CHAPTER XIII.

TORTS AND CRIMES.

§ 80. History of the law. Upon principle, every wrongful act of a corporation must be ultra vires; and such was once the law. At a comparatively recent period, however, the departure from the theory began, and it has continued until it may now be said that, with some limitations, a corporation is liable for the torts of its servants and agents, where under similar circumstances, a natural person, being the master or the principal, would be liable.

The present law has been reached by progressive stages. The first modification of the rule of complete immunity was in cases where the wrongful transaction had been authorized by writing under the common seal. Then, liability was extended to the case of negligent performance of authorized acts; then, to the case of wrongs committed with force and violence; and finally, it became possible to hold a corporation responsible for wrongs involving mental states,—such as malice, intent, guilty knowledge and the like. In Medcalfe v. Insurance Co., 45 Md. 198, one of the questions presented was whether the appellee could be held in an action for malicious prosecution. The court found it unnecessary to decide the question, but in the subsequent case of Carter v. Howe Machine Co., 51 Md. 290, the same point was squarely presented and determined in the affirmative

as follows: "It would seem now to be clear, whatever may have been the former state of judicial opinion upon the subject, that corporations are liable for all acts, whether wilful or malicious, of their agents or servants done in the course of their employment. Hence, it has been repeatedly decided that corporations are liable in actions for assault and battery and false imprisonment, committed by their servants and for false representation, and for libel as well as for all consequences of the negligent or unskillful acts of their servants, within the scope and course of their employment; and it wou'd appear that actions for such injuries may be maintained against corporations aggregate in any case where, under similar circumstances, such actions could be sustained against individuals for the acts of their servants."1

§ 81. Application of the modern rule. To hold a natural person for wrongs committed by his servant or agent, you must show that the act was expressly authorized; or that it was subsequently ratified and adopted; or that it was committed within the scope and course of the employment. The same requirements exist where you are seeking to hold a corporation; but in the latter case there is more difficulty in determining whether or not a particular act meets the third requirement; and the tendency of the courts is to draw

1 One of the still debatable questions is whether a corporation may be sued for slander. The cases are collected in notes to 2 Wilgus, Corp. 1255; 9 L. R. A. (N. S.) 929; 21 L. R. A. (N. S.) 873. In Supreme Lodge v. Unverzagt, 76 Md. 104, the appellant was complaining of slanderous allegations made against it in a suit instituted for its dissolution. The court said "The plaintiff being a corporation, has no personal character to be injured by the alleged slanderous allegations and it is not made to appear in what manner such allegations affected its property."

the line of apparent authority rather closely. In Tolchester Co. v. Steinmeier, 72 Md. 313, the superintendent of the appellant had ordered the arrest of the appellee, and the arrest was made by a special policeman commissioned and employed for the protection of the corporate property and the preservation of order thereon,-the salary of the officer being paid by the appellant. In a suit for false imprisonment, the court held that the appellant was not responsible because the policeman was not its servant and the superintendent was not acting within the scope and limits of his employment. In Turnpike Co. v. Green, 86 Md. 161, a gatekeeper of the appellant had sworn out a warrant for the arrest of the appellee on his refusal to pay toll. It was the duty of the toll gatherer, under the charter, to stop any person from passing through the gate until the toll was paid; and a statute passed for the benefit of the appellant, authorized the arrest of any person who should attempt to defraud it of tolls; moreover, the gate-keeper, before swearing out the warrant, consulted with the attorney of the company and was referred to the statute. It was nevertheless held that the company was not responsible because the arrest was not within the scope of the employment.1

§ 82. Torts growing out of ultra vires transactions. Where a wrongful act is committed in an ultra vires transaction, there is some diversity of opinion as to the liability of the corporation therefor. In this country the weight of authority, inclining to convenience rather than logic, favors

1 See also, Railroad Co. v. Brewer, 78 Md. 401; and compare Boyce v. Coxen, 92 Md. 366. More recent cases are: Beiswanger v. American Bonding Co., 98 Md. 287; Deck v. B. & O. R. R. Co., 100 Md. 168; and Railroad Co. v. Stumpo, 112 Md. 579,-in which the earlier cases are reviewed.

the view which asserts the liability.

In Weckler v. Bank,

42 Md. 581 (1875), there is an apparent exception to the general rule. The appellee was sued in an action of deceit, for false representations made by its teller to the appellant in the sale of certain railroad bonds. The court said: "We are, therefore, clearly of opinion that this business of selling bonds on commission, is not within the scope of the powers of the corporation, and the bank could not, under any circumstances, carry it on; and being thus beyond its corporate powers, the defense of ultra vires is open to the appellee. And it follows from this that the bank is not responsible for any false representations made by its teller to the appellant, by which she was induced to purchase the bonds in question." Here, however, the tort was incidental to the contract. In Bank v. Petrie, 189 U. S. 425, Weckler v. Bank is distinguished and apparently approved on the ground that "An action for damages caused by fraudulent representations which induced a contract affirms the contract and relies upon it, and therefore may be subject to the same defenses as an action brought directly on the contract."2

1 See Bank v. Graham, 100 U. S. 699; 2 Machen, Corporations, sec. 1072. For the English view, see Pollock on Contracts 121. Where the undertaking of a municipal corporation is wholly ultra vires. it is not liable for a tort therein committed by its agents. Horn v. Baltimore, 30 Md. 218; 25 Harvard Law Rev., 648.

2 In Bank v. Boyd, 44 Md. 60 (1875), the appellant was held for negligence as a bailee on the ground that the bailment was not gratuitous, and therefore not ultra vires. In Bank v. Graham, 100 U. S. 699 (1880), it is said that gross negligence on the part of a gratuitous bailee is a tort, and the doctrine of ultra vires has no application.

§ 83. The measure of damages. There is also a diversity of opinion upon the question whether punitive damages may be recovered from a corporation for the wrongs of its agents and servants not expressly authorized, but committed in the course of their employment. In R. R. Co. v. Prentice, 147 U. S. 101, the appellee had recovered a verdict of six thousand dollars in a suit against the appellant, for the wanton and aggravated misconduct of one of its conductors. The judgment was reversed on the ground that "a railroad corporation cannot be charged with punitive or exemplary damages for the illegal and oppressive conduct of a conductor toward a passenger." The contrary view, however, seems to be the prevailing one, and it is the law. of this state. In R. R. Co. v. Larkin, 47 Md. 155, it is said: "That the jury may be allowed to give exemplary or punitive damages against a railroad company, in an action by a passenger for illegal and violent expulsion from their train, is no longer an open question in this state.”

$ 84. The exemption of charitable and public corporations. The common law immunity from suit in tort survives in two cases.

First. Where the corporate funds are held not for profit but solely for charitable purposes; and where the corporation has exercised due care in the selection of its agents, it is not responsible for wrongs committed by them. In Perry v. House of Refuge, 63 Md. 20, the appellant had been assaulted by one of the officers of the appellee, which was a corporation instituted for charitable purposes. It

1 In Railroad Co. v. Harris, 122 U. S. 597, punitive damages were allowed on the ground that the vice-president of the railroad had participated in the tort.