Village of Brooten v. Cudahy Packing Company

• Decision Date: 10 July 1961
• Docket Number: No. 16367.,16367.
• Citation: 291 F.2d 284
• Parties: VILLAGE OF BROOTEN, a Municipal Corporation, Appellant, v. CUDAHY PACKING COMPANY, a corporation, and The Travelers Indemnity Company, a corporation, Appellees.
• Court: U.S. Court of Appeals — Eighth Circuit

291 F.2d 284 (1961)

VILLAGE OF BROOTEN, a Municipal Corporation, Appellant, v. CUDAHY PACKING COMPANY, a corporation, and The Travelers Indemnity Company, a corporation, Appellees.

No. 16367.

United States Court of Appeals Eighth Circuit.

June 5, 1961.

Rehearing Denied July 10, 1961.

COPYRIGHT MATERIAL OMITTED

Rolland L. Thorson, Minneapolis, Minn., for appellant. Carroll, Thorson, Anderson & Cronan, Minneapolis, Minn., on the brief.

A. R. Johanson, Wheaton, Minn., for appellee. Johanson, Winter & Lundquist, Wheaton, Minn., on the brief.

Before JOHNSEN, Chief Judge, and VAN OOSTERHOUT and BLACKMUN, Circuit Judges.

BLACKMUN, Circuit Judge.

This diversity action is one instituted by Cudahy Packing Company and its liability insurer, The Travelers Indemnity Company, against the Village of Brooten in Stearns County, Minnesota. The Village owns and operates a "liquor store" where it sells intoxicating liquors both "off sale" and "on sale". The suit rests on the Minnesota Civil Damage (or "dram shop") Act, now § 340.95 of Minnesota Statutes Annotated.¹ This statute reads:

"Every husband, wife, child, parent, guardian, employer, or other person who is injured in person or property, or means of support, by any intoxicated person, or by the intoxication of any person, has a right of action, in his own name, against any person who, by illegally selling, bartering or giving intoxicating liquors, caused the intoxication of such person, for all damages sustained; * * *"

The plaintiffs seek to recover $29,019.17. This is the sum of amounts paid by Travelers in settlement of personal injury and property damage claims and expenses arising from collisions on New Year's Eve, December 31, 1953, between an automobile driven by Arthur H. Raeker, a Cudahy salesman, and two other vehicles. The case was tried to the court and resulted in judgment for the plaintiffs.

On the afternoon of that last day of the calendar year, Raeker, who lived in Glenwood, Minnesota, was in Brooten on Cudahy business. He completed his work about 2:00 P.M., and spent the next two hours in Brooten's liquor store. During that period he purchased five or six drinks of intoxicating liquor. He then left the tavern, entered his automobile, and started out alone for Glenwood. A few miles out of Brooten he drove unnecessarily on his left hand side of the road in the lane intended for opposing traffic. He collided with an automobile owned and driven by Allan M. Olson and then with another owned and driven by Albert Bly. Each of these cars was proceeding toward Brooten. The weather and visibility were good. It was still light. The tarvia highway was clear and free of ice and snow.

With Dr. Olson in his car were his wife and their three children. Bly was alone. The five Olsons and Bly all sustained personal injuries and their automobiles were damaged.

At the time of the accident three insurance policies, pertinent here and each issued by Travelers, were outstanding. The first was a policy providing personal injury and property damage protection within stated limits. This was issued to Cudahy "and others" listed in attached schedules; one of these schedules named Raeker as an additional insured. Raeker apparently paid the premium on this policy. The second was a Comprehensive Automobile Liability Policy, with stated limits, issued to Cudahy and its subsidiary and affiliated companies. Raeker was not a named insured under this contract. The third was a Comprehensive Automobile Liability Policy also issued to Cudahy and its subsidiaries and affiliates. It effected a retrospective rate premium plan applicable for the 3-year period beginning October 1, 1953. By appropriate indorsement the first two policies, among others covering various Cudahy operations in the United States, Canada and Mexico, were incorporated in this plan.

Dr. and Mrs. Olson and one child instituted actions in federal court against Raeker and Cudahy. These and claims for the two other Olson children were settled during trial in 1954. The Olsons later asserted claims, presumably under § 340.95, against the Village of Brooten; these were settled in 1955. Bly's claims against Raeker and Cudahy were settled in 1956. Travelers also incurred expenses for investigation and fees. Specifically, these several payments were:

$8,000 to the Olsons by Brooten $23,250 to the Olsons by Travelers $3,250 to Bly by Travelers $554.95 to Bly's collision insurer by Travelers $1,964.22 for expenses by Travelers.

