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A principal is liable for punitive damages based upon the acts of his agents only in which the principal participated or which he authorized or ratified.
Respondent purchased what he believed to be a new car from appellant. The car was in fact a demonstrator model. The odometer on the car had been set back by appellant's employee. Respondent was awarded $ 12,500 in punitive damages. Appellant alleged that the award of punitive damages was improper, arguing that the issue should not have been submitted to the jury inasmuch as a corporation could not be held liable for punitive damages based upon the acts of its agents, unless the corporation participated in the wrongdoing or ratified it.
Under the circumstances, could the appellant corporation be held liable for punitive damages upon the acts of its agent?
The court held that, when corporate officials engaged in fraudulent acts in furtherance of the corporation, the acts of such agents were attributed to the corporation. Appellant's general manager admitted that he knew the odometer had been set back, and that he allowed the sale with full knowledge of the deception inherent in the situation; thus, appellant corporation ratified the wrongdoing. Accordingly, the judgment awarding respondent punitive damages was affirmed.