Phillips v. Cook

210 A.2d 743, 239 Md. 215, 1965 Md. LEXIS 541

• Court: Court of Appeals of Maryland
• Decided: June 8, 1965
• Docket: [No. 281, September Term, 1964.]
• Status: Published

Opinions

Marbury, J.,

delivered the majority opinion of the Court. Hammond and Sybert, JJ., dissent. Dissenting Opinion by Hammond, J., at page 224, infra.

This is an appeal by Daniel Phillips individually, and trading as “Dan’s Used Cars”, one of the defendants below, from a judgment in favor of Delores Cook and Marshall Cook, her husband, plaintiffs below, entered upon the verdict of a jury in favor of the plaintiffs against the defendants, Isadore Harris and Daniel Phillips, individually and as co-partners trading as Dan’s Used Cars, in the Superior Court of Baltimore City. The verdict was rendered in an action by the Cooks to recover damages for injuries sustained by them as a result of a collision involving a partnership automobile operated by Harris and bearing dealer plates issued to Dan’s Used Cars by the Department of Motor Vehicles.

The Cooks sued Harris and Phillips, individually, and as co-partners trading as Dan’s Used Cars. The accident in question occurred on January 7, 1960, at about 6:50 p.m., when a partnership automobile operated by Harris struck the rear of a vehicle driven by one Smith, which in turn hit an automobile operated by Delores Cook, at the intersection of Reisterstown Road and Quantico Avenue in Baltimore. Harris was on his way home from the used car lot when the accident occurred. He was using the most direct route from the partnership lot and was only five blocks from his home at the time of the incident.

In October 1959, Harris and Phillips entered into a partnership on an equal basis under the name of “Dan’s Used Cars” for the purpose of buying and selling used automobiles. Phillips owned the lot and a gas station adjacent to it. He went into the partnership with Harris because the latter had the experience and money which he did not have to put into the business. This partnership agreement was oral and it was agreed between the partners that each would have an equal voice in the conduct and management of the business.

Neither of the partners owned a personal automobile or had one titled in his individual name. It was agreed as a part of the partnership arrangement that Harris would use a partnership vehicle for transportation to and from his home. Under this agreement, he was authorized to demonstrate and sell such automobiles, call on dealers for the purpose of seeing and purchasing used cars, or go to the Department of Motor Vehicles on partnership business after leaving the lot in the evening and before returning the next day. Both Harris and Phillips could use a partnership automobile as desired. Such vehicles were for sale at any time during the day or night and at various times and places they had “for sale” signs on the windshields. Harris had no regular hours to report to the used car lot but could come and go as he saw fit. Phillips testified that it was essential that Harris have a partnership automobile for his transportation to and from his home, and that it was the most practical way to operate. It is also significant to note that both Harris and Phillips testified at the trial that each paid for the gasoline used in the partnership automobiles they drove. However, Phillips said at the time of the taking of his deposition, which was admitted in evidence, that the gasoline used came out of the used car business and was for cars that were for sale on the lot. He admitted that the Mercury sedan involved in the collision was for sale and had been sitting on the lot. This car was titled in the name of the partnership and Phillips could have used it if he wanted to. After the accident, he objected to Harris using the dealer’s tags because “he didn’t want to get in any more accidents.” About a week later, the partnership was terminated and Harris left the business.

Harris did not appeal. The questions involved in Phillips’ appeal are: I, did the lower court err in refusing to grant appellant’s motions for a directed verdict in that there was no legally sufficient evidence from which a jury could find that Harris was acting within the scope of the partnership business arrangement and for its benefit; II, was there prejudicial error in the trial court’s charge to the jury with respect to the use of the automobile and the effect of the presumption arising out of its ownership by the partnership; and III, did the lower court err in refusing to direct a verdict as to appellant individually.

I

If there was any evidence, no matter how slight, viewed in the light most favorable to appellees, that Harris, in using the partnership vehicle, was acting within the scope of the partnership agreement and business, i.e., the use was of some benefit or incidental to the partnership arrangement, then the question was for the jury’s determination. Appellant contends that because Harris was on his way home from the used car lot at the time of the accident, the evidence was insufficient to support a finding by the jury that he was acting within the scope of the partnership arrangement or that such use of the vehicle was of benefit to the partnership.

