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filed: June 1, 1984.


No. 1101 Pittsburgh, 1980, Appeal from the Judgment of the Court of Common Pleas, Civil Division, Allegheny County, at No. GD 75-6899. No. 1102 Pittsburgh, 1980, Appeal from the Judgment of the Court of Common pleas, Civil Division, Allengheny County, at No. GD 75-5695.


George I. Buckler, Pittsburgh, for appellant.

Robert W. Murdoch, Pittsburgh, for appellees.

Spaeth, President Judge and Cavanaugh, McEwen, Beck, Montemuro, Montgomery and Cercone, JJ. Spaeth, President Judge and Beck, J., filed concurring opinions. McEwen, J., filed concurring statement. Cercone, J., filed concurring and dissenting opinion.

Author: Montemuro

[ 329 Pa. Super. Page 514]

This appeal is from judgments entered on verdicts in favor of appellees, plaintiffs below. The verdicts awarded damages of $72,000 to Joseph G. DeFrancesco and Frank Crea, trading and doing business as Mt. Washington Ornamental Iron Works, and as individuals; and damages of $173,000 to Joseph F. Loy and Bernice Loy, trading and doing business as Joseph F. Loy Tire Service, Inc. In DeFrancesco v. Western Pennsylvania Water Co., 291 Pa. Super. 152, 435 A.2d 614 (1981), this court vacated the judgments entered on these verdicts on the ground that appellees' claim, that the water company had failed to provide sufficient water and water pressure, was within the original jurisdiction of the Pennsylvania Utility Commission. In DeFrancesco v. Western Pennsylvania Water Co., 499 Pa. 374, 453 A.2d 595 (1982), the supreme court reversed, holding that original jurisdiction properly rested in the trial court. Therefore, the supreme court remanded the case to this court for consideration of the other issues raised by the appellant water company but not decided.

Generally stated, the facts are as follows: On August 11, 1973, at approximately 1:00 a.m., a fire broke out in a pile of tires behind a building on property owned by the Joseph F.

[ 329 Pa. Super. Page 515]

Loy Tire Service, Inc., located at 1655 through 1659 Saw Mill Run Boulevard in Pittsburgh. The City of Pittsburgh Fire Department arrived on the scene while the fire was still confined to the Loy property. However, because of the low volume and sporadic flow of water from the fire hydrants, the Fire Department was unable to contain the fire and it spread next door to the Mt. Washington Ornamental Iron Works Company located at 1651 Saw Mill Run Boulevard. The buildings on both properties and their contents were damaged extensively by the fire.

The issue at trial was who was responsible for the inadequate supply of water. The mains that supplied water to the hydrants were owned and maintained by appellant. Appellees contended that the inadequate supply of water was caused by appellant's employees' negligent repairs on August 10, 1973 -- the day before the fire. Appellant contended that the inadequate supply was caused by the Fire Department's use of too many pumpers.

The issues now before us for disposition are: (1) whether appellant's liability to appellees is precluded by Rule 17 of appellant's tariff,*fn1 (2) whether the trial court erred in refusing to instruct the jury on Section 328 D of the Restatement (Second) of Torts; (3) whether the trial court erred in admitting into evidence certain statements allegedly made by unidentified employees of appellant; and (4) whether the trial court adequately instructed the jury that damages could be awarded only for such of appellees' losses as were caused by appellant's negligence. The concurring opinion by Spaeth, P.J., adequately covers the first and second issues, and we adopt that portion of President Judge Spaeth's opinion as our own. With respect to the third issue, we hold that the trial court erred, and that a new trial must be granted. Thus, we need not consider the fourth issue, for we see no reason to suppose that it will arise again at the new trial.

[ 329 Pa. Super. Page 516]

Appellant's third argument is that the trial court erred in admitting into evidence certain statements allegedly made by unidentified employees of appellant. These statements were admitted, over objection, in the testimony of Battalion Fire Chief Henry Dudek and in the testimony of appellee Joseph Loy. Chief Dudek testified that while at the scene of the fire on August 11, 1973, at approximately 6:00 a.m., a man approached him and identified himself as an employee of the appellant. Chief Dudek testified that when he asked this man what happened to the water, the man responded, "[I]t's not eight or twelve inch mains. It's a four inch main and the valve at the other end was turned down because they were repairing that line -- working on the line." N.T. 269. The trial court allowed this testimony into evidence "as non-hearsay and not to prove the truth of the matter asserted therein." N.T. 284. Chief Dudek testified that the man did not have on a uniform and did not carry any identifying papers, and that he did not see the man get out of one of appellant's vehicles. He further testified that shortly after 2:00 a.m. he had called the fire alarm operator to request that the operator get in touch with appellant and that he assumed that the man had come in response to the operator's call. Chief Dudek testified that he himself was distinguished from other firefighters on the scene in that he was dressed all in white.

