SOUTHERN FIRE & CASUALTY COMPANY v. Teal

Decision Date14 August 1968
Docket NumberCiv. A. No. 66-465.
PartiesSOUTHERN FIRE & CASUALTY COMPANY, Plaintiff, v. James Lawrence TEAL, Jr., Mrs. Ruth Teal, Glover Oldsmobile, Inc., and Glens Falls Insurance Company, Defendants.
CourtU.S. District Court — District of South Carolina

George F. Abernathy, Odom, Nolen & Foster, Spartanburg, S. C., for plaintiff.

James J. Raman, Spartanburg, S. C., for defendants James Lawrence Teal, Jr. & Mrs. Ruth Teal.

Rufus M. Ward, Ward, Howell & Barnes, Spartanburg, S. C., for defendants Glover Oldsmobile, Inc. & Glens Falls Ins. Co.

FINDINGS OF FACT, CONCLUSIONS OF LAW, OPINION AND ORDER

DONALD RUSSELL, District Judge.

This suit for a declaratory judgment under Sections 2201, 2202, 28 U.S.C.A. seeks to resolve the ownership of an automobile involved in an accident and, as a consequence thereof, the liability, as between the two insurance carriers of the parties to the dispute of ownership, for the defense and settlement of the claims arising out of the operation of such automobile at the time.

The matter in litigation represents a real and justiciable controversy within the intendment of the Declaratory Judgment Act, between citizens of different states, over liabilities in an amount of over $10,000, exclusive of any interest or costs. The plaintiff corporation is chartered under the laws of Tennessee. The corporate defendants were created under the laws of states other than Tennessee and the individual defendants are all residents of South Carolina. Under such circumstances, jurisdiction in this Court is admitted. Stout v. Grain Dealers Mutual Insurance Company (C.C.A. 4 1962) 307 F.2d 521, 523; C. Y. Thomason Co. v. Lumbermens Mutual Casualty Co. (C.C.A. 4 1950) 183 F.2d 729, 733.

The action arises out of an alleged exchange of a truck for the car in question had between the defendants Teals and the defendant Glover Oldsmobile, Inc., though their insurance carriers, rather than they, are the real parties to this controversy. The plaintiff is the carrier of the Teals, who admittedly had possession of the offending car at the time of the accident and who, according to the contention of the defendant carrier, were the then owners of such car. The defendant carrier provides liability coverage to Glover Oldsmobile, Inc., an automobile dealer, which, according to the position of the plaintiff, retained ownership of the offending car, though it had entrusted possession to the Teals under circumstances that give rise to the dispute over ownership.

It is conceded by the parties that, if title to the offending car was in the Teals at the time of the accident, liability for any damages on account of the accident properly fell on plaintiff. On the other hand, if Glover Oldsmobile, Inc., retained title, the defendant carrier, unless absolved by certain exclusionary clauses in its policy, would be liable, in whole or in part, for such damages. Ownership of the offending car is thus the basic issue.

The facts surrounding the issue of ownership are relatively free from dispute in the record. On Friday night, March 11, 1966, James Lawrence Teal, Sr., and his wife attended an automobile show at the Spartanburg (South Carolina) Auditorium. While there, they visited the booth of the local franchised Oldsmobile dealer, Glover Oldsmobile, Inc., and discussed with the latter's sales manager, one Baker, a possible trade for a used Oldsmobile car. The car under consideration was parked behind the Auditorium. Mr. Baker took the Teals to the car and provided both of them an opportunity to drive the car. The Teals stated that if they purchased, they would want to "trade in" on the purchase price a truck, which was owned by them and at the time was registered in the name of Mrs. Teal. After some inquiries about the truck, the sales manager offered to trade the used car for the truck plus a cash payment of $1,300, to be financed. It was understood at the time that there was a chattel mortgage held by GMAC on the truck and the balance due on such chattel mortgage was to be added to the $1,300 and the two sums financed through GMAC. The Teals stated to Mr. Baker that they wanted to consider the proposed trade.

