84 Hawai'i 86, United Truck Rental Equipment Leasing, Inc. v. Kleenco Corp.
| Decision Date | 10 December 1996 |
| Docket Number | No. 15883,15883 |
| Citation | 929 P.2d 99 |
| Parties | 84 Hawai'i 86 UNITED TRUCK RENTAL EQUIPMENT LEASING, INC., Plaintiff-Appellee, v. KLEENCO CORP., Defendant-Appellant. |
| Court | Hawaii Court of Appeals |
Syllabus by the Court
1. At common law, the rental of a motor vehicle creates a bailment for the mutual benefit of the parties. Because United Truck Rental Equipment Leasing, Inc.'s (United) rental of the truck to Kleenco Corp. (Kleenco) was a bailment for their mutual benefit, Kleenco, the renter-bailee, was under a duty to use ordinary care and diligence in the safeguarding of the bailor's property. In that regard, theft is clearly one of the harms against which a bailee must protect. However, the parties are free to enter into a contract to alter their common law duties provided their agreement does not contravene public policy or violate a statute.
2. An agreement should be construed as a whole and its meaning determined from the entire context and not from any particular word, phrase, or clause. Construing the contract as a whole, the renter was responsible for all loss or damage except to the extent of the collision waiver amount. Because Kleenco did not accept the collision waiver, however, it was liable for all losses and damages including those resulting from a collision. We believe an ordinary reading of a renter's "full responsibility" under the Agreement for "all loss or damage" to the vehicle and an undertaking of responsibility for "all loss or damage whatsoever" would broadly encompass any mechanism of loss, including theft.
3. It is a well-established principle in the law of damages that when a party sustains a loss by breach of a contract, the party is entitled to just compensation commensurate with the loss and that the damages awarded should be in such amount as will actually or as precisely as possible compensate the injured party.
4. Whether the retail or wholesale price will govern when calculating damages depends on the replacement market available to the injured party. The damages awarded for lost or destroyed property should be based upon the market value, retail or wholesale, which will actually or as precisely as possible compensate the injured party.
5. It may be fairly inferred that United could only purchase at wholesale prices if it purchased its trucks in bulk. There was no evidence that a single vehicle replacement could be purchased by United at the wholesale price. As a result, the market price which would accurately or as precisely as possible compensate United for its stolen truck, under these circumstances, was the retail market price.
6. Damages for loss of use may be recovered when a vehicle is a total loss. A stolen vehicle should be treated in the same way as a completely destroyed vehicle for purposes of loss of use damages. In cases where the owner of damaged property is in the business of hiring the property out, courts recognize that rental value of the property reflects gross, not net, profits, and therefore, whatever the owner has saved in overhead or other costs must be deducted. Consequently, where the rental value is awarded as the measure of loss of use damages, the rental value should be reduced by the amount that United saved in overhead or other costs while not in possession of the truck.
7. The introduction of evidence in rebuttal is a matter within the discretion of the trial court, and appellate courts will not interfere absent abuse thereof.
Patrick M. Moscatello, Richard Hacker, on the brief, Honolulu, for plaintiff-appellee.
Patricia J. McHenry, Darryl H.W. Johnston, on the briefs, Honolulu, for defendant-appellant.
Before BURNS, C.J., and WATANABE and ACOBA, JJ.
We hold Defendant-Appellant, Kleenco Corp. (Kleenco), the renter of a truck from Plaintiff-Appellee, United Truck Rental Equipment Leasing, Inc. (United), was liable to United under the terms of a rental contract for the retail market value of the truck and for United's loss of use of the truck after it was stolen from Kleenco. We also hold that the trial court (court) properly allowed a witness not listed in United's pre-trial statement to testify in rebuttal.
Accordingly, we affirm the court's October 15, 1991 judgment (the judgment) except for the court's award for loss of use damages as to which we remand for an entry of judgment awarding nominal damages only.
Kleenco is in the business of providing commercial cleaning services. United is in the business of renting trucks to the general public. On January 2, 1988, Keith Sugioka (Sugioka), an employee of Kleenco at the time, rented a 1987 one-half ton Toyota pick-up truck (the truck) from United for a total of eighteen days with a return date of January 20, 1988. 1 Having the authority to do so, Sugioka signed a rental agreement for the truck on behalf of Kleenco (the Agreement).
