On appeal from Superior Court of New Jersey, Law Division, Union County.
Before Judges Muir, Jr., D'Annunzio and Eichen
The opinion of the court was delivered by D'ANNUNZIO, J.A.D.
The issue is whether the trial court erred in applying a New York statute governing the liability of a vehicle owner, rather than New Jersey's common law rule.
This is an automobile personal injury negligence action by a New Jersey resident who was struck in Elizabeth, New Jersey, by an automobile registered in New York and operated by a Florida resident. Defendant Dollar Systems, Inc. (Dollar) owned the vehicle. It is a Delaware corporation, but its principal place of business is in New York. The driver, defendant Cedeno, rented the vehicle from Dollar at Newark airport.
Under New Jersey common law, the owner of a motor vehicle is not liable for the negligence of the operator of the vehicle, unless the operator is acting as the owner's agent or employee. Doran v. Thomsen, 76 N.J.L. 754, 71 A. 296 (E & A 1908); Maurer v. Brown, 106 N.J.L. 284, 149 A. 336 (Sup. Ct. 1930); see Harvey v. Craw, 110 N.J. Super. 68, 264 A.2d 448 (App. Div. 1970). The New York rule is different. A statute imposes liability on owners. It provides:
1. Every owner of a vehicle used or operated in this state shall be liable and responsible for death or injuries to person or property resulting from negligence in the use or operation of such vehicle, in the business of such owner or otherwise, by any person using or operating the same with the permission, express or implied, of such owner.
[N.Y. Vehicle and Traffic Law § 388 (McKinney 1986)(hereafter § 388).]
In Fried v. Seippel, 80 N.Y.2d 32, 587 N.Y.S.2d 247, 599 N.E.2d 651 (N.Y. 1992), the Court of Appeals noted that § 388 is designed to protect the innocent victims of automobile accidents by "assuring that there will be a financially responsible party who is available to answer in damages." Id. at 251. The Court reasoned that the legislative scheme requiring owners of registered vehicles to procure insurance to cover the liability that § 388 creates, evinces an intent to extend liability to vehicles "registered, used, operated or intended for use within [New York]." Id. at 250. Moreover, as the New York Law Revision Commission stated, another purpose of § 388 is "to discourage owners from lending their vehicles to incompetent or irresponsible drivers." Report of the New York Law Revision Commission at 593 (1958).
Consistent with those objectives, § 388 has been applied extraterritorially, although on facts distinguishable from the present case. See Farber v. Smolack, 20 N.Y.2d 198, 282 N.Y.S.2d 248, 251, 229 N.E.2d 36 (N.Y. 1967)(holding § 388 has extraterritorial effect in spite of the statute's apparent restriction to operation of a motor vehicle "in this state"); Sentry Ins. Co. v. Amsel, 36 N.Y.2d 291, 367 N.Y.S.2d 480, 483, 327 N.E.2d 635 (N.Y. 1975)("The legislative history of section 388 . . . indicates that the Legislature intended to enlarge the vehicle owner's vicarious liability and not to draw the line at the border."); Johnson v. Hertz Corp., 315 F. Supp. 302 (S.D.N.Y. 1970)(applying the statute when the operator of a vehicle which had been rented in New York injured a Massachusetts resident in New Jersey). The courts have also held that nonresidents can maintain claims under § 388, noting that New York's concern is primarily with regulating the conduct of its resident car owners regardless of whom their tortious conduct victimizes. See Vasquez v. Christian Herald Ass'n, 186 A.D.2d 467, 588 N.Y.S.2d 291, 292 (A.D. 1992)(holding § 388 applicable to Ohio resident injured by New York resident in Pennsylvania); Klippel v. U-Haul Co. of Northeastern Michigan, 759 F.2d 1176, 1180 (4th Cir. 1985)(Under § 388, "the innocent victim class is not limited to New Yorkers, but there must be a connection between the vehicle and its owner on the one hand and the state of New York.").
In the present case, against this background, the trial court determined that § 388 applied and, therefore, defendant Dollar was vicariously liable for Cedeno's negligence. Haggerty v. Cedeno, 267 N.J. Super. 114, 630 A.2d 848 (Law Div. 1993). Dollar appeals.
We affirm substantially for the reasons expressed by Judge Menza in his comprehensive opinion. We add the following comments to sharpen the applicable choice of law analysis and to eliminate one element of the trial court's rationale.
In Veazey v. Doremus, 103 N.J. 244, 510 A.2d 1187 (1986), our Supreme Court applied Florida's interspousal tort immunity to bar a New Jersey action between Florida residents, husband and wife, arising out of a collision which occurred in New Jersey. The Court explained the framework within which choice of law issues are to be decided:
In tort cases, New Jersey has rejected the rule for determining choice of law based on the place where the wrong occurred, sometimes described as lex loci delicti. E.g., Pfau v. Trent Aluminum Co., 55 N.J. 511, 514-15, 263 A.2d 129 (1970); Mellk v. Sarahson, 49 N.J. 226, 228-29, 229 A.2d 625 (1967). Although that rule had the virtue of certainty and predictability, its mechanical application often led to unjust results. Mellk v. Sarahson, supra, 49 N.J. at 228-29. Consequently, we have adopted the more flexible governmental-interest analysis in choice-of-law decisions. E.g., State Farm Mut. Auto. Ins. Co. v. Estate ...