Sanders v. Rowan

WILNER, Judge. Literature abounds with tales of look-alike people exchanging places, each wittingly or unwittingly posing as or simply being taken for the other. The results range from the farcical (The Comedy of Errors, Shakespeare) to the adventuresome (The Prince And The Pauper, Puddinhead Wilson, Twain) to the heroic (A Tale Of Two Cities, Dickens). This case presents a variation on the theme.

It involves not people, but horses; the result is neither farcical, nor adventuresome, nor heroic, but economic. Harland W. Sanders, appellant, is an experienced breeder and owner of thoroughbred horses. He started in the business in 1970; trading as Quality Hills Stables, he is licensed in eight States, including Maryland. He has had twenty or more horses in his stable at given times and in 1975, 1976, and 1977, ranked within the top fifteen stables nationally in terms of wins.

In 1976, Sanders acquired a thoroughbred stallion named Dare to Command; in 1977, he acquired another thoroughbred stallion named Large as Life. Except for a triangular white snip on the nose of Dare to Command, the two horses looked alike; they were both chestnut in color and were about the same size, although Sanders said that Dare to Command was more “robust.” The look-alikes were not alike in ability or value, however, and therein lie the seeds ⁴⁵ of this controversy. Dare to Command was the better performer and therefore the more valuable horse. 1 Sanders turned the two horses over to King T. Leather-bury, an experienced and licensed trainer, for the purpose of training and racing them, and both horses were, indeed, entered in a number of races. In June, 1977, Sanders sent both horses to Leatherbury’s farm for a rest; they remained there for three months.

In September, 1977, the two horses were shipped, together, to the Steele Farm in Kentucky, apparently for the purpose of selling them. In December, 1977, Sanders received an offer of $100,000 for Dare to Command, which he rejected. In February, 1978, Sanders directed that Dare to Command be returned to Maryland for further training and racing under Leatherbury’s care. Unfortunately, someone in Kentucky sent back Large as Life, rather than Dare to Command.

Notwithstanding that a routine comparison of the horse and the foal certificate that accompanied it would have revealed the error, Leatherbury failed to discover the switch. Later that month, Dare to Command, under the name of Large as Life, was sold to a Florida buyer for $25,000. Large as Life, meanwhile, parading as Dare to Command, was at Leatherbury’s farm. On May 27, 1978, Leatherbury, on Sanders’ behalf, entered Large as Life, sub nom Dare to Command, in the seventh race at Pimlico.

The horse was permitted to run, and finished sixth, twenty-three lengths behind the winner. On June 24, 1978, Leatherbury entered the horse, as Dare to Command, in the seventh race at Pimlico; he (the horse) again was permitted to run, and came in seventh, twenty lengths behind the winner. Sanders, laboring under the belief that the horse entered in these races was indeed Dare to Command, was understandably disappointed by these ⁴⁶ dismal results; he concluded that the horse was not worth what he had initially thought. In September, 1978, still in the belief that the horse was Dare to Command, he sold it for $35,000.

Some time in 1979, the error was discovered. The respective buyers exchanged the horses, so that each ended up with the right horse, and Sanders looked around for someone to sue. For some reason, he neglected the obvious targets — Leatherbury and whoever put the wrong horse in the van in. Kentucky — and sued instead James Joseph Rowan and the owner of Pimlico Race Course, The Maryland Jockey Club, Inc. (hereafter Pimlico).

Rowan was employed by Pimlico as an “identifier.” Under regulations promulgated by the Maryland Racing Commission, a horse may not be permitted to start a ra^ce unless it has been “fully identified.” COMAR 09.10.01.17K. This identification is made by the “identifier,” an employee of the track. Before a race, the trainers or their assistants bring the horses entered in the race to the paddock area to be examined by the identifier and saddled. The identifier, armed with the foal certificates for those horses, checks each horse.

He does what Leatherbury could have done in February; he compares the markings on the horse and a tattoo on the horse’s lip against the markings and tattoo listed on the foal certificate. 2 If the markings or tattoo do not match those shown on the foal certificate, the identifier immediately notifies the racing stewards and the horse is scratched. The theory of Sanders’ action was that Rowan, the identifier on May 27 and June 24, 1978, was negligent in failing to note that the horse entered by Leatherbury on those days was not, in fact, Dare to Command and thus in allowing Large as Life, a poorer racehorse, to run under the name of Dare to Command. Rowan should have reasonably foreseen, averred Sanders, that the proximate result of his negligence would be a loss in Dare to Command’s valué as a ⁴⁷ racing and breeding prospect. Pimlico, of course, was sued on the doctrine of respondeat superior; as Rowan’s employer, it was liable for his negligence.

