Federated Mutual Imp. & Hdwe. Ins. Co. v. MFA Mut. Ins. Co.

• Court: U.S. District Court — Western District of Missouri
• Writing for the Court: Kuraner, Freeman, Kuraner, Oberlander & Lamkin, Kansas City, Mo., for plaintiff
• Citation: Federated Mutual Imp. & Hdwe. Ins. Co. v. MFA Mut. Ins. Co., 211 F. Supp. 247 (W.D. Mo. 1962)
• Decision Date: 08 August 1962
• Docket Number: No. 13096-3.,13096-3.
• Parties: FEDERATED MUTUAL IMPLEMENT AND HARDWARE INSURANCE COMPANY, a Corporation, Plaintiff, v. M. F. A. MUTUAL INSURANCE COMPANY, a Corporation, et al., Defendants.

211 F. Supp. 247

FEDERATED MUTUAL IMPLEMENT AND HARDWARE INSURANCE COMPANY, a Corporation, Plaintiff, v. M. F. A. MUTUAL INSURANCE COMPANY, a Corporation, et al., Defendants.

No. 13096-3.

United States District Court W. D. Missouri, St. Joseph Division.

August 8, 1962.

Kuraner, Freeman, Kuraner, Oberlander & Lamkin, Kansas City, Mo., for plaintiff.

Strop, Watkins, Maughmer & Roberts, St. Joseph, Mo., for defendant M. F. A. Mutual Ins.

Gene Thompson, Maryville, Mo., for defendants Doyle, Janice Lee and Christie Davis.

Max Benne, Mound City, Mo., for Ernest A. and Diane Wright.

Hull & Strong, Maryville, Mo., for defendant H. H. Gard.

DUNCAN, District Judge.

Plaintiff, an Illinois corporation, instituted this declaratory judgment action under § 2201 et seq., Title 28 U.S.C.A. wherein plaintiff, and defendant M. F. A. Mutual Insurance Company, dispute liability coverage for damages claimed to have arisen out of an automobile accident. The jurisdictional prerequisites are present.

The material facts are not in dispute, and the case is before the court on stipulation and evidence introduced by the respective parties.

The defendants, Donald E. Hall and his wife, Mattie L. Hall, were, prior to July 30, 1958, engaged in business in Mound City, Missouri, and as a part of that business, they were franchise holders and sales agents for Pontiac automobiles and John Deere farm implements.

On December 29, 1959, the plaintiff issued to the defendants, Donald E. Hall and Mattie L. Hall, its garage liability policy No. 698 652, insuring said defendants for a period of one year, against liability for bodily injury to others, in the amount of $100,000.00 for each person, and in the amount of $300,000.00 for each accident.

The policy also provided against liability for property damage in the amount of $10,000.00 for each accident arising out of the operation by the said defendants of an automobile sales and service business.

Prior to July 30, 1958, the defendant Ernest A. Wright had been in the employ of the defendants Hall as manager of their parts department, and for his services he received a fixed salary. His duties in that connection were to buy and sell at retail, parts and supplies for the automobiles and equipment sold and serviced by the defendants Hall.

Prior to that time it had been the custom and practice of defendants Hall to permit their salesmen to purchase automobiles to be used as demonstrators and to pay therefor the wholesale price plus accrued interest charges and shop expense incident to the preparation of a car for delivery. The evidence reveals that Wright, as the manager of their parts department, was accorded the same privileges granted to salesmen in the purchase of an automobile.

Pursuant to their arrangement, on July 30, 1958, Wright purchased a '58 Pontiac automobile for the sum of $2638.57 and paid cash therefor. At the time the sale was made, there was an entry made on a slip to be recorded in the books and records of the company, which recited: "Paid on a/c $2638.57". This amount was placed to Wright's credit on the books.

No certificate or bill of sale was issued to Wright. He immediately took possession of the car and used Halls' dealer license plates. The car, according to all the evidence, was purchased for use as Wright's personal car and that of his family.

Immediately after the car was delivered to Wright, he caused to be transferred from another car owned by him, a policy of liability insurance written by the defendant Insurance Company.