The Teals walked about the auditorium for "a few minutes", talked over the proposed trade, decided that "it looked like a good deal", and determined, by their own statement, "that we (they) would go ahead and take it." Returning to Glover's booth, they told Baker that they had decided to take the deal. Mr. Baker advised them that immediately after the show closed at nine o'clock, he would meet them at the showroom of Glover Oldsmobile, Inc., where the trade could be completed and an exchange of car for truck made. The Teals went to their home, got their pickup truck and its license registration card (the only evidence of ownership they had), and met Baker at the showroom as agreed. Exchange of delivery was made between the parties, including the delivery to Baker of the license registration card for the truck. The offices of GMAC were closed for the weekend and it was impossible to secure the balance due on the truck for inclusion in the sales agreement and chattel mortgage to be executed by the Teals. It was understood between the parties that this balance would be secured on the Monday following and a sales agreement and chattel mortgage in favor of GMAC would then be executed by the Teals, including such balance. The only feature of the chattel mortgage that was uncertain at that time was the balance due GMAC on the truck. There was no dispute over the monthly payments to be provided in the chattel mortgage. The sole uncertainty was an amount which was subject to exact ascertainment from GMAC; and both parties intended to abide by such ascertainment. That this was so is conclusively attested by the fact that the chattel mortgage subsequently executed by the Teals conformed to such ascertainment. At that time, there was no dispute over the amount of the chattel mortgage after the balance due on the truck was obtained from GMAC; there was no dispute about the monthly payments included by the vendors; there was no dispute over any term included in the chattel mortgage.

It is clear, therefore, that the parties on the evening of Friday, March 11, 1966, had reached agreement upon the terms of the chattel mortgage except for the amount then due GMAC on the truck, an amount to be secured on Monday morning from GMAC. In the meantime, however, and as an interim arrangement, Baker prepared a sales agreement and chattel mortgage covering the transaction, in which the monthly payments and face amount were left blank, and Mrs. Teal signed this. The purpose of this interim arrangement, as explained by the Teals, was to assure that "in case somebody ran into us on the way home we (the Teals) would be covered with insurance." In other words, this arrangement was resorted to in order to avoid this very controversy and to make sure that the Teals' liability insurance attached to the car from that moment on. Following this, Baker told Mr. Teal "the Olds was (is) now my (your) wife's." The Teals returned home, told their married son, who, with his family, had come from their home to visit his parents, that they had purchased the car and that, since his own car was being repaired, authorized "him to drive it over the weekend."

On Saturday following, the son, while driving the car, was involved in an accident, as a result of which the car was severely damaged and the damage suits around which this action revolve arose. The son advised the officers investigating the accident that the car was owned by his parents. This was, of course, based on what he had in turn been told by them. Although Mr. Teal conceded that "verbally" he and his wife "had bought" the car on the previous Friday night, he returned to Glover Oldsmobile the Monday subsequent to the accident and "verbally disagreed", to use his term, that he had purchased the car on Friday night. He claimed that since the formal agreement had not been filled out and signed, neither he nor his wife was bound. He explained his action in these words:

"I felt sure that the monthly payment would be agreeable. The only thing I had in my mind is that I knew that no forms had been filled out, no agreement had ever been reached and signed no paper, and I told him Monday morning when I went back around there that I would not take the car now."

Subsequently, however, the Teals' collision insurer1 paid the collision loss sustained by the car, less a deductible of $100, which was absorbed by Glover Oldsmobile, and the car was repaired by Glover Oldsmobile. The Teals then accepted the car and executed the chattel mortgage in favor of GMAC, as prepared by Glover Oldsmobile, for balance due. As has been pointed out, there was no controversy over, or even any discussion about, the amount, terms or any other provisions of the chattel mortgage so prepared by Glover Oldsmobile.

The real question in issue, as I have observed, is whether responsibility in the damage suits arising out of the accident occurring on Saturday falls on the insurance carrier of Glover Oldsmobile, Inc., or that of the Teals. This, in turn, will be determined, it is conceded by the parties, by the resolution of the issue of ownership of the car at the time of the accident.

Under the law of South Carolina, which is controlling in this situation (Angelo v. Lamborn, C.C.A. 4 1924, 2 F.2d 854, 855; Russell v. Tunno, 1858, 11 Rich. 303, 312;) a sale of personal property is complete and "Change of title takes place when the bargain is struck", Pregnall & Bro. v. Miller & Kelly (1884) 21 S.C. 385, 392; Hassler Sales Agency v. Shaw (C.C.A. 4 1924) 295 F. 854, 856 (rev. on other grounds, R. H. Hassler, Inc. v. Shaw, 271 U.S. 195, 46 S.Ct. 479, 70 L.Ed. 900). Whether a bargain has been "struck" and passage of title had is a matter of the intention of the parties. S. C. Tax Comm. v. Schafer...

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