Employers' Fire Ins. Co. v. Consol. Garage & Sales Co.

• Decision Date: 11 March 1927
• Docket Number: No. 12532.,12532.
• Citation: 85 Ind.App. 674,155 N.E. 533
• Parties: EMPLOYERS' FIRE INS. CO. v. CONSOLIDATED GARAGE & SALES CO. et al.
• Court: Indiana Appellate Court

85 Ind.App. 674

155 N.E. 533

EMPLOYERS' FIRE INS. CO.

v.CONSOLIDATED GARAGE & SALES CO. et al.

No. 12532.

Appellate Court of Indiana, in Banc.

March 11, 1927.

Appeal from Superior Court, Marion County; Sidney S. Miller, Judge.

Action by the Employers' Fire Insurance Company against the Consolidated Garage & Sales Company and others. Judgment for defendants, and plaintiff appeals. Reversed, with directions.Fesler, Elam & Young and Irving M. Fauvre, all of Indianapolis, for appellant.

J. J. M. La Follette and C. K. McCormack, both of Indianapolis, for appellees.

McMAHAN, C. J.

Charles Martindale was the owner of an automobile which he stored with the Consolidated Garage & Sales Company, hereafter referred to as the sales company, and while it was so stored an employee of that company, without the knowledge or consent of the owner, wrongfully took it out of the garage for his personal use and pleasure and wrecked it. At the time Martindale had a policy of theft insurance with appellant, the Employers' Fire Insurance Company. The insurance company paid the loss to the insured, and took an assignment from him of his right of action against the sales company, and brought this action to recover from the sales company the amount of the damages paid by it, the insured being made a defendant to answer as to his interests. The sales company filed an answer of general denial, and the insured filed a disclaimer. Trial by jury, and a judgment for the defendants; hence this appeal. Appellant contends the court erred (1) in giving instruction No. 8; (2) that the verdict is contrary to law; and (3) that the verdict is not sustained by sufficient evidence.

The complaint alleges the ownership of the automobile by Martindale, the storage of the same with the sales company, and its undertaking to look after and protect it against theft and other damage; that an employee of the sales company, who was employed to look after automobiles stored with the company and who was charged with protecting the automobile from theft and damage, while he was on duty as such employee, wrongfully discharged his duty by driving the automobile out of the garage where it was stored and out into the country; that he negligently and carelessly handled the same so that it was wrecked and destroyed; that prior thereto appellant had issued to Martindale a policy of insurance, insuring him against theft of the automobile; that Martindale made claim to the insurance company for loss of the automobile by reason of theft; that appellant settled the claim by paying the insured $1,800 and took from him a written assignment of whatever right he had against any one arising out of or connected with the “aforesaid theft,” and authorized appellant to take any action deemed necessary to protect its said right.

The automobile in question was stored in the garage of the sales company for compensation, and on a night while it was so stored an employee of the sales company, without right, and unknown to his employer or Martindale, and in violation of the contract for storage, took the automobile out of the garage where it was stored and drove it out into the country where it was wrecked and greatly damaged.

The insured under date of September 15, 1923, made proof of his loss, in which he stated the automobile had been stolen from the garage by an employee of the sales company,and while in the possession of the thief had been wrecked and destroyed, and that he thereby transferred, assigned, and set over unto the insurer “all rights, title, and interest in said automobile.” On the reverse side of this proof of loss there is a “Subrogation Receipt,” acknowledging receipt of $1,800 from the insurance company in full settlement for damage to the automobile “by reason of theft,” and stating that the insured, in consideration of such payment, assigned and transferred to appellant all claims and demands of the insured against the sales company, and any other person or persons arising from or connected with such loss or damage. And on the same day the insured also executed a written release, whereby he released and discharged appellant from all damages resulting from the “theft” of his automobile out of appellee's garage, and further assigned and transferred to appellant all the rights he had against any person or corporation arising out of or in any way connected with the “aforesaid theft and damage,” and authorized appellant to take any action necessary in its own name or in the name of Martindale.

[1] Appellant at the proper time and manner requested the court to give the jury three instructions, numbered 2, 3, and 4, to the effect that, if the jury believed the automobile had been “taken” from the garage by an employee of the sales company and by him wrecked, and that such employee was under a general duty to look after cars in the garage and see that they were taken only by the proper people, appellee would be liable for the act of such employee in wrecking the automobile, even though when he took the automobile he was acting in violation of the orders of his employer. The court modified each of the three tendered instructions by striking out the word “taken” in each of them and inserting the word “stolen.” The instructions, as modified, were then given by the court and numbered 5, 6, and 7.

