Associated Indem. Corp. v. Miller-Campbell Co.

• Decision Date: 11 March 1980
• Docket Number: MILLER-CAMPBELL,DRAC-C,No. 61721,61721
• Citation: 596 S.W.2d 383
• Parties: ASSOCIATED INDEMNITY CORPORATION, Plaintiff-Appellant, v.CO., a corporation, d/b/a Jack Miller Chrysler/Plymouth, Defendant-Respondent, Truck Insurance Exchange, Defendant-Appellant,hrysler Motors Corporation, Chrysler Leasing Corporation, and The Continental Insurance Company of New York, Defendants-Appellants, Hazel G. Thurston and Raymond Thurston, Defendants-Appellants, Jerry Stevenson and Donna Stevenson, Defendants-Respondents.
• Court: Missouri Supreme Court

Page 383

596 S.W.2d 383

ASSOCIATED INDEMNITY CORPORATION, Plaintiff-Appellant, v. MILLER-CAMPBELL CO., a corporation, d/b/a Jack Miller Chrysler/Plymouth, Defendant-Respondent Truck Insurance Exchange, Defendant-Appellant DRAC-Chrysler Motors Corporation, Chrysler Leasing Corporation, and The Continental Insurance Company of New York, Defendants-Appellants Hazel G. Thurston and Raymond Thurston, Defendants-Appellants Jerry Stevenson and Donna Stevenson, Defendants-Respondents.

No. 61721.

Supreme Court of Missouri, En Banc.

March 11, 1980.

Rehearing Denied April 8, 1980.

Sylvester Powell, Jr., Kenneth O. Smith, James Welsh, Kansas City, for defendants-appellants.

Thomas J. Conway, Clyde G. Meise, W. Edward Coen, Jr., Harl T. Hanson, Kansas City, for defendants-respondents.

SEILER, Judge.

The question presented by this declaratory judgment action is which of three liability insurance policies covers a claim for personal injuries growing out of an automobile accident. Complications arise from attempted transfers of title to the vehicle involved, a 1974 Plymouth station wagon, and from the station wagon's having been under the Chrysler Corporation dealer rent-a-car program.

The automobile accident occurred on April 5, 1974. Mrs. Thurston was driving the station wagon. She collided with Jerry Stevenson, who sustained serious injuries. Jerry Stevenson and his wife, Donna, have obtained a substantial judgment against Mrs. Thurston. Mrs. Thurston was a named insured under the standard automobile liability policy of Associated Indemnity Corporation (the station wagon replaced another vehicle insured by Associated which the Thurstons traded in as a down payment on the 1974 Plymouth station wagon). Associated, apparently while this case has been on appeal, has arrived, we are informed, at a disposition of the Stevenson claims against it and is no longer interested in the case. The Stevenson judgment exceeds the Associated coverage, however, and the question remains whether Mrs. Thurston is also an insured under and entitled to the protection of policies issued by Continental Insurance Company to Chrysler and by Truck Insurance Exchange to the Chrysler dealer, Miller-Campbell Company d/b/a Jack Miller Chrysler/Plymouth, of Liberty, Missouri.

By way of background, in 1973 and 1974 Chrysler had a dealer rent-a-car program, known as DRAC. Under a lengthy written lease agreement, Chrysler Leasing Corporation, a Delaware corporation, would lease Chrysler automobiles to Chrysler dealers for a maximum of twelve months. The vehicles were financed by Chrysler Motor Corporation and each month the dealer paid the motor corporation, as assignee of the leasing corporation, a monthly charge for each vehicle leased, made up of depreciation, insurance and finance charges. In return, the dealer could use the vehicles for the sole purpose of renting such vehicles in the dealer's vehicle rental business and, after certain periods of time, could purchase the vehicles at prices determined by the capitalized cost less, in most cases, the monthly depreciation allowance. "Vehicle rental business" was defined in the lease contract as "the business of renting any vehicle or combination of vehicles on an hourly, daily, weekly or monthly basis with no rental period to exceed six (6) months with any one rentee." Continental provided coverage for all leased automobiles under a policy which listed as the named insured Chrysler Corporation, Chrysler Motors Corporation, DRAC-Chrysler Leasing Corporation and the participating dealer, (here Miller).

Miller as an automobile dealer was also insured under a separate policy by Truck Insurance Exchange for bodily injury and property damage caused by an occurrence with respect to the use of an automobile under certain terms and conditions mentioned later herein.

