Hamrick v. Spring City Motor Co.

• Citation: 708 S.W.2d 383
• Parties: Samuel HAMRICK and wife, Carol Hamrick, Brenda Gates, widow and next of kin of Carlos Gates, and William Hixson and wife, Vickie Hixson, Plaintiffs/Appellants, v. SPRING CITY MOTOR COMPANY, Defendant/Appellee.
• Decision Date: 24 March 1986
• Court: Tennessee Supreme Court

Page 383

708 S.W.2d 383

Samuel HAMRICK and wife, Carol Hamrick, Brenda Gates, widow and next of kin of Carlos Gates, and William Hixson and wife, Vickie Hixson Plaintiffs/Appellants, v. SPRING CITY MOTOR COMPANY, Defendant/Appellee.

Supreme Court of Tennessee at Knoxville.

March 24, 1986.

Jerry H. Summers, Thomas L. Wyatt, Chattanooga, for plaintiffs/appellants.

N. Mark Kinsman, Thomas L.N. Knight, William H. Ortwein, Larry Roddy, Chattanooga, for defendant/appellee.

OPINION

HARBISON, Justice.

These consolidated actions for personal injury and wrongful death arose out of a motor vehicle accident. They were brought against Luther Champion, operator of a new General Motors four-wheel drive truck, and against Spring City Motor Company, the owner of that vehicle. The accident happened late in the evening of July 10, 1979 when Champion apparently attempted to make a left turn in front of the approaching vehicle in which Messrs. Hamrick, Gates and Hixson were riding.

Following a jury trial judgments were entered against Champion. He is not a party to this appeal, nor are there presented any issues respecting the trial.

The complaint alleged three different theories of individual liability upon the dealership which was the owner of the new 1979 truck. Depositions were taken from Champion and from George W. Baker, Jr., one of the principals of the dealership. These were filed in support of a motion for summary judgment on behalf of Spring City Motor Company. That motion was sustained prior to trial, and the action of the trial court was affirmed by the Court of Appeals. We granted review to give further consideration to that aspect of the case.

The three theories asserted against Spring City Motor Company were (1) permissive use, (2) negligent entrustment and (3) respondeat superior, including the provisions of T.C.A. Sec. 55-10-311 creating a prima facie case upon proof of ownership.

Permissive use, standing alone, establishes only a bailment. In and of itself it is not a basis for the imposition of personal liability upon the owner of a vehicle. When there is permissive use, there may be an issue concerning omnibus insurance coverage carried by the owner, but this is quite different from the imposition of personal liability upon the owner himself. It is well settled that ordinarily a bailor is not liable for negligence of a bailee. See East Tennessee & Western North Carolina Motor Transport Company v. Brooks, 173 Tenn. 542, 548, 121 S.W.2d 559, 561 (1938). Whether an individual is driving a vehicle as a permitee or as the owner, even though there has not yet been a formal transfer of title, can obviously affect questions of insurance coverage. See Mercado v. The Travelers Insurance Co., 59 Tenn.App. 741, 443 S.W.2d 819 (1969). In that case an owner had executed an informal bill of sale to a person who was driving a vehicle at the time of a serious accident. There had not been compliance with the motor vehicle registration and title statutes, but nevertheless the driver was deemed to be operating the vehicle in his own right and not as a permitee or bailee of the owner, so that insurance carried by the latter was held not to cover the driver.

While the evidence in the present case established either a permissive use or an informal, incomplete sale, no basis has been shown for imposition of liability upon the owner simply because of the permission given to Champion to have the vehicle in his possession. Summary judgment was therefore properly granted upon that theory of appellants.

The second theory upon which appellants sought to hold the owner personally liable was that of negligent entrustment. Again, however, there is no evidentiary basis for imposition of liability upon that theory. Champion was 29 years of age, duly licensed, steadily employed, and was neither intoxicated nor otherwise impaired when the vehicle was delivered to him. He drove it from the dealer's place of business in Rockwood, Tennessee to another office of the dealership in Spring City without incident. He stated that he was pleased with the vehicle and wanted to purchase it. He and Mr. Bacon, together with Champion's father, entered into negotiations under which Champion's father donated an older vehicle registered in his name as the down-payment, and Champion was to obtain financing for the balance of the purchase price from a credit union. Champion and his father removed all of their personal possessions from the vehicle being traded and delivered its keys to Mr. Bacon. One of Mr. Bacon's employees transferred the license plate from the traded vehicle to the new truck. It was understood that Champion was to confirm financing at his credit union, and Mr. Bacon testified that he supposed the remainder of the transaction would be handled by mail.