The court on its own motion gave instruction No. 8, of which complaint is made, and which instruction is as follows:

“I instruct you that plaintiff's complaint is drawn on the theory that one of the defendant Consolidated Garage & Sales Company's employees breached the contract to properly care for defendant Martindale's automobile by wrongfully stealing said automobile. The law of theft, as defined by the statute of this state, and applying to this case, is as follows: ‘Whoever feloniously steals, takes, and carries, leads or drives away the personal goods of another of the value of $25 or upwards is guilty of grand larceny.’ It is, therefore, a question of fact for you to determine whether the acts complained of as causing the breach of the contract herein constituted the crime of larceny. If you find from a fair preponderance of the evidence that defendant's agent stole said automobile, and find for plaintiff on the other material allegations of plaintiff's complaint, then your verdict should be for the plaintiff.”

Appellant's first contention is that it was not required to prove a technical theft of the automobile; that the question as to whether the policy covered the loss was a question exclusively between the insurer and the insured, a question in which the sales company was not interested, and in which it had nothing to do; and that the assignment transferred to the insurance company any and all rights of action Martindale had against the sales company. Appellee, on the other hand, contends that in order to recover it was necessary for appellant to prove there had been an actual theft of the automobile by the employee of the sales company.

In Medes v. Hornbach, 56 App. D. C. 13, 6 F.(2d) 711, Hornbach operated a garage for the storage of automobiles. Medes rented space and left his car in defendant's charge. The car was taken out by an employee of the defendant and damaged. The defense was that the employee, in taking the car, was acting without his employment, without the knowledge or consent of the defendant, and in violation of his orders. The trial court directed a verdict for the defendant. In reversing the judgment the court said:

“It is the duty in general of one operating a garage in which automobiles are kept in storage for pay to exercise ordinary care by the employment of trustworthy servants and otherwise for the safe-keeping of the cars in his charge. On the other hand, he is not an insurer of their safety, and if a stored car is stolen from the garage without negligence upon his part, he is not in general liable to the owner for the loss. This rule likewise applies, should the thief be an employee of the person operating the garage, if the theft occurs without the connivance or negligence of the employer. Nevertheless, when the proof establishes that a stored car, while in charge of the garage keeper, has been taken out and used by an employee of the latter, without the knowledge or consent of the owner, and has been damaged by such use, such proof, standing alone and unexplained, is sufficient to make out a prima facie case for a recovery by the plaintiff” (citing Knights v. Piella, 111 Mich. 9, 69 N. W. 92, 66 Am. St. Rep. 375;Hadley v. Orchard, 77 Mo. App. 141;Claflin v. Meyer, 75 N. Y. 260, 31 Am. Rep. 467;Staley v. Colony Co. (Tex. Civ. App.) 163 S. W. 381;Colburn v. Art Ass'n, 80 Wash. 662, 141 P. 1153, L. R. A. 1915A, 594;Travelers' Indemnity Co. v. Fawkes, 120 Minn. 353, 139 N. W. 703, 45 L. R. A. (N. S.) 331;Handley v. O'Gorman, 45 R. I. 242, 121 A. 399).

[2] In Miles v. International Hotel Co., 289 Ill. 320, 124 N. E. 599, the court said:

“The weight of modern authority holds the rule to be that where the bailor has shown that the goods were received in good condition by the bailee and were not returned to the bailor on demand the bailor has made out a case of prima facie negligence against the bailee, and the bailee must show that the loss or damage was caused without his fault. *** The effect of this rule is not to shift the burden of proof from plaintiff to the defendant, but simply the burden of proceeding.”

[3] And such prima facie case is not overcome by a showing on the part of the bailee that the goods have been burned, or otherwise destroyed or stolen. Before such prima facie case can be said to be overcome, the bailee must further produce evidence tending to prove that the loss, damage, or theft was occasioned without his fault. This rule has been applied to garage keepers who failed to return automobiles on demand. Mehesy v. Mission Garage, 60 Cal. App. 275, 212 P. 643;Tatro v. Baker, etc., Co., 215 Mich. 623, 184 N. W....