The truck was stolen while in Kleenco's possession after a Kleenco employee left the keys in the ignition of the unattended and unlocked truck. At the time of the theft, the truck was parked facing the street at the front of a row of trucks in an alley next to Kleenco's facility.
On January 10, 1989, United brought suit against Kleenco for the loss of the truck. United's complaint did not specifically refer to contract or bailment law but stated the essential facts referred to above. 2
On February 1, 1989, Kleenco answered the complaint and counterclaimed. 3 On February 21, 1989, United answered the counterclaim.
On June 24, 1991, the case proceeded to a non-jury trial. The court dismissed Kleenco's counterclaim, awarded judgment against Kleenco for $8,957.23, and filed its combined findings of fact and conclusions of law on October 15, 1991. The decision stated, in pertinent part 4:
4. [Kleenco's] counterclaim is hereby dismissed.
5. The court finds that the language contained in the "full responsibility" box contained on [United's] rental agreement is clear and unambiguous and that by initialing the full responsibility box, [Kleenco] took full responsibility for the loss of [United's] vehicle including the loss by theft.
6. Accordingly, [Kleenco] is liable to [United] and Judgment shall enter against [Kleenco] as and for the following amounts:
Loss of vehicle, based on the fair market value of the
vehicle identified in this action ........................... $7,500.00
Appraisal fee .................................................... $31.20
Loss of vehicle use ............................................. $550.00
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Subtotal [$]8,081.20
Attorney's fees ............................................... [$]827.03
Court Costs .................................................... [$]30.00
Notary .......................................................... [$]4.00
Sheriff fees ................................................... [$]15.00
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Total Judgment .. $8,957.23
Judgment was entered accordingly on October 15, 1991.
Kleenco filed a motion to alter or amend the judgment (the motion) on October 25, 1991, asserting in its supporting memorandum that (1) United should not recover more than the wholesale value of the stolen truck, (2) United cannot recover "lost volume" damages for loss of the use of the truck, and (3) United's rental agreement did not provide for recovery of costs associated with efforts to recover on a breach of contract. 5
On December 23, 1991, the court entered its order denying the motion.
Kleenco appealed on January 17, 1992. 6 On appeal, Kleenco does not challenge the court's dismissal of its counterclaim. Therefore, we affirm the judgment as it relates to Kleenco's counterclaim.
We examine the four contentions raised by Kleenco on appeal.
At common law, the rental of a motor vehicle creates a bailment for the mutual benefit of the parties. Davis v. M.L.G. Corp., 712 P.2d 985, 987-88 (Colo.1986); Chabraja v. Avis Rent A Car Sys., Inc., 192 Ill.App.3d 1074, 140 Ill.Dec. 221, 223, 549 N.E.2d 872, 874 (1989); Omni Aviation v. Managers, Inc. Buckley, 97 N.M. 477, 641 P.2d 508, 510 (1982); 14 F. Lewis, Blashfield Automobile Law and Practice § 475.13, at 395 (3rd ed.1969). A bailment is "a delivery of personal property by one person to another in trust for a specific purpose, with an express or implied contract that the property will be returned or accounted for when the specific purpose has been accomplished or when the bailor reclaims the property." Davis, 712 P.2d at 988; accord Waugh v. University of Hawai'i, 63 Haw. 117, 132, 621 P.2d 957, 958 (1980). Because United's rental of the truck to Kleenco was a bailment for their mutual benefit, Kleenco, the bailee, was under a duty to "use ordinary care and diligence in the safeguarding of the bailor's property, and [it was] answerable for loss or injury resulting from failure to exercise such care, or for any loss or injury due to [its] negligence, or ordinary negligence." M. Bruenger & Co., Inc. v. Dodge City Truck Stop, Inc., 234 Kan. 682, 675 P.2d 864, 868 (1984) (). In that regard, "[t]heft is clearly one of the harms against which a bailee must protect." Id. 675 P.2d at 869. Therefore, under the rules of bailment, Kleenco bore the risk of loss if it was negligent in its handling of the vehicle. 7 However, the parties are free to enter into a contract to alter their common law duties "provided their agreement does not contravene public policy or violate a statute." Davis, 712 P.2d at 988. The contract involved here was the Agreement.
The Agreement was United's standard rental form. It purportedly contained the entire agreement between the parties. 8 The...
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