Roth v. Old Republic Ins. Co.

• Decision Date: 03 May 1972
• Docket Number: No. 40798,40798
• Parties: Ronald ROTH and State Farm Mutual Automobile Insurance Company, Petitioners, v. OLD REPUBLIC INSURANCE COMPANY and North River Insurance Co., Respondents.
• Court: Florida Supreme Court

Page 3

269 So.2d 3

Ronald ROTH and State Farm Mutual Automobile Insurance Company, Petitioners, v. OLD REPUBLIC INSURANCE COMPANY and North River Insurance Co., Respondents.

No. 40798.

Supreme Court of Florida.

May 3, 1972.

Rehearing Denied Dec. 11, 1972.

Richard J. Thornton of Walton, Lantaff, Schroeder, Carson & Wahl, Miami, for petitioners.

L. Norton Preddy of Preddy, Haddad, Kutner & Hardy, and James A. Smith of Wicker, Smith, Pyszka, Blomqvist & Davant, Miami, for respondents.

ERVIN, Justice.

This cause is before us on petition for writ of certiorari to the District Court of Appeal, Third District. Petitioner correctly contends that court's decision in Roth v. Cannel, Fla.App.1970, 242 So.2d 491, is in conflict with the decision of this Court in Susco Car Rental System of Florida v. Leonard, Fla.1959, 112 So.2d 832.

From the facts of the case it appears one Ira Plax came to Miami Beach from New York and rented an automobile from Yellow Rent-A-Car for a one-week period. His rental fee included an item representing the lessor's premiums for automobile liability insurance coverage for the rented car. When Plax signed the rental contract he agreed:

'That the rented automobile will not be operated by anyone other than the undersigned renter without the express written consent of Yellow Rent-A-Car.'

Plax left Miami before the expiration of the rental period and he turned the car over to the 18-year-old petitioner, Roth. Yellow Rent-A-Car did not consent to the exchange. The day Plax departed, Roth, while driving the automobile, struck two elderly women pedestrians. Both were seriously injured, and one died as the result of the accident.

The surviving woman and her husband and the administrator of the estate of the deceased woman filed damage suits against Roth and his mother, Plax, and Yellow Rent-A-Car. A multitude of interventions and crossclaims ensued, and three insurance companies became involved in the action. They are: Petitioner State Farm Mutual Automobile Insurance Company (Roth's insuror); Respondent Old Republic Insurance Company (Yellow Rent-A-Car's insuror, which insured Yellow Rent-A-Car under a single limit policy of $1,000,000 applying to all its rental cars), and North River Insurance Company (Plax's insuror). Settlements were made with the tort-claimants; State Farm advanced the funds with the approval of all parties, without prejudice to judicial determination of questions of indemnity or restitution.

The instant action arose out of a conflict among the insurors as to who is ultimately and primarily liable for the amounts paid the claimants. The trial judge entered a summary judgment against Roth allowing Yelow Rent-A-Car and Plax to receive indemnity from him; he also entered a summary judgment holding State Farm primarily liable and denying its claim for restitution. He based his ruling on the fact that Roth had not received Yellow Rent-A-Car's permission (either directly or by implied consent) to drive the vehicle. Roth and State Farm appealed to the District Court of Appeal, Third District, naming as appellees Yellow Rent-A-Car and Old Republic, and Plax and North River.

The District Court of Appeal affirmed the trial judge. That court held that a lessor of a vehicle is entitled to common law indemnification when damage is caused through the negligence of a lessee's permittee who was not authorized to drive the vehicle under the agreement between the owner and lessee. This decision is in direct conflict with our Susco decision, which is controlling in this case.

In Susco, a Mr. Salicetti rented an automobile from Susco Car Rental System of Florida, Inc. Under the rental agreement Salicetti agreed that no one other than himself would drive the automobile without the express consent of the rental agency. However, the automobile was being driven with Salicetti's consent by Domingo Gonzales, but without Susco's permission at the time it was involved in an accident. This court was faced with the question of '. . . 'whether or not the owner company is relieved of responsibility for damages resulting from the operation of the vehicle by someone other than the person to whom it was rented, when such operation is contrary to the expressed terms of the printed contract, and the oral instruction . . . at the time of rental. '' (Susco, text 244.) This Court held Susco liable saying:

'On the fundamental issue, the simple but sound statement of the district court (Leonard v. Susco Car Rental System of Florida, Fla.App.1958, 103 So.2d 243, 247) can be unequivocally endorsed:

'When this defendant (the automobile rental agency) turns over an automobile to another for a price, he in actuality intrusts that automobile to the renter for all ordinary purposes for which an automobile is rented. The fact that the owner had a private contract or secret agreement with the renter cannot make such restrictions a bar to the rights of the public. The restrictions agreed upon do not change the fact that the automobile was being used with the owner's consent. Nor does it appear that the car was not being used for the purpose for which it was rented i.e., the pleasure, convenience or business of the renter.'

'That opinion contains a thorough and exhaustive treatment of the development of the dangerous instrumentality doctrine in Florida, with which we are in substantial accord. (Footnote omitted.) To this we might add an observation that, whatever may have been the deviations from this course, the logical rule, and, we think, the prevailing rationale of the cases, is that when control of such a vehicle is voluntarily relinquished to another, only a breach of custody amounting to a species of conversion or theft will relieve an owner of responsibility for its use or misuse. The validity or effect of restrictions on such use, as between the parties, is a matter totally unrelated to the liabilities imposed by law upon one who owns and places in circulation an instrumentality of this nature.' (Susco Car Rental System of Florida v. Leonard, 112 So.2d at 835--836.)

The insurer of the owner's automobile is therefore primarily liable for injuries inflicted because of the negligent operation of the automobile under our holding in Susco.

However, it is contended by Respondents that Susco is not conclusive of the issue of liability as among the parties here; that Susco only decided that a rental car owner is liable to injured third party members of the public irrespective of whether its lessee or his permittee may be driving the rental car causing the injury; but that the issue to be decided here is whether the driver tort-feasor Roth, or, rather, his insurer, State Farm Mutual Automobile Insurance Company, who issued its policy to Roth's mother, is entitled to indemnity or restitution from Yellow Rent-A-Car or its insurer, Old Republic Insurance Company, for the amounts State Farm paid for the injury of the two women because of Roth's negligence.

We do not think that Yellow Rent-A-Car and its insurer, Old Republic Insurance Company, can escape ultimate primary liability for the accident. Its automobile was rented to Plax, who, as lessee or bailee, paid the item of premium for the insurance coverage afforded by Old Republic. If Plax had been driving the rented car at the time of the accident, unquestionably, as a permittee of the named insured, he would have been protected by the Old Republic Insurance policy for which he had paid an amount allocated as premium. Furthermore Old Republic Insurance Company would not have had any right of indemnity from Plax, as an insured protected by its policy, even though he was the tort-feasor. Morse Auto Rentals, Inc. v. Lewis, Fla.App.1964, 161 So.2d 235. We conclude Roth, as Plax's permittee, was similarly...