providing a useful summary of the availability of punitive damages under Ohio lawSummary of this case from Auto-Owners Insurance Company v. Redland Ins. Co.
Decided April 3, 1946.
Sales — Action ex delicto against seller permitted and not forbidden, when — Sections 8453 and 8449, General Code — Jury may award exemplary or punitive damages, when — Punitive damages recoverable against employer ratifying conduct of employee, when.
1. Section 8453, General Code, permits and Section 8449, General Code, does not forbid an action ex delicto against the seller where a sale of merchandise has been induced by fraud or misrepresentation.
2. In an action to recover damages for a tort which involves the ingredients of fraud, malice or insult, a jury may go beyond the rule of mere compensation to the party aggrieved and award exemplary or punitive damages. ( Roberts v. Mason, 10 Ohio St. 277, approved and followed.)
3. Where an employer expressly or impliedly ratifies such actionable conduct of his employee, punitive damages may be recovered from the employer in an action ex delicto.
APPEAL from the Court of Appeals of Hamilton county.
The form of the action being material to a decision, we are setting out the petition which reads:
"Plaintiff says that on the dates hereinafter mentioned and prior thereto the defendant operated a retail jewelry store at Seventh and Vine Streets, Cincinnati, Ohio, and that he advertised in the daily newspapers and on the radio, that he handled only quality merchandise; that on or about May 9, 1943, she visited the defendant's place of business and requested the defendant or his agent to assist her in the selection of a wrist watch which she advised the defendant she intended to give to her sixteen (16) year old grandson, as a graduation present.
"Plaintiff says that the defendant, through his agents and servants fraudulently represented that a certain wrist watch was ideally suited for her purpose; that it was a new watch and waterproof. Plaintiff says that these facts were wholly within the knowledge of the defendant, and that she was unaware of the truth or falsity of the defendant's representations but that relying upon the defendant's representations that the watch shown her was a new watch, she purchased the same, paying to the defendant the total sum requested by him, to wit, thirty-three dollars and seventy-five ($33.75) cents, and accepted delivery of the watch from the defendant some two or three weeks thereafter.
"Plaintiff says that the defendant, through his agents and servants, perpetrated a fraud on this plaintiff in that the watch which was delivered to her was not a new watch as represented by the defendant; that it failed to keep proper time, running first fast and then slow at various times, and that in a period of about two months she returned the watch to the defendant at least five times for adjustment, and was told that it was a new watch which often needed adjustment.
"Plaintiff says that on or about August 23, 1943, she learned that the watch the defendant sold her was not a new watch as represented but that it was a new case containing a used works and that said working parts had been repaired, new screws inserted and that the balance wheel had been soldered. Plaintiff says that on the aforesaid date she demanded the refund of the $33.75 which she had paid and offered to return the watch but that the defendant refused to comply with her demand.
"Plaintiff says that she is entitled to the recovery of punitive damages from the defendant.
"Wherefore, plaintiff prays judgment against the defendant in the sum of five thousand ($5,000) dollars and her costs herein expended."
No motion to make definite and certain was filed by defendant.
The following evidence, inter alia, was developed at the trial:
The defendant, Harold Greenwald, d. b. a. Greenwald Jewelry Company, operated a retail jewelry store in Cincinnati. He admitted in his answer and testimony that he advertised in the daily newspapers and on the radio representing that he handled only quality merchandise. Plaintiff testified that after listening to defendant's radio broadcast she went to defendant's store and purchased a wrist watch for her grandson. It is claimed that defendant's store manager sold the watch upon the representation that it was a new watch. Plaintiff testified that upon taking the watch out it gained 45 minutes in a short time. Plaintiff returned the watch and according to her testimony was told by the store manager that "a new watch has to be regulated." The watch was returned five different times for adjustment. On returning it the sixth time plaintiff claims she tendered the watch and demanded her money which was refused.
Before returning the watch the last time, plaintiff had learned that the watch was not a new watch. When asked, "What, if anything, did you state to this manager in Mr. Greenwald's presence at that time as to this watch case containing a rebuilt works?" Plaintiff answered, "I told him the manufacturer of that watch had been out of business for fifteen years, it was an old works and it was soldered and had new screws. in it."
A watchmaker of 25 to 30 years experience was called and testified that the watch was about 25 years old; that the moving parts were "not in condition"; that the watch was not worth repairing; that one of the balance-wheel screws had been soldered in with soft solder and "Of course that is flagrant abuse of watch repair"; that the watch was of no value except for the use of its parts in repairs of other watches; and that its value new was about $20.
Another watchmaker of 27 1/2 years experience in response to the court's question about soft solder on the balance wheel said: "Soft solder. It is on the balance wheel and about the worst type of watch repairing I have ever seen in my life. I think any watchmaker will tell you the same thing. And the watch itself is plenty old. It is not a brand new one by any means." He further testified that the watch was about 20 to 25 years old and beyond repair.
The defendant testified on cross-examination:
"Q. Now, then, in your advertising either in the newspaper or on the radio do you advertise the fact you deal in secondhand merchandise, Mr. Greenwald, of this type? A. This is not commonly known as secondhand merchandise.