Rowan and Pimlico answered Sanders’ declaration and filed third-party claims against Leatherbury. Their basic position was that Leatherbury was the real culprit in the matter in that (1) on both occasions, he brought the wrong horse to the paddock, and (2) even after the two races — during the period from June 24 to the time the horse was sold in September — he should have discovered the switch. Had Leatherbury exercised due care in either situation, they claimed, the misimpression under which Sanders was laboring would either have been avoided or corrected, and the loss would not have occurred. As Leatherbury was Sanders’ agent, they urged, his negligence is imputable to Sanders, thereby making Sanders guilty of contributory negligence in the matter.

In any event, even if Leatherbury’s negligence were not imputable to Sanders, Leatherbury, as the primary negligent actor, would be liable to them for indemnification. All of this was submitted to a jury in the Circuit Court for Baltimore City, on issues. The jury answered the issues thusly: “1. Was James J. Rowan negligent on 5/27/78 and 6/24/78 in identifying ‘Large as Life’ as ‘Dare to Command’?

S Yes _No (a) If your answer is ‘Yes’, was that negligence a cause of the reduction in value of ‘Dare to Command’ complained of by the plaintiff, Harland W. Sanders? _L_Yes _No 2. Was King T. Leatherbury negligent in failing to discover the entry of ‘Large as Life’ instead of ‘Dare to Command’ in the Pimlico races on 5/ 27/78 and 6/24/78? Yes _No (a) If your answer is ‘Yes’, was that negligence a cause of the reduction in value of ‘Dare to Command’ complained of by the plaintiff, Harland W. Sanders? _¿_Yes _No (b) If your answer to both Issues 2 and 2(a) is ‘Yes’, was Mr. Leatherbury then acting as an agent for Mr. Sanders subject to the control and direction of Mr. Sanders? No Yes ⁴⁸ 3.

Was Mr. Sanders negligent in allowing ‘Large as Life’ to be entered in the Pimlico races of 5/27/78 and 6/24/78 under the name of ‘Dare to Command’? _Yes / No (a) If your answer is ‘Yes’, was that negligence a cause of the reduction in value of ‘Dare to Command’ complained of by Mr. Sanders? -Yes _No 4. Was Mr. Sanders or any agent of his acting under his direction and control negligent in failing to discover the mistaken entry of ‘Large as Life’ instead of ‘Dare to Command’ in the Pimlico races of 5/27/78 and 6/24/78 before ‘Dare to Command’ was sold in September of 1978? .. Yes _No (a) If your answer is ‘Yes’, was that negligence a cause of the reduction in value of ‘Dare to Command’ complained of by Mr. Sanders? Yes _No” Upon these verdicts, judgment for the defendants Rowan and Pimlico was entered.

Sanders appeals, complaining that: (1) The court erred by not ruling as a matter of law that Leatherbury was an independent contractor and non-servant and that Sanders is not, therefore, vicariously liable for his negligence; (2) The court erred in its instruction concerning Sanders’ vicarious liability; and (3) The court erred in submitting to the jury the issue of whether Sanders or his agent was negligent between June 24, 1978 (the second entry at Pimlico) and the time he sold what he thought was Dare to Command. We find no error, and shall therefore affirm. Leatherbury’s Status In the present posture of the case, the issues of whether Leatherbury was negligent in bringing the wrong horse to the paddock and whether that negligence was a cause of the reduction in Dare to Command’s value are not before us. Those issues were decided by the jury (see Issues 2 and 2(a) above) and no complaint about them is made here.

Sanders seeks, rather, to escape the effect of the jury’s findings on ⁴⁹ those issues by contending that Leatherbury was neither his employee nor his agent, but was instead an independent contractor. Issue 2(b), he argues, should not have been submitted to the jury; as a matter of law the court should have answered it in the negative. Appellees’ initial response to this is that Sanders failed to object to the submission of that issue to the jury and has therefore waived his right to appellate review of it. The record shows that Sanders did not move for a directed verdict on the question of Leatherbury’s status as an employee or independent contractor, although he could have done so.

He clearly made no objection to the court’s submission of Issues 1, 1(a), 2, and 2(a) to the jury. He began to address the question of Leatherbury’s agency in the context of Issues 2(b), 3(a), and 4(a) when the court interrupted and declared that Leatherbury’s status vis a vis Sanders was an issue of fact for the jury to determine. Sanders responded that he was “not going to belabor it” but urged that, by virtue of COMAR 09.10.01.57P, making the trainer the “absolute insurer of the horse he has entered,” any agency relationship had been abrogated. We think that is enough to preserve the issue.

See Sergeant Co. v. Pickett, 283 Md. 284 , 388 A.2d 543 (1978). Our conclusion that the issue is preserved will avail Sanders naught, however, for we find the complaint to be without merit. The legal theories and distinctions sought to be applied by Sanders arise primarily from actions by third parties who have suffered some physical injury by reason of the tortious physical conduct of a person claimed to be the employee or agent of someone else. Redress is sought against the alleged employer/principal on the basis of vicarious liabili ty — respondeat superior — and the defense is interposed that the tortious actor was not that defendant’s employee or agent but was instead an independent contractor.

