Rhone v. Louis
| Decision Date | 27 June 1978 |
| Citation | 580 P.2d 549,282 Or. 693 |
| Parties | Theodore R. RHONE, Respondent, v. Johnny E. LOUIS, Defendant, Guaranty National Insurance Co., Appellant. |
| Court | Oregon Supreme Court |
Gerald R. Pullen, Portland, argued the cause and filed the brief for appellant.
John F. Reynolds, of McCormick & Reynolds, Portland, argued the cause and filed the brief for respondent.
Before DENECKE, C. J., BRYSON and LINDE, JJ., and THORNTON, J. Pro Tem.
The principal question concerns the coverage of the garnishee-insurance company's liability policy.
Plaintiff sustained injuries in an automobile accident while riding as a passenger in an automobile driven by defendant. Plaintiff obtained a judgment against defendant for $49,717.97. The automobile had been rented by plaintiff from Parquit Corporation. Parquit had a liability insurance policy issued by garnishee Guaranty National Insurance Co. After obtaining judgment, plaintiff garnished Guaranty National seeking to recover under the liability insurance issued to Parquit. Guaranty National raised as a defense in its answer to plaintiff's allegations that the policy provided coverage on rented automobiles only when they were being driven by the rentee, i. e., plaintiff. The plaintiff filed exceptions to the answer and this defense was held inadequate by the trial court. Garnishee refused to plead further, and judgment was entered for plaintiff.
Garnishee raises numerous "questions on appeal," but assigns only two errors. Garnishee first contends there was no coverage for the driver because he was not the rentee.
Plaintiff relies upon Portland City Ordinance No. 139316 which regulates businesses providing motor vehicles for hire. One portion of the ordinance requires such businesses to obtain liability insurance. It further provides that:
" * * * Where the insurance covers a drive-yourself vehicle, it shall expressly provide coverage during the time such vehicle is rented out and shall cover the liability of the driver of such vehicle whether or not such vehicle is retained beyond the expected time of return to the licensee." Portland City Ordinance No. 139316, § 16.48.090.
In a number of circumstances the requirements of statutes and ordinances have been deemed covered by insurance policies that were procured for the purpose of complying with those requirements, adding to or displacing contrary provisions of the policy itself. N. W. Amusement Co. v. Aetna Co., 165 Or. 284, 288, 107 P.2d 110, 132 A.L.R. 118 (1940). See, also, Couch, Cyclopedia of Insurance Law, § 45.673 (2d ed. 1964); ORS 743.759. We need not here examine how far this rule extends because garnishee concedes both in its brief and on oral argument that it applies to its situation.
Garnishee's contention is that we should interpret the portion of the ordinance which requires the insurance to cover "the driver of such vehicle" to mean "the rentee-driver of such vehicle." Garnishee relies in part upon the definition of drive-yourself vehicle which provides that it applies to a business "hiring out vehicles for the use of a person to whom such vehicles are hired." Portland City Ordinance No. 139316, § 16.48.060(5). However, we find nothing inconsistent between this definition and a requirement that insurance be provided for the driver of the vehicle regardless of whether the driver is the rentee.
Garnishee also argues that the purpose of the ordinance is to place responsibility on the renter of the vehicle, thereby providing incentive for the renter to evaluate the driving ability of potential rentees. Thus, garnishee argues, renters will not do business with drivers who would endanger the safety of the public. In support of this position, garnishee cites Covey Garage v. Portland, 157 Or. 117, 70 P.2d 566 (1937). Covey involved the constitutionality of a 1936 Portland ordinance regulating rental car companies. That ordinance also required the companies to procure liability insurance for drivers of rented vehicles. We explained the purpose of that ordinance as follows:
" * * * The primary purpose of the ordinance is not to render damages collectible, but to induce the owner to refrain from renting his cars to the irresponsible and negligent. * * *." 157 Or. at 129, 70 P.2d at 571.
That may have been the purpose for the 1936 Portland ordinance at issue in Covey Garage ; however, we are of the opinion that the purpose for the Portland ordinance we are construing as well as the purpose for various, more recent ordinances and statutes requiring insurance for car renting concerns as well as other types of businesses is different. In State Farm Ins. v. Farmers Ins. Exch., 238 Or. 285, 292-293, 387 P.2d 825, 393 P.2d 768 (1964), after referring to the Financial Responsibility Act and the uninsured motorist statute we stated: " * * * These legislative declarations reflect a governmental policy in favor of protecting the innocent victims of vehicular accidents * * *." 238 Or. at 293, 387 P.2d at 828. We conclude the primary purpose of Portland's requiring liability insurance with coverage for "the driver" was for the protection of injured persons.
We are fortified in this opinion by the language of the ordinance that the insurance shall cover the driver "whether or not such vehicle is retained beyond the expected time of return." This provision would not cause the rental concern to rent only to responsible drivers. It is to protect persons injured by drivers who possibly are irresponsible by failing to return the vehicle within the expected time.
We interpret the ordinance to mean what it says: that the liability insurance shall cover the driver of the vehicle.
Garnishee contends that this interpretation leads to an absurd result because the insurer cannot control the risks it insures, and might be liable if the car were stolen, or driven by a child. Whether this result would necessarily follow is not involved in this case. The defendant driver was not in one of these...
To continue reading
Request your trial
-
Van Vonno v. Hertz Corp.
...ORS 742.502(2) comport with the purpose of the legislation: to protect innocent victims of vehicular accidents. Cf. Rhone v. Louis, 282 Or. 693, 697, 580 P.2d 549 (1978). Washington similarly requires insurers to comply strictly with the UM/UIM statutes. In Finney v. Farmers Ins. Co., 92 Wa......
-
Trust v. Travelers Cas. And Sur. Co. Of Am.
...doctrine of statutory incorporation compels coverage consistently with the reasoning in the Supreme Court's decision in Rhone v. Louis, 282 Or. 693, 580 P.2d 549 (1978), and our decision in American States Ins. v. Super Spray Service, 77 Or.App. 497, 713 P.2d 682, rev. allowed, 301 Or. 78, ......
-
Rowley v. Dairyland Ins. Co., Inc.
...of protecting the innocent victims of vehicular accidents * * * ." Id., supra, at 293, 387 P.2d at 828, See also Rhone v. Louis, 282 Or. 693, 697, 580 P.2d 549 (1978). The wording of the statute is clear. The liability of the insurance carrier is absolute with respect to policies issued as ......
-
5 Star, Inc. v. Atl. Cas. Ins. Co.
...are deemed to be part of an insurance policy, adding to or displacing the provisions of the policy itself. See Rhone v. Louis, 282 Or. 693, 580 P.2d 549 (1978) (describing doctrine). As a practical matter, statutory reformation usually expands the obligations of the insurer beyond the writt......