Business Law Chapter 20 Homework Independent Contractors The General Rule That

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CASE 20-3

CONNES v. MOLALLA TRANSPORT SYSTEM, INC.

Supreme Court of Colorado, 1992

831 P.2d 1316

http://scholar.google.com/scholar_case?case=2485973325983137183&q=831+P.2d+1316&hl=en&as_sclt=2,34

Quinn, J.

[Terry Taylor was an employee of Molalla Transport. In hiring Taylor, Molalla followed its

standard hiring procedure, which includes a personal interview with each applicant and

requires the applicant to fill out an extensive job application form and to produce a current

driver’s license and a medical examiner’s certificate. Molalla also contacts prior employers

and other references about the applicant’s qualifications and conducts an investigation of the

applicant’s driving record in the state where the applicant obtained the driver’s license.

Although applicants are asked whether they have been convicted of a crime, Molalla does

not conduct an independent investigation to determine whether an applicant has been

convicted of a crime. Approximately three months after Taylor began working for Molalla,

he was assigned to transport freight from Kansas to Oregon. While traveling through

Connes sued Molalla on the theory of negligent hiring, claiming that Molalla knew or

should have known that Taylor would come into contact with members of the public, that

Molalla had a duty to hire and retain high quality employees so as not to endanger members

of the public, and that Molalla had breached its duty by failing to investigate fully and

The elements of a negligence claim consist of the existence of a legal duty by the defendant

to the plaintiff, breach of that duty by the defendant, injury to the plaintiff, and a sufficient

causal relationship between the defendant’s breach and the plaintiff’s injuries. [Citations.] A

negligence claim will fail if it is predicated on circumstances for which the law imposes no

duty of care upon the defendant. [Citations.] “A court’s conclusion that a duty does or does

not exist is ‘an expression of the sum total of those considerations of policy which lead the

law to say that the plaintiff is [or is not] entitled to protection.”’ [Citations.]

The initial question in any negligence action, therefore, is whether the defendant owed a

legal duty to protect the plaintiff against injury. The issue of legal duty is a question of law

to be determined by the court. [Citations.]

A duty of reasonable care arises when there is a foreseeable risk of injury to others from

a defendant’s failure to take protective action to prevent the injury. [Citation.] While

The tort of negligent hiring is based on the principle that a person conducting an activity

through employees is subject to liability for harm resulting from negligent conduct “in the

employment of improper persons or instrumentalities in work involving risk of harm to

others.” Restatement (Second) of Agency §213(b)(1958). This principle of liability is not

based on the rule of agency but rather on the law of torts. In [citation], the New Jersey

Supreme Court offered the following distinction between the tort of negligent hiring and the

agency doctrine of vicarious liability based on the rule of respondeat superior:

Thus, the tort of negligent hiring addresses the risk created by exposing members of the

public to a potentially dangerous individual, while the doctrine of respondeat superior is

In recognizing the tort of negligent hiring, we emphasize that an employer is not an

insurer for violent acts committed by an employee against a third person. On the contrary,

liability is predicated on the employer’s hiring of a person under circumstances antecedently

giving the employer reason to believe that the person, by reason of some attribute of

character or prior conduct, would create an undue risk of harm to others in carrying out his

or her employment responsibilities. See Restatement (Second) of Agency §213, comment d.

The scope of the employer’s duty in exercising reasonable care in a hiring decision will

depend largely on the anticipated degree of contact which the employee will have with other

persons in performing his or her employment duties.

We endorse the proposition that where an employer hires a person for a job requiring

frequent contact with members of the public, or involving close contact with particular

persons as a result of a special relationship between such persons and the employer, the

employer’s duty of reasonable care is not satisfied by a mere review of personal data

disclosed by the applicant on a job application form or during a personal interview.

However, in the absence of circumstances antecedently giving the employer reason to

believe that the job applicant, by reason of some attribute of character or prior conduct,

would constitute an undue risk of harm to members of the public with whom the applicant

will be in frequent contact or to particular persons standing in a special relationship to the

employer and with whom the applicant will have close contact, we decline to impose upon

the employer his duty to obtain and review official records of an applicant’s criminal history.