"Q. Well, but it is, isn't it? A. Properly speaking I don't think it comes in the classification of secondhand merchandise. Rebuilt and reconditioned is different than secondhand.
"Q. Well, it is merchandise that has been used previously, isn't that true? A. Part of it has been used previously.
"Q. Do you in your store anywhere display any sign or anything of that sort indicating that you deal in used or secondhand merchandise? A. No."
The defense was that, although the watch was not a new watch, it contained reconditioned works and had been sold as such. A watchmaker who repaired this watch for defendant testified that he had the watch in three times for adjustment and that there was no solder on the balance wheel.
Defendant testified that the watch was a reconditioned watch, and that there was no solder on it at the time he purchased it from a Cleveland concern dealing in reconditioned watches. Defendant further testified that he instructed his employees to tell purchasers that such watch was reconditioned, and that all reconditioned watches bore tags marked with red crayon. The store manager who sold the watch had no recollection of plaintiff's purchase. Nevertheless he denied that he told plaintiff that the watch in question was a new watch.
Under the trial court's instruction excluding plaintiff's right to punitive damages the jury rendered its general verdict in favor of plaintiff for the sum of $38.15 the price paid for the watch.
The jury answered "yes" to each of the following two interrogatories:
(1) "Please state whether or not you find, from all the evidence that the defendant, either personally or through his agents and servants, falsely represented the wrist watch sold to the plaintiff to be a new watch.
(2) "In falsely representing the wrist watch to be a new watch did the defendant or his agents and servants conduct themselves in such a manner as to show a reckless disregard of the plaintiff's rights?"
At the conclusion of all evidence plaintiff submitted two special charges which the court refused to give and to which rulings the plaintiff excepted:
(1) "If from all the evidence you find that the plaintiff in purchasing the wrist watch from the defendant relied on the representations of the defendant, his agents, or servants, that it was a new watch and that said representations were false and were known by the defendant, his agents or servants, to be false; and that the conduct of the defendant, his agents or servants, involved ingredients of fraud which constituted a wanton or reckless disregard of the rights of the plaintiff, and that relying on said false and fraudulent representations the plaintiff was damaged; then I charge you that in addition to her actual damages the plaintiff would be entitled to recover what is known in law as punitive or exemplary damages.
"Exemplary or punitive damages are such as are in excess of the actual loss and are allowed, in theory, where a wrong is aggravated by evil motive, as a punishment to the offender and as an example to deter others from offending in a like manner."
(2) "If from all the evidence you find that the plaintiff had no knowledge of watches and relied on the representation of the defendant, his agents or servants, and that said representations were false, and known by them to be false, and if you further find from all the evidence that said conduct of the defendant or his agents or servants toward the plaintiff involved ingredients of malice, fraud or insult, or a wanton disregard of the rights of the plaintiff, and that relying on said false and fraudulent representations the plaintiff was damaged, then I charge you that in addition to her actual damages, exemplary damages would be allowable at your hands to the plaintiff."
The record shows:
"By the Court: The court also instructed counsel for the plaintiff to exclude from his argument any reference to the allowance of punitive damages with the exception, however, that he may explain his failure to do so to the jury."
At the instance of the defendant the court gave a special charge before argument:
"I am about to give you what is known as a special charge on the law of this case. All special charges as to the law are given in advance of the argument of the attorneys but you will remember that when I give you this statement of the law of the case that it is not all of the law involved in the case, it is only part of the law and will be considered by you along with the general charge of the court as to the law at the conclusion of the case, so you will consider it all together.
"If you find from the evidence that the defendant sold the watch described in the petition to the plaintiff and the plaintiff purchased said watch, and
"2. The defendant did not inform the plaintiff at the time of purchase that said watch contained a rebuilt works and the plaintiff had no knowledge that said watch contained a rebuilt works, but after ascertaining that the works of said watch was a rebuilt works, went to defendant's store, offered to return the watch and requested repayment of the purchase price, then I charge you the measure of her damages is the price she paid for the watch, to wit, $38.15, with interest at six per cent per annum from the 27th day of May, 1943, the date of purchase, and that the plaintiff is not entitled to recover any amount in addition thereto."
The trial court entered judgment upon the jury's verdict in favor of plaintiff for $38.15.
An appeal was taken to the Court of Appeals where the judgment of the trial court was affirmed.
The case is here following the allowance of a motion to certify the record.
Messrs. Burke Cooney, for appellant.
Mr. Saul Zielonka and Mr. Harold M. Baron, for appellee.
The record presents the question whether the action of the trial court and the approval of such action by the Court of Appeals in denying plaintiff the right to recover punitive damages under the facts of this case constitutes error.
To be determined first is whether the action sounds in tort or contract. If ex contractu, it is to be disposed of on the authority of Ketcham v. Miller, 104 Ohio St. 372, 136 N.E. 145, wherein it was held:
"Punitive damages are not recoverable in an action for breach of contract."
On the other hand, if this be an action ex delicto, it is to be governed by the case of Roberts v. Mason, 10 Ohio St. 277, wherein it was held:
"In an action to recover damages for a tort which involves the ingredients of fraud, malice, or insult, a jury may go beyond the rule of mere compensation to the party aggrieved, and award exemplary or punitive damages."