It is in that setting that the courts have generally identified these types of relationships — master/servant (or employ ⁵⁰ er/employee), principal/agent, and independent contractor — and drawn distinctions between and among them with respect to the asserted vicarious liability. What emerges from these cases is that the principal/agent relationship is a generic one — a genus, of which the master/servant relationship is a species. Thus, while all masters are principals and all servants are agents, there are some principals who are not masters and some agents who are not servants. Agents who are not servants are regarded as independent contractors.

See Restatement of Agency 2d, §§ 1, 2, 220; Comments d and e to § 1; Comment a to § 2; and Introductory Note to Title B of Chapter 7, preceding § 219; but compare 1 Mechem On Agency, 2d ed., §§ 36-40. The distinctions between servants and other (non-servant) agents have been stated in various ways. In Henkelmann v. Insurance Co., 180 Md. 591, 600 , 26 A.2d 418 (1942), the Court, speaking through Judge Delaplaine, stated that “[t]he distinction between an agent [who is not a servant] and a servant is that an agent [who is not a servant] is employed to represent his principal in reference to some contractual obligation with a third person, whereas a servant is employed to render service to, rather than for, the master.” In Globe Indemnity Co. v. Victill Corp., 208 Md. 573, 581 , 119 A.2d 423 (1956), again through Judge Delaplaine, the Court restated the distinction thusly: “An agent is a person who represents another in .contractual negotiations or transactions akin thereto. A servant is a person who is employed to perform personal services for another in his affairs, and who, in respect to his physical movements in the performance of the service, is subject to the other’s control or right of control.

Persons who render service but retain control over the manner of doing it are not servants.” ⁵¹ Compare Restatement 2d, Introductory Note to Chapter 7, Title B, which is generally consistent with the approach taken in Globe Indemnity Co. It is clear, from subsequent cases, that although there are several criteria for determining whether an agent is, or is not, a servant, the ultimate test is that of control. If the principal “controls or has the right to control the physical conduct of the other in the performance of the service,” the relationship is that of master/servant. Restatement 2d, § 2(1); B.P. Oil Corp. v. Mabe, 279 Md. 632 , 370 A.2d 554 (1977); L.M.T. Steel Products v. Peirson, 47 Md.App. 633 , 425 A.2d 242 (1981). If there is not that degree of control or right of control, the agent is not a servant, but an independent contractor.

These distinctions, however stated, have little meaning in themselves; they are important only in defining the duties flowing between the principal and the agent and the principal’s liability to third parties harmed by the tortious physical act of the agent. In the latter regard, the prevailing rule is that, where the relationship is that of master/servant, the master is answerable for the tort of the servant committed while acting in the scope of his employment; where the agent is not a servant, the principal is not liable for the agent’s negligent conduct “unless the act was done in the manner authorized or directed by the principal, or the result was one authorized or intended by the principal.” Henkelmann v. Insurance Co., supra, 180 Md. 591, 601 , 26 A.2d 418 ; Globe Indemnity Co. v. Victill Corp., supra, 208 Md. 573 , 119 A.2d 423 ; Cox v. Prince George’s County, 296 Md. 162 , 460 A.2d 1038 (1983). Those are the principles sought to be applied here by Sanders. Leatherbury, he argues, clearly was not his servant, either generally or as to the matter in question.

Leatherbury was in business for himself. He trained horses for several owners and was himself an owner. Sanders did not have or exercise the right to control the precise manner in which Leatherbury carried out his duties. Moreover, Sand ⁵² ers urges, Leatherbury did not act in a manner authorized or directed by him, and he did not authorize or intend the result that occurred.

Accordingly, he is not answerable for Leatherbury’s negligence. What Sanders overlooks is that the liability of a principal for the wrongful acts of his agent is not governed solely by the concepts emanating from these physical injury cases. There is a range of tortious conduct on the part of an agent that may bind the principal and subject him to liability even where the agent is not a servant, where the act was not done in the manner authorized or directed by the principal, and where the result was not authorized or intended by the principal. The principles expressed in Henkelmann, Globe Indemnity Co., and Cox , in other words, do not represent the whole law in this area, but only part of it.

We can see this, almost at a glance, by examining briefly Chapter 7 of the Restatement of Agency 2d, in particular Titles B, C, and D thereof. Title B deals specifically with the master/servant relationship; it defines a “servant” (§§ 220-227) and the concept of “scope of employment” (§§ 228-237), and it sets forth the kinds of tortious acts on the part of a servant for which a master may be held liable (§§ 219, 243-249). Title C is somewhat broader in scope. It describes the situations in which a principal’s liability for the torts of his agent is not dependent upon the agent being a servant.

That is the area we need to explore. . Section 250 introduces Title C with the general statement: “A principal is not liable