Brown v. MacPherson's, Inc.

Wright, J.

(dissenting)- — -The majority’s theory of recovery, whether based on common-law negligence or a statutory duty to warn of known dangers, must, in either instance, be underpinned by an agency relationship between the defendant State of Washington, and the state employees who, for purposes of the “hypothetical facts” under CR 12(b) (6) are deemed to have acted on behalf of the State of Washington. I do not dispute the majority’s analysis regarding the liability of one who undertakes to render aid, but who executes the rescue or warning in a negligent manner. Further, I fully agree, in principle, with the majority’s statement that

the State would be liable for its agents’ failure to warn appellants of their danger if they had assumed a duty to do so within the scope of their employment.

(Italics mine.) The last six words in the above statement are the most crucial in the opinion and it is that brief passage to which I dissent. I believe that under constitutional principles, this court is foreclosed from expanding the powers and jurisdiction of the Department of Motor Vehicles beyond the clear limitations imposed on that agency through the enabling statutes contained in RCW 18.85. The state employees were not within the scope of their employment and the assurances of Mr. Tonnon are no more than words spoken by one private citizen to another, i.e., the alleged misgüiding assurances to give warning cannot be viewed as being spoken on behalf of the State of Washington.

3 Sutherland Statutory Construction § 65.02 (4th ed. C. Sands 1974) states the rule regarding agency jurisdiction as follows at pages 149-50:

*304 Since administrative agencies are purely creatures of legislation without inherent or common-law powers, the general rule applied to statutes granting powers to them is that only those powers are granted which are conferred either expressly or by necessary implication.

(Footnotes omitted.)

In the instant action, the only state agency involved is the real estate division of the Department of Motor Vehicles. The director’s powers and duties are defined and limited by RCW 18.85.040, .085, and .090. The duty of the director is to regulate the activities of real estate brokers only. The means of regulating those persons is expressed in the above statutes and limited to the means of (a) conducting qualifying examinations for license issuance; (b) holding hearings regarding license revocation; and (c) formulating rules and regulations pertaining to professional conduct in general. Of course, any agency may acquire additional powers by necessary implication, but only if those additional powers are indispensable in executing the expressed purpose delegated to the agency by the legislature. In this aspect, caution and restraint must be exercised by courts. State ex rel. Eastvold v. Maybury, 49 Wn.2d 533 , 304 P.2d 663 (1956) states at pages 539-40:

It is one thing to interpret the language of a statute to carry out the manifest intent of the legislature (in which category respondents’ authorities fall), and an entirely different matter to add, by implication, to a statute which is complete in itself, simply because the result intended by the legislature may be doubtful in the minds of certain individuals.

. . . the language of this court in State ex. rel. State Board of Medical Examiners v. Clausen, 84 Wash. 279, 282 , 146 Pac. 630 (1915), is pertinent:

“But where a person or board is charged by law with a specific duty, and the means for its performance are appointed by law, there is no room for implied powers, and the means appointed must be followed, however inadequate may be the result.” (Italics ours.)

... . If the statute, as written, produces a result which is thought to be inadequate . . . the remedy is with the legislature and not . . . the judiciary.

*305 Again, in Department of Labor & Indus. v. Cook, 44 Wn.2d 671 , 269 P.2d 962 (1954), it was stated at page 677:

But, whether the seeming lack of logic in this situation is the product of inadvertence or intention, the fact remains that the act lacks such a provision. The court cannot read into a statute anything which it may conceive that the legislature has unintentionally left out. Seattle Ass’n of Credit Men v. General Motors Acceptance Corp., 188 Wash. 635 , 63 P. (2d) 359 ; Maryland Cas. Co. v. Tacoma, 199 Wash. 384 , 92 P. (2d) 203 .

See also Cole v. State Util. & Transp. Comm’n, 79 Wn.2d 302 , 485 P.2d 71 (1971); Hansen Baking Co. v. Seattle, 48 Wn.2d 737 , 296 P.2d 670 (1956); Karlen v. Department of Labor & Indus., 41 Wn.2d 301 , 249 P.2d 364 (1952); Northern Pac. Ry. v. Denney, 155 Wash. 544 , 285 P. 452 (1930); Wishkah Boom Co. v. Greenwood Timber Co., 88 Wash. 568 , 153 P. 367 (1915).

