Summary
holding that a tire re-capper was not an apparent agent of a tire manufacturer, even though they advertised together, when the plaintiff chose the re-capper because the re-capper was a friend and the re-capper's business was at a convenient location
Summary of this case from Dilley v. Holiday Acres Props., Inc.Opinion
No. 69.
Argued March 29, 1971. —
Decided May 4, 1971.
APPEAL from a judgment of the circuit court for Monroe county: JAMES W. RICE, County Judge of Monroe County, Presiding. Affirmed.
For the appellants there were briefs by Robert D. Johns, Jr., and Johns, Flaherty, Harman Gillette, all of La Crosse, and oral argument by Robert D. Johns, Jr.
For the respondent there was a brief by Stafford, Rosenbaum, Rieser Hansen, and oral argument by Richard A. Hollern, all of Madison.
Francis D. Sorenson is the manager of the plaintiff S.G. Sorenson Son, a feed and grain business located in Tomah, Wisconsin. The business has been in his family since 1919, and he has managed it since 1932. On May 28, 1964, Sorenson was operating the company's International truck on U.S. Highway 16 west of Sparta, Wisconsin, when it was involved in an accident with another vehicle. As a result of the accident the insurer of S.G. Sorenson Son, plaintiff Iowa National Mutual Insurance Company, made payments to the parties injured in the accident. S.G. Sorenson Son sustained certain damage to its vehicle for which it was not compensated by its insurer. Iowa National and Sorenson are seeking recovery of these damages in the present action from defendants. Howard Backens and Goodyear Tire Rubber Company.
The Sorenson truck involved in the accident was equipped with two tires which Sorenson had recapped at OK Tire Service at 211 Superior Avenue in Tomah on or about November 18, 1963. OK Tire Service commenced doing business in the summer of 1963 as a sole proprietorship owned by defendant Howard Backens.
Howard Backens originally began business as Howard's Sinclair station at 304 West Clifton Street in Tomah in 1957. At this station, during the period between 1957 and 1963, he sold Goodyear tires pursuant to a "TBA" (tires, batteries and accessories) franchise available to Sinclair stations through the Sinclair organization. He also sold auto supplies manufactured and supplied by other companies. Any supplies which he received under his TBA franchise were shipped by Sinclair and paid for by Backens. Once in his possession the supplies became Backens' property. To facilitate the sale of these Goodyear products, Backens had a Goodyear sign in public view at his station, invoices and statements on which the Goodyear emblem appeared, uniforms with a Goodyear emblem which were worn by himself and his employees, and advertising of the products on local radio and in the Tomah newspaper which was paid in part by Sinclair. In 1963, he sold about 1,700 new Goodyear tires and had a total of TBA sales of about $30,000.
During the period from 1957 to 1963, and separate from his TBA franchise, Backens also sold tires at his Sinclair station which were recapped by the Goodyear-owned Goodyear Service store in La Crosse and the Goodyear-franchised Nelson Tire Rubber Company in Winona, Minnesota. Some of these were recapped tires which he purchased from the two stores and resold, and others were recaps of tire casings supplied by his own customers which he took to the La Crosse store to be recapped. On some occasions he would indicate to his customers where the recapping would be performed. Tires which were recapped by the Goodyear store bore a Goodyear medallion vulcanized into the recapped rubber.
In the summer of 1963, Ken Oanes, manager of the Goodyear store in La Crosse, indicated to Backens that the store's recapping equipment was for sale. Backens purchased the equipment for $2,000. At the time of the sale Oanes was aware that Backens operated a service station in Tomah at which he sold Goodyear tires, batteries and accessories as well as a substantial number of Goodyear recapped tires, and that Backens planned to use the equipment to go into his own tire recapping business. The sale of the equipment was approved by Goodyear's Akron office.
