Rouse v. Greyhound Rent-A-Car, Inc.

• Decision Date: 13 January 1975
• Docket Number: INC,No. 73-4007,RENT-A-CA,73-4007
• Citation: 506 F.2d 410
• Parties: Luther T. ROUSE, as Administrator of the Estate of Jeptha L. Cobb, and Volkswagen Insurance Co., Plaintiffs-Appellees, v. GREYHOUND, et al., Defendants-Appellees-Cross-Appellants, Lakeland Automobile Auction, Inc., et al., Defendants-Appellants.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 410

506 F.2d 410

Luther T. ROUSE, as Administrator of the Estate of Jeptha L Cobb, and Volkswagen Insurance Co., Plaintiffs-Appellees, v. GREYHOUND RENT-A-CAR, INC., et al Defendants-Appellees-Cross-Appellants, Lakeland Automobile Auction, Inc., et al Defendants-Appellants.

No. 73-4007.

United States Court of Appeals, Fifth Circuit.

Jan. 13, 1975, Rehearing Denied Feb. 13, 1975.

James W. Smith, Daytona Beach, Fla., for Lakeland Auto.

Roland A. Sutcliffe, Jr., George T. Eidson, Jr., Orlando, Fla., for Volkswagen Ins. Co.

Thomas L. Clarke, Jr., Robert L. Trohn, Lakeland, Fla., for Old Republic Ins. Co.

Appeals from the United States District Court for the Middle District of Florida.

Before DYER, SIMPSON and CLARK, Circuit Judges.

CLARK, Circuit Judge:

The narrow question presented by this action for declaratory judgment is which of the insurance carriers must bear the loss for monies paid in settlement of tort claims arising from an automobile accident. Jurisdiction is based upon diversity of citizenship. Based upon an analysis of the particular fact situation existing at the time of the accident, the district court held that both the owner and the bailee of the vehicle at fault must be treated as 'joint' owners and, therefore, that the carrier for the owner and the carrier for the bailee were jointly primarily liable for the payment of damages to the injured third parties and should divide the payment in the proportion the applicable policy limit of each bore to the aggregate of the applicable policy limits of both. We reverse.

The plaintiffs are Luther T. Rouse, a Georgia citizen, as Administrator of the Estate of Jeptha L. Cobb, deceased, and Cobb's insurer, Volkswagen Insurance Company (Volkswagen), a Missouri Corporation. The defendants are Greyhound Rent-A-Car, Inc. (Greyhound), a Florida Corporation, and its insurer, Old Republic Insurance Company (Old Republic), a Pennsylvania Corporation; and Manheim Services Corporation (Manheim), a Delaware Corporation, its subsidiary, Lakeland Automobile Auction, Inc. (Lakeland), a Florida Corporation, and their insurer, St. Paul Fire and Marine Insurance Company (St. Paul), a Minnesota Corporation.

Simply stated this litigation arises from Cobb's negligent operation of an automobile on the public highways of Volusia County, Florida causing death and injuries to persons not party to this suit. The following facts found by the district court are amply supported by the record. At the time of the collision Cobb was driving a Ford Torino automobile owned by Greyhound and insured under a policy issued to Greyhound by Old Republic. Prior to the date of the accident the Torino had been entrusted to Lakeland, Cobb's principal, for purposes of sale either at Lakeland's weekly auction or off the block. The automobile was also insured under the 'non-owned automobile' clause in Lakeland's personal injury liability insurance policy issued by St. Paul. Finally, since Lakeland consented to Cobb's use of the Torino for personal purposes, Cobb was insured with respect to injuries from the accident under the 'non-owned automobile' clause in the policy Volkswagen issued to Ocie Mae Cobb covering Jeptha L. Cobb.

Two of the four state court civil actions arising out of the accident have been settled and the other two remain pending. To effect the settlement, St. Paul, on behalf of Manheim and Lakeland, contributed 75,000 dollars; Old Republic, on behalf of Greyhound, contributed 65,000 dollars; and Greyhound itself contributed 10,000 dollars pursuant to a 10,000 dollar deductible provision in its policy with Old Republic. Volkswagen, on behalf of the Estate of Jeptha L. Cobb, tendered into the registry of the Circuit Court of Volusia County-- in which the civil actions were pending and where two pending civil actions are still docketed-- the limits of its policy, 100,000 dollars. All of the parties herein have stipulated that the amount of the settlement was reasonable and that it was made without prejudice to the rights of any of the parties to seek a declaration of their respective rights and liabilities in connection with the accident.

