Bankert by Habush v. Threshermen's Mut. Ins. Co.

• Decision Date: 03 February 1983
• Docket Number: No. 80-2058,80-2058
• Citation: 110 Wis.2d 469,329 N.W.2d 150
• Parties: John E. BANKERT, a minor, by his guardian ad litem, Robert L. HABUSH, Plaintiff-Appellant-Petitioner, Rosa Bankert and Ervin Bankert, Plaintiffs, v. THRESHERMEN'S MUTUAL INS. CO. and Watertown Mutual Insurance Company, Defendants-Respondents, The Ohio Casualty Ins. Co., Richard D. Mueller, Arnold J. Mueller, Margie Mueller, State Farm Mutual Automobile Insurance Co., Steven J. Johnston, Michael Johnston, Karen Johnston and Mutual Life Insurance Co. of New York, Defendants.
• Court: Wisconsin Supreme Court

Page 150

329 N.W.2d 150

110 Wis.2d 469

John E. BANKERT, a minor, by his guardian ad litem, Robert L. HABUSH, Plaintiff-Appellant-Petitioner Rosa Bankert and Ervin Bankert, Plaintiffs, v. THRESHERMEN'S MUTUAL INS. CO. and Watertown Mutual Insurance Company, Defendants-Respondents The Ohio Casualty Ins. Co., Richard D. Mueller, Arnold J Mueller, Margie Mueller, State Farm Mutual Automobile Insurance Co., Steven J. Johnston, Michael Johnston, Karen Johnston and Mutual Life Insurance Co. of New York, Defendants.

No. 80-2058.

Supreme Court of Wisconsin.

Argued Nov. 1, 1982.

Decided Feb. 3, 1983.

Patrick O. Dunphy, Milwaukee, argued, for plaintiff-appellant-petitioner; Howard A. Davis and Habush, Habush & Davis, S.C., Milwaukee, on brief.

Thomas R. Schrimpf, Milwaukee, argued, for defendants-respondents; Kluwin, Dunphy, Hankin & McNulty, Milwaukee, on brief.

HEFFERNAN, Justice.

This is a review of a decision of the court of appeals which reversed an order of the circuit court dismissing a motion for summary judgment. ¹

The court of appeals held that, where the language of a farmowners policy provided that the coverage did not apply "to the ownership, operation, maintenance or use ... of (1) automobiles while away from the premises or the ways immediately adjoining" (p. 441, 313 N.W.2d 854), there was no coverage for an accident on a public highway even though the plaintiff alleged that the parents' negligent entrustment of the vehicle or negligent supervision of the minor driver occurred on the farm premises and not at the situs of the accident. We agree with the court of appeals and affirm its decision that the farmowners policy does not afford any coverage where the underlying "occurrence"--the automobile accident--took place away from the premises.

The facts which must be accepted at this stage of the proceedings are set forth in the complaint. On September 22, 1978, Richard D. Mueller, aged fifteen, was driving an unlicensed motorcycle, without functioning lights, when it crashed into a car illegally parked on the streets of Watertown. His passenger, John E. Bankert, also a fifteen-year-old, was injured.

The plaintiffs, John Bankert and his parents, sued Richard Mueller and his parents, Arnold Mueller and Margie Mueller. Plaintiffs claim that both Mueller parents are liable because they "negligently entrusted" the motorcycle to Richard and because they "negligently supervised" him on the night of the accident.

The plaintiffs claim that Threshermen's Mutual Insurance Company ² (hereinafter Threshermen's or the company) was liable under a farmowners policy issued to the Muellers. Threshermen's has responded by asserting that, under its policy, no coverage is afforded even if the accident occurred exactly as alleged by the plaintiffs and even if the parents were negligent in the respects alleged.

Threshermen's moved for summary judgment, asking that it be dismissed because its policy did not afford coverage. In an order entered by the trial court, the motion of the company was denied. The trial court found that, although no coverage was afforded on the cause of action for negligent entrustment, coverage was afforded on the cause of action for negligent supervision.

The Bankerts appealed from the portion of the trial court order holding there was no coverage for the negligent-entrustment action and the company cross-appealed from the portion of the order holding that coverage was afforded on the alleged negligence in respect to supervision.

The court of appeals concluded that the farmowners policy afforded no coverage under either alleged cause of action. The effect of its decision was to grant summary judgment dismissing Threshermen's and to reverse the trial court order. It improperly denominated its decision as one which "modified and, as modified, affirmed." We affirm the court of appeals decision reversing the order of the trial court.

