Lunderberg v. Bierman

• Decision Date: 05 March 1954
• Docket Number: No. 36109,36109
• Citation: 63 N.W.2d 355,43 A.L.R.2d 865,241 Minn. 349
• Parties: , 43 A.L.R.2d 865 LUNDERBERG v. BIERMAN et al. (LUNDERBERG, third-party defendant).
• Court: Minnesota Supreme Court

Page 355

63 N.W.2d 355

241 Minn. 349, 43 A.L.R.2d 865

LUNDERBERG v. BIERMAN et al. (LUNDERBERG, third-party defendant).

No. 36109.

Supreme Court of Minnesota.

March 5, 1954.

Syllabus by the Court.

1. Where the owner of an automobile has become liable to a third party injured by one to whom the owner has granted permission to drive his car solely by virtue of our financial responsibility act, such owner is entitled to recover indemnity from the operator of the car in the absence of any active negligence chargeable to the owner.

2. Where the owner of an automobile entrusts his automobile to the owner of a garage and one employee of such garage owner is injured by the negligent operation of the automobile by another employee, the fellow-servant doctrine which bars the right of the injured employee to sue the employer does not bar an action by the owner of the automobile to recover indemnity from the owner of the garage if held liable to the injured employee solely on account of our financial responsibility act.

3. Where the owner of an automobile entrusts the automobile to a garage owner and an employee of the garage owner is injured in the negligent operation of the car by another employee in the performance of a contract of bailment, payment to the injured employee of benefits under our workmen's compensation act does not bar an action for indemnity by the owner of the automobile against the garage owner if the owner of the automobile is held liable to the injured workman solely on account of our financial responsibility act.

4. Third-party complaint examined and Held to state a cause of action for indemnity.

Freeman, Larson & Peterson, M. W. Gaughan, Minneapolis, for appellant.

Snyder, Gale, Hoke, Richards & Janes, by Nathan A. Cobb, Minneapolis, for defendant M. Bierman.

Ellis L. Bursell, Landree Clark & Gove, Minneapolis, for respondents.

DELL, Chief Justice.

Margaret A. Bierman purchased a 1950 Hudson automobile from Reuben G. Lunderberg, an individual doing business as Lunderberg Motor Company, referred to hereinafter as Lunderberg Motor. The contract of purchase provided for a 2,000-mile checkup. On March 21, 1950, Mrs. Bierman took her car to Lunderberg Motor's garage for such checkup. Walter Ilstrup and Elder Lunderberg were employees of Lunderberg Motor. As part of the checkup, Ilstrup and Elder Lunderberg took the car out for a road test. Ilstrup was driving, and Elder was sitting beside him. In the course of the road test, the automobile was involved in an accident in which Elder was injured. Mrs. Bierman was not in the car at that time. Elder collected benefits under the Workmen's Compensation Act, M.S.A. § 176.01 et seq., from his employer, Lunderberg Motor, and thereafter commenced this action against Ilstrup and Mrs. Bierman alleging that Ilstrup was driving the car with the permission of Mrs. Bierman and that Ilstrup's negligence in driving the car caused his injury. Mrs. Bierman was granted leave to serve a third-party complaint against Lunderberg Motor; she claimed that if she was liable to Elder Lunderberg she was entitled to indemnity from Lunderberg Motor. Mrs. Bierman and Lunderberg Motor both moved for summary judgment on the issues raised by the third-party complaint and the answer thereto. The court granted the motion of Mrs. Bierman, holding that as a matter of law Lunderberg Motor was liable to indemnify Mrs. Bierman for any recovery obtained by Elder Lunderberg against her. This appeal is from the judgment so entered.

This appeal presents essentially the following four questions: (1) Is there any right of indemnity over at all? (2) Does the fellow-servant doctrine bar the right of indemnity? (3) Does payment by the employer of benefits under the Workmen's Compensation Act bar the right of action for indemnity by Mrs. Bierman? (4) Does the complaint state a cause of action?

1. Appellant admits that the relationship between Mrs. Bierman and Lunderberg Motor was that of bailor-bailee. He also admits that the bailee would be liable in the performance of the contract of bailment for any misfeasance resulting in damage to the bailor's property, but he insists that, as to tort liability resulting from injury to a third person, the bailee is personally liable but is not liable to the bailor for a liability imposed upon him by statute. Appellant relies upon Kurzon v. Union Ry. Co., City Ct., 21 N.Y.S.2d 310. Apparently that case does furnish some support for appellant's contention, although it is not clear just what the court did hold. It is a decision of the city court of New York and apparently, so far as we have been able to determine, did not reach the appellate division of the New York court. It is not good law and is not followed even in New York. See, Parness v. Halpern, 257 App.Div. 678, 15 N.Y.S.2d 199, a decision of the New York appellate court; Chernoff v. Wholesome Bakery Products, Inc., Sup., 17 N.Y.S.2d 570, a decision of the supreme court of New York.

