Hertz Corporation

Not overruled or negatively treated on appealinfoCoverage
Appellate Division of the Supreme Court of New York, Second DepartmentMay 24, 1971
36 A.D.2d 973 (N.Y. App. Div. 1971)

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May 24, 1971

In a negligence action to recover damages for personal injuries, etc., defendant Hertz Corporation appeals from a judgment of the Supreme Court, Kings County, entered April 15, 1970, in favor of plaintiffs upon a jury verdict of $200,000 for plaintiff Silvi Furletti, of $26,000 for plaintiff Silvio Furletti, of $20,000 for plaintiff George Furletti and of $10,000 for plaintiff Peter Watral. Judgment reversed, on the law, and new trial granted, with costs to abide the event. The court has considered the questions of fact and has determined that it would not grant a new trial upon those questions. On Novmber 16, 1966, Lovejoy, the Public Administrator's decedent, went to the office of defendant Hertz on Tenth Avenue and 38th Street in Manhattan to rent a small panel truck. While there he signed a paper denominated a rental agreement. The front of the agreement contained the following printed legend in small capital letters: "I HAVE READ THE TERMS AND CONDITIONS ON PAGE 1 (OTHER SIDE) AND PAGE 2 OF THIS RENTAL AGREEMENT AND AGREE THERETO:" The reverse side of the form (p. 1), which itself was of thin quality, of the type used in a packet containing multiple copies separated by sheets of carbon paper, contained the following terms: "2. Under no circumstances shall vehicle be used, operated or driven: (A) to carry persons other than drivers or helpers, who shall ride only within the cab". * * * "11. No right of Lessor under this Rental Agreement may be waived except by a written instrument duly signed by a Principal Officer of Lessor." The reverse side of the paper also contains, in mirror reverse style, the many handwritten entries made on the front, which had the effect of obscuring, in many places, the terms printed thereon. The jury could have found that Lewis, the Hertz dispatcher, had simply turned the form toward Lovejoy, directing him to sign in one place and initial it in another, and that he then retrieved it. The jury could also have found that Lewis was aware that plaintiffs George and Silvi Furletti and Peter Watral intended to take the truck on a hunting trip and that some of them were to ride in the van. These three plaintiffs were injured when the truck, which had been traveling on the New York State Thruway at a speed of about 80 miles per hour, struck a center mall and then veered towards and struck a bridge railing and overturned in the middle of the northbound lane. The case was submitted to the jury, without objection by either side, on the theory that Hertz could validly shield itself from derivative liability by clause 2 above set forth (cf. Vehicle and Traffic Law, § 388). It is therefore unnecessary for present purposes to determine the validity of that clause in the contract. The jury was charged as follows with respect to the issue of Lewis' ability to waive clause 2 on behalf of Hertz: "There is a contention on the part of these plaintiffs that notwithstanding there was a provision in this contract which precluded its use by more than two persons, and precluded anybody getting and riding in the body of that truck, the operator of that station in behalf of Hertz, in delivering the truck to Lovejoy knew of the use to which it was put, knew that more than two persons were going to get into the truck, took the money from Lovejoy knowing that is the way the truck was to be used, and thereby waived that provision in the contract which said only two persons may ride in the cab and nobody in the body. * * * There is a claim in this action that the acts of the defendant Hertz constituted a waiver of one of the terms and conditions of the rental agreement. A waiver is an intentional abandonment or relinquishment of a known right or advantage which, but for such waiver the party would have enjoyed. It is a voluntary act of a party and does not require or depend upon a new contract, new consideration or new estoppel. It is essentially a matter of intentions." The charge was later "clarified" as follows: "Jurors, in the instructions I had given to you on the matter of waiver, I have been told there may have been some confusion in the instructions which I had given to you. So in order that there may be no confusion, I will advise you as to a particular point, and that is this. In connection with the making of the contract itself, right up to the time the contract was signed, anything that took place by way of discussion before that was merged into and included in the contract, and the terms of that contract may not be changed. However, as regards whether there was a waiver of any one of the terms of that contract or not, the immediate, subsequent conduct of the parties, either by word of mouth or by physical and actual conduct, may be taken into consideration as to whether there was a waiver of that paragraph number 2, referring to whether more than two persons could ride in that truck. In appraising whether there was or was not a waiver, you have the right to take into consideration the knowledge which the agent of Hertz had in connection with the use to which the truck was to be put, in connection with his conduct after the signing. If you find that after the contract was fully signed, the agent for Hertz then turned the keys over to Mr. Lovejoy with knowledge that it was to be used for a hunting trip, if there was such knowledge, and with knowledge that three or more were going to get into that truck and use it, if there was such knowledge, and watched them get into the truck and drive away, that would be a waiver. But the agent for Hertz, who has the right to break a contract as well as make it, did have the right to waive the provision against more than two people using that truck. But all of the circumstances must be taken into consideration, but the waiver could only take place after the contract was signed