In the Ketcham case, which was an action for damages growing out of a wrongful ejectment, Judge Robinson said, at page 377:
"While the facts in this case might well have justified a pleading charging a tort, we are unable from the amended petition itself to reach any other conclusion than that the gravamen of the complaint is the breach of the contract * * *"
On behalf of appellee it is claimed "The Uniform Sales Code (Sections 8381-8456 G. C. O.) does not authorize the buyer of chattel property to recover from the seller punitive damages for alleged false and fraudulent representations as to the quality of the property," to which the appellant has responded by citing Section 8453, General Code, which provides:
"In any case not provided for in this chapter, the rules of law and equity, including the law merchant, and in particular the rules relating to the law of principal and agent and to the effect of fraud, misrepresentation, duress or coercion, mistake, bankruptcy, or other invalidating cause, shall continue to apply to contracts to sell and to sales of goods."
Section 8449, General Code, on which appellee relies, provides:
"(1) When there is a breach of warranty by the seller, the buyer may, at his election —
"(a) Accept or keep the goods and set up against the seller, the breach of warranty by way of recoupment in diminution or extinction of the price;
"(b) Accept or keep the goods and maintain an action against the seller for damages for the breach of warranty;
"(c) Refuse to accept the goods, if the property therein has not passed, and maintain an action against the seller for damages for the breach of warranty;
"(d) Rescind the contract to sell or the sale and refuse to receive the goods, or if the goods have already been received, return them or offer to return them to the seller and recover the price or any part thereof which has been paid.
"(2) When the buyer has claimed and been granted a remedy in any one of these ways, no other remedy therefor can be granted.
"(3) When the goods have been delivered to the buyer, he cannot rescind the sale if he knew of the breach of warranty when he accepted the goods, or if he fails to notify the seller within a reasonable time of the election to rescind, or if he fails to return or to offer to return the goods to the seller in substantially as good condition as they were in at the time the property was transferred to the buyer. But if deterioration or injury of the goods is due to the breach of warranty, such deterioration or injury shall not prevent the buyer from returning or offering to return the goods to the seller and rescinding the sale.
"(4) When the buyer is entitled to rescind the sale and elects to do so, the buyer shall cease to be liable for the price upon returning or offering to return the goods. If the price or any part thereof has already been paid, the seller shall be liable to repay so much thereof as has been paid, concurrently with the return of the goods, or immediately after an offer to return the goods in exchange for repayment of the price.
"(5) When the buyer is entitled to rescind the sale and elects to do so, if the seller refuses to accept an offer of the buyer to return the goods, the buyer shall thereafter be deemed to hold the goods, as bailee for the seller, but subject to a lien to secure the repayment of any portion of the price which has been paid, and with the remedies for the enforcement of such lien allowed to an unpaid seller by Section 8433.
"(6) The measure of damages for breach of warranty is the loss directly and naturally resulting, in the ordinary course of events from the breach of warranty.
"(7) In the case of breach of warranty of quality, such loss, in the absence of special circumstances showing proximate damage of a greater amount, is the difference between the value of the goods at the time of delivery to the buyer and the value they would have had if they had answered to the warranty."
The only inhibition in this section is contained in the language: "When the buyer has claimed and been granted a remedy in any one of these ways, no other remedy therefor can be granted." The buyer has not claimed a remedy under Section 8449, General Code, but she has claimed a remedy under Section 8453, General Code, which is in part materia with Section 8449, General Code.
The trial court held the action to be one in tort and proceeded to charge the jury in respect of misrepresentation and fraud, but also charged the jury that it might not consider punitive damages.
We are of the opinion that the trial court was right in holding the action to be ex delicto, but wrong in holding that under the evidence in the case punitive damages might not be recovered.
In the case of Atlantic Great Western Ry. Co. v. Dunn, 19 Ohio St. 162, 2 Am. Rep., 382, Brinkerhoff, C.J., said at page 167:
"That such damages [punitive] may, in a proper case, be recovered against an individual party acting for himself, is settled in this state by the case of Roberts v. Mason, 10 Ohio St. R., 277 * * *."
At page 170, supra, the chief justice said in respect of the theory of punitive damages: "It rests not on the ground of abstract or theoretical justice, but on the ground of public policy — a policy which seeks to promote the public safety; to punish, through the medium of a civil proceeding, a fraudulent, malicious, insulting, or wilful wrongdoer, and to hold him up as a warning example to others, to deter them from offending in like manner."
It is said in 13 Ohio Jurisprudence, 235, Section 137:
"With respect to the recovery of exemplary damages in private actions, the different states have not adopted a uniform rule.
