McPhee v. Tufty

Decision Date20 March 2001
Docket NumberNo. 20000047.,20000047.
Citation623 N.W.2d 390,2001 ND 51
PartiesLory L. McPHEE and Roy McPhee, individually and as the surviving parents of Sandra A. McPhee, deceased, Plaintiffs and Appellees, v. Christopher C. TUFTY and Curtis Tufty, Defendants, and AMCO Insurance Company, a corporation, Garnishee and Appellant.
CourtNorth Dakota Supreme Court

Leland F. Hagen (argued), Lee Hagen Law Office, Ltd., Fargo, ND, for plaintiffs and appellees.

Troy A. Wolf (argued) & Paul R. Oppegard, Smith Bakke Hovland & Oppegard, Moorhead, MN, Michael J. Hagburg (appeared), Smith Bakke Hovland & Oppegard, Bismarck, ND, for garnishee and appellant.


[¶ 1] AMCO Insurance Company ("AMCO") appealed from an amended judgment awarding Lory L. McPhee and Roy McPhee, individually and as the surviving parents of Sandra A. McPhee, $100,000 from the proceeds of an automobile liability insurance policy AMCO issued to Curtis and Debra Tufty. We conclude the trial court erred in ruling the AMCO insurance policy provided coverage under the circumstances, and we reverse.


[¶ 2] In 1994, Curtis and Debra Tufty's teenage son, Christopher Tufty, lived in Gwinner with his parents and brother and sister, Travis and Amanda Tufty. In September 1994, Curtis and Debra Tufty renewed until March 1995 an automobile liability insurance policy they had purchased from AMCO through Brian Orn of the Forman Insurance Agency. The policy limits of the AMCO policy were $100,000 per person and $300,000 per accident, and Curtis, Debra and Travis Tufty were listed on the original application as "Drivers." Christopher and Amanda Tufty were listed as "Children Or Others In Household Not Driving." A 1983 Ford van, a 1979 GMC pickup, and a 1983 Dodge four-door were listed on the declarations page of the policy as the insured vehicles.

[¶ 3] After Christopher Tufty turned 16 years old in April 1994, his parents bought him a 1978 Ford pickup for $500, and the pickup was insured effective May 25, 1994, under the AMCO policy. The engine failed shortly thereafter, and the Ford pickup was dropped from coverage on June 13, 1994. Orn was not informed Christopher was the principal user of the pickup when coverage was obtained.

[¶ 4] On June 16, 1994, Curtis Tufty wrote a $650 check for the purchase of a 1973 Pontiac LeMans. According to Curtis and Christopher Tufty, the teenager paid his father for the car from money he had saved while working part-time during the school year and full-time during the summer. Curtis Tufty said he wrote a check for the Pontiac to make a record of the transaction because Christopher Tufty did not have a checking account.

[¶ 5] Curtis and Debra Tufty wanted to add the Pontiac to their AMCO policy, but Orn requested a driving record for Christopher Tufty. The driving record revealed he had been convicted in 1993 of operating a vehicle without a license and fleeing a law enforcement officer, resulting in his license being suspended for more than 100 days. Orn told Curtis Tufty that AMCO would not cover Christopher Tufty because of his driving record. Orn obtained quotations for coverage from three high-risk insurance carriers, and on September 16, 1994, Orn prepared an application for insurance for the Pontiac with Farm and City Insurance Company ("Farm and City"). The application listed Curtis Tufty as the "Owner" and Christopher Tufty as one of the "Operators." The application informed the company AMCO would not insure Christopher Tufty because of his "driving record." Farm and City issued a policy effective September 16, 1994, to December 16, 1994, which had liability coverage limits of $25,000 per person and $50,000 per accident. Orn opened a second file with a second log relating to Christopher Tufty. Curtis and Debra Tufty continued to pay the premium on the AMCO policy and also paid the premium on the Farm and City policy.

[¶ 6] In the meantime, AMCO requested information from Orn during summer 1994 about the status of Christopher Tufty as a driver under its policy. AMCO sent two requests for the information in August and September 1994, but Orn did not respond with an update on his driver status.

[¶ 7] On November 12, 1994, Curtis Tufty wrote a $200 check for the purchase of a 1976 Toyota Corolla. Curtis and Christopher Tufty said the teenager again paid his father cash for the Toyota within the next couple of days. According to Curtis Tufty, he again paid by check so there would be a family record of the transaction. According to Christopher Tufty, the Toyota was intended to be a replacement vehicle for the Pontiac. No request was made to Orn at that time to have the Toyota covered by either the AMCO or Farm and City insurance policy. The Toyota also was not registered in the name of either Curtis or Christopher Tufty.