We are not in this opinion concerned with the merits of plaintiffs' claim on either theory. We treat only the question of coverage under Threshermen's farmowners policy. For the purpose of determining the coverage question, we assume, although we do not decide, that the facts are sufficient to state a claim under both theories: Negligent entrustment of the motorcycle to Richard and failure to exercise proper control over Richard shortly before the accident. We conclude that in neither instance, although liability be found against Richard's parents, does the Threshermen's policy afford coverage.

In order to reach that conclusion, we must first consider the nature of the claim for "negligent entrustment" and the claim of "negligent parental control."

The common law does not make parents routinely liable for damages caused by their children. Prosser, Law of Torts (4th ed. 1971), sec. 123; 59 Am.Jur.2d, Parent and Child (1971), sec. 130. However, in some circumstances parents would be held liable. Four general situations resulting in parental liability have been recognized at common law: (1) Where the parent negligently entrusts the child with an instrumentality which may become a source of danger to others; (2) where the child is acting as the parent's agent; (3) where the parent knows of the child's wrongdoing and consents to it, or directs or sanctions it; and (4) where the parent fails to exercise control over the child, although the parent knows, or should know, that injury to another is a probable consequence. See, Comment, Parental Liability for a Child's Tortious Acts, 81 Dickenson Law Rev. 755, 759 n. 25 (1977). The commentators indicate that parental liability is based on ordinary rules of negligence, not the parent-child relationship.

Only two of these common-law types of possible liability are relevant here--negligent entrustment and negligent failure to exercise control.

Hopkins v. Droppers, 184 Wis. 400, 198 N.W. 738 (1924), and 191 Wis. 334, 210 N.W. 684 (1926), appears to be the first Wisconsin negligent-entrustment case. Hopkins involved a fifteen-year-old child for whom his father purchased a motorcycle. On the first appeal of that case to the Wisconsin Supreme Court, it was assumed that, under the pleadings, young Droppers had used the motorcycle with the express consent and approval of his father.

This court recognized the general rule that no liability arises at common law by virtue of the parental relationship alone. It pointed out that some participation by the parent in respect to a tort of a minor child was an essential predicate for parental liability. It held, however--applying the general rule that an owner may be liable for his own negligence in entrusting an instrumentality to a person that he knows will be incompetent or incapable of managing it--that a parent could be liable for negligently entrusting an automobile or motorcycle to a minor child. Accordingly, this court affirmed the trial court's order holding that a cause of action for negligent entrustment had been stated.

At the trial following remand, the jury found that the father had failed to exercise ordinary care to prevent his son from operating the motorcycle. That verdict was reversed by this court, because there was no evidence to show that the child was habitually disobedient of his parents and that the father had twice just prior to the use resulting in an accident told the child not to operate the cycle unless accompanied by an adult. After reviewing the evidence relied upon to support the jury verdict and finding it insufficient, the court ruled as a matter of law that the father did not violate his duty to supervise his son and, accordingly, did not commit any act of negligence.

It is noteworthy that what in the first Hopkins v. Droppers case was referred to as "negligent entrustment" in the second case resolved itself into a problem of whether the parent was negligent in the "supervision" or control of a minor child. The two cases are instructive of the fact that the theories merge almost imperceptibly, depending on a court's interpretation of the facts. Hence, the Hopkins v. Droppers duo exemplifies this court's acceptance of both negligent entrustment and negligent control in finding a parent a joint tortfeasor when the parent's act is in conjunction with a negligent act by a minor. ³

It is apparent, then, that in Wisconsin parental liability, at common law, never arises from the familial relationship alone; but in respect to the problem pertinent to this case, liability can arise when any person (whether parent or not) who has a vehicle under his control permits another to use the vehicle if he knows, or should know, that the other is unable to manage the vehicle and, therefore, injury to others is likely to result.

Restatement (Second), Torts 2d, sec. 308, p. 100 (1965), states the rule in general terms:

"Sec. 308. Permitting Improper Persons to Use Things or Engage in Activities

"It is negligence to permit a third person to use a thing or to engage in an activity which is under the control of the actor, if the actor knows or should know that such person intends or is likely to use the thing or to conduct himself in the activity in such a manner as to create an unreasonable risk of harm to others."

Analysis of Wisconsin authority and the rule of the Restatement illustrates that the negligence of the entruster is a separate act of negligence. It is also apparent, however, that such negligent entrustment is irrelevant unless the person to whom a thing is entrusted acts in a negligent manner (creates an unreasonable risk) and in fact inflicts injury as the result of such conduct. For liability to ensue, the negligence of the entruster and the entrustee must result in the injury.

This was the express position taken by this court in the first Hopkins case when it quoted with approval Berry on Automobiles (3rd ed.), sec. 1040, p. 410:

" 'In such a case of mere permissive use, the liability of the owner would rest ... upon the combined...