and not before. If you decide there was a waiver, it must have been an actual knowing waiver, not just that three fellows jumped into the truck and skipped off before Mr. Lewis could stop them from doing such thing. The waiver must have been intentional, knowingly, and performed after the signing of the contract." In our opinion these portions of the charge were erroneous. By the terms of the rental agreement only a principal officer of Hertz was empowered to waive a provision of the agreement. Lewis, the dispatcher, was not such an officer (cf. Bible v. Hancock Mut. Life Ins. Co., 256 N.Y. 458). In any event, no waiver may be imputed to Hertz if Lovejoy had actual or imputed knowledge of clause 11, a point which was never clearly brought home to the jury. To compound the error further, the jury was instructed "that a written contract may thus be effectively modified even when it contains a stipulation against oral modification has long been established, as was said by Judge CARDOZO, who was Chief Judge of this State, `those who make a contract may unmake it. The clause which forbids a change may be changed like any other. The prohibition of oral waiver may itself be waived'." Again, this portion of the charge ignored the fact that the contract was made by Hertz and not Lewis (see 2 Williston, Contracts [3d ed.], § 277A). The trial court stated, in refusing an additional request for an instruction, "I don't want to get this jury confused any more than perhaps they already are. The more instructions you give them, the more confused they can become. They were charged too much already." We agree. Shapiro, Gulotta and Brennan, JJ., concur; Hopkins, Acting P.J., dissents and votes to affirm the judgment, with the following memorandum, in which Christ, J., concurs: Plaintiffs George and Silvi Furletti and Peter Watral were passengers in the panel truck rented by the decedent Lovejoy from Hertz through Lewis, its employee authorized to deal with customers in the course of Hertz' business. They were present at the time Lovejoy signed the rental agreement and received the vehicle. They testified that there was no discussion between Lewis and Lovejoy of any restriction in the number of passengers to be carried in the truck. Moreover, they testified that they entered the truck and Lovejoy drove away under circumstances that the jury could reasonably find gave Lewis full opportunity to observe that they were passengers. Lewis testified, on the other hand, that he informed Lovejoy in the presence of these plaintiffs that the terms of the rental agreement forbade more than one passenger besides the driver. This evidence was of course in conflict with the testimony of plaintiffs and created an issue of fact for the jury to resolve. The issue was determined by the jury favorably for plaintiffs. Upon this state of the record, Hertz cannot rely on the agreement to dissolve its derivative liability under subdivision 1 of section 388 Veh. Traf. of the Vehicle and Traffic Law. This is not a case where the owner of a vehicle limits his permission for its operation and use (cf. Rolfe v. Hewitt, 227 N.Y. 486; Arcara v. Moresse, 258 N.Y. 211). Rather, it is a case where the owner has entrusted his business of renting vehicles to an employee who, in the eyes of the customer and the public, has apparent authority to negotiate the terms on which the vehicles are rented. These plaintiffs, as the jury found, did not know the limitation of the consent granted by the rental agreement, yet they were permitted to enter the vehicle without objection or denial of use by Hertz' employee in charge of the leasing of the vehicle. Under these circumstances plaintiffs made out a case that their lawful use of the vehicle could not be controverted by Hertz in the face of the conduct of its employee. The employee's apparent authority created an estoppel against Hertz to defeat its derivative liability (cf. Smyth v. Pellegrino, 28 A.D.2d 537; Sweeney v. Hartman, 296 Mich. 343; Leviness v. Post, 6 Daly 321; Santise v. Martins, Inc., 258 App. Div. 663; 2 N.Y. Jur., Agency, §§ 92, 242, 246). Under this view, it is immaterial that the rental agreement provided for no waiver of its terms except in writing executed by an officer of Hertz. The authority of Lewis, the employee, in the setting of the leasing itself was not diminished by any notice to the public; these plaintiffs never saw or heard of the restriction of Lewis' authority; and, like the limitation as to the number of passengers, the apparent authority of Lewis held out by Hertz estops Hertz from asserting the restriction of power. In the sense of estoppel, then, the trial court's charge was not erroneous. True, the charge put the issue under the category of waiver rather than estoppel, but we should not stand on characterizations, if the essential elements of the conduct of Lewis and Hertz were fairly brought to the attention of the jury. Here the court described the evidence of the conduct in issue and the claims of the parties and instructed the jury as to the effect of waiver, in the event the jury found the conduct of Lewis so to be constituted. Though the correct legal term for the complex of rights which was the center of the question before the jury was estoppel, yet it must be recalled that "Waiver belongs to the family of estoppel, and often in such cases they are convertible terms" ( Maloney v. Northwestern Masonic Aid Assn., 8 App. Div. 575, 579). Indeed the Court of Appeals has said ( Kiernan v. Dutchess County Mut. Ins. Co., 150 N.Y. 190, 195), "While express waiver rests upon intention, and estoppel upon misleading conduct, implied waiver may rest upon either, for it exists when there is an intention to waive unexpressed, but clearly to be inferred from circumstances, or when there is no such intention in fact, but the conduct of the insurer has misled the insured into acting on a reasonable belief that the company has waived some provision of the policy" (see, also, 5 Williston, Contracts [3d ed.], § 679; 28 Am.Jur.2d, Estoppel and Waiver, § 30, pp. 634-635).