Question

Maria Millan opened two brokerage accounts at Dean Witter Reynolds. The broker for both accounts was her son Miguel, an employee of Dean Witter. Over the course of the next three years, Miguel systematically looted his mother’s account, ultimately stealing from her more than $287,000. He stole checks from his mother’s bathroom drawer, wrote checks on his mother’s account, deposited his mother’s checks into his own account, forged his mother’s signature on numerous occasions, stole statements from her mailbox, created and sent bogus statements to his mother, and opened a post office box so he could receive his mother’s actual statements. Dean Witter did not verify Millan’s signature, as policy required. A Dean Witter supervisor also did not verify a check in the amount of $35,000, which was against Dean Witter written policy. Millan sues her son and Dean Witter for unauthorized transactions, negligence, and gross negligence. Under a theory of direct liability, who is a jury likely to find for? Under the doctrine of respondeat superior, is Dean Witter vicariously liable for the actions of Miguel? (Hint: Think about whether Miguel’s actions were within his general scope of authority as a broker.)

Answer 1

Direct liability theory identifies the person/business who actually caused the negligent event or intentional tort that resulted in damage or injury to the other party. In this case, the person who had initiated all the stealing activities and was directly involved in stealing $287000 is Miguel.

Thus under the theory of direct liability, Miguel will be held responsible and punished.

The theory of respondeat superior states “let the senior answer”. In other words when an employee of an organization goofs up on his duty, it is the company who is liable and answerable for the damages/injuries caused. In this instance, Miguel is an employee of the company Dean Witter Reynolds. He got the opportunity to cheat because he was the employee of this company and he stole the money. In several instance, the company could have checked suspicious behavior but they did not. Due to this, they will be held liable especially where Miguel transacted using checks by forging Maria Millan’s signature.

Under the theory of repondeat superior, Dean Witter Reynolds will be vicariously liable for actions of Miguel in certain instances such as transaction of the checks, change of postal address without permission, etc. However, stealing from bathroom drawer and other actions that were not conducted as part of the role at Dean Witter Reynolds is not something that the company will be liable for.