"That punitive or exemplary damages may be given in a proper case is not an open question in Ohio. It is an established principle of law in Ohio that in actions to recover damages for tort, which involve the ingredients of fraud, malice, or insult, the jury may go beyond the rule of mere compensation of the party aggrieved, and award exemplary or punitive damages. The rule was distinctly recognized in early Ohio cases. As far back as 1859, Brinkerhoff, Ch. J., stated that the rule was considered established and elementary in Ohio jurisprudence. The rule is deemed so firmly settled as to require alteration to come from the legislature rather than from the judiciary. And it is said by Brinkerhoff, Ch. J., that the courts are not prepared to recommend any such alteration. Their position is that, in cases of this kind, twelve intelligent and impartial men, acting under oath, and subject, in a proper case, to the control of the court, are not likely to do any great wrong, and that the power which this rule confers upon a jury may, in practice, operate as a salutary restraint upon the evil passions of bad men. Punitive damages also are recoverable in many cases of actions ex delicto where the defendant's conduct shows a wanton or reckless disregard of the legal rights of others, even where the gist of the cause of action is negligence, although, as a general rule, exemplary damages are not recoverable in negligence actions, and with very few exceptions exemplary damages are not allowed in contract actions."
In Section 138, ibid., it is said:
"In some jurisdictions the theory is that exemplary damages are awarded by way of compensation, though they incidentally operate by way of punishment; but in Ohio, in accord with the weight of authority, punitive damages are allowed as a punishment to the offender, and as an example, to deter others from offending in a like manner. As stated in an early case, exemplary damages not only look to compensating the plaintiff for actual loss, but to punish the defendant, and as an example to deter others from committing the like offense. Such damages are given as smart money in the way of pecuniary punishment. The allowance of such damages rests not upon the ground of abstract or theoretical justice, but upon the ground of public policy, a policy which seeks to promote the public safety, to punish through the medium of a civil proceeding a fraudulent, malicious, insulting, or wilful wrongdoer, and to hold him up as a warning example to others, to deter them from offending in a like manner."
In 25 Corpus Juris Secundum, 708, Section 117, it is said:
" Origin of doctrine. According to some authorities the practice of allowing exemplary damages had its origin in cases involving elements of recovery incapable of pecuniary estimate, and hence, of necessity, peculiarly within the discretion of the jury. Another theory advanced has been that the doctrine had its origin and foundation in a failure to recognize as items of recovery for which compensation could be given elements which should have been so regarded. Whichever theory may be correct the right of a jury in certain cases to award exemplary damages has been said to be as old as the right of trial by jury itself, and, while objections have been advanced, the doctrine is now one of general acceptation."
In Section 120, ibid. (page 716), it is said:
"As a general rule exemplary damages are not recoverable in actions for the breach of contracts, irrespective of the motive on the part of defendant which prompted the breach. No more can be recovered as damages than will fully compensate the party injured. * * *
"Where the acts constituting a breach of contract also amount to a cause of action in tort, there may be a recovery of exemplary damages upon proper allegations and proof. As sometimes stated, exemplary damages are recoverable for a tort committed in connection with, but independently of, the breach of contract, where the essentials of an award of such damages are otherwise present, the allowance of such damages being for the tort and not for the breach of contract. In order to permit a recovery, however, the breach must be attended by some intentional wrong, insult, abuse, or gross negligence which amounts to an independent tort."
In Section 125, ibid. (page 734), it is said:
"It may be stated as a general rule that the principal or master may be held liable for exemplary damages where the act complained of was authorized or subsequently adopted by him, or where he participated in and ratified the wrongful act of the agent or servant."
In 46 American Jurisprudence, 910, Section 781, it is said:
"In accordance with the right to bring an action of deceit generally, a buyer who has been induced by the fraud of the seller to purchase personal property may ordinarily maintain an action of, or in the nature of, deceit to recover damages resulting from the fraud."
In 24 American Jurisprudence, 21, Section 200, it is said:
"A person who has been injured by the fraud of another or others, by either a party or parties to a transaction or a third party or third parties committing fraudulent acts involving or bringing about the negotiation of a transaction, such transaction usually but not necessarily involving business or commercial dealings, may maintain an action at law in tort to recover damages for the injury received from the fraud and deceit perpetrated by such other or others. The foundation of the action is not contract but tort. Such action was at common law, and is in the states where common-law pleading still is employed, in the nature of an action on the case, and under common-law pleading or under the code form of action is denominated as the 'action of deceit.' The tort action for the redress of fraud is of ancient origin, and is fully established by the authorities both in England and America."
In 37 Corpus Juris Secundum, 352, Section 63, it is said:
"An action of deceit to recover damages for fraud inducing the making of a contract is not based on the contract but on the tort, and the consummation of the contract does not shield the wrongdoer or preclude recovery of damages for the fraud."
In 13 Ohio Jurisprudence, 238, Section 139, it is said:
"By no means does every legal wrong entitle the injured party to recover exemplary damages; by far the larger portion of actionable wrongs form no basis whatever for the recovery of such damages. The Ohio rule allowing a recovery of punitive or exemplary damages is, as the statement of the rule implies, predicated upon the circumstance that the wrong complained of involves ingredients of fraud, malice, or insult, or a wanton and reckless disregard of the plaintiff's rights. Exemplary damages are a punishment, and should only attach to a wrongful intention, and it is frequently stated broadly that malice or insult is a necessary element in order to warrant a recovery thereof. That such damages are allowable only in cases of that kind is settled beyond dispute. As pointed out in an early case, the principle of permitting damages beyond naked compensation is for example, and the punishment of the guilty party for the wicked, corrupt, and malignant motive and design which prompted him to the wrongful act."
