in failing to provide in a contract or otherwise that Maier take such precautions." (Emphasis added.)

The second and third theories implicate Sohio directly. It is Sohio's active negligence that is at issue under those two theories. Under the first theory, Maier's negligence is the focus, with Maier's relationship with Sohio as a side issue. Thus, it is quite conceivable that the jury's general verdict for Sohio was based upon those claims which the jury believed implicated Sohio directly.

The interrogatories were structured in a way that mirrored the court's presentation of the theories of liability. The first two interrogatories concerned Maier's negligence directly. The first asks whether Maier's negligence proximately caused Hutton's death. The second interrogatory does not regard Sohio's negligence directly, but rather deals with Sohio's relationship with Maier. Interrogatories three and four deal with whether Sohio employed Maier as an independent contractor and, if so, whether Sohio was negligent in so hiring. Interrogatories five and six concern unreasonable risk in airplane refueling and whether Sohio was negligent in not requiring Maier to take special precautions.

The jury answered all the interrogatories regarding Sohio's direct negligence in favor of Sohio. Thus, it is at least understandable that the jury returned a general verdict in Sohio's favor. The fact that Sohio is liable to Shaffer only because of its relationship with Maier and not because of anything Sohio actively did easily explains how the jury could make such an error.

It is clear that the jury made an error in returning its general verdict for Sohio. Pursuant to Civ.R. 49(B), "[w]hen one or more of the [interrogatory] answers is inconsistent with the general verdict, judgment may be entered pursuant to Rule 58 in accordance with the answers, notwithstanding the general verdict, or the court may return the jury...