Federated Mutual Implement & H. Ins. Co. v. Rouse

• Decision Date: 09 August 1955
• Docket Number: Civ. No. 715.
• Citation: 133 F. Supp. 226
• Parties: FEDERATED MUTUAL IMPLEMENT & HARDWARE INSURANCE CO., Plaintiff, v. Floyd A. ROUSE, James Kahler, Mary M. Kahler, Warren C. Sturtz, Francis Beadles, and Paul Durham, Defendants.
• Court: U.S. District Court — Northern District of Iowa

133 F. Supp. 226

FEDERATED MUTUAL IMPLEMENT & HARDWARE INSURANCE CO., Plaintiff, v. Floyd A. ROUSE, James Kahler, Mary M. Kahler, Warren C. Sturtz, Francis Beadles, and Paul Durham, Defendants.

Civ. No. 715.

United States District Court N. D. Iowa, E. D.

August 9, 1955.

Robert G. Riley, and E. Eugene Davis (Evans, Duncan, Jones, Hughes & Riley), Des Moines, Ia., for plaintiff.

Thomas C. Strack (Willoughby, Strack & Sieverding), Grundy Center, Ia., for defendant Floyd A. Rouse.

Leo J. Cohrt (Swisher, Cohrt & Swisher), Waterloo, Ia., for defendants James Kahler and Mary M. Kahler.

Marion G. Mickelson (Dickens & Mickelson), Toledo, Ia., for defendants Warren Sturtz, et al.

GRAVEN, District Judge.

The plaintiff issued a so-called garage liability policy to the defendant Floyd A. Rouse. In this action it seeks to have it declared as against all of the defendants that it is not under any liability under that policy based upon a collision in which a certain Plymouth automobile was involved.

There is involved in this action the effect of certain provisions of the recently enacted Iowa Motor Vehicle Certificates of Title Act. That Act was enacted by the Iowa legislature in 1953 as chapter 127, Acts of the Fifty-fifth General Assembly. It became effective October 1, 1953. The provisions of that Act appear nonsequently in chapter 321, Code of Iowa 1954, I.C.A. The principal controversy of the parties is as to the liability of a vendor of an automobile for a tort subsequently committed by his vendee in the operation of it where the parties to the transaction failed to comply with the provisions of the Act in connection with the transfer.

The defendant Floyd A. Rouse was the vendor of an automobile and the defendant Warren C. Sturtz was the vendee thereof in a transaction in which there was a noncompliance with the provisions of the Act. The other defendants are persons who subsequent to the transaction sustained damages as the result of claimed negligence on the part of the defendant Sturtz in the operation of the automobile.

The plaintiff is an insurance corporation organized and existing under the laws of the state of Minnesota. All of the defendants are citizens of the state of Iowa. The amount in controversy, exclusive of interest and costs, is in excess of $3,000.

The defendant Rouse is engaged in the garage and automobile business at Grundy Center, Grundy County, Iowa, under the trade name of Rouse Motor Company. He was a licensed automobile dealer under the laws of the state of Iowa. On or about July 1st, 1954, the plaintiff issued Auto Garage Liability Policy No. 421.374 to the defendant Rouse covering the period from July 1st, 1954, to July 1st, 1955. That policy, among other things, insured the liability of Rouse arising out of the ownership, maintenance or use of automobiles in connection with the operations necessary to his business. It also insured the liability of persons using automobiles covered by the policy with his permission. It is as to this policy that the plaintiff seeks a declaration of nonliability.

The significant details of the transaction between the defendant Rouse and the defendant Sturtz can better be brought into proper focus when considered against the background of the Iowa Motor Vehicle Certificates of Title Act. That Act purported to make many important changes in the law relating to the disposition of motor vehicles. The Act makes provision for certificates of title for motor vehicles, for the transfer of them, and for the noting of liens thereon. Section 7 of the Act, Iowa Code 1954, Section 321.24, I.C.A. provides, in part, as follows:

"* * * The certificate of title shall contain upon the reverse side a form for assignment of title or interest and warranty thereof by the owner, for reassignments by a licensed dealer and for application for a new certificate of title by the transferee as provided in this chapter. * * *"

Section 19 of the Act, Iowa Code 1954, Section 321.48, I.C.A. provides, in part, as follows:

"1. When the transferee or purchaser of a vehicle is a dealer who holds the same for resale and operates the same only for purposes incident to a resale and displays thereon the registration plates issued for such vehicle, or displays his dealer plates thereon or does not drive such vehicle or permit it to be driven upon the highways, such transferee shall not be required to obtain transfer of registration or a new certificate of title but upon transferring his title or interest to another person shall execute and acknowledge an assignment and warranty of title upon the certificate of title assigned to him and deliver the same to the person to whom such transfer is made. * * *"

Section 20 of the Act, Iowa Code 1954, Section 321.49, I.C.A. provides, in part, as follows:

"1. If an application for transfer of registration and certificate of title is not submitted to the county treasurer of the residence of purchaser or transferee within five 5 days of actual change of possession, a penalty of five 5 dollars shall accrue against said vehicle, and no registration card or certificate of title shall thereafter be issued until penalty is paid."

