Bronson, P. J.
We are asked to decide here whether a person injured by the tortious conduct of a "Checker” taxicab driver has presented sufficient proofs to impose liability upon defendant, Checker Cab Company. We hold that proof that the company is furnishing services to these taxicabs, such as a trade name, headquarters, or radio dispatching, is sufficient to avoid a directed verdict prior to defendant’s proofs.
Plaintiffs, Gilmer and Dorothy Thomas, were [155]*155injured in an automobile accident occurring on June 21, 1970. Plaintiffs’ car collided with a Checker taxicab driven by Wendell West, and owned by Tim Castillo. Alleging that the accident was caused by West’s negligence, plaintiffs brought separate suits against Tim Castillo and defendant, Checker Cab Company. These two cases were consolidated for trial.
Plaintiffs attempted to impose liability upon Checker Cab by proving that a master-servant or employer-employee relationship existed between Checker and the cab driver, Wendell West. At the close of plaintiffs’ proofs, Checker moved for a directed verdict of no cause of action, on grounds that there had been no showing of control by Checker over the various operations of the drivers. That motion was granted, with the trial judge holding that Checker was actually an agent of the cab owners. Plaintiffs appeal from that decision as of right.
After the trial judge granted the motion for a directed verdict, the case proceeded without Checker Cab Company, and a judgment was entered in favor of plaintiffs against Tim Castillo.
Testimony at trial indicated that any person desiring to take a "Checker Cab” could hail one from the street or call a single telephone number, Woodward 3-7000. "Checker Cabs” are identifiable on the street by potential customers through the Checker Cab insignia and a common color scheme. When a call is placed to the above telephone number, it is answered through a switchboard call system maintained by Checker Cab Company. The request for cab service is then relayed to one of the radio-equipped "Checker Cabs”. One company official at trial estimated that 40% of the company business came from radio calls.
[156]*156We hold that such proof that Checker Cab Company holds itself out to the public as having control over the operation of "Checker Cabs” was sufficient to constitute prima facie showing of an employer-employee relationship between Checker Cab Company and the cab drivers. The trial judge improperly granted a directed verdict in favor of Checker Cab, and we reverse.
Checker argues that even if a taxicab company holds itself out as purporting to be the employer of the drivers, no liability results toward third-person non-passengers injured by the driver’s negligence. That contention rests upon the premise that Checker is not "estopped” from denying an employer-employee relationship unless the injured party relied upon the appearance of such a relationship. We accept that premise, but disagree with the conclusion, inasmuch as our decision does not rest on an "estoppel” doctrine.
As a general rule, an employer is vicariously liable for the torts of his employee committed while that employee is acting within the scope of his employment, but is not similarly liable for the tortious actions of independent contractors. One exception to the independent contractor rule is found in the doctrine of "estoppel”. The application of that doctrine to the area of vicarious liability is found in 1 Restatement Agency 2d, § 267, p 578:
"One who represents that another is his servant or other agent and thereby causes a third person justifiably to rely upon the care or skill of such apparent agent is subject to liability to the third person for harm caused by the lack of care or skill of the one appearing to be a servant or other agent as if he were such.”
Where one holds himself out as the employer of a [157]*157certain person, and there is reliance, that apparent employer is estopped from arguing that such person is an independent contractor.
Checker correctly points out that the reliance element has been interpreted by the courts to exclude "reliance” by the general public. The Restatement illustration following the rule fits our situation exactly:
"1. P, a taxicab company, purporting to be the master of the drivers of the cabs, in fact enters into an arrangement with the drivers by which the drivers operate independently. A driver negligently injures T, a passenger, and also B, a person upon the street. P is not liable to B. If it is found that T relied upon P as one furnishing safe drivers, P is subject to liability to T in an action of tort.”
Pedestrians and drivers of other cars injured through the tortious conduct of a taxicab have not "relied” upon the employer-employee relationship as that term is used here. See, for example, Mercury Cab Owners’ Association v Jones, 79 So 2d 782, 784 (Fla, 1955), Rhone v Try Me Cab Co, 62 App DC 201; 65 F2d 834 (1933). Estoppel cannot be used to hold the taxicab company liable for injuries to non-passengers.