The district court correctly concluded that Cobb, Lakeland, and Greyhound were all subject to damage suit judgments in favor of the injured parties. Cobb was of course liable as the driver for damages proximately resulting from his negligent operation of the vehicle. Lakeland, as bailee of the automobile was also liable because of its consent to Cobb's operation of the vehicle. Martin v. Lloyd Motor Co., 119 So.2d 413 (Fla.App.1960); Frankel v. Fleming, 69 So.2d 887 (Fla.1954). Greyhound is similarly liable under the Florida dangerous instrumentality doctrine which imposes upon the owner of an automobile vicarious liability to persons injured as a result of the negligence of a person operating the automobile with the owner's consent. E.g., Engleman v. Traeger, 102 Fla. 756, 136 So. 527 (1931); Southern Cotton Oil Co. v. Anderson, 80 Fla. 441, 86 So. 629 (1920); Ray v. Earl, 277 So.2d 73 (Fla.App.1973); Martinez v. Hart, 270 So.2d 438 (Fla.App.1972); Allstate Ins. Co. v. Chastain, 251 So.2d 354 (Fla.App.1972), cert. denied, 263 So.2d 578 (Fla.1972); Hertz Corp. v. Hellens, 140 So.2d 73 (Fla.App.1962). '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.' Susco Car Rental System V. Leonard, 112 So.2d 832, 835-836 (Fla.1959); accord, Thomas v. Atlantic Associates, Inc., 226 So.2d 100 (Fla.1969); Ivey v. National Fisheries, Inc., 215 So.2d 74 (Fla.App.1968).

The point which Manheim, Lakeland and St. Paul contest is the lower court's conclusion of law that St. Paul was jointly primarily liable along with Old Republic.

As noted by the district court, Florida case law has established the principle that the insurer of the owner of a vehicle is primarily liable to persons injured as a result of the negligence of a person operating that instrumentality with the owner's consent. E.g., Roth v. Old Republic Ins. Co., 269 So.2d 3 (Fla.1972); Ray v. Earl, 277 So.2d 73 (Fla.App.1973). The Roth opinion 'is based on the policy of Florida law as developed in the dangerous instrumentality doctrine to require an owner to provide financial responsibility for his motor vehicles operated on the public highways of the state with his 'consent'.' Rouse v. Greyhound Rent-A-Car, Inc., 369 F.Supp. 1072, 1076 (M.D.Fla.1973). Even where an owner of an automobile has voluntarily entrusted it to another, and this second person subsequently entrusts the vehicle to still another, the third person is also covered by the owner's policy because of the Financial Responsibility Law and the policy's conformity therewith. Fla.Stat.Ann. 324.151(1)(a) (1971). ¹ See Roth, supra. In such a case, where a permittee of the bailee acquires possession of the automobile, the owner's consent to the third party's use will be implied in cases where no express limitation or negation of consent can be found. See, e.g., Ray v. Earl, and Susco, supra. In fact, this 'doctrine of implied consent . . . has been used to extend the insurer's liability in a manner such that it is usually coextensive with the owner's liability to injured third parties under tort doctrines of dangerous instrumentality and vicarious and imputed negligence.' Ray v. Earl, 277 So.2d 73, 76 (Fla.App.1973).

The district court concluded that since Lakeland enjoyed certain incidents of ownership in the vehicle at fault it should be treated as a joint 'owner' with Greyhound, that as owners both were liable under the Florida dangerous instrumentality doctrine, and, therefore, that Old Republic and Lakeland were primarily and jointly liable for the payment of damages. We disagree with the district court's holding that Lakeland was an 'owner' of the vehicle.

Since the primary liability of the owner's insurer is founded upon the Florida requirement that an owner be financially responsible for use of dangerous instrumentalities such as automobiles, the definition of 'owner' adopted by the Financial Responsibility Law governs our determination of Lakeland's status. Section 324.021(9) of the Florida Statutes defines an 'owner' as:

A person who holds the legal title of a motor vehicle or in the event a motor vehicle is the subject of an agreement for the conditional sale or lease thereof with the right of purchase upon performance of the conditions stated in the agreement and with an immediate right of possession vested in the conditional vendee or lessee, or in the event a mortgagor of a vehicle is entitled to possession, then such conditional vendee or lessee or mortgagor, shall be deemed the owner for the purpose of this chapter.

Clearly, Florida intends for the term 'owner' to be synonymous with the terms legal or equitable titleholder. Lakeland was not the holder of title nor was it a conditional vendee, lessee, or mortgagor. Given this definitional policy, Old Republic was and remained solely primarily liable for damages to the injured parties. Therefore, unless its coverage amounts be first exhausted, Old Republic must reimburse Volkswagen for the 100,000 dollars which it paid into the registry of the Circuit Court of Volusia County for settlement of the claims of the injured persons, and reimburse St. Paul for the 75,000 dollars which it contributed to the settlement fund.

Old Republic, while accepting the proposition that the owner's insurer is primarily liable under the dangerous instrumentality doctrine, argues that the doctrine is not applicable...