SC Lawyer, May 2011, #3. Understanding the Tort of Negligent Entrustment and Its Application Inside and Outside the Context of Alcohol Intoxication.

• Author: By Michael Montgomery

South Carolina BAR Journal

2011.

SC Lawyer, May 2011, #3.

Understanding the Tort of Negligent Entrustment and Its Application Inside and Outside the Context of Alcohol Intoxication

South Carolina LawyerMay 2011Understanding the Tort of Negligent Entrustment and Its Application Inside and Outside the Context of Alcohol IntoxicationBy Michael Montgomery In automobile accident litigation, the tort of negligent entrustment often accompanies a primary claim against the allegedly at-fault driver. The requisite elements to support a claim of negligent entrustment have been the subject of numerous opinions by South Carolina appellate courts. The majority of cases involve the factual scenario in which the driver of a vehicle causes injury to a third-party, and a claim is made against the owner, or someone in control of the vehicle, for entrusting the vehicle to the driver. The main issue addressed in these cases to date is the necessity of evidence of alcohol intoxication by the driver to whom the vehicle is entrusted. The purpose of this article is to review the development of the tort of negligent entrustment as it relates to automobile accidents, to examine its current status, and to consider the unanswered questions in this area of litigation.

The beginnings of negligent entrustment and the legacy of Homer Whatley

Earlier cases involving entrustment of vehicles were analyzed under basic negligence principles with the focus on proximate cause. SeeTucker v. U.S., 385 F.Supp. 717, 722-723 (D. S.C. 1974).

The "modern" negligent entrustment cases can be traced back to American Mutual Fire Insurance Company v. Passmore, 275 S.C. 618, 274 S.E.2d 416 (1981). In Passmore, the S.C. Supreme Court stated that the theory of negligent entrustment provides "the owner or one in control of the vehicle and responsible for its use who is negligent in entrusting it to another can be held liable for such negligent entrustment." Id. at 621, 274 S.E.2d at 418 (citing 19 A.L.R.3d 1175, superseded by 91 A.L.R.5th 1, and Bahm v. Dormanen, 543 P.2d 379, 381 (Mont. 1975)). The opinion focused on the necessity of an insurable interest for liability insurance to apply, and the court held that an insurable interest would exist if one could be held liable for the vehicle's use. Id. The Passmore court ultimately determined that a negligent entrustment claim could not be supported against the alleged insured because he did not own or control the vehicle involved in the accident. Id.

Passmore has come to form the basis of the analysis in subsequent negligent entrustment cases involving automobiles. However, it is important to note that Passmore was a declaratory judgment action to resolve insurance coverage disputes among potential insurers with respect to an automobile accident, and the court simply acknowledged the "theory" of negligent entrustment. The court did not indicate the factual basis for an underlying claim of negligent entrustment; in fact, the opinion implies that entrustment was not an issue at all. The only elements cited for negligent entrustment were ownership, control and responsibility for the use of the vehicle. Passmore, 275 S.C. at 621, 274 S.E.2d at 418.

The next negligent entrustment case was McAllister v. Graham, 287 S.C. 455, 458, 339 S.E.2d 154, 156 (Ct. App. 1986). In McAllister, an employee furnished with a company truck was involved in an automobile accident while he was off duty and driving under the influence of alcohol. The only evidence asserted to support a cause of action for negligent entrustment against the employer was the fact that the employee had been previously convicted for driving under the influence approximately nine years before the accident.

The S.C. Court of Appeals cited Passmore in setting forth, for the first time, the following elements for a negligent entrustment cause of action: (1) knowledge of or knowledge imputable to the owner that the driver was either addicted to intoxicants or had the habit of drinking; (2) that the owner knew or had imputable knowledge that the driver was likely to drive while intoxicated; and (3) under these circumstances, the entrustment of a vehicle by the owner to such a driver. McAllister, 287 S.C. at 458, 339 S.E.2d at 156. The McAllister court held the employee's prior DUI conviction was too remote in time to meet the test and that the employer did not have the knowledge required under the first two elements.

When listing the above elements for negligent entrustment, the McAllister court also cited Nettles v. Your Ice Company, 191 S.C. 429, 4 S.E.2d 797 (1939). The Nettles opinion tells the interesting story of Homer P. Whatley, whose impact on the tort of negligent entrustment is far-reaching, as his actions form the basis for the first two elements of the McAllister test. Whatley was a truck driver employed by "Your Ice Company," where he worked with the plaintiff, Nettles. On a fateful night in 1935, Nettles accompanied Whatley on some evening deliveries. Early in the evening, Whatley bought and began drinking a pint of whiskey. (The court's opinion also reported that "after some persuasion...