Sexton v. Ryder Truck Rental, Inc.

Decision Date14 June 1982
Docket Number63362,Nos. 1,Docket Nos. 61606,2,s. 1
Citation320 N.W.2d 843,413 Mich. 406
PartiesRichard W. SEXTON and Karen S. Sexton, husband and wife, Plaintiffs-Appellants, v. RYDER TRUCK RENTAL, INC., a foreign corporation, Defendant-Appellee. Jareta D. STORIE, Administratrix of the Estate of Charles E. Storie, Deceased, v. SOUTHFIELD LEASING, INC., a Michigan corporation, Defendant-Appellant, and SOUTHFIELD LEASING, INC., a Michigan corporation, Defendant and Third Party Plaintiff, v. LEBOW ASSOCIATES, INC., a Michigan corporation, Third Party Defendant. Calendar413 Mich. 406, 320 N.W.2d 843
CourtMichigan Supreme Court

Randolph McCarthy, Jr., Kalamazoo, for the Sextons.

J. William Dark, Kalamazoo, for Ryder Truck Rental, Inc.

Gromek, Bendure & Thomas by Carl L. Gromek, Nancy L. Bosh, Detroit, for Michigan Trial Lawyers Ass'n.

Schaden & Heldman, Victoria C. Heldman and Richard M. Goodman, P.C., Detroit, for Storie.

Plunkett, Cooney, Rutt, Watters, Stanczyk & Pedersen, John P. Jacobs, C. Barry Wetherington, Detroit, for Southfield Leasing, Inc.

Chris M. Parfitt, Southfield, for Lebow Associates, Inc.

WILLIAMS, Justice.

These companion cases challenge us to decide whether this Court should continue to follow the doctrine of lex loci delicti, which was upheld more than a decade ago in Abendschein v. Farrell, 382 Mich. 510, 170 N.W.2d 137 (1969). This Court, in granting leave to appeal, said:

"The parties are directed to include among the issues to be briefed: (1) whether the doctrine of lex loci delicti should be abandoned in favor of the dominant or substantial contacts test for determining the law to be applied in a conflict of laws context; or whether, in lieu of abandoning the doctrine of lex loci delicti, the public policy of this state mandates application of Michigan law under the facts of this case, and (2) whether the Michigan owners' liability statutes have extra-territorial application." 407 Mich. 897, 908 (1979).

Review of these matters convinces us that not only has there been a major retreat from the doctrine of lex loci delicti among scholars and the state courts, but that in Michigan itself the doctrine is at least as much honored in the breach as observed. Furthermore, both Abendschein and Kaiser v. North, 292 Mich. 49, 289 N.W. 325 (1939), on which Abendschein so strongly relied, have been seriously eroded, and Kaiser has in effect been overruled.

As a consequence, not following lex loci delicti in these cases does not flout stare decisis. Furthermore, Abendschein is not on all fours with the facts of these cases. Abendschein dealt with a Michigan plaintiff and a New York defendant with a third-state accident. Here both the plaintiffs and defendants are Michigan residents, or corporations doing business in Michigan, with a foreign accident.

Upon consideration of all the arguments for lex loci and the alternate choice-of-law methodologies as well as the Michigan precedents, we presently adopt no extant methodology outright but hold that when two residents, or two corporations doing business in the state, or any combination thereof, are involved in an accident in another state, the forum will apply its own law.

Nor are we persuaded that the application of the owners' liability statutes under these facts results in an extraterritorial application of Michigan law. The cause of action arising under the statutes is not founded so much on defendants' conduct as it is on the relationship between the owner and the operator. In both cases the owner-operator relationship took place exclusively in Michigan. Therefore, the application of the owners' liability statutes under these facts is not an extraterritorial application. Sexton is reversed, and Storie is affirmed.

I. FACTS
A. Sexton v. Ryder Truck Rental, Inc.

On March 29, 1976, plaintiff and a co-employee, Michigan residents and employees of a Michigan corporation, were operating a truck leased from defendant during the course of their employment. The truck was titled and registered in the name of defendant Ryder Truck Rental, Inc., a Florida corporation authorized to do business in Michigan, and leased from defendant's offices in Grand Rapids, Michigan, where it had been principally garaged and, presumably, insured.

Plaintiff had embarked on a business trip to an unspecified location outside of Michigan. The journey originated and was to have terminated in Kalamazoo, Michigan, at the employer's place of business. Early in the morning of March 29, however, the truck overturned in Wytheville, Virginia. Plaintiff, who occupied the sleeper portion of the vehicle at the time of the accident, suffered serious injury. The record does not indicate that any other person was injured or that other property damage was sustained.

