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Byers v. Auto-Owners Insurance Co.11/21/2003
d Practice Section 4366 (1977)).
While Commercial Union not specifically addressing the "second permittee" or "third permitee" situation found in the case at bar, the Arkansas Supreme Court did state:
The cases adopting the "initial permission" rule usually provide that it governs "short of theft or conversion." [citations omitted]. Although the question is not before us now, we agree that an insurer should not be liable to a thief or a person who has no permission to use a vehicle and who converts it to his or her own use. With respect to the situation in which one who has permission of the named insured grants permission to another person to use the named insured's vehicle, we make no decision. . . . Some of the policy reasons for adopting the "initial permission" rule probably apply in the "second permittee" case to the same extent that they apply no matter how greatly the person having permission of the named insured may deviate from the permitted route or use, but we leave that question open.
Id. at 594.
Additionally, in Liberty Mut. Ins. Co. v. Thomas, 971 S.W.2d 244, 247 (Ark. 1998), the Arkansas Supreme Court found the insurer liable even though the driver violated a written policy against using alcohol while operating the vehicle. The Arkansas court held that "any deviation from the permitted use is immaterial," and affirmed its commitment to Commercial Union despite the appellant's invitation to distinguish Commercial Union or not consider it at all. Id. Therefore, Liberty can be seen as a further expansion of the initial permission rule.
Before adopting the initial permission rule, the Arkansas Supreme Court analyzed the policies underlying the rule, as well as the "strict rule" and the "minor deviation rule." While its primary justification for the ultimate adoption of the initial permission rule was the public policy of protecting Arkansas citizens and others from uninsured drivers, the court found the reasons expressed in Milbank Mut. Ins. Co. v. U.S. Fid. & Guar. Co. , 332 N.W.2d 160 (Minn. 1983), gave further support to its decision.
In Milbank , the Minnesota Supreme Court stated that the rule "guarantees fulfillment of the state's policy of compensating innocent accident victims from financial disaster. Courts also have recognized that application will discourage collusion between bailor and bailee in order to escape liability; and courts have noted that will greatly reduce a most costly and wasteful type of litigation." Commercial Union, 745 S.W.2d at 593 (quoting Milbank , 332 N.W.2d at 166.) In adopting the rule, the Arkansas court further pointed to the rationale of the Illinois court in adopting the initial permission rule, that " liability insurance policy is for the benefit of the public as well as for the benefit of the named insured and that it is undesirable to permit litigation as to the details of the permission and use." Commercial Union, 745 S.W.2d at 594 (quoting Visintin v. Country Mut. Ins. Co., 222 N.E.2d 550 (Ill. App. 1966)).
As an additional reason for adopting the initial permission rule, the Arkansas Supreme Court cited a Nevada case in which the Nevada Supreme Court stated that it was adopting the rule in order to "effectuate the legislative policy of proving certain and maximum coverage." Commercial Union, 745 S.W.2d at 592 (quoting United States Fid. & Guar. Co. v. Fisher , 494 P.2d 549, 552 (Nev. 1972)). This rationale has been codified in the Arkansas Motor Vehicle Safety Responsibility Act where the Arkansas General Assembly stated, in pertinent part:
The owner's policy of liability insurance shall . . . (2) insure the person named therein and any other pe
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