Being that the director of the Department of Motor Vehicles is charged with the duty of regulating real estate brokers only, and in view that the means for the performance of that duty is expressed in RCW 18.85.040, .085, and .090, we cannot, by judicial construction or by the doctrine of implied agency power, mutate that state agency into a different entity so as to charge it at the times here relevant with the responsibility of overseeing land development projects. The director was given such power in 1973. RCW 58.19.300.

A second approach to finding liability was briefly discussed by appellants and the majority, but mentioned in theory rather than by name. This second theory of recovery is based on the agency principle of “apparent or ostensible authority,” or alternatively, on “agency by estoppel.” Under the doctrine of “ostensible authority,” a principal is liable for acts outside the express powers of the agent, where the principal, by its own acts, has placed the agent in the position that could reasonably be viewed by third persons as having the authorization by the principal, and as empowering the agent to act in the specific capacity that is *306 being disclaimed by the principal. That doctrine is based on the theory equivalent to the objective theory of contracts; namely, that one should ordinarily be bound by what he says (words or actions) rather than by what he secretly intends. Restatement (Second) of Agency § 8 (1958). A related rule is “agency by estoppel,” which occurs when one intentionally or carelessly causes the belief in third persons that an act is committed on behalf of the estopped party. As a corollary to that rule, “estoppel by silence” exists where one knows that another is acting or will act under a misapprehension yet remains silent. Restatement (Second) of Agency § 8B, comment (b) (c) (1958).

In the case of a public entity, where its authority is limited by statute, which in itself is notice to the public, there is no rule of apparent authority or agency by estoppel and the public entity can only be bound to the extent of the true agency. G. Reinhard, Law of Agency § 472 (1902) states at page 549:

A private agent might render his principal liable on mere appearances, or the principal might estop himself from denying the agent’s authority by acts in pais; but this is not true of public agents; and the state or government cannot be bound by an estoppel in pais or by laches.

(Footnote omitted.) The reason for the distinction between private and public agents is simply based on the reason that there can be no misleading where the agent’s instructions are a matter of public law. 1 W. Clark & H. Skyles, Law of Agency § 205 (1905) states at pages 478-79:

Although a private agent, acting in violation of specific instructions, yet within the scope of a general authority, may bind his principal, the rule as to a like act of a public agent is otherwise. The specific definitions and limitations of the powers of a public agent are given by ordinances, orders of court, or by statute, and thus bear the character and force of public laws, ignorance of which can be presumed in favor of no one dealing with him on matters thus conditionally within his official discretion. For this reason the law makes a distinction between the effects of the acts of a public agent and those of a private agent. In the latter case, the extent of au *307 thority ■ is necessarily known only to the principal and agent, while in the former, it is a matter of record in the books of the corporation or of public law, and the third party cannot plead ignorance thereof in order to bind the principal for acts done by the public agent in excess of his specific instructions.

(Footnote omitted.) And, in S. Steele, The Law of Principal and Agent § 85 (1909) it is stated at page 125:

The authority of a public officer to act in a particular transaction could be .established only by showing that power to do the act, or make the contract, was expressly, or by necessary implication, conferred by law. Here, the authority is a matter of public record, and all persons are bound to take notice whether it exists at all and if so, what is its nature and extent.

(Footnotes omitted.)

An additional justification for the special rule in public agents rests in the purpose to protect the public treasury and taxpayer resource from possible fraud, mistake or folly, even if well meaning, of- state employees acting on their own behest, rather than at the behest of the state. G. Reinhard, Law of Agency § 299 (1902) states at pages 294-95:

Concerning the duties, obligations and liabilities of these respective classes of agents to third persons, and the rights of third persons as against agents, a marked distinction must be observed. The authority of a public agent is generally conferred by statute or other public law, of which every one is bound to take notice; and the government or other public authority can not be bound by the acts of its agents, unless they be performed according to the power thus conferred, or unless the agent is held out as possessing such power, or is employed thus to represent his government or that division thereof for . which he assumes to act. In cases of private agencies, on the other hand, the authority is not generally conferred by statutes or other public law, but by private contract, of which third parties can not be presumed to have actual knowledge; and the principals of such private agents are therefore held responsible, not only for the exercise of authority actually conferred, but for such also as they hold out their agents to appear to possess. This is so, as *308 stated by Story, “in order to guard the public against losses and injuries arising from the fraud or mistake, or rashness and indiscretion of their agents. And there is no hardship in requiring from private persons, dealing with public officers, the duty of inquiry, as to their real or apparent power and authority to bind the government.”

