Levy v. Daniels’ U-Drive Auto Renting Co.

Brief Fact Summary.

Levy (Plaintiff) was injured while riding as a passenger in an automobile rented by Sack (Defendant) from Daniels (Defendant) in Connecticut, which was involved in an accident in Massachusetts, and Plaintiff sued for damages in Connecticut.

Synopsis of Rule of Law.

The liability that arises from a contract depends upon the law of the place of contract, unless the contract is to be performed or to have its beneficial operation and effect elsewhere, or the contract is made with reference to the law of another place.

Facts.

Daniels (Defendant), an automobile rental company located in Hartford, rented an automobile to Sack (Defendant).  At the time the events in question took place, Connecticut law provided that anyone who rents a motor vehicle to another shall be liable for any damage to any person or property caused by operation of the vehicle during the rental period.  Plaintiff was a passenger in the rented automobile when Sack (Defendant) drove negligently on a Massachusetts highway where Maginn (Defendant) negligently collided with Sack’s (Defendant) vehicle.  As a result of their negligence, Levy (Plaintiff) suffered severe injuries and sued Daniels (Defendant) in Connecticut, seeking to apply the Connecticut statute.  Massachusetts had no statute defining the liability of renters of motor vehicles.  Daniels (Defendant) demurred, arguing that the law of the place of the tort should apply.  Plaintiff claimed he was suing upon a contract.  The demurrer was sustained.

Issue.

Does the liability that arises from a contract depend upon the law of the place of contract, unless the contract is to be performed or to have its beneficial operation and effect elsewhere, or the contract is made with reference to the law of another place?

Held.

(Wheeler, C.J.)  Yes.  The liability that arises from a contract depends upon the law of the place of contract, unless the contract is to be performed or to have its beneficial operation and effect elsewhere, or the contract is made with reference to the law of another place.  The purpose of the Connecticut statute was to protect those who use highways by urging businesses to rent their vehicles only to cautious and able drivers.  The renter’s liability was made a part of every contract for vehicle rental in Connecticut.  The obligation imposed by law was for the direct, sole, and exclusive benefit of Levy (Plaintiff).  The contract was made for him and every other member of the public.  Plaintiff was a beneficiary of the contract between Daniels (Defendant) and Sack (Defendant).  Levy’s (Plaintiff) sustained injury determined his identify as a beneficiary and his right of action.  While Plaintiff’s complaint alleges tortious operation of the automobile, his right to sue arose upon the contract.  The demurrer should have been overruled.

Discussion.

Under the First Restatement of Conflicts, the “vested rights†approach to choice of law is followed.  In regards to contracts, generally the law of the place of the making is applied for formation and interpretation questions, while the law of the place of performance is applied for questions concerning performance and damages.