Opinion ID: 1847998
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Heading: Statutory Background of Consent-Owner Motor Vehicle Liability.

Text: The specific issue presented in this case broadly pertains to the liability of one person for the tort of another, or what is commonly called vicarious liability. [4] At common law, a person was, generally, only liable for the torts of another in a master-servant setting. See Hartman v. Norman, 253 Iowa 694, 701, 112 N.W.2d 374, 379 (1961). Over the years, however, various exceptions have been crafted to the common-law rule, including the motor vehicle consent statute, otherwise known as the owners' responsibility law. See id. at 701, 112 N.W.2d at 378-79. This statute, originally enacted in 1919, imposes liability on the owner of a motor vehicle for damage done by reason of the negligent operation of the motor vehicle by the driver when driven with the consent of the owner. Iowa Code § 321.493(1). The legislature understood motor vehicles can be dangerous and, in the exercise of its police powers, wanted to hold owners responsible for damage caused by persons who drive a vehicle with the owner's consent. Seleine v. Wisner, 200 Iowa 1389, 1391-92, 206 N.W. 130, 131 (1925). Thus, the purpose of the law is to provide greater protection for an innocent third party from the careless operation of a motor vehicle by making the owner responsible for the negligence of a driver to whom the owner entrusted the vehicle. Briner v. Hyslop, 337 N.W.2d 858, 870 (Iowa 1983) (citing Stuart v. Pilgrim, 247 Iowa 709, 715, 74 N.W.2d 212, 216 (1956)). The rationale for imposing liability on a consent owner is consistent with the rationale for creating an exception to the common-law rule of vicarious liability for the master-servant relationship. The owner of a motor vehicle has the ability to control its use and to entrust the vehicle to competent drivers. See Federated Mut. Implement & Hardware Ins. Co. v. Rouse, 133 F.Supp. 226, 235 (N.D.Iowa 1955). As with other legal principles, the principle of consent-owner liability has been shaped by events and discourse of time. This transformation was first observed in 1937 when the legislature amended the motor vehicle laws to exempt the owner of a motor vehicle from the owners' responsibility law when the owner made a bona fide sale or transfer of his title or interest and ... delivered possession of such vehicle to the purchaser or transferee.... See 1937 Iowa Acts ch. 134, § 82 (codified as amended at Iowa Code § 321.493(2)). At the same time, the legislature amended the definition of an owner for purposes of the motor vehicle law to include the vendee or lessee under a conditional sales agreement or lease of a vehicle. See id. ch. 134, § 1(33). The legislature made the changes to the owners' responsibility law in response to various legal proceedings brought by tort victims seeking to impose liability on a conditional vendor of a motor vehicle under the owners' responsibility law for the negligence of the conditional vendee-driver of the vehicle. See Rouse, 133 F.Supp. at 234-35. Consequently, we found the 1937 amendments were passed by the legislature as an expression of its intent to exclude vendors under a conditional sales contract from liability under the owners' responsibility law. Hansen v. Kuhn, 226 Iowa 794, 803-04, 285 N.W. 249, 255 (1939). The reason for this exclusion was apparent. When an owner has departed with possession and control of a vehicle under a conditional contract for sale, the rationale for imposing vicarious liability on a consent owner dissipates. See Rouse, 133 F.Supp. at 235-36. It would be unfair to impose liability on an owner who holds title after the sale only to secure future payment of the amount of the purchase, not to exercise control over the use of the vehicle. See id. Thus, the legislature began to shape the broad rule of consent-owner liability in two ways. First, it expanded the definition of an owner by including vendees and lessees under a conditional sales agreement. Second, it crafted an exemption from the substantive rule of owner liability for sellers in a bona fide sale or transfer. Both amendments reflected circumstances in which the imposition of liability on the actual owner did not conform with the purpose of the owners' responsibility statute. The next event that shaped the owners' responsibility law came in 1953 when the legislature enacted the Iowa Motor Vehicle Certificate of Title Act. 1953 Iowa Acts ch. 127 (codified as amended at Iowa Code §§ 321.17-.44A). This legislation was part of a national movement for laws governing certificate of title to motor vehicles. See Rouse, 133 F.Supp. at 230. Among other provisions, the Act provided that a person could not acquire a right, title, or interest in any vehicle (subject to registration) from the owner except by a certificate of title. See Iowa Code § 321.45(2) (1954); see also Schultz v. Sec. Nat'l Bank, 583 N.W.2d 886, 889 (1998). However, the new provision made no reference to the existing owner responsibility law. Thus, a question arose whether the existing bona fide sale or transfer exception to the owners' responsibility law required an assignment of title. See Hartman, 253 Iowa at 703-04, 112 N.W.2d at 380. The legislature ultimately answered the question in 1955 through additional amendments. It combined the owner consent statute and the bona fide sale or transfer exemption into the same statute, declared a purchaser or transferee of a bona fide sale or transfer to be an owner under the statute, and expressly stated that the certificate-of-title requirement did not apply in determining whether a person had made a bona fide sale or transfer under the consent-owners' liability statute. 