This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. ' 480A.08, subd. 3 (1994).


Bonita Schelin, et al.,
Appellants (C4-95-2712),
Respondents (C8-96-97),


Mavis Bush,
Respondent (C4-95-2712),
Appellant (C8-96-27),

W.W. Wallwork, Inc.,


Dairyland Insurance Company,
Respondent (C4-95-2712),
Plaintiff (C8-96-27),


Mavis Bush,
Respondent (C4-95-2712),
Plaintiff (C8-96-97),

Leonard I. Bush, et al.,

W.W. Wallwork, Inc.,
Respondent (C8-96-97),

Bonita Schelin, et al.,
Appellants (C4-95-2712)

Respondents (C8-96-97),
Auto Owners Insurance Company,
Respondent (C4-95-2712).

Filed July 9, 1996
Affirmed in part and reversed in part.
Klaphake, Judge

St. Louis County District Court
File No. C3-94-600370/C6-94-600370

Sean M. Quinn, Falsani, Balmer, Berglund & Peterson, 1200 Alworth Building, 306 West Superior Street, Duluth, MN 55802 (for Appellants-Respondents Bonita Schelin, et al.)

Thomas O. Albers, David E. Flotten, Courey, Albers & Gilbert, Suite 1117, 100 Washington Square, Minneapolis, MN 55401 (for Respondent-Appellant Mavis Bush)

Tim A. Strom, Hanft, Fride, O'Brien, Harries, Swelbar & Burns, P.A., 1000 First Bank Place, 130 Superior Street, Duluth, MN 55802-2094 (for Respondent W.W. Wallwork)

Joseph M. Goldberg, Peter J. Manderfeld, Joseph M. Goldberg & Associates, Suite 102, 1660 South Highway 100, St. Louis Park, MN 55426 (for Respondent-Plaintiff Dairyland Insurance Company)

Peter W. Cannon, Cannon and Kunz Law Office, P.O. Box 342, Mahnomen, MN 56557 (for Respondent-Appellant Mavis Bush)

Thomas R. Thibodeau, Johnson, Killen, Thibodeau & Seiler, P.A., 811 Norwest Center, 320 West Superior Street, Duluth, MN 55802 (for Respondent Auto Owners Insurance Company)

Considered and decided by Klaphake, Presiding Judge, Randall, Judge, and Schultz, Judge.*



On July 1, 1991, respondent W.W. Wallwork, Inc. (Wallwork), a car dealership in Fargo, North Dakota, allowed two men to test drive a 1978 Ford Fairmont, worth $200, from its bargain lot. Wallwork did not request identification or accompany the men on the test drive. When the car was not returned an hour later, Wallwork decided to wait until morning to report the vehicle's disappearance, reasoning that the test drivers might have had mechanical trouble with the car.

The next morning, Wallwork called and reported the car's disappearance to police. Police arranged to broadcast locally that the car was missing. Police further advised Wallwork that if the car didn't reappear within a few days Wallwork should recontact police, report the car "stolen," and authorize registration of the car on a national list of stolen vehicles. Wallwork, however, never contacted police to authorize a change in the car's status from "missing" to "stolen."

Shortly after the car disappeared, an unknown individual sold it to Leonard Bush in Fargo, North Dakota. He drove the car for about a month before he was arrested by Mahnomen County police for driving while intoxicated (DWI). The record reflects that Leonard Bush has a long history of DWI arrests and license revocations. Upon his arrest, the stolen car was impounded, and the police ran a check of the car through the national "stolen cars" registry. When the car did not appear in the registry, the police, at Leonard Bush's request, released the car to his sister-in-law, respondent Mavis Bush.

Shortly thereafter, while Mavis Bush was driving the car in Duluth with Leonard Bush and three other passengers, Leonard began fighting in the back seat of the car. As Mavis Bush attempted to control her intoxicated brother-in-law from the driver's seat, she ran or rolled through a stop sign and was hit by appellant Bonita Schelin's car as Schelin passed through the intersection. Schelin was severely injured.

