35 N.Y.2d 260 | NY | 1974
The question presented is whether an insurer issuing a standard liability policy to an auto rental company may disclaim financial responsibility for the negligence of a person operating a rented vehicle with the express permission of the lessee, in violation of a private rental agreement between the rental agency and the lessee.
Discount Rent-A-Car (Discount) was the named insured in a policy issued by the defendant Continental National American Group Company (Continental).
Victor Anderson rented a car from Discount for one day for the ultimate purpose of driving the Sills family to a funeral and, because of a last minute work conflict, he was unable to do so and he then authorized Ronald Sills to drive his family to the funeral. The printed rental agreement contained a clause that the vehicle would be driven by the lessee or an adult member of his immediate family and that the lessee would not surrender the use of the vehicle to any other person without first obtaining
In the present action, plaintiff’s motion for summary judgment was granted, the court holding that the consent given by Anderson was sufficient to afford Sills coverage and that the disclaimer was invalid. The Appellate Division reversed on the theory that the restrictive clauses in the rental agreement and insurance contract were “ reasonable and realistic ”. We are unable to agree with that determination.
The leasing of automobiles has become a large, widespread business. For example, during 1973, over 65,000 rental automobiles were registered in this State (New York Department of Motor Vehicles Report MV-213 [April, 1974]). As these vehicles traverse our highways it is inevitable that some will become involved in their fair share of accidents. In recognition of this, the Legislature has required rental agencies to file a financial security bond as a certificate of self-insurance prior to registering their vehicles (Vehicle and Traffic Law, § 370, subds. 1, 3).
Daily, car rental agencies rent large numbers of vehicles to the general public for profit. They are not in the same position as the private car owner who loans his car to a friend or relative for a limited purpose (cf. Arcara v. Moresse, 258 N. Y. 211; Chaika v. Vandenberg, 252 N. Y. 101) and, unlike the short span of a friendly individual loan, restrictions in rental agreements affect the use of a large number of vehicles, these arrangements sometimes continuing over long periods of time.
Discount, and in turn, Continental, knew or certainly should have known that the probabilities that vehicles coming into the hands of another person are entirely too great for respondent to evade responsibility. We hold, in the circumstances of this
Continental has urged that this court is bound by the jury finding that Discount did not give its consent to Sills to drive its car. A jury may only make findings of fact. As noted, we have concluded, as a matter of law, that constructive consent was given.
The case of Aetna Cas. & Sur. Co. v. World Wide Rent-A-Car (28 A D 2d 286) cited by Continental is distinguishable. The rental lease arrangement there fell within the provisions of section 128 of the Vehicle and Traffic Law which defines “ owner ” to include “ any lessee * * * of a motor vehicle * * * for a period greater than thirty days.” The lessee in Aetna held an 18-month lease and thus was an “ owner ” and, as such, was required to obtain its own insurance coverage and could not rely on its lessor’s policy.
Our holding is intended to further the public policy that victims of automobile accidents should have recourse to a financially responsible defendant. It is not intended to settle the rights, if any, that Discount, or Continental as its subrogee, may have against Anderson for the alleged violation of any agreement.
Accordingly, the order of the Appellate Division should be reversed, with costs, plaintiff’s cross motion for summary judgment should be granted, and defendant’s motion should be denied.
Order reversed, etc.
Section 388 of the Vehicle and Trafile Law provides, in pertinent part, that: “ 1. Every owner of a vehicle used or operated in this state shall be liable and responsible for death or injuries tp person or property resulting from negligence in the use or operation of such vehicle, in the business of such owner or otherwise, by any person using or operating the same with the permission, express or implied, of such owner.”
Designated pursuant to section 2 of article VI of the State Constitution.