Estoppel creates liability on the part of the apparent employer as a matter of law once the fact of a representation and justifiable reliance are established. As we concluded above, that doctrine cannot be applied here. However, we find that proof that Checker held itself out as the employer of the drivers was sufficient to prevent a directed verdict for another reason — that proof established a prima facie showing of an employer-employee relationship. Under this concept, liability is not placed upon Checker as a matter of law, but, [158]*158rather, the burden of going forward with the evidence is shifted to defendant.
We adopt the rule followed in many other jurisdictions: evidence establishing that defendant company’s name and colors are upon the taxicab creates a prima facie case that defendant had custody and control of that cab, whether the company owned it or not. That presumption of custody and control is sufficient to carry the case to the jury, Callas v Independent Taxi Owners’ Association, 62 App DC 212; 66 F2d 192 (1933), P & S Taxi & Baggage Co v Cameron, 183 Okla 226, 230; 80 P2d 618, 622 (1938), Cappello v Aero Mayflower Transit Co, 116 Vt 64, 67; 68 A2d 913, 915 (1949), Walker v Johnston, 236 SW2d 534, 541 (Tex Civ App, 1951), Reddick v Gilliam, 263 P2d 742 (Okla, 1953), Mercury Cab Owners’ Association v Jones, 79 So 2d 782, 784 (Fla, 1955).1 This rule affects only the burden of going forward with the evidence, and not the ultimate burden of proof, which is still upon plaintiffs, Smith v Deutsch, 89 Cal App 2d 419; 200 P2d 802 (1948).
The rule which we now adopt was created in recognition of the difficulties injured individuals encounter in unraveling the complex organization structures set up between taxicab companies and their drivers. The equitable nature of this type of rule is emphasized in Fullerton v Motor Express, Inc, 375 Pa 173, 175-176; 100 A2d 73, 74 (1953), wherein it was stated:
[159]*159"The law is clear that an identifying sign on a commercial vehicle declares its reputed ownership as much as a flag proclaims the nationality of the ship which flies it. If the ship is sailing under false colors it will have to answer for the deception.
Free access — add to your briefcase to read the full text and ask questions with AI
Bronson, P. J.
We are asked to decide here whether a person injured by the tortious conduct of a "Checker” taxicab driver has presented sufficient proofs to impose liability upon defendant, Checker Cab Company. We hold that proof that the company is furnishing services to these taxicabs, such as a trade name, headquarters, or radio dispatching, is sufficient to avoid a directed verdict prior to defendant’s proofs.
Plaintiffs, Gilmer and Dorothy Thomas, were [155]*155injured in an automobile accident occurring on June 21, 1970. Plaintiffs’ car collided with a Checker taxicab driven by Wendell West, and owned by Tim Castillo. Alleging that the accident was caused by West’s negligence, plaintiffs brought separate suits against Tim Castillo and defendant, Checker Cab Company. These two cases were consolidated for trial.
Plaintiffs attempted to impose liability upon Checker Cab by proving that a master-servant or employer-employee relationship existed between Checker and the cab driver, Wendell West. At the close of plaintiffs’ proofs, Checker moved for a directed verdict of no cause of action, on grounds that there had been no showing of control by Checker over the various operations of the drivers. That motion was granted, with the trial judge holding that Checker was actually an agent of the cab owners. Plaintiffs appeal from that decision as of right.
After the trial judge granted the motion for a directed verdict, the case proceeded without Checker Cab Company, and a judgment was entered in favor of plaintiffs against Tim Castillo.
Testimony at trial indicated that any person desiring to take a "Checker Cab” could hail one from the street or call a single telephone number, Woodward 3-7000. "Checker Cabs” are identifiable on the street by potential customers through the Checker Cab insignia and a common color scheme. When a call is placed to the above telephone number, it is answered through a switchboard call system maintained by Checker Cab Company. The request for cab service is then relayed to one of the radio-equipped "Checker Cabs”. One company official at trial estimated that 40% of the company business came from radio calls.
