Neale v. Wright

ELDRIDGE, Judge. In this case a husband and wife together purchased an automobile at a time when the husband was excluded from the liability insurance policy on the vehicle under the named driver exclusion provision of the Insurance Code, Maryland Code (1957, 1986 Repl.Vol., 1990 Cum.Supp.), Art. 48A, § 240C-1. The principal issue is whether the joint ownership under these circumstances constituted “negligent entrustment” by the wife. The case was decided in the trial court on the wife’s motion for summary judgment.

The relevant facts, for purposes of summary judgment, were set forth in the pleadings and depositions. Sometime before 1981, Alvin Morris Neale was issued an automobile insurance policy by Nationwide Mutual Insurance Company covering the Neales’ family car. In 1981, Nationwide offered to exclude Mr. Neale from coverage under the named driver exclusion provision of the Insurance Code, Art. 48A, § 240C-1, in lieu of not renewing the ¹¹ policy. 1 Mr. Neale signed the offer, and thereafter the ¹² Nationwide policy continued to cover the Neales’ family car except when “the vehicle [was] operated” by Mr. Neale. In 1983, two years after Mr. Neale was excluded from the Nationwide policy, Mr. and Mrs. Neale traded in the family car, a 1977 Chevrolet Nova which they co-owned, for a new Mercedes-Benz.

Like the Nova, the Mercedes-Benz was purchased jointly by Mr. and Mrs. Neale and was titled in both names. Mrs. Neale had used the Nova, and continued to use the Mercedes-Benz, to go to and from her job as a teacher at a senior high school. Mr. Neale also drove the Mercedes-Benz occasionally even though he was excluded from the automobile insurance. Mr. Neale used at least one other vehicle, a truck owned by Mr. Neale’s construction company.

On August 25, 1985, the Reverend Fletcher Wright, his wife and two children, were involved in a head-on collision on Allentown Road in Prince George’s County with Mr. Neale who was driving the Mercedes-Benz. Mrs. Neale was not in the car at the time of the accident. The Wrights instituted the present action in the Circuit Court for Prince George’s County, initially naming only Mr. Neale as defendant, and alleging that his negligent driving caused their injuries. Because Mr. Neale was uninsured, the Wrights, sometime after this action was filed, collected uninsured motorist benefits from their own insurer, Allstate Insurance Company, under the uninsured motorist endorsement of their policy.

Allstate was permitted to intervene in light of the approximately $90,000 it had paid to the ¹³ Wrights. Thereafter, Allstate and the Wrights amended their complaints to name Mrs. Neale as a defendant on a theory of negligent entrustment and Neale Construction Company on a theory of respondeat superior liability. In May 1988, Mrs. Neale moved for summary judgment, taking the position that she, as a co-owner, had no power to prevent her husband, the other co-owner, from operating the jointly owned automobile. As previously indicated, the circuit court granted Mrs. Neale’s motion and, under Maryland Rule 2-602, finalized the judgment in her favor so that an appeal could be taken.

The Wrights and Allstate appealed to the Court of Special Appeals, arguing that Mrs. Neale negligently entrusted the car to her husband in 1983 because she allowed him to become an owner when he was excluded from the Nationwide automobile insurance policy. The Wrights and Allstate alternatively argued that Mrs. Neale entrusted the car to Mr. Neale at the time of the accident because she failed to prevent him from using it. The Court of Special Appeals reversed and remanded the case against Mrs. Neale for trial. The intermediate appellate court held that a jury could reasonably conclude that Mrs. Neale “supplied” the Mercedes-Benz to her husband at the time of purchasing the automobile “by joining with him in obtaining registration when his lack of insurance precluded him from doing so in his own name.” Wright v. Neale, 79 Md.App. 20, 28 , 555 A.2d 518, 522 (1989).

The appellate court further stated that Mrs. Neale’s liability “flows from her participation in making [Mr. Neale] an owner with knowledge of his driving habits.” Ibid. Thereafter, this Court granted Mrs. Neale’s petition for a writ of certiorari. We shall reverse the decision of the Court of Special Appeals. This Court first dealt with the cause of action for negligent entrustment in Rounds v. Phillips, 166 Md. 151 , 170 A. 532 (1934).

