Bisi v. American Auto. Ins. Co.

• Citation: 78 A.2d 533,137 Conn. 424,23 A.L.R.2d 787
• Court: Supreme Court of Connecticut
• Decision Date: 16 January 1951
• Parties: , 23 A.L.R.2d 787 BISI v. AMERICAN AUTOMOBILE INS. CO. et al. Supreme Court of Errors of Connecticut

Page 533

78 A.2d 533

137 Conn. 424, 23 A.L.R.2d 787

BISI v. AMERICAN AUTOMOBILE INS. CO. et al.

Supreme Court of Errors of Connecticut.

Jan. 16, 1951.

Edward Seltzer, Hartford, for the appellants (defendants).

William M. Pomerantz, Hartford, for the appellee (plaintiff).

Before BROWN, C. J., and JENNINGS, INGLIS, O'SULLIVAN and BALDWIN, JJ.

INGLIS, Judge.

This action is to recover upon an automobile collision insurance policy. The principal question is whether the trial court erred in concluding that the policy covered the automobile which was damaged.

The plaintiff was a dealer in used cars. On October 29, 1948, the defendants issued to him an automobile dealers' policy, insuring him for one year against loss by reason of 'collision or upset,' in which the coverage clause, in so far as it is relevant to the case, read as follows: '1. Coverage. The policy designated above covers automobiles owned by the insured and held for sale or used in repair service, or as demonstrators, but excludes automobiles sold under a conditional sale, mortgage, lease or similar agreement.'

On Saturday morning, August 27, 1949, the plaintiff agreed to sell and Joseph Finch agreed to buy on conditional sale a Plymouth sedan which was then owned and held for sale by the plaintiff. The purchase price agreed upon was $1275, to be paid by $400 in cash, an allowance of $75 on a Ford which Finch was to transfer to the plaintiff, and the financing of the balance of $800 through the assignment of the conditional sale contract to a finance company. It was agreed that the sale would be consummated provided the plaintiff could succeed in negotiating the conditional sale contract and note to an automobile finance company and thereby obtain the balance of the purchase price. The plaintiff explained to Finch that it would be necessary for him to procure a guarantor to sign the note with him and that the finance company would require time in which to investigate the financial responsibility of Finch and his comaker. Finch produced William Gallagher, who was willing to sign the note. The plaintiff then telephoned the Associates Discount Corporation and gave that company the details of the proposed transaction. He was told that the transaction could not be completed that day because sources of information as to credit risks were closed on Saturday. That information was communicated to Finch. Thereupon Finch executed an instrument transferring title of his Ford to the plaintiff and paid him $350 in cash. He and Gallagher signed a note and, in duplicate, a conditional sale contract which stated that the price of the Plymouth was $1275, to which were to be added finance charges of $354.40, that $475 had been paid by cash and the trade-in value of the Ford and that the balance of $1154.40 was to be paid in twenty-four monthly instalments. Finch also signed an application for the motor vehicle registration of the Plymouth in his name. All of these documents were delivered to the plaintiff. It was agreed that Finch would pay the $50 balance of the down payment on the following Monday when and if the Associates Discount Corporation approved the terms of the sale and if it agreed to accept the negotiation of the note and conditional sale contract.

After the various papers had been signed, Finch stated that he had to have the use of a car over the weekend to drive to his family's home in the village of Maine, New York, and that his Ford was not in proper mechanical condition to make the trip. Thereupon, the plaintiff allowed Finch to use the Plymouth to make the trip. He attached his used-car dealer's registration plates to the Plymouth and Finch drove it off.

On Sunday, August 28, while Finch was making the trip, he was in a collision with another car near Endicott, New York. The Plymouth was damaged and it cost $529.35 to repair it. The bill for repairs was later paid by the plaintiff and the car was returned to him. On Monday, before he received the news of the collision, he had been advised that the Associates Discount Corporation would finance the conditional sale contract and had been paid the $800 on account thereof. When, later in the same day, the accident was reported to him, he returned the $800 to the finance company.