"A principal, therefore, though, of course, liable to make compensation for injuries done by his agent within the scope of his employment, cannot be held liable for exemplary or punitive damages merely by reason of wanton, oppressive, or malicious intent on the part of the agent. In other words, where that which is tantamount to punitive or exemplary damages is to be recovered by reason of the willful character of the wrongful act, proof of this knowledge and willfulness on the part of the party producing the wrong must be made. The employer cannot be punished for the personal guilt of his servant or agent, unless the employer authorized, ratified, or participated in the wrongdoing."
The answer admits and the testimony shows that the defendant advertised in the daily newspapers and on the radio that he handled only quality merchandise. The record shows the following questions to and answers by the defendant on cross-examination:
"Q. Do you recall her being in your store purchasing a watch? A. No, I recall her having been in the store to complain about the watch after having purchased it.
"Q. You were present, were you not, on several occasions when she was there? A. On at least one."
The plaintiff testified:
"Q. Was Mr. Greenwald present in the store? A. Yes, he was, and he was there when the watch was taken back. He stood and listened and never said a word.
"Q. Was Mr. Greenwald in hearing of your conversation? A. Oh, Yes, he came over and listened but he never said anything."
The witness, Lolita Wendling, testified:
"Q. Was Mr. Greenwald present on that occasion? A. He was present in the background.
"Q. Was he in hearing distance of your conversation? A. He was.
"Q. Will you tell the ladies and gentlemen of the jury just what conversation occurred at that time between you, Mrs. Saberton and the man in the Greenwald's store? A. Well, when we went in we explained to him that we knew the watch was not worth anything and that we had it to a watchmaker and would they give us the money back. Of course he said no, so we said, 'Will you give us another watch?' So he said no again, and we said" we can't use this. After all we paid for it it is no good, We brought it back and it is not worth anything. What do you intend to do about it?' He said 'nothing, you can leave it here again.' There was no point in doing that."
While there is no evidence that the defendant was in the store at the time of the purchase there is evidence, as well as an admission in the answer, that he claimed to handle only quality merchandise. There is evidence in the record that the watch which was sold the plaintiff was not quality merchandise. There is evidence in the record from which it may be inferred that the defendant ratified the actions of his store manager in respect of this sale.
In 15 American Jurisprudence, 731, Section 289, it is said:
"In jurisdictions which limit the recovery of exemplary or punitive damages from an employer for acts committed by his employee to cases where he authorized or ratified the employee's act, the necessary authorization or ratification may be evidenced either by an express order to do the act or an express approval of its commission, or it may be implied from the acts or conduct of the principal, and in this regard it has been said that slight acts of ratification will be sufficient to support a claim for exemplary damages against the employer. Ratification, however, is to be inferred only from acts which evince an intention to ratify, and not from acts which may be readily and satisfactorily explained without involving intention to ratify. On general principles, to authorize ratification it must appear that the employer had knowledge of the facts and circumstances attending the transaction or, at least, an intention to take upon himself without inquiry the risk of any improper acts of his agent. The fact that an employer retains an employee, after knowledge of the latter's wilful and malicious conduct, tends to prove ratification of the employee's act sufficient to support a verdict against the employer for exemplary damages. Some courts apparently take the view that the subsequent retention or promotion of the servant guilty of the wrong is of itself sufficient evidence of ratification. Most courts, however, do not regard the fact that the servant was continued in the master's employment, standing alone, as sufficient to establish ratification of the censurable features of his conduct. On the other hand, the fact that the master discharged the servant on learning of his act may show his disapproval of the servant's conduct and relieve him from liability for exemplary damages."
The record shows that the store manager who sold the watch to plaintiff was retained thereafter in the employment of defendant.
Summarizing, we are of the opinion that:
(a) Section 8453, General Code, permits, and Section 8449, General Code, does not forbid an action ex delicto against the seller of merchandise where the sale has been induced by fraud or misrepresentation.
(b) The petition in the instant case states facts which show a cause of action sounding in tort.
(c) Such petition seeks damages both actual and punitive.
(d) A jury would have been justified in finding ingredients of fraud, malice and insult from the evidence introduced in this case.
(e) There was evidence from which the jury would have been justified in finding that defendant below (appellee here) ratified the actionable conduct of his employee.
(f) The refusal of the trial court to charge that punitive damages might be recovered under the pleadings and evidence in this case was prejudicial error.
Therefore, the judgment of the Court of Appeals should be and hereby is reversed and the cause is remanded for further proceedings according to law.
WEYGANDT, C.J., ZIMMERMAN and BELL, JJ., concur.
WILLIAMS, MATTIHAS and HART, JJ., dissent.
In my view, there is no basis for the allowance of punitive or exemplary damages in this case, and the trial court did not commit error in refusing to submit this issue to the jury.