The controlling principle set forth in Rounds, 166 Md. at 160-161 , 170 A. at 535 , quoting with ¹⁴ approval from the Restatement of Torts § 390 (1934), is as follows: “ ‘One who supplies directly or through a third person a chattel for the use of another whom the supplier knows, or from facts known to him should know, to be likely because of his youth, inexperience or otherwise, to use it in a manner involving unreasonable risk of bodily harm to himself and others whom the supplier should expect to share in, or be in the vicinity of its use, is subject to liability for bodily harm caused thereby to them.’ ” See Restatement (Second) of Torts § 390 (1965). The cause of action for negligent entrustment does not rest on a theory of vicarious liability; it may be maintained against a person who, because he or she entrusts personal property to a known “reckless” individual, is directly negligent. See also Rounds, supra, 166 Md. at 160 , 170 A. at 535 ; Kahlenberg v. Goldstein, 290 Md. 477, 489-90 , 431 A.2d 76, 83-84 (1981). The cause of action may lie against one who has the power to permit or prohibit the use of the property entrusted.

Rounds, supra, 166 Md. at 168 , 170 A. at 538 . In Rounds , this court held that a cause of action for negligent entrustment existed against a father for entrusting an automobile to his son even though the vehicle was titled in the mother’s name. The reason for so holding was that “[t]he son was a minor, and the father, as the controlling head of the family, had the authority and power to permit the use by the son of the mother’s automobile, or to prohibit it.” Rounds, supra, 166 Md. at 167 , 170 A. at 538 . The son, it was alleged, negligently caused the death of another motorist while driving the mother’s car.

This Court recently addressed the cause of action for negligent entrustment in Kahlenberg v. Goldstein, supra, 290 Md. 477 , 431 A.2d 76 . We there recognized that liability could extend to the situation “where a gift of an automobile is made to a member of the donor’s immediate family.” 290 Md. at 489 , 431 A.2d at 83 . In Kohlenberg, a jury verdict was upheld against a father who had purchased a ¹⁵ car for his twenty-year old son who, soon after the car was purchased, was involved in an accident causing the plaintiffs injuries. In the case before us, the Court of Special Appeals extended the concept of “one who supplies a chattel” to include someone who co-purchases an automobile with his or her spouse who is a named excluded driver.

In our view, the intermediate appellate court erroneously held that a jury could reasonably conclude that Mrs. Neale “supplied” the family car to her husband in 1983 by purchasing the car with him as co-owner. The position of the respondents and the Court of Special Appeals shows a misunderstanding of the named driver exclusion provision of the Insurance Code, Art. 48A, § 240C-1, as well as the motor vehicle registration provisions of the Vehicle Laws, Code (1977, 1987 Repl. Vol., 1990 Cum.Supp.), §§ 17-101, et seq., of the Transportation Article. The respondents and the Court of Special Appeals erroneously assumed that Mr. Neale could not have purchased or registered the Mercedes-Benz without Mrs. Neale because he was excluded from the Nationwide policy under the named driver exclusion provision and was somehow uninsurable. 2 A major premise of the Court of Special Appeals’ holding is that Mr. Neale’s “lack of insurance precluded him from [obtaining registration] in his own name.” 79 Md.App. at 28 , 555 A.2d at 522 .

The fact that Mr. Neale was excluded from the Nationwide policy and may have been without other insurance, however, is irrelevant to the matter of automobile ownership and registration. In order to register a vehicle in the State of Maryland “the owner or prospective owner of the vehicle” must ¹⁶ furnish evidence “that the required security is in effect.” Code (1977, 1987 Repl.Vol.), § 17-104 of the Transportation Article. 3 The “minimum required security” means that the automobile is covered by “a vehicle liability insurance policy written by an insurer authorized to write these policies in this State.” § 17-103. 4 The required insurance attaches to automobiles and not to individuals. Nowhere in the Insurance Code or the Vehicle Laws is it provided that a named excluded driver may not own or register a vehicle. Had the Legislature wished to preclude a named excluded driver from becoming an owner or registering a vehicle it would have said so.

See Allstate Ins. ¹⁷ Co. v. Detroit Auto. Inter-Ins., 142 Mich.App. 436 , 369 N.W.2d 908 (1985). 5 Nothing prevented Mr. Neale from purchasing and registering the Mercedes-Benz in his name alone in light of the facts that the vehicle was covered by an insurance policy which met the Maryland statutory requirements and that there was another family member who drove the vehicle and was covered by the insurance policy. See Muxlow v. Auto Club Insurance Association, 152 Mich.App. 817 , 394 N.W.2d 121 (1986); Allstate Ins. Co. v. Detroit Auto, Inter-Ins., supra, 142 Mich.App. 436 , 369 N.W.2d 908 ; Baker, Shpiece, Jasinksi, Insurance Law, 34 Wayne L.Rev. 859, 911-912 (1988).