In a case involving a partnership, the contract of partnership constitutes all of its members as agents of each other and each partner acts both as a principal and as the agent of the others in regard to acts done within the apparent scope of the business, purpose and agreement of the partnership or for its benefit. It is clear that the partnership is bound by the partner’s wrongful act if done within the scope of the partnership’s business. Code (1957), Article 73A, Section 13 provides:

“Where, by any wrongful act or omission of any partner acting in the ordinary course of the business of the partnership, or with the authority of his co-partners, loss or injury is caused to any person, not being a partner in the partnership, or any penalty is incurred, the partnership is liable therefor to the same extent as the partner so acting or omitting to act.” ¹

The test of the liability of the partnership and of its members for the torts of any one partner is whether the wrongful act was done within what may reasonably be found, to be the scope of the business of the partnership and for its benefit. The extent of the authority of a partner is determined essentially by the same principles as those which measure the scope of an agent’s authority. Schloss v. Silverman, 172 Md. 632, 192 Atl. 343. Partnership cases may differ from principal and agent and master and servant relationships because in the nonpartnership cases, the element of control or authorization is important. This is not so in the case of a partnership for a partner is also a principal, and control and authorization are generally within his power to exercise.

In the past, we have held both in workmen’s compensation cases and others that where an employer authorizes or furnishes the employee transportation to and from his work as an incident to his employment, or as a benefit to the employer, the employee is considered in the course of his employment when so traveling. This is so whether it be to his place to eat, sleep or to the employee’s home. In Rumple v. Henry H. Meyer Co., Inc., 208 Md. 350, 118 A. 2d 468, where an employer furnished an employee free transportation to and from his work as an incident to his employment, we held that an injury sustained by the employee during such transportation arose out of and in the course of his employment. In Beam Motor Car Co. v. Loewer, 131 Md. 552, 102 Atl. 908, an employee told his employer that he thought he might be able to sell one of its automobiles, and while on his way home and before showing it to the prospective customer, he became involved in an accident. We held that the question of whether the employee was acting in the scope of his employment was for the jury. See also Scott v. James Gibbons Co., 192 Md. 319, 64 A. 2d 117, where an employee was going to a place to sleep; and McDowell Etc. v. Magazine Service, 164 Md. 170, 164 Atl. 148, where an employee was going to get his lunch. Other jurisdictions have held that the question of agency or scope of employment is for the jury where the use of a motor vehicle by an employee or agent to go to and from the place of his employment, to his home or to get his meals, is dictated by the nature of the services to be performed, part of the contract of employment, or whether such use is beneficial to both principal and agent or master and servant. Ely v. Rice Bros., 167 S. W. 2d 355 (Tenn.) ; Randall Insurance, Inc. v. O’Neill, 128 S. E. 2d 239 (N.C.); Merwin v. Kellems, 78 So. 2d 865 (Fla.).

Here, the fact that the defendant partners were in the used car business; that the very vehicle involved in the accident was one of the partnership assets for sale at all times, day or night, at any location; that Harris was on call by Phillips or customers at his home — he went back to the lot two or three times after going home; that he had no set time and worked irregular hours, coupled with the fact that he frequently stopped to conduct partnership business on the way to and from the lot; drove partnership vehicles to the Department of Motor Vehicles, and to dealers in Baltimore to view and buy used cars while on his way to or from his home; that one of the elements of the partnership arrangement was that each partner could have full use of the vehicles; that the use of the automobile by Harris for transportation to and from his home was admittedly “essential” to the partnership arrangement and the most practical and convenient way to operate; and that Harris conducted partnership business both at the used car lot and from his home requires that the question of whether the use of the automobile at the time of the accident was in the partnership interest and for its benefit be submitted to the jury. We find that the lower court did not err in refusing to grant appellant’s motions for a directed verdict as to him in the capacity of a co-partner trading as Dan’s Used Cars.

II

The appellant next complains that the lower court committed reversible error in charging the jury that the burden of proof was upon the defendants to show that the vehicle was not at the time being operated on partnership business. The trial court in its charge instructed the jury that the ownership of the automobile by the partnership raised the presumption that it was being operated by Harris on partnership business at the time of the collision and instructed that the jury would have to determine from the evidence whether or not Harris was, in fact, operating the automobile on partnership business at the time of the accident. Judge Carter went on to say:

“When I say it is a rebuttable presumption, what do I mean? You have the presumption in the first instance, and then it is rebuttable, and then it becomes the duty of the defendant—that would be Harris and Phillips, operating the partnership — to go forward with the evidence to establish to your satisfaction by a fair preponderance of the evidence that the car was not at that time being operated on partnership business. So again you will have to determine from the facts of the case whether or not at the time of this accident this car was in fact then and there being operated by Mr. Harris on partnership business.”

