Opinion ID: 2209899
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Heading: Liability of defendant Smothers under an agency theory.

Text: In their petition, plaintiffs asserted that the driver, Webster, was operating the rental vehicle as an agent of defendant Smothers and that Smothers was therefore liable for Webster's negligence in operating the vehicle under an agency theory. The parties assume on appeal that the district court apparently adopted this agency theory of liability in entering judgment for plaintiffs against Smothers. Plaintiffs do not contend that defendant Smothers is liable to plaintiffs under Iowa Code section 321.493, that Smothers was an owner of the vehicle, or under a bailment theory. Defendant Smothers asserts on her appeal that the district court erred in impliedly concluding that she is liable to plaintiffs for Webster's negligence under an agency theory. Smothers contends she cannot be liable under an agency theory because she did not consent to Webster's operation of the vehicle and thus did not authorize him to act as her agent. The focus of the inquiry in this appeal relates more to whether an agency relationship existed between defendants Smothers and Webster, rather than the implications arising therefrom. The party asserting the existence of an agency relationship bears the burden of proof. See Kanzmeier v. McCoppin, 398 N.W.2d 826, 830 (Iowa 1987). An agency relationship exists where there is (1) a manifestation of consent by one person that another shall act on the former's behalf and subject to the former's control and (2) the consent of the latter to so act. Mermigis v. Servicemaster Indus., Inc., 437 N.W.2d 242, 246 (Iowa 1989). The primary consideration in determining whether an agency relationship exists is the principal's right of control. See id. As one authority explains: The agency relation results if, but only if, there is an understanding between the parties which, as interpreted by the court, creates a fiduciary relation in which the fiduciary is subject to the directions of the one on whose account he acts. It is the element of continuous subjection to the will of the principal which distinguishes the agent from other fiduciaries and the agency agreement from other agreements. Restatement (Second) of Agency § 1 cmt. b. (1958) (emphasis added). Thus, implied in any agency relationship is the notion that the principal exercises some type of control over the agent in performance of the act to be done and that the agent agrees to be subject to that control. Under common law, an owner of a vehicle had no liability to third parties concerning the negligent operation of the vehicle. At the time of the enactment of Chapter 275, Acts of the 38th G.A., supra, [the predecessor to Iowa Code section 321.493] the rule was firmly established in Iowa that the owner of a motor vehicle who permitted another to drive it, when no relation of principal and agent, master and servant, partnership or joint venture existed, was ordinarily a mere bailor and being such was not liable for the negligence of his bailee in the operation of the car .... The statute in question was undoubtedly made into law to remedy this situation, to make the owner of an automobile responsible for the negligence of one to whom he entrusted its operation. Stuart v. Pilgrim, 247 Iowa 709, 715, 74 N.W.2d 212, 216 (1956) (emphasis added) (citations omitted). Here, defendant Smothers did not know defendant Webster before the accident and did not authorize Webster to drive the rental vehicle. Thus, there was no direct agency relationship between Smothers and Webster. As a result, Smothers can only be liable for Webster's negligence under an agency theory if Webster is a subagent of Smothers, through an agency relationship between Smothers and Wilcox. [2] Stated another way, Smothers is only liable for Webster's negligent operation of the rental vehicle if Wilcox was an agent of Smothers. Upon our review, we conclude that Wilcox was not acting as Smothers' agent in performing the act of returning the vehicle to the rental agency. Plaintiffs presented no evidence that Smothers imposed any conditions concerning Wilcox's operation of the vehicle or the route he was to take. Nor is there any evidence that Wilcox agreed to any such conditions. Thus, plaintiffs failed to show that Smothers exercised control, as a principal would, concerning Wilcox's actions or conduct in returning the vehicle to the rental agency. We view the relationship between Smothers and Wilcox as nothing more than a social relationship and that Wilcox was simply doing a favor for Smothers in returning the vehicle. Although we have said that [t]he driver may be the agent or servant of the owner `if the particular trip is in furtherance of the owner's business or for [the owner's] benefit,' Perry v. Tendal, 538 N.W.2d 296, 298 (Iowa 1995) (quoting Duffy v. Harden, 179 N.W.2d 496, 502 (Iowa 1970)), we believe that simply doing a favor for someone else, absent some evidence of control by the person for whom the favor is done, does not create an agency relationship. Cf. Houlahan v. Brockmeier, 258 Iowa 1197, 1202, 141 N.W.2d 545, 548 (1966) (stating that [w]here, as in the case at hand, control is relinquished by the car owner to a consent user no agency is created; father exercised no right of control over son's actions or conduct in driving car and son's negligence in driving car would therefore not be imputed to father so as to bar father's action for property damage to car). For these same reasons, Webster cannot be considered a subagent of defendant Smothers and thus there was no agency relationship between Smothers and Webster. Our conclusion that no agency relationship existed between Smothers and Wilcox is also supported, by analogy, by our refusal in Van Zwol v. Branon to adopt the initial permission rule. See Van Zwol v. Branon, 440 N.W.2d 589, 593-94 (Iowa 1989). The initial permission rule provides that when permission to use a vehicle is initially given by the owner, subsequent use thereof, even by unknown third parties, remains permissive as to the owner. See id. at 593. If our Iowa rule is that an owner's initial grant of permission to a consent driver does not extend to a third-party driver unknown to the owner, such that the owner is not liable for the third-party driver's negligence, we fail to see why the lessee of a rental vehicle should be liable under the same circumstances. Thus, Smothers has no liability for Webster's operation of the rental vehicle absent evidence of an agency relationship. We conclude that the district court erred in finding that defendant Smothers was liable under an agency theory to plaintiffs for Webster's negligence in operating the rental vehicle. We, therefore, reverse the judgment of the district court against defendant Smothers on this issue.