On June 11, 1960, while the car was being operated by Wright's wife, it came into collision with another automobile. The accident resulted in the death of Mrs. Wright and the operator of the other car, and one of the passengers therein. Numerous other persons who were named as defendants in this Complaint were injured.

The claims of the various parties growing out of the collision have been settled in accordance with a stipulation which provided that after completion of the settlement of the claims filed as a result of the accident, the complaint will be dismissed without prejudice as to all defendants except M. F. A. Mutual Insurance Company, leaving the Federated Mutual Implement and Hardware Insurance Company as plaintiff. The stipulation provides that the ultimate responsibility as liability insurer on the Pontiac automobile "only will be determined by the declaratory judgment of this court."

The defendant Insurance Company contends that the defendants Hall were the owners of the automobile at the time of the collision and that plaintiff is liable under the terms of its garage liability policy for the damages and injuries resulting from the use thereof by Mrs. Wright. Plaintiff contends that Wright was the owner at the time of the collision and that the defendant Insurance Company is liable under the terms of its policy.

This case revolves around the principal question of whether or not there was a sale of the automobile within the meaning of § 301.200, RSMo 1949, V.A.M.S. To resolve that question we must look to the law dealing with the sale and registration of motor vehicles in Missouri, as contained in Chapter 301, V.A.M.S. The first section of that Chapter dealing with the subject is § 301.020 which provides:

"Every owner of a motor vehicle or trailer, which shall be operated or driven upon the highways of this state, except as herein otherwise expressly provided, shall file, by mail or otherwise, in the office of the director of revenue, an application for registration on a blank to be furnished by the director of revenue for that purpose, containing:

"(1) A brief description of the motor vehicle to be registered, including the name of the manufacturer, the manufacturer's or other identifying number, and character, and amount of motive power, stated in figures of horse power;

"(2) The name, residence and business address of the owner of such motor vehicle; * * *."

The next section which is pertinent is 301.190. This section provides that:

"No certificate of registration of any motor vehicle or trailer, or number plate therefor, shall be issued by the director of revenue unless the applicant therefor shall make application for and be granted a certificate of ownership of such motor vehicle or trailer, or shall present satisfactory evidence that such certificate has been previously issued to the applicant for such motor vehicle or trailer.

"Application shall be made upon a blank form furnished by the director of revenue and shall contain a full description of the motor vehicle or trailer, manufacturer's or other identifying number, together with a statement of the applicant's source of title and of any liens or encumbrances on the motor vehicle or trailer."

There are two sections dealing with the sale of motor vehicles in Missouri. The first section, 301.200, defines the procedure in connection with the sale of new motor vehicles by dealers, as follows:

"1. In the case of dealers, a separate certificate of ownership, either of such dealer's immediate vendor, or of the dealer himself, shall be required in the case of each motor vehicle in his possession, and the director of revenue shall determine the form in which application for such certificates of ownership and assignments shall be made, in case forms differing from those used for individuals are, in his judgment, reasonably required; provided, however, that no such certificates shall be required in the case of new motor vehicles or trailers sold by manufacturers to dealers.

"2. Dealers shall execute and deliver bills of sale in accordance with forms prescribed by the director of revenue for all new cars sold by them. On the presentation of a bill of sale, executed in the form prescribed by the director of revenue, by a manufacturer or a dealer for a new car sold in this state, a certificate of ownership shall be issued."

Section 301.210 deals with the transfer of used cars. The last section of that statute provides that:

"* * * the sale of any motor vehicle or trailer registered under the laws of this state, without the assignment of such certificate of ownership, shall be fraudulent and void."

It should be noted that this section deals with the sale of motor vehicles for which certificates of ownership have been issued—used cars. This section is important to show legislative intent.

While I have not reviewed the legislative history of the enactment of this section, certainly it is easy to assume what was in the minds of the framers of the Act. The transfer of ownership of used motor vehicles was susceptible of unlimited fraud and deception by unscrupulous dealers or owners of fraudulent titles, and it was necessary to require strict conformance to the statute requirements to avoid this possibility.

That, however, may not be said of the sale and transfer of ownership of new motor vehicles which have never been titled. Paragraph 2 of § 301.200...