And, at section 348, page 352:

Hence, when third parties deal with public agents, . . . they must know the powers of such agents or officials as they are contained in the city ordinances or other public law which contains the grant, and the legal effect thereof; and if they fail to do so, . . . they do so at their peril.

(Footnotes omitted.)

It is argued by the majority that a simple act on the part of the state, i.e., telephoning and letter writing (see dissent in Brown v. MacPherson’s, Inc., 85 Wn.2d 17 , 530 P.2d 277 (1975) ) could have avoided the accident and that this should militate toward liability. Not wishing to sound insensitive to the tremendous sense of loss appellants must feel, it must also be remembered that a simple inquiry into the public statutes would have revealed that the assurances given by Mr. Tonnon, an employee of the real estate division, to Dr. Edward LaChapelle, which assurances caused Dr. LaChapelle to refrain from taking further actions to warn appellants himself, were actions strictly between two private citizens. The assurances of Mr. Tonnon cannot be viewed as assurances by the State of Washington. In Atlantic Tobacco Co. v. United States, 249 F. Supp. 661 (D.S.C. 1966) the court held at page 663:

And this is so even though, as here, the agent himself may have been unaware of the limitations upon his authority. [Citations omitted.] . . . He who deals with an agent of the government must look to his authority, which will not be presumed but must be established. He cannot rely upon the scope of dealing or apparent authority as in the case of a private agent. [Citations omitted.]

Even when the State acts in a sphere traditionally occupied *309 by private principals, the rule requiring “agency in fact” still holds true and this is so even though hardship may result. In Federal Crop Ins. Corp. v. Merrill, 332 U.S. 380, 383-84 , 92 L. Ed. 10 , 68 S. Ct. 1 , 175 A.L.R. 1075 (1947), the Supreme Court states the rule to be applied in transactions with agents of the government:

The case no doubt presents phases of hardship. We take for granted that, on the basis of what they were told by the Corporation’s local agent, the respondents reasonably believed that their entire crop was covered by petitioner’s insurance. And so we assume that recovery could be had against a private insurance company. But the Corporation is not a private insurance company. It is too late in the day to urge that the Government is just another private litigant, for purposes of charging it with liability, . . . Government is not partly public or partly private, depending upon the governmental pedigree of the type of a particular activity or the manner in which the Government conducts it. The Government may carry on its operations through conventional executive agencies or through corporate forms especially created for defined ends. [Citation omitted.] Whatever the form in which the Government functions, anyone entering into an arrangement with the Government takes the risk of having accurately ascertained that he who purports to act for the Government stays within the bounds of his authority.

(Footnote omitted.)

As a final matter, I wish to point out that all of the cases mentioned by the majority are distinguishable from the present case. In Sheridan v. Aetna Cas. & Sur. Co., 3 Wn.2d 423 , 100 P.2d 1024 (1940), the principal was a private corporation, which is subject to altogether different rules of agency liability. In United States v. Gavagan, 280 F.2d 319 (5th Cir. 1960), a government agency was involved, but the faulty promise to rescue was made pursuant to and within the scope of the actual authority of the agent, i.e., the Coast Guard officer in charge of the rescue ship. The same is true with Fair v. United States, 234 F.2d 288 (5th Cir. 1956), in which the military officer failing to *310 warn of the release of the prisoner, had legal custody and jurisdiction of the mental patient. In this case, the Department of Motor Vehicles did not have the jurisdiction or power to regulate the development or adjacent avalanche chute. To convert that agency into a “watch-dog” type land-planning agency, when the legislature has clearly foreclosed such path of action, to me, is judicially impermissible.

Stafford, C.J., and Rosellini and Hunter, JJ., concur with Wright, J.

Petition for rehearing denied March 11,1976.