[156]*156We hold that such proof that Checker Cab Company holds itself out to the public as having control over the operation of "Checker Cabs” was sufficient to constitute prima facie showing of an employer-employee relationship between Checker Cab Company and the cab drivers. The trial judge improperly granted a directed verdict in favor of Checker Cab, and we reverse.
Checker argues that even if a taxicab company holds itself out as purporting to be the employer of the drivers, no liability results toward third-person non-passengers injured by the driver’s negligence. That contention rests upon the premise that Checker is not "estopped” from denying an employer-employee relationship unless the injured party relied upon the appearance of such a relationship. We accept that premise, but disagree with the conclusion, inasmuch as our decision does not rest on an "estoppel” doctrine.
As a general rule, an employer is vicariously liable for the torts of his employee committed while that employee is acting within the scope of his employment, but is not similarly liable for the tortious actions of independent contractors. One exception to the independent contractor rule is found in the doctrine of "estoppel”. The application of that doctrine to the area of vicarious liability is found in 1 Restatement Agency 2d, § 267, p 578:
"One who represents that another is his servant or other agent and thereby causes a third person justifiably to rely upon the care or skill of such apparent agent is subject to liability to the third person for harm caused by the lack of care or skill of the one appearing to be a servant or other agent as if he were such.”
Where one holds himself out as the employer of a [157]*157certain person, and there is reliance, that apparent employer is estopped from arguing that such person is an independent contractor.
Checker correctly points out that the reliance element has been interpreted by the courts to exclude "reliance” by the general public. The Restatement illustration following the rule fits our situation exactly:
"1. P, a taxicab company, purporting to be the master of the drivers of the cabs, in fact enters into an arrangement with the drivers by which the drivers operate independently. A driver negligently injures T, a passenger, and also B, a person upon the street. P is not liable to B. If it is found that T relied upon P as one furnishing safe drivers, P is subject to liability to T in an action of tort.”
Pedestrians and drivers of other cars injured through the tortious conduct of a taxicab have not "relied” upon the employer-employee relationship as that term is used here. See, for example, Mercury Cab Owners’ Association v Jones, 79 So 2d 782, 784 (Fla, 1955), Rhone v Try Me Cab Co, 62 App DC 201; 65 F2d 834 (1933). Estoppel cannot be used to hold the taxicab company liable for injuries to non-passengers.
Estoppel creates liability on the part of the apparent employer as a matter of law once the fact of a representation and justifiable reliance are established. As we concluded above, that doctrine cannot be applied here. However, we find that proof that Checker held itself out as the employer of the drivers was sufficient to prevent a directed verdict for another reason — that proof established a prima facie showing of an employer-employee relationship. Under this concept, liability is not placed upon Checker as a matter of law, but, [158]*158rather, the burden of going forward with the evidence is shifted to defendant.
We adopt the rule followed in many other jurisdictions: evidence establishing that defendant company’s name and colors are upon the taxicab creates a prima facie case that defendant had custody and control of that cab, whether the company owned it or not. That presumption of custody and control is sufficient to carry the case to the jury, Callas v Independent Taxi Owners’ Association, 62 App DC 212; 66 F2d 192 (1933), P & S Taxi & Baggage Co v Cameron, 183 Okla 226, 230; 80 P2d 618, 622 (1938), Cappello v Aero Mayflower Transit Co, 116 Vt 64, 67; 68 A2d 913, 915 (1949), Walker v Johnston, 236 SW2d 534, 541 (Tex Civ App, 1951), Reddick v Gilliam, 263 P2d 742 (Okla, 1953), Mercury Cab Owners’ Association v Jones, 79 So 2d 782, 784 (Fla, 1955).1 This rule affects only the burden of going forward with the evidence, and not the ultimate burden of proof, which is still upon plaintiffs, Smith v Deutsch, 89 Cal App 2d 419; 200 P2d 802 (1948).
