13 April 2021
The Supreme Court rendered the 109-Tai-Shang-2064 Decision of October 19, 2020 (hereinafter, the “Decision”), holding that Article 188 of the Civil Code does not apply if an employee who engages in a tortious act has lost the qualifications as an employee or if the act objectively does not appear to be engaged to perform job duties or if the act is simply a personal criminal offense not related to the performance of job duties.
According to the facts underlying this Decision, Appellant A asserted that B, not a party to this lawsuit, was a broker of a franchised store, Appellant D, of the Appellee (Company C). Appellant A commissioned B to sell the property at issue for NT$7.5 million.
B subsequently requested to extend the term of the commission for one month and promised that if the sale was not made, B was willing to purchase the property at issue for NT$7.5 million. Both parties entered into a sales agreement and B provided a promissory note for the same amount as the security.
However, B sold the property at issue for NT$7.2 million without authorization and falsely stated that the buyer was willing to pay an additional sum of NT$300,000 privately. B further requested, under the pretext of convenience of transaction, that A change the password for the bank account and put his bank book and chop under B’s custody, resulting in B’s theft of around NT$7.06 million. In addition, B conducted the title transfer registration in the name of A in an obvious attempt to illegally violate A’s ownership of the property at issue or of the price payment for the sale. Since B was employed by Company D and also objectively carried out his job duty for Company C, a court decision was sought to compel Company D and Company C to jointly and severally pay NT$7.2 million (B has paid NT$300,000) in accordance with Article 188, Paragraph 1 of the Civil Code.
According to the Decision, the requirement that the employer shall be liable for damages under Article 188, Paragraph 1 of the Civil Code is that the employer is at fault in the selection or supervision of the employee.
Although the employee within the meaning of such paragraph is not limited to an employee under an employment contract and any person whose services are used by another person and who is therefore subject to the supervision of such person also counts as an employee, this article does not apply if the employee has lost the qualifications as an “employee” at the time of the tortious act, or if the act objectively does not appear to be conducted to perform any job duty or if the act is the personal criminal behavior of the employee and is not related to the performance of any job duty.
It was further indicated in the Decision that the term of the commission expired on June 2, 2015, according to the commission agreement at issue and Company C terminated the contract relationship with B on August 31 of the same year. However, since B had failed to sell the property at issue by the deadline and A agreed to extend the sales period to October 31, both parties entered into a sales agreement on October 31 of the same year, and B issued a promissory note as the security. Whether A separately agreed with Company C on an extension or simply commissioned B to personally continue the sales activity is relevant to the issue of whether B handled the sales in his personal capacity or still provided services or performed job duty for Company C and should certainly be clarified first. According to the commission contract at issue, the period of the commissioned sale expired on June 2, 2015 and could be extended as agreed by both parties. If that is the case, was the period of the commissioned sale between A and Company C extended as separately agreed by both parties?
Moreover, what are the empirical connections, if any, between the commissioned sale of the property at issue and the delivery of the bank book and the password change of the bank account? These questions are highly relevant to the credibility of Company C’s repeated contention that this sale was not made through the intermediation or negotiation by its broker, that B only came to the company to sign an agreement for handover purposes as the actual owner, that C wired the price payment to A’s bank account according to the standard operating procedure for performance guarantee, that B’s tortious act of stealing the price payment was a personal criminal offense, and that he was not objectively supervised by Company C, did not serve Company C and was also not its employee. Without detailed investigation and explanation of the basis and grounds, the original trial court elected to make a determination unfavorable to Company C merely based on the identification of A as the seller according to the sales agreement at issue, Company C’s role as the intermediary, the completion of this transaction by Company C, which also profited as the intermediary, and the connection between the delivery of the bank book and the password change of the bank account and the job function of the intermediated sale.
Since the original decision was erroneous for insufficiency of grounds and violation of evidentiary and empirical rules, the portions in the original decision which compelled Company C to pay and rejected the remaining portions of the appeal of Appellant A against Company C were reversed and remanded to the Taiwan High Court.
For further information, please contact:
Angela Wu, Lee Tsai & Partners
lawtec@leetsai.com
