American States Insurance Co. v. Angstman Motors, Inc.

Decision Date24 May 1972
Docket NumberCiv. No. 2902.
PartiesAMERICAN STATES INSURANCE COMPANY, Plaintiff, v. ANGSTMAN MOTORS, INC., a corporation, et al., Defendants.
CourtU.S. District Court — District of Montana


L. Morris Ormseth, Jardine, Stephenson, Blewett & Weaver, Great Falls, Mont., for plaintiff.

Jess L. Angstman, Havre, Mont., for Angstman Motors, Inc.

Robert J. Emmons, Smith, Emmons & Baillie, Great Falls, Mont., for U. S. F. & G.

John B. Kuhr, and John A. Warner, Weber, Bosch, Kuhr, Dugdale & Warner, Havre, Mont., for Rueben Johnson.

Robert B. Gillan, Staff Atty., Cascade County Legal Services Assn., Great Falls, Mont., Guardian ad Litem for Ronald Hearn.

J. Chan Ettien, Morrison & Ettien, Havre, Mont., for Ruth Griffin.


BATTIN, District Judge.

On August 1, 1968, defendant Johnson arranged to try out a 1952 Chevrolet grain truck owned by defendant Angstman Motors, Inc. (Angstman). It was his intention to purchase this truck, if it was adequate for his needs. Johnson needed a truck to replace one of his trucks which had become inoperable.

Johnson gave Battleson, salesman for Angstman, a check for $450.00 on that date. This was one-half of the price which the parties had agreed upon. Johnson did not sign a certificate of title for the vehicle. Johnson did, however, sign a "blank slip" which was apparently a purchase order for the vehicle.

Johnson took the truck on August 1 and drove it from Havre, Montana, to Kremlin, Montana, where he was custom cutting wheat for his neighbor. The truck was used in this work. However, after Johnson had arrived at the job site the truck would not start by use of the starter. The truck was pulled and started. To avoid further problems, the truck was not shut off during the balance of its use on August 1.

A new starter was installed in the truck on August 2, 1968. It started that morning by use of the starter. Johnson assigned defendant Ronald Hearn to drive the truck that morning. The truck was loaded with grain from a combine. Hearn started for the grain elevator in the truck. On the way he was involved in an accident with a car driven by defendant Ruth Griffin. The truck was a total loss.

On September 6, 1968, Johnson gave Angstman $450.00. He also signed the certificate of title on that date. On September 14, 1968, Angstman forwarded the proper documents to the Registrar of Motor Vehicles, Deer Lodge, Montana. The Registrar issued a title certificate for the truck to Johnson on October 15, 1968.

At the time of the accident, Johnson had in force a policy of liability insurance with Western Pacific Insurance Company. Plaintiff American States Insurance Company (American) later became successor to all obligations and rights under that policy. At the time of the accident, Angstman had in force a liability insurance policy written by defendant United States Fidelity and Guaranty Company (U.S.F. & G.).

American filed this action seeking a declaratory judgment regarding ownership of the truck at the time of the accident, extent of liability of the two insurance companies, and the obligation of defense of Johnson and Hearn in a suit brought by Ruth Griffin and her passengers.

Discovery has proceeded and the case is now before the court on cross motions for summary judgment by plaintiff American, Defendant U.S.F. & G., and defendant Johnson. The court finds that no material issues of fact are in dispute and, therefore, the case is proper for disposition by summary judgment.


Common to all other issues is the determination of ownership of the truck at the time of the accident. It is clear from the depositions that no meeting of the minds had occurred between Johnson and Battleson as representative of Angstman. Therefore, in legal contemplation, a transfer of the truck had not taken place. U.S.F. & G. disputes this fact, arguing that a sale had occurred and that Johnson became the owner on August 1, 1968. It is the court's finding, based on the depositions of Johnson and Battleson,1 that as a matter of law there was not a completed sale.

Even assuming that Johnson and Battleson had reached an agreement and that the truck was sold, Montana Law, Revised Codes of Montana, 1947, § 53-109, prevents an effective transfer from having occurred at the time of the accident.