[¶ 8] On November 27, 1994, Christopher Tufty was driving the Toyota when it was involved in an accident with another vehicle near Gwinner. A passenger in the Toyota, Sandra McPhee, was killed, and two other passengers were injured. Debra Tufty informed Orn of the accident that evening. A log entry in both Curtis and Christopher Tuftys' files at the insurance agency stated:

Debra called this evening to tell us that their son, Christopher was involved in a[n] accident east of Gwinner. He had 3 other passengers with him and slid on ice through a[n] intersection and 1 of the occupants was killed. She also said that they had purchased a different car for Chris on Nov. 12, 1994. The other passengers were also hurt, however, none were injured severely. The driver of the other auto was not hurt. See Loss Notice in file for more information. Debra said there was no alcohol or drugs involved. She will call us with the Vin number tomorrow.

Orn sent a loss notice regarding the accident to Farm and City, but did not send a loss notice to AMCO.

[¶ 9] On November 29, 1994, Orn sent AMCO Christopher Tufty's driver information the company had previously requested during the summer. On December 1, 1994, AMCO amended the Tuftys' policy to omit Christopher Tufty as a household member not driving. On January 31, 1995, Curtis Tufty had the Farm and City policy changed to list only Christopher Tufty. The AMCO policy was again changed on March 20, 1995, to specifically list Christopher Tufty as an excluded driver. On November 7, 1996, Orn filed an automobile loss notice with AMCO.

[¶ 10] Sandra McPhee's parents, Lory and Roy McPhee, brought a wrongful death action against Curtis and Christopher Tufty in March 1998. The McPhees and the Tuftys entered into a Miller v. Shugart settlement agreement1 under which the Tuftys confessed judgment in the amount of $124,000. A stipulated judgment against Christopher Tufty was satisfied from $24,000 in proceeds from the Farm and City insurance policy. The McPhees agreed to seek the remaining $100,000 of the judgment from Curtis Tufty's AMCO insurance policy, and he assigned his rights against AMCO to the McPhees. The McPhees and AMCO then entered into a stipulation in which AMCO agreed to be added as a party in the underlying action by service of a garnishment complaint. They also agreed the court would determine whether Curtis Tufty was liable under the family car doctrine and whether the AMCO insurance policy provided coverage under the circumstances. Following an evidentiary hearing, the trial court found Curtis Tufty was liable under the family car doctrine and ruled the AMCO insurance policy provided coverage for the accident.

[¶ 11] The trial court had jurisdiction under N.D. Const. art. VI, § 8, and N.D.C.C. § 27-05-06. AMCO's appeal is timely under N.D.R.App.P. 4(a). This Court has jurisdiction under N.D. Const. art. VI, § 6, and N.D.C.C. § 28-27-01. Retaining jurisdiction under N.D.R.App.P. 35(b), we temporarily remanded this case to the trial court for clarification of an inconsistency in two of its findings of fact. The trial court has submitted its clarification.


[¶ 12] AMCO argues the trial court erred in ruling the family car doctrine applied in this case to render Curtis Tufty liable for Christopher Tufty's negligence.

[¶ 13] The family car doctrine imposes liability on the owner of a vehicle for its negligent operation by one who is using the vehicle with the express or implied consent of the owner for purposes of the business or pleasure of the owner's family. Staroba v. Heitkamp, 338 N.W.2d 640, 641 (N.D.1983). The doctrine, adopted by this Court more than 80 years ago, is founded on the theory that the driver of a family car, in pursuit of recreation or pleasure, is engaged in the owner's business and is viewed as either the agent or servant of the owner. Schobinger v. Ivey, 467 N.W.2d 728, 729 (N.D.1991). The respondeat superior theoretical basis for the doctrine is a fiction created in furtherance of the public policy of giving an injured party a cause of action against a financially responsible defendant. Michaelsohn v. Smith, 113 N.W.2d 571, 573-74 (N.D.1962), overruled on other grounds, Schobinger, 467 N.W.2d at 730. Under the family car doctrine, the owner of the vehicle is not liable for his own negligence, but is vicariously liable for the tortious acts of the driver. Nelson v. Johnson, 1999 ND 171, ¶ 8, 599 N.W.2d 246.

[¶ 14] Whether the family car doctrine applies depends on the totality of the circumstances. See Erdmann v. Thomas, 446 N.W.2d 245, 250 (N.D.1989); Lauritsen v. Lammers, 161 N.W.2d 804, 805-11 (N.D.1968). While ownership of the vehicle by the head of the household is a circumstance strongly favoring application of the doctrine, see Staroba, 338 N.W.2d at 644, to be liable under the family car doctrine, the head of the household must furnish, but need not own, the vehicle for the use, pleasure, and business of himself or a member of his family. Herman v. Magnuson, 277 N.W.2d 445, 458 (N.D.1979).

While the element of furnishing does not hinge on legal ownership, we cannot state exhaustively the

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