The rule which we now adopt was created in recognition of the difficulties injured individuals encounter in unraveling the complex organization structures set up between taxicab companies and their drivers. The equitable nature of this type of rule is emphasized in Fullerton v Motor Express, Inc, 375 Pa 173, 175-176; 100 A2d 73, 74 (1953), wherein it was stated:
[159]*159"The law is clear that an identifying sign on a commercial vehicle declares its reputed ownership as much as a flag proclaims the nationality of the ship which flies it. If the ship is sailing under false colors it will have to answer for the deception. If a name on a vehicle misstates ownership, opportunity is afforded the named person or firm to disprove the asserted proprietorship.
"The most elementary rules of logic, woven into the fabric of correlative social responsibility, as well as the requirements of simple justice, demand that the law be as above indicated. The person who is struck down by a strange vehicle cannot automatically know the business of the owner of the vehicle; and, even with the most diligent inquiry, he may not be able to ascertain the nature of the mission to which the driver was committed at the time. Hence the imperative necessity of the presumption, in a situation of this kind, that the first person or firm to be called to answer for the mishap should be the person or firm whose name decorates the offending vehicle.”
The rationale behind a similar presumption was presented in Webb v Dixie-Ohio Express Co, Inc, 291 Ky 692, 694; 165 SW2d 539, 540 (1942):
"Because it is often impossible for the plaintiff to prove the agency of the operator, it is deemed desirable socially that the burden of introducing evidence on non-agency should be placed upon the defendant in whose peculiar knowledge rests the material evidence essential to a determination of this fact.”
Recognizing these policy considerations, we feel that the above-stated rule is the best one to apply to the case at hand.2
The presumption of an employer-employee rela[160]*160tionship is evidence to go to the jury, so a directed verdict cannot be granted at the close of plaintiffs’ proofs. It should be noted, however, that a directed verdict can properly be granted at the close of all proofs. That would occur only in rare cases, however.3 A good example of such an extreme set of circumstances is found in Burns v Michigan Paint Co, 152 Mich 613; 116 NY 182 (1908). There, plaintiff relied only on the proof that he was injured by a truck bearing defendant company’s name. On the other hand, defendant presented "undisputed” proofs of complete control by the driver over the operations of his work. The Court held that the trial judge should have granted a directed verdict at the close of the proofs.
We of course cannot decide now whether a directed verdict would have been proper at the close of defendant’s proofs. However, we express strong doubts that such a ruling would have been correct. Plaintiffs did not rely solely upon the presumption in this case. The testimony at trial [161]*161established at least some degree of control by Checker over the activities of the drivers. Checker was shown to be operating a personnel office at which prospective drivers applied for jobs. Although Checker officials maintained that the ultimate authority to hire drivers rested with the owners, several drivers testified that Checker itself had appeared to hire them. Checker officials admitted that an organizational structure was maintained by them to resolve complaints against drivers but they again insisted that the ultimate authority to dismiss a driver was in the owner of the taxicab. Finally, there was testimony to the effect that a book of rules and regulations was distributed to the drivers by Checker. In light of that evidence, it would be hard for us to say that defendant’s proofs of lack of control would have been "undisputed”.
Checker also argues on appeal that Tim Castillo entered into a release with plaintiffs, whereby plaintiffs’ cause of action was surrendered for a payment of approximately $31,000. The argument is that the release of the "servant” releases the "principal”, rendering this appeal moot. It must be summarily rejected, for the document executed was a "covenant not to sue”, which has no effect of releasing the principal, Prosser, Torts (4th ed), § 49, p 303, Cook v City Transport Corp, 272 Mich 91; 261 NW 257 (1935), Boucher v Thomsen, 328 Mich 312; 43 NW2d 866 (1950), Centala v Navrude, 45 Mich App 282; 206 NW2d 544 (1973).
Reversed and remanded, cost of this appeal to plaintiffs.
D. E. Holbrook, Jr., J., concurred.