Appellant contends that the above quoted part of the court’s charge cast the burden of proof upon the defendants to show that the automobile was not being operated on partnership business. It is the established law in Maryland that the legal presumption arising from the ownership of a motor vehicle places the burden of overcoming the presumption on the owner. We see no difference between a master and servant situation and one involving a partnership. We have held that in a collision caused by an automobile operated by the servant of the owner, there is a reasonable presumption that the servant was acting in the scope of his employment and upon the business of his master, and the burden of overcoming this presumption is upon the master by showing that the servant was employed in business other than his employer’s. Grier v. Rosenberg, 213 Md. 248, 131 A. 2d 737; Erdman v. Horkheimer & Co., 169 Md. 204, 181 Atl. 221; Jordan Stabler v. Tankersly, 146 Md. 454, 126 Atl. 65. Here, where it was shown that a vehicle was owned by the partnership for resale and operated by one of the partners at the time of the accident, there arose the presumption that the car was upon partnership business. It was incumbent at that time for the defendants to show otherwise. We think that the court’s instruction concerning the presumption was substantially correct, fairly presented the question to the jury, and find no error in this regard.

Ill

At the conclusion of the plaintiff’s evidence and again at the conclusion of all the evidence, Phillips, the appellant, moved for a directed verdict in his favor as an individual. These motions were apart from and in addition to the motions with regard to directing a verdict in Phillips’ favor as a co-partner. Phillips contends that, in any event, he could not be held liable as an individual because partnership assets must first be used in the payment of partnership liabilities and the individual assets in the payment of individual liabilities, although, concededly, a partner’s individual assets may be held liable for the payment of partnership debts where partnership assets are insufficient.

The principle prevails both at common law and under the Uniform Partnership Act when suit is brought on an alleged contractual obligation of the partnership. Union Bank v. Mechanics’ Bank, 80 Md. 371, 30 Atl. 913; Glenn v. Gill, 2 Md. 1; McCulloh v. Dashiell’s Adm'r., 1 Harr. & G. 96; Code (1957), Article 73A, § 15 (b). The rule is otherwise, however, both at common law and under the Uniform Partnership Act, where the claim is based upon an alleged tortious act committed in the course of the partnership business. In the early case of Stockton v. Frey, 4 Gill 406, 422, we held that the members of a firm are individually liable in actions of tort for the acts of the firm, their agents and servants, and for such acts may be sued individually. In Schloss v. Silverman, supra, at page 638, we reaffirmed this principle of the common law even without reference to the Uniform Partnership Act. The Maryland common law rule is in accordance with the great weight of authority. Weaver v. Marcus, 165 F. 2d 862 (4th Cir.). See Annotation, Liability of Partners in Tort as Joint and Several, 175 A.L.R. 1310.

It has been held that the language of the Uniform Partnership Act, in making all partners jointly and severally liable for tortious acts chargeable to the partnership (Code 1957, Article 73A, §§ 13 and 15), reaffirms the common law doctrine. Weaver v. Marcus, supra; Soberg v. Sanders, 220 N. W. 781 (Mich.). See also David v. David, 161 Md. 532, 537-538, 157 Atl. 755. In Weaver and Soberg it was held that under the Uniform Partnership Act, as at common law, a member of the partnership individually is liable for injuries sustained by reason of a tortious act of another partner or of a servant or agent of the partnership. We agree with the reasoning of these cases that in tort actions, as contrasted with contractual claims, each member of the partnership may be held personally liable. See Rowley on Partnership, § IS (a) C and D (2d ed. 1960). If the tortious act may reasonably be found to be done within the scope of the business of the partnership, the individual partner against whom judgment is obtained may have a right of contribution from the partnership and from the other partners, but that right does not limit the remedy of the plaintiff to proceed against the members of the partnership as individuals as well as co-partners.

The motions of the appellant for directed verdicts in his favor as an individual were properly denied.

Judgment affirmed; costs to be paid by appellant.

1 . Section 15.

“All partners are liable:

(a) Jointly and severally for everything chargeable to the partnership under §§ 13 and 14.”