1955 Iowa Acts ch. 157, § 8 (codified as amended at Iowa Code § 321.493(2)). We subsequently concluded the legislature intended to express the notion that a bona fide sale or transfer, with delivery of possession of the vehicle, relieved the vendor of liability for damages resulting from the negligent operation of the vehicle even when the vendor failed to transfer the certificate of title. Hartman, 253 Iowa at 703-04, 112 N.W.2d at 380. We said: The question under this statute is not who may own the vehicle or have a lien according to the county records. It is not who may owe for the purchase price or how the indebtedness is evidenced. If there was a bona fide sale and delivery of possession, the statute relieves the seller from liability for subsequent negligence of the operator. Id. at 704, 112 N.W.2d at 380. The next significant event affecting the owners' responsibility law occurred in 1965 when the legislature, as part of its adoption of the Uniform Commercial Code, amended the definition of an owner in the definition section of the motor vehicle chapter. While maintaining the primary definition of an owner as a person who holds legal title, the legislature removed the alternate definition of an owner pertaining to vendees, lessees, or mortgagors. 1965 Iowa Acts ch. 413, § 10112 (codified as amended at Iowa Code § 321.1(49)). In its place, the legislature declared a debtor to be an owner when a motor vehicle is the subject of a security agreement with a right of possession [vested] in the debtor. Id. The final substantive amendment to the statute occurred in 1995. At this time, the legislature defined an owner for the purposes of imposing civil liability under the owners' responsibility law as a person to whom the certificate of title for the vehicle has been issued or assigned or to whom a manufacturer's or importer's certificate of origin for the vehicle has been delivered or assigned. 1995 Iowa Acts ch. 136, § 1 (codified as amended at Iowa Code § 321.493(1)). Yet, the legislature specifically excluded a lessor of a motor vehicle from the meaning of an owner for the purposes of determining civil liability. Id. It also provided a definition of a leased vehicle. Id. This amendment followed on the heels of our decision that a leasing company remained the owner of a motor vehicle because the lease of a motor vehicle did not constitute either a security agreement or a bona fide sale or transfer. Peterson v. Ford Motor Credit Co., 448 N.W.2d 316, 319-20 (Iowa 1989). Accordingly, the legislative history of the owners' responsibility law reveals our legislature has modified the breadth of consent-owner liability over the years in two ways. First, consent-owner liability under the owners' responsibility law has been circumscribed by changes made to the definition of an owner. The legislature has not only defined an owner as a person to whom the certificate of title to the vehicle has been issued or assigned, but also included three additional categories of persons to whom the certificate of title has not been issued or assigned. These categories are: (1) the lessee under a written lease for a period of twelve months or more with a lessor to whom the certificate of title has been issued, (2) a debtor in possession of a vehicle pursuant to a security agreement, and (3) a purchaser or a transferee of a vehicle who has received delivery of the vehicle under a bona fide sale or transfer. Iowa Code §§ 321.493(1)(a), 321.1(49), 321.493(2). Second, the corresponding titleholder in each additional category of those persons defined as an owner has either been excepted by the legislature from the definition of an owner or exempted from liability. Thus, a lessor who holds title is excluded from the definition of an owner, while the lessee is included in the definition. Id. § 321.493(1)( a ). A title-holding creditor of a debtor in possession of a vehicle under a security agreement is excluded from the definition of an owner, while the debtor is included in the definition. Id. Finally, no liability is imposed on a person who has made a bona fide sale or transfer of a motor vehicle and delivered possession to the purchaser or transferee, but who remains the record titleholder. Id. § 321.493(2). Accordingly, the legislature excepts or exempts three categories of titleholders who have a legal relationship with the possessor of the vehicle and substitutes the possessor of the vehicle for each titleholder as the owner subject to the owners' responsibility law. As a result, to avoid consent-owner liability in Iowa, a person to whom title has been assigned or transferred must either fall within the statutory exclusion of an owner or be exempt under the statute from liability.