Appellee Joseph Loy testified that he was at the fire scene on August 11, 1973, and between 11 a.m. and 12 noon, an "old Italian fellow" approached him and stated, "I guess you think I played a dirty trick on you. We weren't allowed to work overtime." N.T. 43. The trial court admitted this statement not to prove the truth of the matter asserted but for the fact that it was made. N.T. 42. Mr. Loy testified that he did not know the man's name but that he knew that he was employed by appellant because on the morning of the fire the man was in one of appellant's trucks, and also because he had seen the man before in one of appellant's trucks, had talked with him on previous occasions, and had previously sold him tires.

[ 329 Pa. Super. Page 517]

Appellees argue that each of the above statements was admissible on each of three grounds: (1) as non-hearsay and only to prove that it was made; (2) as within the present sense exception to the hearsay rule; and (3) as within the vicarious admission exception to the hearsay rule. We may quickly dispose of the first two asserted bases of admissibility; the third asserted basis of admissibility will require considerable discussion.

The statements were not admissible as non-hearsay only to prove that they were made, and it was error for the trial court to have admitted them on that basis. The fact that the statements were made was of no relevance to any fact of consequence in the case. The statements were only relevant to prove the truth of the matter asserted, i.e., that appellant was at fault. They were, therefore, hearsay and inadmissible unless within an exception to the hearsay rule.

Even though it was error for the trial court to have admitted the statements as non-hearsay, the error would be inconsequential if the statements could properly have been admitted as an exception to the hearsay rule. See Commonwealth v. Whitehouse, 222 Pa. Super. 127, 292 A.2d 469 (1972). Appellees' argument that the statements were properly admissible as within the present sense exception to the hearsay rule is, however, without merit. Neither statement concerned conditions or events that the declarant was observing at the time of the declaration. See Commonwealth v. Coleman, 458 Pa. 112, 326 A.2d 387 (1974); McCORMICK ON EVIDENCE § 298 (2d ed. 1972).

We now consider appellees' argument that the statements were admissible under the vicarious admission exception to the hearsay rule. Appellees contend that a "less restricted" vicarious admission rule should be adopted in Pennsylvania in place of the "traditional, restricted" vicarious admission rule. The traditional rule is that statements made by a party's agent may be offered in evidence against him if the agent had authority to make the statement. McCORMICK ON EVIDENCE § 267 (2d ed. 1972). Obviously, the statements

[ 329 Pa. Super. Page 518]

    objected to here would not be admissible under the traditional vicarious admission rule. This is so because even if the requirement of agency was proven, there is no indication that either of the declarants had authority to make his declaration.

Appellees assert, however, that the rule to be applied in Pennsylvania is the "less restricted" rule. That rule provides that a statement offered against a party will be admissible if it is "a statement by his agent or servant concerning a matter within the scope of his agency or employment, made during the existence of the relationship." Federal Rule of Evidence 801(d)(2)(D). While we are sympathetic to appellees' arguments that the traditional rule should be reexamined, it is not our prerogative to replace a rule of evidence which has consistently been applied in this jurisdiction.

The concurrence of President Judge Spaeth springboards to the adoption of the "less restricted" rule from the premise that the law in Pennsylvania on the vicarious admission standard is "unclear." Specifically, President Judge Spaeth finds that he cannot tell whether the traditional rule was applied in Berkebile v. Brantly Helicopter Corp., 462 Pa. 83, 337 A.2d 893 (1975), and Murray v. Siegal, 413 Pa. 23, 195 A.2d 790 (1963), the two cases relied upon by appellant. It is obvious that these cases refer to the traditional rule requiring agency plus authority, and do not refer to any sort of "less restricted" rule requiring agency plus something less than authority:

The trial judge excluded a memorandum of defendant's chief test pilot to the defendant's president dated January 24, 1960, as hearsay. The memorandum was written by Captain Erickson while he was an agent of the defendant in the course of his duties and within the scope of his authority, and thus is admissible as substantive evidence against the defendant (emphasis added).

Berkebile, supra, 462 Pa. at 102 n. 9, 337 A.2d at 903 n. 9.

Neither was it admissible as an admission by an agent of the city against the city's interest. Admissions of a

[ 329 Pa. Super. Page 519]

    declarant are not admissible against his asserted principal, unless the declarant's agency and authority are first established: Central Pennsylvania Telephone Co. v. Thompson, 112 Pa. 118, 3 A. 439 (1886); Yubas v. Makransky, 300 Pa. 507, 150 A. 900 (1930) (emphasis added).