After purchasing the equipment, and pursuant to a mutual understanding between Backens and Oanes, Backens attended an informal training course in recapping tires at the La Crosse store. This informal training lasted a few hours a day for three to four weeks. Backens then transported the equipment to his new location in Tomah and began business as OK Tire Service. He also continued to operate his service station at its old location.
Following the opening of his new business Backens advertised his two businesses together on local radio and in the local newspaper in an effort to transfer the good will which he had built up at his service station to this new tire service. He ran ads in the Tomah newspaper which noted that "Retreads with Exclusive Goodyear Design" were available at both places of business. The advertisements made no mention of who was doing the recapping.
Upon commencing business as OK Tire Service, Backens regularly wore clothing having a visible Goodyear emblem, used invoices with the Goodyear emblem which he had purchased from the company, and purchased almost all of his recapping supplies from the Goodyear organization. The Goodyear district sales manager called upon Backens to solicit his purchase of Goodyear tires, batteries and accessories as well as recapping supplies. Also, when visiting with him, the Goodyear representative would keep him advised of new developments and processes in the area of tire recapping.
In the fall of 1963, Goodyear's regional salesman assisted Backens in preparing an application to the Goodyear Identification Division to obtain signs to identify his OK Tire Service. The signs to be installed would extend across the front of his building and continue around the side, and read "Goodyear OK Tire Service" on both the front and the side. The purpose of these signs was acknowledged to be to encourage sales of his Goodyear products. In supplying such signs the Goodyear organization did not distinguish between company-owned, company-franchised, and independent dealers. The request for Backens' signs was received by the Goodyear Identification Division on October 16, 1963. It was approved by the company on December 10, 1963, and shipment of the completed signs was made on January 15, 1964.
OK Tire Service was not a Goodyear store nor a Goodyear franchise store. Goodyear could not compel Backens to sell its products or purchase Goodyear recapping supplies. Goodyear received no profit from OK Tire Service sales of recapped tires. Goodyear had no authority over Backens' control or management of the business.
Sometime prior to November 18, 1963, Sorenson went to OK Tire Service to inquire about the feasibility of recapping two tires on one of the corporation's trucks. He testified at trial that he observed numerous. tires on the premises and saw a large sign across the front of the exterior of the building which read "Goodyear OK Tire Service." His recollection as to the sign was faulty since the sign was not shipped to Backens until about two months later. Sorenson testified that he went to OK Tire Service because it was convenient to his place of business, he considered Backens to be a business friend and associate, and because he did not want to take his tires to a "junk place" to be recapped. Prior to that date he had purchased various brands of tires from different dealers and he stated that he might have purchased Goodyear tires from Backens at his Sinclair service station. Subsequent to his visit, Sorenson had the truck delivered to Backens to have the tires recapped.
The instant action was commenced on December 18, 1967. The plaintiffs, Iowa National and Sorenson, alleged that the accident was caused by a blowout of a tire which had been recapped by Backens.
Before considering the questions of Backens' negligence or the damages, on the stipulation of the parties, the court agreed to determine if the relationship between Backens and Goodyear created (1) an apparent or ostensible agency as to Sorenson, or (2) a duty upon the defendant Goodyear Tire Rubber Company to supervise and regulate Backens in his recapping business for the protection of Sorenson.
After a trial without a jury the court concluded that no agency of any kind existed between Backens and Goodyear, and that Goodyear had no responsibility to regulate or supervise Backens. Judgment dismissing the plaintiffs' complaint against Goodyear was entered on March 9, 1970. The plaintiffs appeal.
The parties have presented two issues on this appeal:
(1) Was Howard Backens an apparent agent or did he have apparent authority to act on behalf of the Goodyear Tire Rubber Company?
(2) If Backens was not an apparent agent, did the Goodyear Tire Rubber Company have the duty to regulate and supervise the operation of his business for the protection of his customers?
The first issue tried by the court was whether an apparent or ostensible agency existed between Backens, as an apparent agent, and Goodyear as principal. It is undisputed that at no time was Backens an actual agent of Goodyear.
