Beatty v. Western Pac. Ins. Co., 39473

• Decision Date: 26 September 1968
• Docket Number: No. 39473,39473
• Court: Washington Supreme Court
• Parties: Darryl BEATTY, individually, and as Guardian ad Litem for Marie Beatty, a minor, Respondent, v. WESTERN PACIFIC INSURANCE COMPANY, a corporation, Appellant, James R. Scott, Defendant.

Page 530

74 Wn.2d 530

445 P.2d 325

Darryl BEATTY, individually, and as Guardian ad Litem for Marie Beatty, a minor, Respondent, v. WESTERN PACIFIC INSURANCE COMPANY, a corporation, Appellant James R. Scott, Defendant.

No. 39473.

Supreme Court of Washington, Department 2.

Sept. 26, 1968.

Rehearing Denied Dec. 18, 1968.

Ferguson & Burdell, W. Wesselhoeft, Seattle, for appellant.

Guttormsen, Scholfield, Willits & Ager, Frank D. Howard, Shannon Stafford, Seattle, for respondent.

HAMILTON, Judge.

This is an appeal from a summary judgment entered in favor of plaintiff (respondent) and against defendant (appellant), Western Pacific Insurance Company. A question of insurance coverage is presented.

The circumstances giving rise to the question rotate about the sale of an old automobile. In early May, 1965, one Eugene F. Sutliff placed an advertisement in a newspaper offering to sell his 1952 automobile for $75. On May 9th, James R. Scott, then 19 years of age and a stranger to Sutliff, read the advertisement and telephoned Sutliff to ascertain if the car was in good shape and available for inspection. Upon receiving an affirmative response, Scott, together with a friend, went to Sutliff's home, inspected the car, drove it around the block, and asked if Sutliff would sell it on time, i.e., $35 down and and $40 balance in 2 weeks. Sutliff agreed, whereupon Scott paid him the $35, accepted a receipt along with the keys to the vehicle, and drove away. Sutliff retained possession of the certificate of title, and the certificate of registration indicating Sutliff as the registered owner remained in the automobile. The receipt which Sutliff wrote and gave Scott reads as follows:

'May 9. Received from James R. Scott, $35.00 now and balance to be paid two weeks. Total sum, $75.00. Eugene Sutliffe.'

At the time of the transaction Sutliff carried a policy of liability insurance with appellant insurance company upon which the 1952 Ford was listed as one of the described automobiles. On the day following the transaction, May 10th, Sutliff telephoned the appointed agent of appellant, informed that agent of the situation, and asked what to do with respect to continuing coverage. The agent advised that he retain his coverage until the balance due from Scott was paid and title to the vehicle was delivered. This was done.

On May 11th, Scott, while driving the car, struck and injured the minor child of respondent. The accident was investigated and reported with Sutliff being listed as the registered and legal owner of the vehicle. Scott, however, told the police he was buying the car. Scott did not advise Sutliff of the accident because he considered it 'none of his business.' Sutliff learned of the accident through a newspaper, but took no action. In the meantime Scott continued to use the car as he saw fit and told friends it was his.

Around May 15th, Scott called Sutliff and complained about the transmission in the car. Sutliff went to Scott's home and the two drove around in the car. In response to Scott's inquiry as to what could be done about it, Sutliff said:

'You gave me a down payment on the car. If you want to, I will just take the car back, but I am not going to give you back the down payment.'

Scott, rather than risk the loss of his $35, kept the car and, on May 23rd, went to Sutliff's home and paid the balance due. At this time Sutliff signed and delivered the certificate of title to Scott and, at Scott's request, a handwritten document which reads:

Bill of Sale

This is to signify the sale of one 1952 Ford, two door, motor I.D. B2RM111747 to James R. Scott, 4463 Woodland Park Pl. for the sum of seventy-five dollars on the 23rd day of May May (sic) 1965. Paid in Full

seller - (signed) Eugene F. Sutliff

buyer - (signed) James R. Scott

Sutliff notified appellant's agent that the transaction had been completed and subsequently received an endorsement deleting the automobile from his policy effective as of May 24th.

In September, 1965, respondent instituted a suit against Scott for injuries to his child caused by the accident. Scott's attorney tendered the defense of the case to appellant. The tender was declined. Trial of the action resulted in a substantial judgment against Scott. Respondent then initiated this action against appellant, contending that at the time of the accident Sutliff was the legal owner of the vehicle, that Scott was driving the vehicle with Sutliff's permission and that appellant was obligated under the omnibus clause of Sutliff's liability policy to pay the judgment rendered in the previous suit.

