## Facts

- Mary Cleghorn, a passenger, was injured when a passenger train collided with a stock train.
- The collision occurred after a switchman failed to close a switch after a stock train entered a side track and then gave a false “all clear” signal to the approaching passenger train.
- At trial, the railroad’s negligence for compensatory liability was treated as clear based on the switchman’s conduct.
- To support exemplary (punitive) damages, Cleghorn offered evidence that the switchman was intoxicated at the time and had intemperate habits known to the railroad’s agent with authority to hire and discharge him.
- The trial court admitted the evidence and instructed the jury to award full compensation and that it could add exemplary damages as the case called for, depending largely on the defendant’s conduct.
- The jury returned a verdict for Cleghorn; the railroad appealed, challenging both the evidentiary ruling and the exemplary-damages instruction.

## Issues

1. Whether evidence of the switchman’s intemperate habits, known to the railroad’s hiring agent, was admissible when offered to support a claim for exemplary damages.
2. Whether the jury instruction improperly permitted exemplary damages in a negligence case without limiting them to aggravated or gross misconduct by the defendant.

## Decision

- The Court of Appeals reversed and ordered a new trial.
- The court held the evidence of known intemperate habits was admissible when offered to show employer-level gross negligence in employing or retaining an unfit employee as a basis for exemplary damages.
- The court held the jury instruction on exemplary damages was erroneous because it could be read to allow punitive damages generally in negligence cases, without adequately confining such damages to exceptional circumstances of aggravated fault.

## Legal Principles

- An employer may be vicariously liable for compensatory damages for an employee’s negligence within the scope of employment, but punitive damages are not automatic and require proof of aggravated, reckless, or gross misconduct attributable to the employer.
- Evidence of an employee’s prior misconduct or habits is inadmissible if offered only to prove negligence on the specific occasion, but may be admissible if it tends to prove gross negligence by the employer in hiring, retaining, or supervising an unfit employee.
- Jury instructions on exemplary damages must clearly limit such damages to exceptional cases involving aggravated wrongdoing; it is error to frame punitive damages as a routine discretionary add-on to compensatory damages in ordinary negligence actions.

## Conclusion

The court permitted proof that the railroad knowingly employed or retained an intemperate switchman as relevant to an exemplary-damages theory, but reversed for a new trial because the jury was not properly instructed to confine exemplary damages to cases of aggravated misconduct rather than ordinary negligence.


Cleghorn v. N.Y. Cent. & Hudson River R.R. Co., 56 N.Y. 44 (1874)