Section 16 of the Act, Iowa Code 1954, Section 321.45(2), I.C.A. provides, in part, as follows:

"2. Except as provided in section twenty-one 21 of this Act, no person shall acquire any right, title, claim or interest in or to any vehicle subject to registration under this chapter from the owner thereof except by virtue of a certificate of title issued or assigned to him for such vehicle * * *; nor shall any waiver or estoppel operate in favor of any person claiming title to or interest in any vehicle against a person having possession of the certificate of title * * *. No court in any case at law or equity shall recognize the right, title, claim or interest of any person in or to any vehicle subject to registration sold or disposed of, or mortgaged or encumbered, unless evidenced by a certificate of title * * * duly issued in accordance with the provisions of this chapter."

Section 21 of the Act, Iowa Code 1954, Section 321.50, I.C.A. relates to the noting of liens on the certificate of title. Included among such liens are conditional sale contracts.

Under the provisions of the Act where a motor vehicle is acquired by a licensed dealer for purposes of resale he is not required to have a new certificate of title issued to him. Under the provisions of the Act when a licensed dealer sells such motor vehicle it is his duty to assign the certificate of title to the purchaser, whether or not such motor vehicle is the subject of a conditional sale contract, and it is the duty of the purchaser to make application for and to secure the issuance to him of a new certificate of title. Under the provisions of the Act if the motor vehicle is the subject of a conditional sale contract and the seller wishes to protect his security rights thereunder, it is his duty to have the conditional sale contract noted as a lien on the title certificate issued to the purchaser. See also section 3 of the Act, I.C.A. § 321.18.

On March 17th, 1954, the defendant Rouse acquired for purpose of resale a 1947 Plymouth automobile. He acquired it from one Paul Allen Yeager, also known as Paul A. Yeager. Yeager held a certificate of title to the automobile which had been issued to him under the provisions of the Iowa Motor Vehicle Certificates of Title Act. In connection with the transfer Yeager assigned the title certificate to Rouse, using for that purpose the form of assignment provided on the reverse side of the certificate. Upon the execution of the assignment Yeager delivered the certificate of title to the defendant Rouse. In the assignment the name of the latter appears as "Rouse Motor Co."

On March 24th, 1954, the defendant Rouse sold the automobile to the defendant Sturtz under a conditional sale contract. That defendant was at the time working on a farm in the vicinity of Grundy Center. The conditional sale contract provided for the payment of the sum of $403.86, payable in monthly installments extending through March, 1955. At the time of the closing of the sale the defendant Rouse handed the certificate of title to the defendant Sturtz. The latter signed the form on the reverse of the certificate entitled "Application for Certificate of Title" without filling in the blanks in the form and returned the certificate to the defendant Rouse. The latter placed the certificate in his file where it remained until the time of trial. The defendant Rouse never executed the form entitled "Reassignment By Iowa Licensed Dealer" contained on the reverse side of the certificate. The defendant Sturtz neither filled in the blanks in the form for "Application for Certificate of Title" nor presented the certificate to the County Treasurer of Grundy County, Iowa, for transfer.

Following the execution of the conditional sale contract, the defendant Rouse delivered possession of the automobile to the defendant Sturtz, and, from then until the automobile was damaged beyond repair in a collision later referred to, he was in sole control and possession of it and used it entirely for his own purposes. It is not indicated that the defendant Sturtz was at any time in default on the payments specified in the conditional sale contract.

On December 24th, 1954, the defendants Francis Beadles and Paul Durham, who were acquaintances of the defendant Sturtz, desired to attend Christmas eve midnight church services. The defendant Sturtz, who was then working in the vicinity of Gilman, Iowa, agreed to transport them in his automobile. While on that trip a collision occurred between his automobile and an automobile owned and operated by the defendant James Kahler. Both of the vehicles involved in the collision were damaged beyond repair. The defendant Mary M. Kahler was a passenger in the car operated by James Kahler. The defendants James Kahler, Mary M. Kahler, Francis Beadles,...