There is basis for good argument against the assessment of punitive damages in a civil action, in any event. The law should not take from a defendant and give to a plaintiff more than justice requires. The allowance of punitive damages in civil actions has no logical basis in law. A plaintiff in a civil action is entitled to be made whole for injury to person or property, including direct and proximate loss, physical pain and suffering if any inflicted, medical and hospital expenses of any incurred, mental anguish and wounded sensibilities. On what theory of justice is a plaintiff entitled to punitive damages in addition, awarded as a penalty against the defendant?
Penalties are an adjunct of the criminal law. In this state all crimes are defined and made such by legislative enactment. In criminal procedure a jury has no authority to consider or assess a penalty. That is the province of the court, and the statute carefully fixes the limit of the penalty beyond which the court cannot go. A defendant cannot be compelled to testify against himself, and he cannot be made subject to any penalty unless he is convicted of the crime by evidence of guilt beyond a reasonable doubt. In the consideration of punitive damages in a civil action, the defendant may be compelled to testify upon the call of the plaintiff; punitive damages may be assessed on a preponderance of the evidence; and the jury, not the court, without any legislative sanction or limitation as to the amount of penalty, may make the assessment at its sole discretion. In the administration of criminal justice, penalties, when assessed, are paid to the state. On what theory of justice should penalties be assessed in a civil action and, if assessed, paid to the plaintiff instead of the state? See 20 American Law Register (N.S.), 570.
The Supreme Court of Washington, in the case of the Spokane Truck Dray Co. v. Hoefer, 2 Wn. 45, 55, 25 P. 1072, 11 L.R.A., 689, 26 Am. St. Rep., 842, in discussing the subject of punitive damages, quoted from the case of Murphy v. Hobbs, 7 Colo. 541, 5 P. 119, as follows:
" 'The reflecting lawyer is naturally curious to account for this "heresy" or "deformity," as it has been termed. Able and searching investigations made by both jurists and writers disclose the following facts concerning it, viz.: That it was entirely unknown to the civil law; that it never obtained a foothold in Scotland; that it finds no real sanction in the writings of Blackstone, Hammond, Comyns, or Rutherford; that it was not recognized in the earlier English cases; that the Supreme Courts of New Hampshire, Massachusetts, Indiana, Iowa, Nebraska, Michigan and Georgia have rejected it in whole or in part; that of late other states have falteringly retained it because committed so to do; that a few years ago it was correctly said, "At last accounts the Court of Queen's Bench was still sitting hopelessly involved in the meshes of what Mr. Chief Justice Quain declared to be 'utterly inconsistent propositions' "; and that the rule is comparatively modern, resulting in all probability from a misconception of impassioned language and inaccurate expressions used by judges in some of the earlier English cases.' "
In the case of Brown v. Swineford, 44 Wis. 282, 289, 28 Am.Rep., 582, involving an assault and battery of which the defendant had already been convicted and fined in a criminal action, the plaintiff, as a witness in the civil action, was permitted to make an indecent exposure of his person before the jury. The court, after censuring the trial court for permitting such an exhibition, said:
"The argument and consideration of this case have gone to confirm the present members of this court in their disapprobation of the rule of exemplary damages which they have inherited. But they * * * do not feel at liberty to change or modify the rule at so late a day, against the general current of authority elsewhere. * * * if a change should now be made, it is with the Legislature."
The Supreme Court of Indiana, in revolt against the award of punitive damages, has repeatedly held that only compensatory damages can be awarded where the wrong complained of is punishable under the criminal statutes. The theory adopted by the court in so holding is that the constitutional prohibition against twice putting in jeopardy means that no person shall be made liable to be punished twice for the same offense; and that when a state adopts a criminal statute and annexes penalties it destroys at once all other or further penal liability, even though no criminal penalty has yet been assessed. White v. Sun Publishing Co., 164 Ind. 426, 73 N.E. 890; Wabash Printing Publishing Co. v. Crumrine, 123 Ind. 89, 21 N.E. 904; Nossaman v. Rickert, 18 Ind. 350.
In other states, not following this rule, a money penalty in many instances has been twice assessed against the same defendant. Cook v. Ellis, 6 Hill., 466, 41 Am. Dec., 757. This matter is well illustrated in the case of Roberts v. Mason, 10 Ohio St. 277. The defendant there had been indicted for stabbing with intent to kill. After criminal trial and disagreement of the jury, he had pleaded guilty to assault and battery whereupon he "had been sentenced to a fine of $100, and imprisonment for six days in the dungeon of the county jail, and to pay the costs of the prosecution, amounting to $557.57." In the civil action for damages the defendant asked the court to charge the jury that since he had already been punished on the criminal side of the court for the same offense, the jury could not, in the civil action, give plaintiff anything more than compensatory damages and could not increase that amount by including anything for punitive damages. The court refused the request and charged the jury that if the conduct of the defendant "was the result of settled hatred against the plaintiff, or of a cruel and malignant disposition," the jury could go beyond compensation and "may add any sum you may think reasonable by way of punishment of the defendant, and of example to the public." But, said the court, "in adding any sum to your verdict by way of punishment and example, it will be proper for you to consider the punishment, fine and costs adjudged against the defendant in the criminal prosecution." After the court charged the jury, as above indicated, the jury inquired of the court whether they were to consider plaintiff's lawyer's fees as compensatory damages, whereupon the court replied that the jury could allow reasonable attorney fees as part of plaintiff's actual or compensatory damages. The jury then awarded the plaintiff $700, and the verdict and judgment on review were sustained by this court. This court in that case expressed the view that it was questionable whether the evidence of the criminal conviction was not improper, we may suppose, on the theory that it had a tendency to reduce the amount of the punitive damages which the jury might award as the personal right of the plaintiff. See 6 Central Law Journal, 74.
