Section 83 Scope of Entrustment

• Library: Commercial Law 2007

When a party entrusts property to another and the property is used differently than was originally intended by the entrustor, it may not necessarily matter for purposes of imposing liability. In Byers v. Auto-Owners Insurance Co., 119 S.W.3d 659, 666 (Mo. App. S.D. 2003) (applying Arkansas law), the court explained that the initial permission rule has been defined as follows:

“[I]f permission to use the automobile was initially given, recovery may be had regardless of the manner in which the automobile was thereafter used.” Id. at 591 (quoting Arndt v. Davis, 183 Neb. 726, 163 N.W.2d 886, 888 (1969)). In adopting the initial permission rule, the Arkansas Supreme Court quoted the discussion of J. Appleman in his treatise Insurance Law and Practice with approval:

[Those] states [adopting the initial permission rule] have arbitrarily adopted a doctrine that if the vehicle was originally entrusted by the named insured, or one having proper authority to give permission, to the person operating it at the time of the accident, then despite hell or high water, such operation is considered to be within the scope of...