The total is $37,019.17; of this amount, $8,000 was paid by Brooten and $29,019.17 by Travelers. Cudahy, in view of the one policy's retrospective rate provisions and as a result of the payments made by Travelers, then paid Travelers $13,889. The net amount paid out by Travelers with respect to the Raeker accidents was thereby reduced to $15,131.17. Cudahy and Travelers then jointly instituted this action to recover the $29,019.17.

The trial court found that the Village, through its liquor store, sold intoxicating liquor to Raeker when he was obviously intoxicated; that the sale was illegal; that as a proximate result of that sale Raeker became further intoxicated; that as a proximate result of this intoxication he negligently operated his automobile so that he collided with the Olson and Bly cars; and that as a result of this negligence, the Olson and Bly personal injuries and automobile damages were sustained. The court concluded that both Cudahy and Travelers were proper parties plaintiff under § 340.95. Judgment against the Village was entered accordingly.

The Village argues on this appeal that Travelers does not fall within the category of persons given a cause of action under the statute; that, specifically, it does not qualify as an "other person"; that the payments Travelers made did not constitute an injury "in * * * property"; that Cudahy has failed to prove damage in a fixed amount; that even if it has proved damage with sufficient certainty, it also was not injured "in * * * property"; that in any event the rights of Travelers and Cudahy are no greater than those of Raeker who has no cause of action against the Village; that Travelers has no right of indemnity; that Travelers' payment of the claims resulted from its contractual liability to Cudahy and Raeker and the latter's intoxication was therefore not the proximate cause of its loss; and that the trial court erred in refusing to pass on certain requested findings.

Travelers and Cudahy urge that Travelers is an "other person" and Cudahy an "employer" within the statute; that both sustained injuries "in * * * property"; that Cudahy's loss was fixed; that Travelers and Cudahy have independent status under the statute which is not defeated or limited by Raeker's; that Travelers may recover, in any event, as an assignee of Cudahy; and that the illegal liquor sale was the proximate cause of the accident and of plaintiffs' losses.

In this appellate phase of the case no question is raised as to any of the following:

1. That the Village's ownership and operation of its liquor store were authorized under M.S.A. § 340.07, subd. 5. Judicial notice of this perhaps could be taken in any event. Stabs v. City of Tower, 229 Minn. 552, 554, 40 N.W.2d 362, 365.

2. That Raeker's travel to and from Brooten and his presence there on December 31, 1953, were within the scope and course of his employment by Cudahy.

3. That an illegal sale of intoxicating liquor was made by the Village to Raeker on December 31, 1953. Although contested below, this is admitted by the Village in its brief here. We take it that the illegality lies in the sale of intoxicating liquor to Raeker when he was "obviously intoxicated"; this is prohibited by M.S.A. § 340.14, subd. 1. The admission, of course, eliminates an issue which often proves troublesome. See Strand v. Village of Watson, 245 Minn. 414, 421-424, 72 N.W.2d 609, 615-617.

4. That this illegal sale contributed to Raeker's intoxication and his intoxication was the proximate cause of the personal injuries and property damages sustained by the Olsons and by Bly.

5. That the sums paid by Travelers in settlement of the Olson and Bly claims were reasonable; that the payments were made in good faith; and that they were for the purpose of discharging possible legal liability of Raeker and Cudahy.

The elimination of these questions enables us to focus our attention upon what now becomes the primary issue, namely, whether an intoxicated person's employer, such as Cudahy, and the liability carrier, such as Travelers, of both that person and the employer may recover their respective losses, under the Minnesota Civil Damage Act, from the vendor making the illegal liquor sale. The Supreme Court of Minnesota has not passed upon this issue.² The matter comes to us, therefore, as one of Minnesota law of first impression. This causes us once again to refer to two principles well established by this court:

1. Because our task "is not to formulate the legal mind of the state, but merely to ascertain and apply it", Yoder v. Nu-Enamel Corporation, 8 Cir., 117 F.2d 488, 489, the problem here is the usual one of endeavoring to determine what the Supreme Court of Minnesota would declare the Minnesota law to be were this case before it. National Bank of Eastern Ark. v. General Mills, Inc., 8 Cir., 283 F. 2d 574, 576.

2. The standard for review here on doubtful questions of state law is not whether the trial court has reached a correct conclusion but whether it has reached a permissible one, National Bellas Hess, Inc. v. Kalis, 8 Cir., 191 F.2d 739, 741, certiorari denied 342 U.S. 933, 72 S.Ct. 377, 96 L.Ed. 695; and the appellant's burden of showing misconception or misapplication of local law by the trial court is a heavy one, Milwaukee Insurance Company v. Kogen, 8 Cir., 240 F. 2d 613, 615. We recognize that some of the usual reasons for this great reliance on a trial judge's "considered appraisal", namely, the presence of ...