In Harris v. Knutson the court stated at pages 574, 575:
(1967), 35 Wis.2d 567, 151 N.W.2d 654.
"In Hansche v. A. J. Conroy, Inc. (1936), 222 Wis. 553, 559, 269 N.W. 309, this court defined apparent authority as follows:
"`Respondent seeks to hold appellant liable on the basis of apparent agency. This brings us to consideration as to what is meant by apparent authority. The rule applicable here is thus stated in 1 Restatement, Agency, p. 25, sec. 8:
"`"Apparent authority is the power of an apparent agent to affect the legal relations of an apparent principal with respect to a third person by acts done in accordance with such principal's manifestations of consent to such third person that such agent shall act as his agent.
"`"Comment: a. An apparent agent is a person who, whether or not authorized, reasonably appears to third persons, because of the manifestations of another, to be authorized to act as agent for such other. An apparent principal is the person for whom an apparent agent purports to act. The apparent agent may have authority which is coextensive with his apparent authority; he may be authorized to act in other ways but not in the way as to which he has apparent authority; or he may not be authorized to act in any respect for the purported principal. If the authority and the apparent authority are coextensive, the liability of the principal resulting from conduct of the agent may be based upon either authority or apparent authority.
"`" b. The manifestation that another is to act as agent may be made to the community in general, by advertisements or otherwise. Apparent authority, however, exists only with respect to a person to whom such a manifestation has been made or to whom knowledge of it comes."
"`Three elements are necessary to establish apparent agency: (1) Acts by the agent or principal justifying belief in the agency. (2) Knowledge thereof by the party sought to be held (in the present case, appellant). (3) Reliance thereon by the plaintiff, consistent with ordinary care and prudence. Domasek v. Kluck, 113 Wis. 336, 339, 89 N.W. 139.'
"We have recently stated in Ivers Pond Piano Co. v. Peckham (1966), 29 Wis.2d 364, 370, 139 N.W.2d 57:
"`". . . apparent authority results from conduct by the principal which causes a third person reasonably to believe that a particular person, who may or may not be the principal's agent, has authority to enter into negotiations or to make representations as his agent." Seavey, Law of Agency (hornbook series), p. 13, sec. 8.'"
The question of the existence of the three elements necessary to establish apparent agency ordinarily presents issues of fact to be resolved by the finder of fact, whether it be a jury or the court without a jury. Harris v. Knutson, supra. Consequently, the standard of review to be applied here is whether the findings which have been made are against the great weight and clear preponderance of all the evidence. Mitchell v. Western Casualty Surety Co. (1966), 30 Wis.2d 419, 421, 141 N.W.2d 212.
In this regard it should be noted that the trial court here did not make any delineated findings of fact and conclusions of law, but simply issued a brief memorandum decision. Two sections of that decision may be interpreted as implying the necessary findings of fact. Concerning the first element, acts by the agent or principal justifying belief in the agency, the court said:
"The defendant Howard Backens has been the operator of a Sinclair Station in Tomah, Wisconsin for many years. As such operator he sold Goodyear tires, batteries and appliances. The tires included recaps which he purchased from a Goodyear recapping plant in La Crosse, Wisconsin.
"In 1963 he purchased a recapping plant from Goodyear, purchased material from them, displayed Goodyear advertising signs, placed Goodyear's approved advertising in the newspaper and on radio, and he wore Goodyear work uniforms."
And concerning the third element, reasonable reliance on these acts by the party seeking to establish the apparent agency, it said:
"The plaintiff, Francis Sorenson, who purchased the tires which are the subject of this lawsuit, went to the `Goodyear OK Tire Service' because Backens was `a friend' and because `it was convenient' but he would not have gone to `a junk place' to buy a recapped tire."
The court then concluded by saying:
"Plaintiff desires that it be concluded from these facts that Goodyear cloaked Backens with `apparent authority' to act as its agent. "I have reviewed all the authorities submitted by both parties and cannot arrive at such a conclusion."