To impose such a requirement would mean that an employer would be obligated to seek out

and evaluate official police and perhaps court records from every jurisdiction in which a job

III

In the instant case, we agree with the court of appeals’ determination that Molalla had no

duty to conduct an independent investigation into Taylor’s non-vehicular criminal

background before hiring him as a long-haul driver. Molalla had no reason to foresee that its

hiring of Taylor under the circumstances of this case would create a risk that Taylor would

sexually assault or otherwise endanger a member of the public by engaging in violent

conduct. To be sure, Molalla had a duty to use reasonable care in hiring a safe driver who

would not create a danger to the public in carrying out the duties of the job. Far from

requiring frequent contact with members of the public or involving close contact with

persons having a special relationship with the employer, Taylor’s duties were restricted to

the hauling of freight on interstate highways and, as such, involved only incidental contact

with third persons having no special relationship to Molalla or to Taylor. After checking on

Taylor’s driving record and contacting some of his references, Molalla had no reason to

believe that Taylor would not be a safe driver or a dependable employee. In addition,

Molalla specifically instructed its drivers to stay on the interstate highways and, except for

Vicarious Liability for Unauthorized Acts of Agents

A principal is liable for torts that are committed by his employee where the

employee is acting within the scope of employment, even if the tort

committed is attributable solely to negligence of the employee. The third

person can bring action against either the principal or the employee, or both.

This is because the principal and employee (“respondeat”) are jointly and

severally liable.

Respondeat Superior — is the doctrine just described imposing liability on

the employer (“superior”) for unauthorized acts of an employee committed

within the scope of employment.

Agent Acts with Apparent Authority— “A principal is subject to vicarious

liability for a tort committed by an agent in dealing or communicating with a

third party on or purportedly on behalf of the principal when actions taken by

Torts of Independent Contractors — The general rule is that employers

are not responsible for torts committed by independent contractors.

However, the employer may be liable if it can be demonstrated that he was

NOTE: See Figure 20-4.

*** Question to Discuss ***

Discuss the criminal liability of a principal for the acts of agents..

Criminal Liability of the Principal

The general rule is that a principal is not liable for the unauthorized criminal

acts of the agent, even if the act occurs within the scope of employment.

However, liability will be imposed where the principal directed, participated

in, or rati-ed the criminal act.

II. RELATIONSHIP OF AGENT & THIRD PERSONS

*** Question to Discuss ***

Discuss the contractual liability of the agent when the

principal is (a) disclosed, (b) partially disclosed, and (c) undisclosed.

A. CONTRACT LIABILITY OF AGENT

Disclosed Principal

The third person is aware that an agency relationship exists and knows the

identity of the principal. The agent is not a party to the contract and the

third person is liable directly to the principal. Generally, agents cannot bring

suit on the contract.

Authorized Contracts — When an agent acting with actual or apparent

authority makes a contract with a third party on behalf of a disclosed

principal, the agent is not a party to the contract unless she and the third

party agree otherwise.

Unauthorized Contracts — If an agent exceeds his actual and apparent

authority, the principal is not bound. The fact that the principal is not bound

Unidentified Principal

The third person is aware that an agency relationship exists but does not

know the identity of the principal. The agent is liable on the contract to the

third party.

Undisclosed Principal

The third person is unaware that an agency relationship exists and believes

that the agent is acting personally.

The agent is liable as a party to the contract but may recover any losses or

cost from the principal if he acted with actual authority. Subsequent to

CASE 20-4

PLAIN DEALER PUBLISHING CO. v. WORRELL

Court of Appeals of Ohio, Ninth District, Summit County, 2008

178 Ohio App.3d 485, 898 N.E.2d 1009

http://scholar.google.com/scholar_case?

q=Plain+Dealer+v+worrell&hl=en&as_sdt=2,34&case=13457191655705896330&scilh=0

Moore, P. J.

