Rental car company liability for an unlicensed driver.
The 1994 case of Drinkall v. Used Car Rentals Inc. at the Federal District Court for the Southern District of Iowa revolved around the issue of a rental car company's liability for an accident involving one of its cars driven by an unlicensed driver. The jury found Used Car liable based on an Iowa law on owner liability. On appeal, Used Car's argument that Nebraska's law should have been used was rejected by the appellate court.

Liability for traffic accidents (Cases)
Accident law (Interpretation and construction)
Automobile lease and rental industry (Laws, regulations and rules)
Maroney, Patrick F.
Pub Date:
Name: Journal of Risk and Insurance Publisher: American Risk and Insurance Association, Inc. Audience: Trade Format: Magazine/Journal Subject: Business; Insurance Copyright: COPYRIGHT 1995 American Risk and Insurance Association, Inc. ISSN: 0022-4367
Date: March, 1995 Source Volume: v62 Source Issue: n1
Product Code: 7512000 Automobile Rent & Lease NAICS Code: 53211 Passenger Car Rental and Leasing
Accession Number:
Full Text:
Drinkall v. Used Car Rentals, Inc., 32 F.3d 329 (8th Cir. 1994)

Bayles, a Nebraska resident, rented a car from a rental car office in Nebraska. Bayles had formerly lived in Iowa, but at the time of the accident he did not have a valid drivers license. Bayles' car was being repaired at a Hyundai dealership, which arranged for him to obtain a rental from Used Car Rentals. An employee of Used Car drove to the Hyundai dealership, picked up Bayles and a friend, and drove them to the rental car office. The employee then began filling out a rental agreement. The back of the agreement provided that the rental car could only be operated by licensed drivers over the age of 21 and that if the car was obtained by misrepresentation, all use of the vehicle was without the rental car company's permission.

The rental car employee then asked Bayles for his drivers license and Bayles indicated that it was in his car at the dealership. Bayles' friend was also asked for her drivers license and she indicated that it was at the dealership as well. The manager of the rental car agency was asked if they should return to the dealership to obtain the drivers licenses, but the manager told the employee to go ahead and complete the rental agreement.

In April, 1991, the plaintiff, Drinkall, an Iowa resident, was injured in an accident in Iowa involving a car driven by Bayles. Because Bayles and Used Car were residents of Nebraska and Drinkall was an Iowa resident, the case was heard in federal court under "diversity of citizenship" jurisdiction.

The case was tried in the Federal District Court for the Southern District of Iowa. The jury found the rental car company liable. The trial court had instructed the jury that in order to find Used Car liable it had to find that Used Car had consented to Bayles' use of the vehicle at the time of the accident. Iowa law provides that, where damage is done by any motor vehicle by reason of its negligence of the driver and the auto is driven with the consent of the owner, the owner of the motor vehicle shall be liable for such damage.

On appeal, defendant Used Car argued that the district court should not have used Iowa law but rather Nebraska law, which does not provide for owner liability. The appellate court found that the district court was correct in using Iowa law. In conflicts of law situations, the federal court is to use the conflicts of law that is prevailing in the state in which it sits. Iowa uses the significant relationships test, a theory that the court should use the law of the state which has the most significant relationships to the matter and parties involved in the litigation.

The appellate court also found that there was sufficient evidence to submit the issue of consent to the jury and that by its conduct Used Car had consented to Bayles' use of the car. Defendant Used Car had demonstrated little interest in the provisions of the rental agreement limiting persons permitted to operate the car. Used Car did nothing to determine whether Bayles had a valid drivers license and did not inform Bayles about the terms and conditions on the back of the rental agreement. Additionally, Bayles was to call Used Car and give his drivers license number, which he did not do and Used Car did not follow-up on this conversation. The appellate court affirmed judgment in favor of the plaintiff.
Gale Copyright:
Copyright 1995 Gale, Cengage Learning. All rights reserved.