Plaintiff and his wife instituted a tort action for personal injuries against the Michigan defendant-owner in Kalamazoo Circuit Court pursuant to the Michigan motor vehicle owners' liability statute which provides in pertinent part that "[t]he owner of a motor vehicle shall be liable for any injury occasioned by the negligent operation of such motor vehicle". M.C.L. Sec. 257.401; M.S.A. Sec. 9.2101.

Defendant moved for summary judgment on the ground that since both the accident and injury occurred in Virginia, pursuant to the lex loci rule, the law of Virginia rather than the Michigan law should control disposition of plaintiff's asserted owners' liability claim. Since Virginia had not provided for such owners' liability actions by statute or at common law, Virginia law should be applied to disallow plaintiff's suit.

Because the accident occurred in Virginia, which had made no provision for owner's liability, Judge Borsos granted defendant's motion for summary judgment. In so ruling, Judge Borsos remarked:

"Since Michigan is the forum, this court will apply Michigan's choice of law rule. There is no doubt that traditionally Michigan, like all other states, has applied the common-law rule--'the place of the wrong'--when confronted with a conflict of state laws. But while Michigan has clung to this rule, many other states have shifted to a new approach, the dominant contacts method. Although this method has its difficulties, there is much to be said for it; under the significant contacts rule, cases such as this one appear to reach a more reasonable result. In this case, it is clear that Virginia really has no interest at stake at all. The parties and property involved are all from Michigan, and there is nothing in this case that would affect the safety of Virginia highways or the burden on its hospitals or social service rolls. By contrast, Michigan has much at stake. The Legislature has decided for policy reasons that those who own automobiles have such powerful instruments at their disposal that when they turn over the keys to someone else, they are still responsible. This is important not only for the security of Michigan roads, but for the security of Michigan citizens.

* * *

"Unfortunately (as this court believes), the court is precluded from using this more equitable approach. In 1969, the Michigan Supreme Court considered the relative merits of the two rules and held that Michigan would retain lex loci delicti unless the Legislature changed the rule. Abendschein v. Farrell, 382 Mich. 510 (1969). There is no need for legislative sanction of any change, however, since choice-of-law rules are fundamentally judge-made guidelines that direct a forum court which laws to use. And while the Court clearly examined the policies behind both methods eight years ago, this court believes that since 1969, scholars and sister states have further shown that the modern, better-reasoned approach is that we apply the law of the state that has a greater interest--not the law of the state where the accident just happened to occur.

* * *

"Despite all this, however, this court remains mindful of its duty to stare decisis. Given the opportunity, this court would hasten to use any exception it could find to the lex loci delicti precedent, simply because it is particularly unfair and extreme to apply it in this case. But the court concludes that this is just what Abendschein and the cases before it demand." [12a-15a] (Emphasis supplied.)

On appeal, Judge J. H. Gillis felt "bound to follow the mandate of the Supreme Court [in Abendschein, supra ] and apply the outmoded doctrine of lex loci delicti to this case". Sexton v. Ryder Truck Rental, Inc., 84 Mich.App. 69, 70, 269 N.W.2d 308 (1978). Applying that doctrine, Judge Gillis "reluctantly" affirmed the trial court, id., 74, 269 N.W.2d 308, but stated:

"In doing so, this writer reaches what he perceives to be an inequitable result, and urges plaintiffs to appeal this case to the Supreme Court, who will hopefully abandon the lex loci delicti doctrine and adopt the more equitable 'dominant contacts' approach." Id., 70, 269 N.W.2d 308.

We granted plaintiff's application for leave to appeal on October 31, 1979. 407 Mich. 897 (1979).

B. Storie v. Southfield Leasing, Inc.

On January 17, 1974, plaintiff's decedent was the sole passenger in a leased 1968 Beechcraft "Bonanza" aircraft piloted by the president of Lebow Associates, the Michigan corporation for which both worked. During the course of their round-trip business journey from Michigan to visit business accounts in the Cleveland-Akron area of Ohio, both Michigan residents were killed when the aircraft crashed near Akron, Ohio. No other fatalities or injuries to residents or property were reported in the record. Decedent is survived by plaintiff widow and the couple's two sons, all of whom reside in Michigan.

The aircraft was owned and registered by defendant Southfield Leasing, Inc., a Michigan corporation having its principal place of business in Southfield, Michigan. Defendant had leased the aircraft to Lebow Associates. The aircraft was purchased from Production Automation Corporation with financing...

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