The manifest meaning of the policy of insurance is that it will cover any automobile owned by the plaintiff as a dealer until it is sold by him, if he disposes of it by absolute sale, or if he disposes of it by conditional sale, until he delivers possession of it to the vendee pursuant to the conditional sale contract. Any car which he owns is still 'held for sale' under the terms of the policy after he has agreed to sell it, if his agreement to sell is nothing more than an executory contract. It continues to be held for sale until he has completed a sale. In the case of an executory agreement to sell by absolute sale, the car continues to be held for sale until title to the car passes. In the case of a conditional sale, title does not pass upon delivery to the vendee. All that then passes is the right to possession. Baker v. Brown & Thomas Auto Co., 101 Conn. 575, 577, 126 A. 703. Accordingly, an executory agreement to make a conditional sale becomes executed so that the vendor no longer holds the car for sale only when possession is delivered pursuant to the conditional sale. Delivery for any purpose other than to complete the executory agreement does not execute that agreement. See Lockwood v. Helfant, 126 Conn. 584, 586, 13 A.2d 136; Vanderbeek v. Francis, 75 Conn. 467, 469, 53 A. 1015.

In the present case, the agreement between the plaintiff and Finch was an executory one. Each of the parties had an unfulfilled promise to perform, and both promises were subject to the condition that the finance company would accept an assignment of the conditional sale contract. Their agreement would become executed only when the plaintiff delivered possession of the car to Finch pursuant to the conditional sale agreement. Until that time the plaintiff held the car for sale as specified in the policy. Until that time, also, the car was not an automobile which had been sold under a conditional bill of sale so as to bring it within the exclusionary clause of the policy.

The real question in the case, therefore, is whether the delivery of possession of the car by the plaintiff to Finch was a delivery in pursuance of the executory agreement for a conditional sale. That is a question of intent. All the attendant circumstances having been found as matters of fact, the intent of the parties is to be determined from those circumstances. Preston v. Verplex Co., 135 Conn. 187, 190, 62 A.2d 860; Ives v. Willimantic, 121 Conn. 408, 411, 185 A. 427; Peterson v. Universal Automobile Ins. Co., 53 Idaho 11, 20, 20 P.2d 1016. Aside from the finding by the trial court that the conditional sale would be consummated only in the event that a finance company would finance the transaction, there are two very significant facts bearing on the question. One is that no copy of the conditional sale contract was delivered to Finch. If the parties understood that the delivery of possession of the car was the performance of the agreement to sell, the natural thing for the plaintiff to do would be to hand Finch one copy of the contract. In the second place, it was not under a claim of right that Finch took the automobile for his trip to New York state. The finding is that he did not demand delivery of the car but rather merely told the plaintiff that he needed a car for use over the weekend and that then the plaintiff 'allowed' him to use the car in question. If the intent of the parties had been that the executory agreement was to be performed by the delivery of the car--if, in other words, the delivery of possession had been deemed by them to be a delivery under the conditional sale agreement--then Finch would naturally have insisted that he had the right to take the car. From these facts it is clear that the intent of the parties was not to deliver the Plymouth to Finch pursuant to the conditional sale contract at that time. The plaintiff had in his possession ample security to guarantee the return of the car by Finch if the conditional sale agreement was not consummated. It is clear that Finch was expected to return the car at the termination of the weekend, and if he had not been involved in the collision and had failed to return the automobile the plaintiff was in a position to replevy it. He would not have had to wait for any default in the conditional sale contract or even for an answer from the finance company refusing to accept the paper. Under all the circumstances, therefore, it appears that the intent of the parties was that the car was merely being loaned to Finch for use over the weekend. The transaction was one of bailment. It follows that even after the loan of the car was made it was still held by the plaintiff for sale and did not come within the exclusionary clause of the policy relating to automobiles sold on conditional sale. See Allen v. Berkshire Mutual Fire Ins. Co., 105 Vt. 471, 476, 168 A. 698, 89 A.L.R. 460; Williams v. General Motors Acceptance Corporation, 61 Ga.App. 750, 7 S.E.2d 402; 45 C.J.S., I...