Moreover, the Court of Special Appeals’ holding in this case overlooks the fact that married couples purchase automobiles and other property together for many reasons, totally unrelated to the right to control the operation of the vehicle or other property. As this Court stated in Nationwide Mut. Ins. Co. v. Stroh, 314 Md. 176, 183 , 550 A.2d 373, 376 (1988), quoting the Supreme Court of Missouri in Stover v. Patrick, 459 S.W.2d 393, 401 (Mo.1970): “ ‘Automobiles are frequently jointly titled for various reasons, such as minimizing inheritance taxes, or avoiding the necessity of probate to transfer title to the automobile on death, or to facilitate financing, or for other reasons, none of which have anything to do with a right of control in the operation of the vehicle at the time it is being operated on the highway by the co-owner spouse.’ ” The respondents failed to set forth any facts that would reasonably permit an inference that Mr. and Mrs. Neale’s ¹⁸ co-purchase of the 1983 Mercedes-Benz had any relationship to Mr. Neale’s driving the vehicle without insurance.

The only inference concerning the reason for having the 1983 Mercedes-Benz titled in both names, which might be drawn from the record, is that the vehicle which was traded in on the Mercedes-Benz had been titled in both names. The Court of Special Appeals relied on this Court’s decision in Kahlenberg v. Goldstein, supra, 290 Md. 477 , 431 A.2d 76 , as well as on McCart v. Muir, 230 Kan. 618 , 641 P.2d 384 (1982), in finding that Mrs. Neale “supplied” the automobile to her husband at the time of purchase. Both Kahlenberg and McCart upheld jury verdicts, based on negligent entrustment, against fathers who had purchased cars for their sons who had bad driving records. Shortly after the vehicles were purchased, the sons’ negligent driving caused plaintiffs’ injuries. 6 Both Kahlenberg and McCart are distinguishable in several important respects.

In Kahlenberg and in McCart the defendants purchased automobiles specifically for the use of the alleged negligent drivers. In the present case, the Mercedes-Benz was not specifically purchased for Mr. Neale’s use; instead, the vehicle was normally used by Mrs. Neale. Furthermore, in Kahlenberg and McCart there existed a parent-child relationship between the defendants and the entrustees. Mr. Kahlenberg’s son was living at home with his parents and was still a minor.

Kahlenberg v. Goldstein, supra, 290 Md. at 479 n. 1, 431 A.2d at 78 n. 1. The Supreme Court of Kansas in McCart noted that the defendant’s son “was not an emancipated child. He remained under the control of his parents. The automobile was being operated with the permission of the father.” McCart v. Muir, supra, 230 Kan. at 621 , 641 P.2d at 388 .

In the case at bar, Mr. and Mrs. Neale are husband and wife, not parent and child. Whatever the law may have ¹⁹ once been, today one spouse does not have authority over the other spouse such as a parent has over a child. See the discussion in Frye v. Frye, 305 Md. 542, 551-561 , 505 A.2d 826, 831-836 (1986). Lastly, the negligent entrustment claims in Kahlenberg and in McCart were not in any part based upon the entrustees having been drivers excluded from family automobile insurance policies pursuant to a statutory provision.

The respondents alternatively argue that, even if Mrs. Neale was not “liable for negligent entrustment for making her husband an owner of the Mercedes,” nevertheless “Mrs. Neale would be liable for negligent entrustment because she failed to exercise her power to prevent her husband from driving the Mercedes at the time of injury.” (Respondents’ brief, p. 9.) As the respondents acknowledge, in order for Mrs. Neale to have “supplied” the car to Mr. Neale at the time of the accident, and thus be liable under a negligent entrustment theory, she had to have the power to permit or prohibit Mr. Neale from using the vehicle. Rounds v. Phillips, supra, 166 Md. at 167 , 170 A. at 538 . That power could emanate from a superior right to control the operation of the car, see Nationwide v. Stroh, supra, 314 Md. at 182 , 550 A.2d at 375 , or from a special relationship between the “entrustor” and the driver, such as a parent-child relationship, see Rounds v. Phillips, supra, 166 Md. at 167 , 170 A. at 538 ; McCart v. Muir, supra, 230 Kan. at 621 , 641 P.2d at 388 . Mrs. Neale in this case did not have the power to permit or prohibit Mr. Neale’s use of the Mercedes because, as co-owner, she did not have superior rights to it.

See Nationwide v. Stroh, supra, 314 Md. at 182 , 550 A.2d at 375 . Moreover, as discussed