Edgar Frank Blanchard and Home Indemnity Company, his employer's workman's compensation insurer, instituted this suit for damages resulting from personal injuries suffered by Blanchard. A Volkswagen titled in the name of Russo Muffler Shop, a trade name under which the defendant Vincent Russo operated, was driven by the codefendant Sam Ogima and left parked on an incline unattended. The car became disengaged from the parked position and crushed Blanchard against another automobile. General Guaranty Insurance Company, Russo's insurer, was made a codefendant by amended petition and was made a third party defendant by Russo.
The trial court rendered judgment for the plaintiffs against Ogima, dismissed the suit against Russo and General Guaranty, and also dismissed the third party demand. The Court of Appeal, Fourth Circuit, affirmed the district court's judgment. See 200 So.2d 374. The trial court based its judgment upon a finding that Ogima was an independent contractor, and that Russo and his insurer were therefore not liable. The trial court did not consider the possible liability of General Guaranty under the omnibus clause of its insurance policy. The basis of the Court of Appeal's judgment was its finding that there was a relationship of principal and agent between Russo and Ogima, but that the agent Ogima had deviated from his agency, and that Russo was therefore not liable. The Court of Appeal further found that General Guaranty Insurance Company was not liabile for Ogima's negligence under the omnibus clause of its policy because coverage under the insurance policy did not extend to the particular vehicle involved.
We granted certiorari upon application of the plaintiffs, Blanchard and Home Indemnity. Since lengthy findings of fact by the trial court and lengthy findings of fact by the appellate court have been given in this case, we will briefly set forth only the accepted conclusions of fact necessary for this opinion.
Neither the negligence nor the liability of Ogima is in dispute. The Court of Appeal found that the defendant Ogima was "a kind of free-lance individual known in the trade as a `bird dog' salesman". This term is derived from such a salesman's practice of `flushing' out a prospect for the purchase of a certain type of car. The salesman then makes an arrangement with a car dealer to offer the car to the prospect, and is paid on commission or by retaining all of the purchase price above an agreed figure. Ogima also sold cars owned by Russo from a used-car lot in Gentilly. The Court of Appeal found that there was no joint venture between Russo and Ogima, and also that "Apparently Russo had little or no control over Ogima's sales contacts or methods". It also found that Ogima possessed and used the Volkswagen with Russo's permission and consent for the purpose of selling it. The legal conclusions by the Court of Appeal based upon its factual findings were:
It is apparent, then, that the pertinent articles under the title dealing with quasi-contracts and offenses and quasi-offenses, Article 2315 et seq., govern the instant case, and that the articles under the title "Of Mandate" are not applicable.
These provisions of our Code have their source in the Code Napoleon (1804), Articles 1382-1384. Article 1384 of that Code provides in part:
Planiol says of this article of the Code Napoleon:
The Anglo-American or common law doctrine comparable to our master-servant doctrine is labeled "respondeat superior".
In the Morton case the court then quoted Louisiana Civil Code Article 3000, which concerns the contractual obligation of principals and mandataries, and concluded:
That court then erroneously held the principal liable for the physical tort of his agent who was neither servant nor employee, for there were absent both the right to exercise physical control and the economic relationship necessary to establish master-servant status.
A master or employer is liable for the tortious conduct of a servant or employee which is within the scope of authority or employment, but a principal is not liable for the physical torts of a non-servant agent.
The comment under this section states the problem succinctly:
Although a servant may possess the qualities of an agent, all agents do not qualify as servants. The master-servant relationship cannot be equated with the principal-agent relationship. Employer-employee status may be included within the master-servant relation, but principal-agent status cannot unless the agent is also a servant. Neither jurisprudence nor modern commerce will allow us to define "servant" as one who does only physical acts. "Servant" must be interpreted as that particular kind of agent who has a very close economic relation to, and is subject to very close control by, the principal. A servant is one who offers his personal services for a price. He is an integral part of his employer's business and must submit to the control of his physical conduct as well as of his time.
The particular consideration for this court in the instant case is properly stated as follows:
The Court of Appeal found as a fact that Russo had little or no control over Ogima's sales contacts or methods, that Ogima was not an employee of Russo subject to the usual control and supervision, and that Ogima was in fact a freelance salesman of a type that would be compensated, if the car were sold, by a commission or by being allowed to keep all of the price above an agreed figure. We find that Russo did not have the right to control the physical movements of Ogima, or to require a specific allotment of time by Ogima for his benefit. This was a "one-shot" operation. There was no fixed salary or payment for services to be rendered; compensation was to depend upon results obtained and not services rendered for this one act. The only control which Russo exercised over Ogima was that he should obtain at least a fixed minimum sum for the car he sold. Russo could not determine to whom the sale was to be made, the time to be spent in effectuating the sale, or the place of sale, nor could he control any of the details of Ogima's physical conduct in effecting the sale. Ogima was an independent freelance agent or salesman for one sale. It must be concluded that Ogima was not the servant of Russo, and that Russo was therefore not liable for the physical negligence of Ogima.
There was a policy of insurance in the name of Vincent J. Russo d/b/a Russo's Muffler Shop at 1111 North Broad Street, New Orleans, Louisiana. It is contended that Ogima's liability extended to the insurer, General Guaranty Insurance Company, because of coverage under the policy's omnibus clause afforded those who operate the insured vehicles with permission. The policy issued to Russo contained the standard clause:
"Persons Insured * * * (3) With respect to the Automobile Hazard: (a) any person while using, with the permission of the named insured, an automobile to which the insurance applies under paragraph 1(a) or 2 of the Automobile Hazards, provided such person's actual operation or (if he is not operating) his other actual use thereof is within the scope of such permission * * *."
It cannot be seriously disputed that Ogima was such a person who might claim protection under this provision if the automobile he was operating or using at the time of the accident was covered by the policy. The policy is a standard garage liability policy, and the relevant provisions for a determination of coverage of the particular automobile here involved are:
"* * *
"* * *
"* * *."
Under these provisions of the policy, if the automobile was kept at the premises of Russo at 1111 North Broad Street and was either a car used in garage operations or a utility car, the car would come within the coverage of the policy. Both the trial court and the appellate court, however, found that the automobile was in fact located at 442 North Broad Street on a used-car lot owned by Russo and operated under the trade name Russo Motors. We accept and agree with this finding of fact by the courts below, and also agree with the conclusion reached by the Court of Appeal as to coverage:
Hence General Guaranty Insurance Company is not liable under the omnibus clause of this policy for the negligent acts of Ogima, since the automobile he was using with the permission of Russo was not within the coverage of the policy.
The judgments of the district court and the Court of Appeal are affirmed. Costs in this court are to be paid by the plaintiffs-relators.
McCALEB, J., recused.
On Application for Rehearing.
Applicant correctly urges that we were in error in stating: "That court [in Morton v. American Employers Insurance Co., 104 So.2d 189 (La.App. 2nd Cir. 1958)] then erroneously held the principal liable for the physical tort of his agent * * *."
The Morton case was used for a comparison of language and not for its holding. While finding a non-servant agent free from negligence and his principal therefore absolved from liability, the court used language indicating that it would have fixed personal liability upon the principal had the non-servant agent been negligent.
McCALEB, J., recused.