While we do not consider the memorandum a model to be followed, we do believe that it does contain sufficient findings of fact to support the judgment. The evidence here is relatively undisputed and we are confident that the final decision on these issues would not be different if we returned the matter to the trial court for more detailed findings of fact.
As set forth above, the first two elements of apparent authority are, "(1) Acts by the agent or principal justifying belief in the agency," and "(2) Knowledge thereof by the party sought to be held."
Here, pursuant to his TBA franchise with Sinclair, Goodyear allowed Backens to display a Goodyear sign in public view at his Sinclair station, to use invoices and statements which bore the Goodyear emblem, to wear a Goodyear emblem on his service station uniforms, and to advertise Goodyear products on the local radio and in the local newspapers. It approved the sale of their recapping equipment to him, and also allowed him to continue these advertising practices in his new place of business, the OK Tire Service.
These facts are undisputed and, although not specifically ruled upon by the trial court, probably satisfy the first two elements of the apparent authority test.
Under the facts of this case the issue of apparent authority is determined by the third element, namely, reliance by Sorenson (consistent with ordinary care and prudence) that Backens was the apparent agent of Goodyear in the recapping of tires.
To satisfy the burden of proof, a party claiming apparent agency must show that he relied upon the apparent agency and that he exercised ordinary care in such reliance.
Harris v. Knutson, supra, footnote 1.
The plaintiffs-appellants cite Everlite Mfg. Co. v. Grand Valley Machine Tool Co. (1969), 44 Wis.2d 404, 171 N.W.2d 188, as authority for their contention that the evidence compels a finding of reliance. The language which appellants have cited from the Everlite Case deals with the question of the reasonableness of reliance, not with its existence. The only evidence in the instant case touching on the question of reliance is the testimony of Francis Sorenson. On direct examination Mr. Sorenson testified that his employees took care of all routine maintenance and repairs on the company's vehicles and would simply take them to some service station when something was needed. Most major repairs were handled by him. He stated that he had bought various kinds of tires in the past, including Goodyear tires. He said that he might have purchased tires from Backens and, if he had, it would have been at his Sinclair service station. He had on occasion bought gasoline and oil at the station. Sorenson further testified that he considered Backens to be a hardworking and honest person, and that he first became aware that he was doing tire recapping when his equipment was installed in the building located about 75 to 100 yards from Sorenson's office. Sorenson stated that he went to Backens when he needed the two tires recapped because "he was right handy there." He knew that Backens sold Goodyear tires but was not sure whether he knew that Backens also sold them at the Sinclair station. When he went in to Backens' recapping plant he did not look at any new tires, only recaps. He was not aware of any brand names. Sorenson said that he did not notice any signs or advertising but that he thought there was a large sign across the front of the building, though he did not pay much attention to it.
On cross-examination Sorenson testified that he dealt with a number of service stations in the area and that he had never had any recapping done by Backens before. He stated that the sign might have been across the front of the building but he was not sure. (It is now undisputed that Sorenson was mistaken about any exterior signs since they were not delivered to Backens until several months later.) Sorenson testified that he knew that Backens sold Goodyear tires, and in response to the question of whether he placed any weight on that fact he stated: "Well, the fact that he handles good tires. We couldn't take it to a junk place."
Following this testimony respondent's attorney introduced into evidence excerpts from an adverse examination of Mr. Sorenson, without any objection by appellants' attorney, which read as follows:
"` Question: How did you happen to have OK Tire Service do the recapping? What brought about the necessity for it, is what I am asking.
"` Answer: These tires were getting down where they were a little smooth and, as I remember, the truck was not being used at that time and the place is real handy, so we thought we would take it over there and let them fix it.'
"` Question: When you went to have the tires recapped by Mr. Backens you said that this was fundamentally because it was convenient, is that correct?
"` Answer: Yes.'