Murray, supra, 413 Pa. at 31, 195 A.2d at 794. Indeed, the cases cited in Murray for the agency plus authority standard are demonstrative of the traditional rule.

President Judge Spaeth, after reading ambiguity into these straightforward recitations of the traditional rule, goes on to reason that even if the traditional rule had, in fact, been applied in Berkebile and Murray, those opinions do not require that the traditional rule be applied. His logic is that since agency and authority were clearly exhibited in Berkebile, and since agency and authority were clearly not exhibited in Murray, in neither case did the supreme court have the occasion "to consider whether the traditional, restricted rule was to be preferred as sounder than a less restricted rule." (Concurring opinion of Spaeth, P.J. at p. 1310).

While the observation that our supreme court has not yet considered a more liberal rule is certainly true, President Judge Spaeth's deduction that this lack of reevaluation emasculates the binding and precedential value of the traditional rule is improper. The reconsideration of established legal principle merely on an attack that a more liberal rule should be applied, renders every established legal principle questionable in undermining the doctrine of stare decisis.*fn2

[ 329 Pa. Super. Page 520]

This court is powerless to alter the decisional law of our supreme court. Commonwealth v. Butch, 257 Pa. Super. 242, 390 A.2d 803 (1978); Lowery v. Pittsburgh Coal Co., 216 Pa. Super. 362, 268 A.2d 212 (1970).

Furthermore, we note two additional and relatively recent Pennsylvania cases which endorse the traditional rule. In a factual background analogous to the one presently before us, the court addressed the issue of the trial court's failure to admit certain hearsay testimony:

Immediately after the accident [Mrs. Watkins/plaintiff fell on the premises of a club] one or two persons gathered around Mrs. Watkins, and one, whom Mrs. Watkins was unable to identify by name, stated that Mrs. Watkins should be sent to the hospital and that Mrs. Watkins should not worry because they would take care of this matter. Mr. Watkins testified that he did not know the man's name but he 'took it to be the Governor of the Lodge and the Secretary.' Appellants could not and did not establish that it was the Governor or the Secretary or an officer of the defendant, or that he had authority to bind the defendant, or even that he had witnessed the accident. The lower Court correctly excluded this evidence.

Watkins v. Sharon Aerie, No. 327 Fraternal Order of Eagles, 423 Pa. 396, 401, 223 A.2d 742, 745 (1966). In Adams v. Mackleer, 239 Pa. Super. 244, 361 A.2d 439 (1976), this court found that appellant-mother's admission should

[ 329 Pa. Super. Page 521]

    not have been admitted at trial due to the resulting prejudice against appellant-son, and further:

Appellant-mother was not appellant-son's authorized agent in this matter and was not empowered to make admissions on behalf of appellant-son.

Id. 239 Pa. at 249, 361 A.2d at 441.*fn3

Thus, we hold that there is no confusion in the law of Pennsylvania regarding the vicarious admission exception to the rule against hearsay,*fn4 that Pennsylvania has consistently applied the traditional vicarious admission rule requiring proof of agency plus authority, and that we are bound by the decisional law. While we are mindful of the often harsh results effected by the precise and parsimonious exceptions to the rule against hearsay, such sympathy does not afford this court a foothold towards the abrogation of these established exceptions. We reverse the trial court

[ 329 Pa. Super. Page 522]

    on the basis that the statements admitted were improper under the traditional vicarious admission rule. The prejudicial impact of those statements is self-evident.

Having determined that the limitations of this court preclude us from embarking on the path chosen by President Judge Spaeth, we none-the-less entreat our supreme court to reevaluate its unflinching application of the traditional vicarious admission rule. Unlike the concurrence of President Judge Spaeth, we do not advise a radical revision of the traditional rule to some point of illogical hybridization. Instead, we suggest retention of the traditional rule but would create, in addition thereto, a new rule directly responsive to the serious inequities which result from the exclusion of employee statements. To fashion such a new rule, it must be recognized that a complete departure from the usual hearsay analysis is necessitated. To assist in any possible reconsideration, we offer the following observations and ruminations.

Hearsay exceptions have historically been justified under two divergent theories. The first and most common justification for the admission of hearsay statements is that such statements exhibit a high degree of reliability, so that the denial of the right to cross-examination is minimized. Thus, a jumble of hearsay exceptions have sprung up on the basis that the circumstances surrounding the statement guarantee the requisite measure of reliability.