Bonita Schelin and her husband Rodney sued Mavis Bush. They also sued Wallwork, alleging negligent entrustment and liability under the Minnesota Safety Responsibility Act, Minn. Stat. ' 170.54 (1994) (Safety Act). At the same time, Mavis Bush's insurance company, respondent Dairyland Insurance Company (Dairyland), brought a declaratory judgment action against all parties. Dairyland claimed it owed no duty to defend or indemnify Mavis Bush with respect to the Schelins' lawsuit because Mavis Bush's policy extended coverage to nonowned vehicles only if driven with the owner's permission. The district court consolidated the two suits at the parties' request.

The district court (1) concluded that no coverage existed under Mavis Bush's policy with Dairyland and (2) granted summary judgment to Wallwork on the Schelins' negligent entrustment and Safety Act claims. The Schelins appealed. Mavis Bush also filed a notice of appeal contesting the grant of summary judgment to Wallwork on the Schelins' negligent entrustment claim. At Mavis Bush's request, this court has consolidated her appeal with the Schelins' and allowed her to join the Schelins' brief with respect to the their negligent entrustment argument. We affirm the grant of summary judgment to Wallwork and reverse the grant of summary judgment to Dairyland.


Summary judgment is appropriate when the record shows that there are no genuine issues of material fact, and it is clear that the moving party is entitled to judgment as a matter of law. Minn. R. Civ. P. 56.03.

Nonowned Vehicle Provision

Under the heading "Cars We Insure," the Dairyland policy provided: "We insure other cars you use with the permission of the owner." The district court concluded that Dairyland was not required to provide liability coverage because its insured, Mavis Bush, did not have permission to drive the 1978 Ford Fairmont from its owner.

The Schelins assert that under the circumstances, Mavis Bush reasonably believed that she was driving her brother-in-law's car with his permission and reasonably expected that she would be covered in the event of an accident. See Atwater Creamery Co. v. Western Nat'l Mut. Ins. Co., 366 N.W.2d 271, 277 (Minn. 1985) (insured's reasonable expectations regarding coverage honored "even though painstaking study of the policy provisions would have negated those expectations") (citations omitted). This reasonable expectations doctrine generally applies when an ambiguity is present or when a policy contains a major hidden exclusion, neither of which is the case here. Id. at 278.

Rather, we conclude that because the nonowned vehicle provision effectively operates as an exclusion, it must be strictly interpreted against the insurer. See Hennings v. State Farm Fire & Casualty Co., 438 N.W.2d 680, 683 (Minn. App. 1989), review denied (Minn. June 9, 1989). We further conclude that even when policy terms are clear and unambiguous, as in this case, they may not be interpreted so as to lead to a harsh or absurd result. See Employers Mut. Liability Ins. Co. v. Eagles Lodge, 282 Minn. 477, 479-80, 165 N.W.2d 554, 556 (1969); North Star Mut. Ins. Co. v. Johnson, 352 N.W.2d 791, 793 (Minn. App. 1984), review denied (Minn. Jan. 9, 1985).

If Dairyland's nonowned vehicle provision is read literally, it would lead to an unreasonable and absurd result in this case. In other cases, it would require a driver to ask for proof of ownership before driving a nonowned vehicle. The "with the permission of the owner" language is obviously intended to bar coverage for thieves and joy riders, not for those who drive another's vehicle in the good faith belief that they have been given permission by the vehicle's owner. Cf. Safeco Ins. Cos. v. Diaz, 385 N.W.2d 845, 846 (Minn. App. 1986) (discussing policy language excluding coverage "for any person * * * [u]sing a vehicle without a reasonable belief that that person is entitled to do so"), review denied (Minn. June 30, 1986); Minn. Stat. ' 65B.58 (1994) (person not disqualified from No-Fault benefits if using vehicle "in the good faith belief that the person [is] legally entitled to do so"). Because Mavis Bush had a good faith belief that her brother-in-law was the owner of the vehicle and because she had his permission to drive the vehicle, she is entitled to coverage under her Dairyland policy.