During 1973 and 1974 Miller was one of Chrysler's participating dealers in the DRAC program. One of the leased cars was the Plymouth station wagon. On a Saturday afternoon, March 30, 1974, Mr. and Mrs. Thurston came to Miller's place of business looking for a car. They decided to buy the 1974 Plymouth station wagon at a price of $4,318.00, $1,000.00 of which was to be the trade-in of Thurston's 1969 Chevrolet pickup. The balance was to be financed by Thurston's credit union, something which would require an additional two weeks' time to arrange. Thurston made a cash deposit of $20.00 and signed a note to Miller for the balance, payable April 13, 1974, at which time he expected to return to Miller to pay the note with the money obtained from the credit union, which would take a lien on the station wagon to secure its loan to Thurston. The station wagon had 8,250 miles on it. The Thurstons thought it was a demonstrator. In fact, it was a leased vehicle which had been used in the dealer's rent-a-car business for about five months, being rented out on nine occasions, for periods running from one to nineteen days.

Thurston turned over his pickup truck to Miller's salesman, took possession of the station wagon and departed, with the station wagon either bearing dealer's license tags or the tags it had as a leased vehicle. Mrs. Thurston called the Associated agent, told him they had bought the station wagon and wanted coverage, which the agent assured them they had. As earlier said, Associated has settled with the Stevensons for whatever its liability is for Stevenson's injuries.

To go back to the history of the station wagon prior to March 30: When the vehicle was manufactured, Chrysler Motors Corporation, using a form of document known as manufacturer's statement of origin to a motor vehicle (commonly referred to as an MSO) transferred the vehicle to Chrysler Leasing Corporation, to be tagged for the DRAC program. The MSO was executed on October 8, 1973 and served to put legal title to the vehicle in Chrysler Leasing Corporation. ¹ As will be seen presently, this is where title has remained.

The vehicle was delivered to the Miller dealership in Liberty. The DRAC lease agreement provided that any certificate of registration was to indicate clearly that the lessor, or other person designated by the lessor, was the legal owner. Nothing in the record shows any authorizations to Miller to put title back in Chrysler Motors Corporation, but Miller, on October 23, 1973, in the name of DRAC-Chrysler Motors Corp. purported to make application for a Missouri certificate of title to be issued on the station wagon, putting up $30.00 for a license and $127.73 in sales tax. On January 1, 1974, a Missouri certificate of title was issued on the station wagon to DRAC-Chrysler Motors Corp., showing a first lien in Chrysler Motors Corp. No application for transfer of title was made by the holder of legal title, Chrysler Leasing Corporation, and no certificate of title issued to Chrysler Leasing.

On April 1, 1974, Miller, again in the name of DRAC-Chrysler Motors Corp., purported to make an assignment of title on the reverse side of the above certificate to Jack Miller Chrysler-Plymouth and then, also on April 1, 1974, under the portion headed "Re-Assignment by Registered Dealer Only", purported to assign the title to Ray K. &/or Hazel G. Thurston. Thereafter, on April 13, 1974 (although the date continued to be shown on the certificate as 4/1/74) Miller inserted as lienholder Guy's Nut & Chip Credit Union, Liberty, the credit union where Thurston borrowed the money to pay the note he had given Miller.

Thurston, either on March 30, 1974 (according to Miller's salesman) or on April 13, 1974 (according to Mr. and Mrs. Thurston) signed an application for title in his name.

On April 1, 1974, Miller signed a card denominated Dealer Rent-A-Car Early Retirement Notice requesting termination of the station wagon from the DRAC program on that date. This card was stamped received by Chrysler in Detroit May 1, 1974. Miller sent his check to Chrysler Motors Corporation on April 23, 1974, amount $3,377.33, in payment of the station wagon. The check was deposited by Chrysler on May 1, 1974. The regular monthly statement and detailed invoice from Chrysler charged Miller with the usual depreciation, insurance and finance charges on the station wagon for the entire month of April and for one day in May, with the off lease date stated on the invoice as May 1, 1974.

The Stevensons brought suit against Mrs. Thurston for damages. Associated defended the action. Continental and Truck Insurance refused to participate. Associated then brought a declaratory judgment against all the parties and persons mentioned above.

The declaratory judgment was filed November 22, 1974. In their pleadings the insurance companies, at least at the outset, regarded the matter of where title lay to the 1974 Plymouth station wagon on April 5, 1974, as decisive of the coverage question.

Associated (the Thurstons' insurer) alleged title was vested in DRAC-Chrysler Motors or Chrysler Leasing Corporation and that any coverage under the Associated policy was excess coverage only.

Truck Insurance Exchange (the dealer's insurer) took the position the vehicle was owned by the Thurstons.

Continental Insurance Company, DRAC-Chrysler Motors and Chrysler Leasing Corporation took the position title was either in the Thurstons or the dealer.

Subsequently, Continental, Chrysler Motors and Chrysler Leasing amended their answers to add that under the Continental policy the insurance to the dealer ceased when the dealer elected to purchase the car, which they contended occurred on April 1, 1974, four days prior to the accident; that the insurance was limited to rented vehicles and the vehicle in question was the subject of a sale and not a rented automobile.

Thereafter, Truck Insurance amended its answer to set up a res judicata defense, saying that by virtue of a prior suit between the Thurstons and Miller (dealer), title had been determined to be in the Thurstons. Shortly thereafter, Continental,...