". . .
"` Question: Was there any other reason that you had Mr. Backens do your recapping other than the fact that it was convenient?
"` Answer: It was convenient, and he was a friend.'"
From its evaluation of this testimony, the trial court stated that:
"The plaintiff, Francis Sorenson, who purchased the tires which are the subject of this lawsuit, went to the `Goodyear OK Tire Service' because Backens was `a friend' and because `it was convenient' but he would not have gone to `a junk place' to buy a recapped tire."
Though the court was mistaken in that Sorenson did not buy recapped tires from Backens but rather took his tires there to be recapped, its finding as to why he went there is not against the great weight and clear preponderance of the evidence. We conclude that the plaintiffs-appellants have not met their burden of proof to establish that they relied upon the fact that Backens was an apparent agent of Goodyear.
The plaintiffs-appellants also assert a second theory of recovery by urging that respondent Goodyear has a duty to the public purchaser to regulate and supervise, or to withhold public association and sanction from independent tire recappers who sell its products. They argue that this duty which they attempt to create is analogous to the duty on an employer to exercise reasonable care to employ a competent and careful contractor to do work which will involve a risk of physical harm unless it is skillfully and carefully done. Restatement, 2 Torts 2d, p. 376, sec. 411.
On this theory the appellants assume that Backens was not the apparent agent of Goodyear. However, while Goodyear had no actual control over Backens and the operation of his business, appellants argue that a certain degree of control should be created as a matter of law, to the extent of imposing upon Goodyear the duty to "regulate and supervise" the performance of his work. If it was not willing to do so appellants then argue that it had the duty to withhold any public association of its name with Backens.
The appellants submit that the purchaser of a recapped tire, or in this case, a party who has his own tires recapped, is entitled to expect that the recapper is properly trained and is competent in the process of recapping, and that a recapper employed by a major tire company possesses such training and competence. From this they conclude that any major tire company which allows its name to be associated with an independent tire recapper must be held liable for his lack of proper training or incompetency.
The first two elements of the appellants' argument are that "a negligently recapped tire is imminently dangerous to life and limb," and that "a tire recapper is liable for negligently recapping a tire." There can be little dispute as to the validity of both statements. The third element of their argument is that which they are trying to establish, i.e., that such a duty exists on the part of Goodyear, and the fourth element is that the customer's reasonable expectations should not be denied.
If we assume that the duty urged by appellants did exist, we conclude that their own arguments would preclude them from recovery on this theory in the instant case. The appellants argue that a consumer such as Mr. Sorenson has certain expectations which lead him to patronize a business establishment such as OK Tire Service. These expectations, they contend, are molded by the reputation of a name-brand manufacturer and the relationship which appears to exist between that manufacturer and the particular businessman with whom he deals. It is these expectations which appellants seek to justify and to protect.
However, to say that a consumer's expectations have been so formed and molded is to say nothing more than that he has relied upon the reputation of the manufacturer, and the manifestations of some sort of relationship which the manufacturer has made or allowed to be made through an individual business establishment. But if such reliance is shown, and it was reasonable under the circumstances, then the consumer has established an apparent agency upon which he may hold the manufacturer liable. To attempt to draw a distinction between reliance upon the manifestations of a manufacturer, and the mere creation of expectations by those manifestations, is to draw a rather illusory line. The two concepts are one and the same thing. A presumption of some form of reliance is present throughout appellants' second argument. It is precisely the absence of a showing of any reliance that is fatal to appellants' assertion of apparent authority; the same failure of proof would be fatal under this second theory were the court to adopt it.
The respondent has moved that the court impose double costs on the appellants for failure to comply with the provisions of sec. 251.34(5)(c), Stats., to wit: for failing to include a synopsis of the testimony as a part of their appendix. While the motion for double costs is not without merit, in the exercise of our discretion it is denied and the respondent is allowed ordinary costs.
By the Court. — Judgment affirmed.