In Kramer v. Morgan, 2 Cir., 85 F.2d 96, the federal circuit court of appeals had before it a case involving the New York Financial Responsibility Act, ¹ which is substantially the same as M.S.A. § 170.54. ² There, defendant permitted his son Richard to drive his automobile in the state of New York. While so doing, he injured plaintiff. Plaintiff sued Richard and recovered a verdict but was unable to collect it. He then sued defendant, the owner of the car, whose liability rested on the Financial Responsibility Act alone. While the case was reversed on other grounds, the federal court, speaking through Mr. Justice Learned Hand, said:

'It will be observed that Richard and the defendant were not joint tortfeasors, but that the defendant's liability is imputed; he was in effect Richard's surety and could therefore recover over against him, if compelled to pay the loss.'

The general rule is stated in Restatement, Restitution, § 96, as follows:

'A person who, without personal fault, has become subject to tort liability for the unauthorized and wrongful conduct of another, is entitled to indemnity from the other for expenditures properly made in the discharge of such liability.'

Under Comment a we find the following:

'The rule applies * * * to * * * situations in which, by statute or otherwise, a person without fault is responsible for the conduct of another. Illustrations of this are found under modern decisions and statutes which impose liability upon a person who has permitted another to drive an automobile, as where the head of a household is made liable for the negligent driving of the members of the family, the licensed driver is made liable for the negligence of an unlicensed driver driving in his presence, or the owner of a car is made the insurer of the conduct of one to whom he lends the car.'

Substantially the same language is used in 27 Am.Jur., Indemnity, § 18. In 42 C.J.S., Indemnity, § 21, we find the following:

'* * * the owner of a motor vehicle who has been subjected to liability to a person injured through its operation, under a statute imposing such liability by virtue of his ownership, is, although the statute does not so provide, entitled to be indemnified by the wrongdoer.'

While the California statute is somewhat broader than ours, in Baugh v. Rogers, 24 Cal.2d 200, 215, 148 P.2d 633, 642, 152 A.L.R. 1043, the court said with respect to the liability of a bailee over to a bailor in a situation such as we have here:

'* * * If Dr. Rogers (the bailee), in negligently backing Warnock's car into the plaintiff, had injured the Vehicle we have no doubt but that under the above-stated principles of the law of bailments he would be liable to Warnock for the damage to the bailed property. The fact that it was with an employee of the bailee that the damagecausing collision occurred would be wholly immaterial. This principle, we are satisfied, is equally applicable to the case before us insofar as concerns the independent and correlative rights and obligations of the owner and of the operator as between them.'

The rule permitting the owner of an automobile to recover from a bailee when the owner's liability exists solely by virtue of the statute imputing to him the liability of one to whom he entrusts his car is analogous to that permitting the master to recover of a servant damages which the master has been compelled to pay on account of the negligence of the servant. In cases of that nature we permit recovery. Magistad v. Andrew Schoch Grocery Co., 177 Minn. 453, 225 N.W. 287; see, Annotation, 110 A.L.R. 834.

The whole doctrine of indemnity rests upon the proposition that, when one is compelled to pay money which in justice another ought to pay, the former may recover of the latter the sum so paid unless the one making the payment is barred by the wrongful nature of his conduct. 42 C.J.S., Indemnity, § 20.

In Rozmajzl v. Northland Greyhound Lines, 242 Iowa 1135, 49 N.W.2d 501, plaintiff was a passenger on a bus owned by Sioux Lines, Inc., driven by one of its drivers. She was riding on a ticket purchased from the Northland Greyhound bus company over a route on which it held a permit. Due to the fact that the Northland bus was incapacitated, Northland had obtained a Sioux Lines bus and driver to drive the route that day. In an action against both lines, plaintiff recovered a joint judgment, and Northland Greyhound claimed that it was entitled to indemnity from Sioux Lines. In holding that Northland Greyhound was so entitled, the Iowa court said, 242 Iowa 1143, 49 N.W.2d 506:

'One who is liable only by reason of a duty imposed by law for the consequences of another's negligence may recover over against the active perpetrator of the wrong. So a servant is liable to his master who is not at fault for damages the latter is compelled to pay a third person because of the servant's negligence. * * *

'Indemnity is also frequently allowed a party guilty of passive negligence against one guilty of...