Safety Act

The Schelins contend that the district court erred in granting summary judgment to Wallwork on their Safety Act claim. That Act provides:

Whenever any motor vehicle shall be operated within this state, by any person other than the owner, with the consent of the owner, express or implied, the operator thereof shall in case of accident, be deemed the agent of the owner of such motor vehicle in the operation thereof.

Minn. Stat. ' 170.54 (1994).

A car dealer gives implied consent to drive its cars under the Safety Act when it permits a prospective customer to test drive an automobile, even if the test driver's intentions are to convert the car fraudulently. Fischer v. Market Ford Sales, Inc., 302 Minn. 301, 305, 225 N.W.2d 370, 372 (1974). A dealer may withdraw its implied consent, however, by "show[ing] that reasonable steps were taken to recover the car, such as notifying the police." Id.

The record in this case shows Wallwork (1) called police, (2) cooperated with police during further questioning, and (3) reported an informant's tip to police almost a month after the car's disappearance. While the Schelins contend the question of whether these actions constituted reasonable steps is a fact question for the jury, we disagree. As a matter of law, these actions represent reasonable steps toward recovering a $200 vehicle. See id. at 305-06, 225 N.W.2d at 373-74 (when reasonable persons must agree certain actions represent "reasonable effort" to recover stolen vehicle, summary judgment for car dealer appropriate).

Negligent Entrustment

The Schelins contend that the district court erred in granting summary judgment to Wallwork on their negligent entrustment claim. Negligent entrustment occurs when (1) the negligence of some driver is reasonably foreseeable, (2) a car owner fails to take steps to prevent operation of his car by the suspect driver despite the foreseeability of negligence, and (3) the driver then negligently injures a third party while driving the owner's car. Lim v. Interstate Sys. Steel Div., Inc., 435 N.W.2d 830, 832 (Minn. App. 1989), review denied (Minn. Apr. 19, 1989).

No evidence suggests that Wallwork failed to take steps to prevent the operation of the car by a "suspect driver." Wallwork may have entrusted the car to the thief test driver, but nothing suggests that the thief was an incompetent driver. In addition, Mavis Bush, not the thief, was driving at the time of the accident. See Axelson v. Williamson, 324 N.W.2d 241, 244 (Minn. 1982) (negligent act of knowingly entrusting car to inexperienced or incompetent driver "becomes a proximate cause when it combines with negligent acts of the driver causing the damage."). We reject the Schelins' argument that Wallwork's continuing failure to reclassify the car's status from missing to stolen "caused the vehicle to be entrusted" to Mavis Bush. Wallwork's actions do not amount to "entrustment" in any meaningful sense of that word.

In addition, the Schelins failed to establish foreseeability. They asserted that negligence was foreseeable because Leonard Bush was a known alcoholic prone to drinking and driving. This argument ignores the separate identities of Mavis and Leonard Bush; in fact, the police specifically refused to release the car to Leonard Bush because of his driving record. Further, an incompetent driver's negligence must be foreseeable to the car owner. See Austin v. Metropolitan Life Ins. Co., 277 Minn. 214, 217, 152 N.W.2d 136, 138 (1967) ("The duty to exercise care [in negligent entrustment cases] is dictated and measured by the exigencies of the occasion as they are or should be known * * *."); Schumacher v. Heig, 454 N.W.2d 446 (Minn. App. 1990) (owner not liable under negligent entrustment theory because no evidence of duty "on him" to reasonably foresee possibility of injury or peril). Wallwork was entirely unaware that the thief had sold its car, did not know Leonard or Mavis Bush, and had no knowledge of Leonard Bush's poor driving record. Thus, there is no foreseeability on Wallwork's part.


We affirm the grant of summary judgment to Wallwork on the Schelins' negligent entrustment and Safety Act claims. We reverse the grant of summary judgment to Dairyland based on our conclusion that Mavis Bush is entitled to coverage under her policy with Dairyland.

Affirmed in part and reversed in part.


* Retired judge of the district court, serving as judge of the Minnesota Court of Appeals by appointment pursuant to Minn. Const. art. VI, ' 10.