There exists, however, a very narrow second category of hearsay exception which does not deal with reliability at all. Instead, out-of-court statements may be admitted regardless of trustworthiness where the right to cross-examination is preserved. This category originates with the case of party admissions. The reason for the admission of a party's statement is not that it is especially reliable, but rather, because the right to cross-examination is not lost; i.e., the party is present to take the stand and explain his statement. See McCORMICK ON EVIDENCE § 262 (2d ed. 1972); 4 WIGMORE ON EVIDENCE § 1048 (Chadbourne

[ 329 Pa. Super. Page 523]

    rev. 1972). Thus, the hearsay rule is not a ground for objection when a party's extra-judicial opinions are offered against him, although it remains a ground for objection when a party attempts to offer his extra-judicial assertions in his own behalf. See 4 WIGMORE ON EVIDENCE, supra. The probative value of such statements derives, therefore, from satisfaction of the hearsay rule via retention of the right to cross-examination, rather than from any independent indicia of reliability.

The alignment of the vicarious admission exception within this dichotomy is squarely in the party admission category. Resorting to the rules of agency, the party admission exception was extended to admit against a party any declaration by the party's agent where the agent had authority to make the declaration. With the invocation of authority, agency law permitted an imputation of the agent's declarations to his principal, thereby allowing treatment of the agent's declaration as if it had been made by the principal himself. Id., G. HENRY, PENNSYLVANIA EVIDENCE § 94 (4th ed. 1953), and cases cited therein. The agent's statement being thus attributed to his principal, the rule against hearsay was satisfied for the reason that the right to cross-examination was not lost -- the principal as a party was present to explain "his" statement.

In view of this background, it is evident that President Judge Spaeth's purported "liberalization" of the traditional vicarious admission rule is unsound. The analysis engaged in by President Judge Spaeth commences with the premise that all hearsay exceptions are based on a demonstration of special reliability. He next examines the traditional vicarious admission rule and, not surprisingly, finds that the requirement of authority is "simply arbitrary" as an indicant of reliability. Finally, he discards the "arbitrary" requirement of authority and replaces it with other criteria which he feels will alleviate the vexatious consequences of the traditional rule while at the same time offer sufficient assurances of reliability.

[ 329 Pa. Super. Page 524]

This analysis completely confuses the two categories of hearsay exceptions and the unrelated justifications of each. The concurrence of President Judge Spaeth evaluates the traditional vicarious admission rule against the standard of reliability, when reliability has absolutely no bearing on the function of the traditional vicarious admission exception. Furthermore, the attempted relaxation of the rule by removing the requirement of authority, totally destroys the very essence of that exception -- without authority, the theoretical scheme of imputation fails. Finally, engrafting a modicum of requirements which demonstrate reliability, onto an ineffectual version of the fiction that cross-examination is preserved, does not enhance admissibility under either category. Thus, we would reject President Judge Spaeth's deduction of the "less restricted" vicarious admission rule under the guise that such a rule is merely an expansion of the traditional position.

The Federal Court system appears to have recognized the distinct natures of the traditional and "less restricted" rules, in that it retains the traditional rule, Fed.Rules of Evidence 801(d)(2)(C), while adding the most generous variation of the "less restricted" rule, Fed.Rules of Evidence 801(d)(2)(D).*fn5 Since it is clear that, having discarded the requirement of authority, the basis for the "less restricted" rule cannot be the preservation of the right to cross-examination, the question becomes -- on what basis does the "less restricted" rule satisfy the hearsay prohibition?

We agree with President Judge Spaeth that the very existence of an employment relationship invests an employee's statement concerning his employment with some degree of reliability. An employee is, or should be, knowledgeable about matters within the scope of his employment. Furthermore, since such statements would only be admissible if made before the termination of the employment,

[ 329 Pa. Super. Page 525]

    it is presumable that the employee would not jeopardize his job by making a false statement which is costly to his employer.

Concern over reliability, however, is understandable.*fn6 Since the employee is not personally responsible, "What is to prevent him from playing fast and loose with the facts and to make admissions which are costly to his employer but not to himself?" Report, New Jersey Supreme Court Committee on Evidence 166 (1963) cited in 4 WEINSTEIN'S EVIDENCE § 801(d)(2)(D)[01] (1981). There are also those employees who are disloyal and those who talk too much about things they do not understand. Finally, there is no guarantee in the Federal Rule's formulation of the "less restricted" rule to guard against the possibility that the employee's utterance is itself mere speculation or gossip.*fn7

On the whole, therefore, the degree of reliability furnished by the "less restricted" rule falls far below the usual requirement that the particular hearsay be endowed with "extraordinary indicia" of reliability. Thus, we are still left

[ 329 Pa. Super. Page 526]

    with the question of why the "less restricted" rule deserves to be excepted to the hearsay rule.

The answer seems to revolve around the blatant concern of necessity,*fn8 and involves a conscious decision to shift the evidentiary risk which can neither be significantly minimized by reliability nor obviated ...

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