Both parties filed motions for summary judgment. The trial court granted respondent's motion.

In granting respondent's motion for summary judgment, and as a prelude to imposing liability on appellant, under the omnibus clause, the trial court asserted that there was no material dispute in the facts and that as a matter of law the transaction between Sutliff and Scott on May 9th did not amount to a conditional sale. In so ruling, the trial court did not undertake to characterize or categorize the transaction.

We agree with the trial court that there is no material dispute of fact concerning what Sutliff and Scott said and did on May 9th or during the interval between then and May 23rd, the date when title to the vehicle was delivered. We cannot agree, however, with the trial court's conclusion that the transaction did not amount to or was not tantamount to a conditional sale.

Speaking in a somewhat different context, yet to the point of the characteristics of a conditional sale, we said in Hafer v. Spaeth, 22 Wash.2d 378, 386, 156 P.2d 408, 412 (1945):

In almost all jurisdictions a conditional sale is held to be a sale in which the vendee receives the possession and right of use of the goods sold, but the transfer of the title to the vendee is made dependent upon the performance of some condition or the happening of some contingency, usually the full payment of the purchase price. 47 Am.Jur. 7, Sales, § 828. This court is in accord with that concept. Inland Finance Co. v. Inland Motor Car Co., 125 Wash. 301, 216 P. 14. This court has also clearly explained the functions of a conditional sales contract and has defined the character of relationship existing between the parties to such instrument. In Lyon v. Nourse, 104 Wash. 309, 176 P. 359, and in Hughbanks, Inc. v. Gourley, 12 Wash.2d 44, 120 P.2d 523, 138 A.L.R. 658, we declared that it is not the office of a conditional bill of sale to secure a loan of money, but, rather, only to permit an owner or personal property to make a bona fide sale on credit, reserving title in himself for security until the purchase price is fully paid.

See also Annot., 175 A.L.R. 1366 (1948) wherein the annotator summarizes the general rule as follows, at 1368:

As indicated in the earlier annotions, one of the essential elements and distinguishing features of a conditional sale is the reservation of title in the seller until the performance of some condition or the happening of some contingency, usually the full payment of the purchase price.

As between the parties a contract or agreement of conditional sale need not be expressed in any set form or language. Lundberg v. Kitsap Cy. Bank, 79 Wash. 75, 139 P. 769 (1914). It may be partly in writing and partly oral, or it may be entirely oral. It is the intention of the parties to the transaction which controls. Gaffney v. O'Leary, 155 Wash. 171, 283 P. 1091 (1929).

In the instant case, the undisputed facts, as outlined above, can lead to but one logical conclusion--that Sutliff and Scott did intend to effect a conditional sale or an arrangement tantamount thereto. In this respect, it is beyond question that Sutliff intended to sell and Scott intended to buy the automobile. It is further perfectly clear that they undertook and intended to accomplish their respective purposes by a bona fide sale on credit, with unrestricted possession, dominion and use of the vehicle actually and immediately passing to Scott with delivery, and with Sutliff retaining title and registration in his name solely as security until the purchase price was fully paid. Cf. United Fire and Casualty Co. v. Perez, Colo., 419 P.2d 663 (1966).

The trial court erred in ruling that the transaction was something less than a conditional sale.

Despite the character of the transaction, respondent nevertheless contends that the particular factual situation presented in this case renders appellant liable under the omnibus clause contained in Sutliff's liability policy, which provides:

The following are Insureds under Part 1:

(a) with respect to the owned automobile,

* * * * * *

(a) any other person using such automobile with the permission of the named Insured, provided his actual operation or (if he is not operating) his other actual use thereof is within the scope of such permission. * * *

Respondent predicates this contention upon the grounds that Sutliff initially, and until sometime after the date of the accident, retained both the certificate of title and the registration certificate to the vehicle in his name, thereby failing to comply with the provisions of RCW 46.12.010, ¹ 46.12.100, ² and 46.12.110 ³ as they then pertained to the duties of parties to a vehicular sales transaction with respect to such certificates. Because of the lack of compliance with these statutes, respondent asserts Sutliff at all times concerned legally remained the 'owner' of the vehicle for all pertinent purposes within the framework of the liability policy as well as within the statutory definitions found in RCW 46.04.270, ⁴ 46.04.380, ⁵ and 46.04.460. ⁶ Therefore, respondent argues, Scott could only have been in possession of and driving the vehicle with the 'permission' of Sutliff as contemplated by the policy's omnibus clause.

To the contrary, appellant contends that strict compliance with the automobile title and registration certificate statutes is...