This case arises out of an action by appellee, the Plain Dealer Publishing Company, to

collect a debt against Frederick “Rick” Worrell, doing business as WRL Advertising. The

lawsuit also named Martha J. Musil, who placed advertising orders with the Plain Dealer.

Musil placed orders on March 14, 2003, and March 28, 2003. The order form indicated that

although the ad insertions for June, July, and September were cancelled, there was still a

of its motion for summary judgment, the Plain Dealer relied primarily on the order forms

that were written when the advertising orders were placed. The forms listed Musil as the

contact person and indicated that the company name was WRL Advertising, and that the bill

was to be sent to WRL Advertising.

Musil filed a combined response to the Plain Dealer’s summary judgment motion and

filed her own summary judgment motion. In her summary judgment motion, Musil

confirmed that at all the relevant times, she (1) was an employee of WRL Advertising, (2)

did not have an ownership interest in the company, and (3) had placed the order for

advertising at the direction of her employer, WRL Advertising, of which Worrell was the

owner. Musil attached to her summary judgment motion both her own affidavit and

Worrell’s affidavit.

On February 26, 2008, the trial court filed an order granting the Plain Dealer’s motion

awarding judgment against Musil in the amount of $8,720, with statutory interest from July

2, 2004. Musil timely filed the instant appeal. * * *

* * *

In resolving this case, we must look to the law of agency. Agency law in Ohio has been

summarized as follows:

(1) Where the agent is acting for a disclosed principal, i.e., where both the existence of

the agency and the identity of the principal are known to the person with whom the agent

(2) Where the principal is only partially disclosed, i.e., where the existence of an agency

is known to the third person, but the identity of the principal is not known. Here, the

agent is held to be a party to the transaction and is liable to the third party, as is the

agent’s principal. [Citations.] The reason for the rule is that since the identity of the

principal is not known to the third party, he ordinarily will not be willing to rely wholly

upon the credit and integrity of an unknown party.

(3) Where the principal is undisclosed, i.e., where neither the existence of an agency nor

the identity of the principal is known to the third party. Here, the dealing is held to be

between the agent and the third party, and the agent is liable. [Citation.] Should the

In the instant case, the trial court determined that although Musil communicated her

agency relationship to the Plain Dealer, she did not sufficiently disclose the identity of her

principal. In making this determination, the trial court noted that “[i]t is also undisputed that

WRL Advertising is not a legal entity in its own right, but rather a trade name for Winfield,

* * *

The parties do not contest the fact that Musil communicated to the Plain Dealer that she

was working on behalf of a principal. In its brief, the Plain Dealer asserts that “Musil dealt

directly with [the] Plain Dealer and held herself as acting on behalf of ‘WRL Advertising.’

Musil executed two contracts on behalf of ‘WRL Advertising [,]’ an entity that does not exist

in Ohio.” Therefore, Musil properly notified the Plain Dealer that she was acting as an agent.

* * *

“A corporation may use a name other than its corporate name in the conduct of its

business.” [Citation.] * * * In the instant case, the parties do not dispute that Wingfield,

Bennett & Baer L.L.C. was registered with the Secretary of State. We find that Wingfield,

Bennett & Baer is therefore not a fictitious or nonexistent principal for agency law purposes.

Further * * * we note that WRL Advertising was a fictitious name for Wingfield, Bennett &

Baer and that Musil was acting on behalf of Wingfield, Bennett & Baer, which was in turn

using a fictitious name.

An agent will “avoid personal liability for debts of the corporation only if he complies

with the rules which apply in all agency relationships—he must so conduct himself in

dealing on behalf of the corporation with third persons that those persons are aware that he

B. TORT LIABILITY OF AGENT

An agent is personally liable for his own tortious acts that injure third

persons, whether or not such acts are authorized by the principal and

whether or not the principal may also be liable.

C. RIGHTS OF AGENT AGAINST THIRD PERSON

An agent who makes a contract with a third person on behalf of a disclosed

principal usually has no right of action against the third person for breach of