Moreover, in cases where exemplary damages are recoverable, the court may permit the introduction of evidence as to the wealth of the defendant and his ability to pay such damages. The reason assigned for this practice is that it aids the jury in determining what amount would constitute punishment. The weak theory is that a penalty which would be sufficient to reform a poor man would not tend to rectify the misconduct of a rich man, and therefore the richer the defendant the larger the punitive damage award should be. If this is insufficient to give the jury the proper cue to "smart" the defendant, the Supreme Court of Illinois ( Schmitt v. Kurrus, 234 Ill. 578, 85 N.E. 261), holds that the impecunious position of the plaintiff may be shown. It was shown in the last cited named case that plaintiff "was a poor man, having nothing but a little household furniture, and owing considerable debts." What more should be needed to poison and prejudice a jury? The fact is that the whole scheme of punitive damages lies in the field of passion and prejudice.
There are other respects in which the doctrine of punitive damages serves to work oppression and injustice. In cases where joint or concurrent tort-feasors are joined in a single action, a joint judgment, of course, may be taken against all, including aggregate punitive damages in a proper case to punish all the defendants. The accessibility of the wealth of any defendant will probably determine against whom the judgment creditor chooses to levy execution. The one defendant caught in the levy, albeit he may be the least culpable, may be obliged to pay the entire judgment including the punitive damages assessed against his more culpable tort-feasors, and since they are joint tort-feasors he may claim no contribution or reimbursement from them.
Another instance where injustice may occur through the award of punitive damages is in cases where two persons may each have a separate cause of action against a third person arising out of the same tortious conduct of the latter. Each may bring a separate action and each recover full punitive damages from the same defendant. This is illustrated by the case of Luther v. Shaw, 157 Wis. 231, 147 N.W. 17, wherein the defendant was charged with seduction and breach of promise to marry. He was sued by the young lady for breach of promise in which suit she recovered both compensatory and punitive damages. He was also sued by her father, in an independent action in which the latter recovered both kinds of damages ( Luther v. Shaw, 157 Wis. 234, 147 N.W. 18).
The foregoing observations are the basis of my belief that the application of the doctrine of punitive damages should not be extended. It is likewise my belief that the decision in the instant case clearly extends and broadens the field within which punitive damages may be awarded.
This court has, over the years, recognized the propriety of submitting to a jury the question of the assessment of punitive damages in certain tort cases where the defendant's wrongdoing has been intentional and deliberate, or has the character of outrage frequently associated with crime. Not all tort actions are of such A character as to warrant the assessment of punitive damages. Generally the application of the doctrine is confined to cases where there is involved actual malice, interference with marital relations, or wanton personal injury, such as in cases of seduction, assault and battery, false imprisonment, or wrongful expulsion from public passenger vehicles or places of public entertainment.
However, the instant action, as I view it, is one for the rescission of a contract of sale of merchandise on the ground of misrepresentation of the quality of goods sold. The petition does not make any case for punitive damages. The plaintiff alleges that the defendant, through his agents, represented that a certain wrist watch which she purchased from him was a new watch whereas it was not new and would not give performance as such; that she later learned that it was a repaired or rebuilt watch, whereupon she offered to return the watch and demanded the return of her money. The plaintiff then alleges that she is "entitled to the recovery of punitive damages from the defendant." There are no allegations of operative facts furnishing a basis for the recovery of punitive damages, and the concluding statement just quoted as to damages is a pure legal conclusion and, in effect, is a part of the prayer of her petition.
The petition makes out a cause of action the pattern of which calls for the specific remedy provided for under paragraph one, subparagraph (d) of Section 8449, General Code.
Such provision reads:
"When there is a breach of warranty by the seller, the buyer may, at his election — * * *
"(d.) Rescind the contract to sell or the sale and refuse to receive the goods, or if the goods have already been received, return them or offer to return them to the seller and recover the price or any part thereof which has been paid."
The same section of the General Code then provides:
"When the buyer has claimed and been granted a remedy in any one of these ways, no other remedy therefor can be granted."
The plaintiff, having sought rescission of contract, which remedy alone is warranted by the allegations of her petition, Section 8453, General Code, has no application.
I claim that this is an action sounding in contract and that it is governed by the authority of Ketcham v. Miller, 104 Ohio St. 372, 136 N.E. 145, in which case this court held that "punitive damages are not recoverable in an action for breach of contract." Reference to the allegations of the amended petition in that case will indicate that the plaintiff made strenuous effort to convert the breach of a contract of lease into a malicious tort, but this court held that "the gravamen of the complaint is the breach of the contract, and the action sounds in contract, and the averment that the breach was unlawful, wilful, wanton and malicious does not change the action from one ex contractu to one ex delicto."
