Peterson v. Halsted

Supreme Court of Colorado, En Banc · 1992 · Torts

TortsNegligent EntrustmentNegligenceDutySummary Judgmentnegligent entrustmentsection 390supplier of chattel

Facts

Tamara Peterson, age twenty-five, drove her Ford Bronco while intoxicated, failed to stop at a stop sign, and collided with Barry Halsted's vehicle, causing multiple deaths and injuries. Tamara had an alcohol problem known to her parents, and years earlier had received a DUI after colliding with a fire truck while intoxicated. Tamara bought the Bronco in 1985; Donald Peterson co-signed the financing documents and title listed Donald and Tamara as co-owners, but Tamara made the payments, lived apart from her parents, supported herself, and her parents did not control her driving activities. The accident occurred about three years after the Bronco's purchase.

Issue

Whether parents who assist their adult daughter in purchasing a vehicle by co-signing and lending credit may be liable under negligent entrustment when they know she has a history of alcohol abuse. If not under negligent entrustment, whether general negligence principles nevertheless impose a duty to the later accident victims under these facts.

Rule

Negligent entrustment under Restatement (Second) of Torts § 390 applies to one who supplies a chattel, and the court declined to classify lenders of money or credit categorically as suppliers of chattels merely because the loan or credit enabled acquisition of the item. Under general negligence law, duty is a question of law determined by considering factors including the risk involved, the foreseeability and likelihood of injury weighed against the social utility of the actor's conduct, the magnitude of the burden of guarding against harm, and the consequences of placing that burden on the actor.

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One of 10 multiple-choice questions for this case. Pick an answer to see why.

In Phoenix, 29-year-old Lena Ortiz bought a used pickup from Desert Mesa Motors using her own funds and a bank loan that became available only because her uncle, Martin Vega, co-signed the note. Martin knew Lena had a long history of drunk driving, but he never possessed the truck, never transferred it to her, and did not provide the purchase money. Two years later, Lena drove drunk and injured a pedestrian.

If the pedestrian sues Martin for negligent entrustment under Restatement § 390, which is the strongest argument for Martin?

Explanation. The majority held that one who merely lends money or credit to facilitate another's purchase of a vehicle is not categorically a supplier of a chattel for negligent entrustment purposes. Section 390's examples of suppliers involve persons with possession or the right to possess the chattel who directly supply it. Thus, Martin's strongest argument is that co-signing alone does not place him within the negligent entrustment framework.