Section 53-109(c) provides that the rules for obtaining title to a vehicle, as stated in Section 53-109(b), do not apply to the "transfer of a motor vehicle to a duly licensed automobile dealer intending to resell such vehicle . . . ." However, the statute goes on to state:

". . . but every such dealer shall upon transferring such interest deliver such certificate of ownership and certificate of registration with an application for registration executed by the new owner in accordance with the provisions of section 53-107, and the registrar upon receipt of said certification of ownership, certificate of registration and application for registration, together with the conditional sales contract or other lien, if any, shall issue a new certificate of ownership and certificate of registration, . . . ." (Emphasis supplied.)

Section 53-109(d) then provides that until the registrar has issued these documents,

". . . delivery of any motor vehicle shall be deemed not to have been made and title thereto shall not have passed and said intended transfer shall be incomplete and not be valid or effective for any purpose."

These statutes have been construed by the Montana Supreme Court and by this court. Irion v. Glens Falls Insurance Co., 154 Mont. 156, 461 P.2d 199 (1969); Ostermiller v. Parker, 152 Mont. 337, 451 P.2d 515 (1968); Safeco Insurance Co. v. Northwestern Mutual Insurance Co., 142 Mont. 155, 382 P.2d 174 (1963); Phoenix Insurance Co. v. Newell; 329 F.Supp. 172 (D.Mont. 1971); Glens Falls Insurance Co. v. Irion, 323 F.Supp. 1164 (D.Mont.1970); Colbrese v. National Farmers Union Property & Cas. Co., 227 F.Supp. 978 (D.Mont.1964), reversed, 368 F.2d 405 (9th Cir. 1966).2

It is clear from the case law that it is the dealer-seller, and not the buyer, who bears the burden of seeing to timely compliance with the statute. In Irion the Montana Supreme Court stated this rule succinctly:

"The legislature has exempted duly licensed automobile dealers from the requirement by paragraph (b) of section 53-109 of securing registration of their vehicular stock in trade, a requirement which would be onerous, but the price the dealers pay for this privilege is that they, the dealers, and not their customers, are to see to the timely and proper registration on resale, and, if they do not, the legislature, in paragraph (d) of section 53-109, has provided a penalty—the dealer will remain the owner with all the responsibilities of ownership—his sale and transfer of possession will be deemed not to have been made and the `intended transfer * * * incomplete and not * * * valid or effective for any purpose.'" Irion, 154 Mont. at 166-167, 461 P.2d at 205.

Applying the facts of this case to the established rule, there was no sale or transfer of possession within legal contemplation. Angstman did not obtain a signed application for registration from Johnson at the time of the alleged sale. It did not send the required papers to the registrar until September 14, 1968, more than one month after the alleged sale. While much argument is made by U.S.F. & G. that it was Johnson who failed to sign the application for registration, because of his great hurry, and that it was he who was responsible for the delay in application, the fact remains that it was the duty of Angstman to see that these matters were completed within the terms of the statute. Because it failed to comply with Section 53-109(c), the sale, if any, was void and ineffective for any purpose by operation of Section 53-109(d).

U.S.F. & G. also argues that, because Johnson did sign the application for registration on September 6, 1968, and because Angstman complied with the statute on September 14, 1968, title actually passed on August 1, 1968, under a theory of relation back. This court held in Phoenix, supra, on the basis of Safeco, supra, that passage of title could relate back to the date of actual transfer.

In Safeco, the Montana Supreme Court held that in a regular transaction, the new certificate, issued by the registrar, caused the legal transfer to become effective as of the date of actual transfer. In Phoenix, this court held that submission of the proper documents on the first Monday after a Saturday sale, and subsequent issuance of a new certificate by the registrar, caused the transfer to take effect on the date of sale, that is, Saturday, rather than on the date of submission of the documents. The basis for this decision was that the dealer had done everything within his power to meet his duty of "timely and proper registration on resale." To have held to the contrary would have been to penalize the dealer for the fact that the county courthouse was not open on Saturday.

However, the same reasoning does not apply in this case. Angstman did not obtain Johnson's required signature on August 1, 1968, but rather obtained it on September 6, 1968. In other words, there was not a regular sale within the meaning of Safeco. Moreover, to allow the transfer to become effective as of August 1 by a relation back theory, in this case would be to allow the dealer to escape the penalty of his failure to meet his statutory duty. The consistent application of this statutory duty by the Montana Supreme Court prevents this court from making such a finding.

Consequently, Angstman was the legal owner of the vehicle at the time of the accident and the transfer could not have become effective before September 6, 1968, if then. Since it is immaterial to this case, the court does not reach the question of when title actually passed, except to hold that it had not passed as of August 2, 1968.



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