The Ketcham case, decided in 1922, is in line with modern authority throughout the country and should not be modified or weakened. We should follow it as authority in this case rather than the case of Roberts v. Mason, supra, a clear tort case of assault and battery, decided more than 85 years ago.
A case which seems to me to be directly in point is the case of Cable v. Bowlus, 21 C. C., 53, 11 C. D., 526, affirmed by this court without opinion in 1903 ( Bowlus v. Cable, 69 Ohio St. 563, 70 N.E. 1115). In that case an action was brought by the plaintiff to recover damages for misrepresentation and fraud in a contract to purchase mining stock. It was claimed that the president of the mining company represented to the plaintiff, as a purchaser of stock, that the title to the mine was good, and that there was no indebtedness upon the property, whereas the company had taken title under a title bond upon which it was to pay $60,000 and upon which it had paid but $15,000. Six months later, the payments, not being made, the title was forfeited. The plaintiff asked that he recover both compensatory and punitive damages. A charge requested by the plaintiff permitting a recovery of punitive damages was refused by the trial court. The Circuit Court of the Sixth District held there was no error in the refusal and the judgment was affirmed by this court.
15 American Jurisprudence, 709, Section 273, says:
"According to the overwhelming weight of authority, exemplary damages are not recoverable in actions for breach of contract, although there are dicta and intimations in some of the cases to the contrary. This rule does not obtain, however, in those exceptional cases where the breach amounts to an independent, willful tort, in which event exemplary damages may be recovered under proper allegations of malice, wantonness, or oppression — as, for example, in actions for breach of marriage contracts." (Italics mine.) See annotation 84 A.L.R., 1345, 1346, and cases reviewed, including Ketcham v. Miller, supra.
25 Corpus Juris Secundum, 716, Section 120, says:
"As a general rule exemplary damages are not recoverable in actions for the breach of contracts, irrespective of the motive on the part of defendant which prompted the breach. No more can be recovered as damages than will fully compensate the party injured."
There is another reason why no error intervened in this case with the result that the judgment of the Court of Appeals should be affirmed. The principal ground of complaint of the plaintiff in the instant case is that the trial court refused to give to the jury before argument her special request to charge, which was as follows:
"If from all the evidence you find that the plaintiff in purchasing the wrist watch from the defendant relied on the representations of the defendant, his agents, or servants, that it was a new watch and that said representations were false and were known by the defendant, his agents or servants, to be false; and that the conduct of the defendant, his agents or servants, involved ingredients of fraud which constituted a wanton or reckless disregard of the rights of the plaintiff, and that relying on said false and fraudulent representations the plaintiff was damaged; then I charge you that in addition to her actual damages the plaintiff would be entitled to recover what is known in law as punitive or exemplary damages. * * *
"If from all the evidence you find that the plaintiff had no knowledge of watches and relied on the representation of the defendant, his agents or servants, and that said representations were false, and known by them to be false, and if you further find from all the evidence that said conduct of the defendant or his agents or servants toward the plaintiff involved ingredients of malice, fraud or insult, or wanton disregard of the rights of the plaintiff, and that relying on said false and fraudulent representations the plaintiff was damaged, then I charge you that in addition to her actual damages, exemplary damages would be allowable at your hands to the plaintiff." (Italics mine.)
The trial court was justified in refusing to Submit this special request to charge to the jury, not only because it presented the issue of exemplary damages, which in my view was not in the case either by pleadings or evidence, but because the request to charge was otherwise incomplete and erroneous. It will be noted that it entirely omitted from the statement of facts necessary to be found by the jury to warrant a recovery by the plaintiff, the essential fact that the claimed false representations were not only relied upon by the plaintiff but that they were actually made by the defendant. In other words, the requested charge assumed that the false representations were made by the defendant, an issuable fact which was in sharp controversy.
The requested charge was defective in another respect. It says that if the jury found certain facts to exist, then "in addition to her actual damages the plaintiff would be entitled to recover what is known in law as punitive or exemplary damages." (Italics mine.) The request to charge made punitive damages recoverable as a matter of right. This is erroneous. Punitive damages, in any event, must be left to the discretion of the jury and are never recoverable by the plaintiff as a matter of right. 15 American Jurisprudence, 705, Section 269, and cases cited.
Exemplary damages are not favored in the law and the awarding of them should be exercised with great caution. Under many circumstances the submission of the issue of punitive damages furnishes an opportunity for the exercise of passion and prejudice upon the part of a jury, resulting in an unjust award. In this case the plaintiff recovered full compensatory damages in the sum of $38.15. By successive appeals she has carried on this litigation for the sole purpose of securing an award of punitive damages. We are now remanding the case to the trial court to begin the process all over again and to require the trial court to submit to another jury the question of punitive damages and to advise it that the plaintiff may recover such damages as it may deem proper, not however in excess of the sum of $5,000, the amount prayed for in the petition which is more than one hundred and twenty-eight times the amount of the actual damage suffered. To say the least, the course of this litigation is unfortunate.
In my opinion, the instant case presents no justification for the award of exemplary damages, and the judgment should be affirmed.