On the following day Champion did visit the credit union and testified that financing was confirmed. He did not have an executed bill of sale from Mr. Bacon in his possession, but simply an unsigned one setting out the terms of the purchase, showing the down-payment and the balance to be financed. Accordingly Champion would have had to contact Mr. Bacon or go back to the dealership to get an executed bill of sale and whatever other papers the credit union would have needed in order to complete the transaction and send a check to the seller.

Mr. Champion's father was well acquainted with Mr. Bacon and had purchased several automobiles at his dealership previously. Mr. Bacon did not know the son, but the evidence reveals nothing in the background of the son which would have been evidence of negligence in entrusting possession of a new vehicle to him. The evidence shows that he obtained a commitment for proper financing of the vehicle on the day after it was entrusted to him. That evening he drank a considerable amount of intoxicating beverages, and the accident occurred about 11:45 in the evening after he had taken his girl friend to her home and was returning to his father's residence. He was not shown, however, to be a chronic alcoholic, nor was he intoxicated at the time the vehicle was entrusted to him. There is no dispute as to any material facts concerning entrustment to him and no basis upon which a finding of negligence by the seller in that regard could be sustained. See Kennedy v. Crumley, 51 Tenn.App. 359, 367 S.W.2d 797 (1962). Accordingly summary judgment was properly granted to appellee upon that theory.

There is no claim of any defect in the vehicle delivered to Champion, so that the only remaining basis upon which liability could theoretically be imposed upon the dealership was that of respondeat superior. In order to impose liability under this theory, of course, it is necessary to show that the operator of a vehicle was acting as a servant or employee of the owner and in the course and scope of the employment at the time of the accident. To establish a prima facie case on this theory, appellants rely upon the terms and provisions of T.C.A. Sec. 55-10-311:

"Prima facie evidence of ownership of automobile and use in owner's business.--In all actions for injury to persons and/or to property caused by the negligent operation or use of any automobile, auto truck, motorcycle, or other motor propelled vehicle within this state, proof of ownership of such vehicle, shall be prima facie evidence that said vehicle at the time of the cause of action sued on was being operated and used with authority, consent and knowledge of the owner in the very transaction out of which said injury or cause of action arose, and such proof of ownership likewise shall be prima facie evidence that said vehicle was then and there being operated by the owner, or by the owner's servant, for the owner's use and benefit and within the course and scope of his employment. The prima facie evidence rules of the preceding sentence shall also apply in cases of the negligent operation of a vehicle being test-driven by a prospective purchaser with the knowledge and consent of the seller or his agent whether or not the seller or his agent is present in the vehicle at the time of the alleged negligent operation. This section is in the nature of remedial legislation and it is the legislative intent that it be given a liberal construction."

The second sentence, making the prima facie evidence rules applicable to the test-driving of a vehicle by a prospective purchaser, was added by 1974 Tenn.Pub.Acts ch. 750 ¹. The predecessor of the remainder of the statute was enacted by 1921 Tenn.Pub. Acts, ch. 162, and the statute was subsequently amended by 1957 Tenn.Pub. Acts, ch. 123.

The principal provisions of this section, other than the sentence pertaining to prospective purchasers, have been construed many times by the courts of this state. It is not necessary here to discuss all of these decisions. As presently written, the statute does not contain the word "presumption," although prior versions did so. Earlier cases construing the statute held that it created a "rebuttable presumption" of a master-servant relationship, sometimes referred to as an "agency," and that unless there was countervailing evidence introduced at trial, this prima facie evidence was sufficient to take the case to the jury and to support a jury verdict against the owner. See Emert v. Wilkerson, 7 Tenn.App. 269 (1928); Racy Cream Company v. Walden, 1 Tenn.App. 653 (1925). In the latter case it was stated that the purpose of the General Assembly in enacting the statute was:

"to create one or more new rules of evidence in these automobile cases under which mere proof of ownership of an automobile effecting an injury, being negligently operated, should establish a prima-facie case of liability against the car, or against the owner, and thus bring our State in line with those holding this to be a correct conclusion without the aid of the statute." 1 Tenn.App. at 667-668.

Essentially, the statute does provide a...