Calhoun v. Farm Bureau Mut. Ins. Co., No. 51194

• Court: United States State Supreme Court of Iowa
• Writing for the Court: MOORE
• Citation: 255 Iowa 1375,125 N.W.2d 121
• Docket Number: No. 51194
• Decision Date: 10 December 1963
• Parties: Harry L. CALHOUN, Appellant, v. FARM BUREAU MUTUAL INSURANCE COMPANY, Appellee.

Page 121

125 N.W.2d 121 255 Iowa 1375 Harry L. CALHOUN, Appellant,
v.
FARM BUREAU MUTUAL INSURANCE COMPANY, Appellee. No. 51194. Supreme Court of Iowa. Dec. 10, 1963.
As Amended on Denial of Rehearing Feb. 11, 1964.

Newport, Wine & Schebler, Davenport, for appellant.

John E. McCracken, Davenport, for appellee.

MOORE, Justice.

This is a law action by plaintiff, Harry L. Calhoun, to enforce payment by defendant, Farm Bureau Mutual Insurance Company, on its automobile insurance policy with [255 Iowa 1376] him for collision damage to a 1958 Pontiac automobile. Defendant alleged plaintiff had sold the car prior to its damage and was not the owner. Plaintiff had an Iowa Certificate of Title to the vehicle on which he relied to establish his ownership under Code section 321.45(2), I.C.A.

After trial to the court and a judgment dismissing his petition and assessing costs against him, plaintiff has appealed.

The facts are not in dispute. In June 1960 plaintiff purchased a 1958 Pontiac and obtained a certificate of title (exhibit 1) showing him as owner. Within a few days he obtained from defendant an insurance policy including 'collision coverage' with a $50 deductible clause therein.

Page 122

In November 1960 plaintiff and Rick Hudson, his fellow employee and friend, agreed to the terms of a trade of automobiles. The latter part of November they took possession of each other's automobile. Each was to keep in repair the vehicle in his possession. In order to finance the trade, Hudson was to apply for a loan from his credit union when he became eligible on January 5, 1961. No transfer of the certificate of title on the 1958 Pontiac was to be made by plaintiff until Hudson's loan had been approved by the credit union.

December 10, 1960, Hudson driving the 1958 Pontiac wrecked it causing total loss. Plaintiff notified defendant insurance company and made claim under the 'collision coverage' section. After full disclosure by plaintiff of his arrangement with Hudson, defendant denied his claim on the ground he was not the owner of the car. The value of the car was $2200.

The trial court found there had been a completed sale of the Pontiac prior to collision damage and therefore plaintiff was not insured by defendant's policy for damages to a car not owned by him. The court ruled the statute, Code section 321.45, I.C.A., requiring a certificate of title to an automobile has no reference to the transfer of title between buyer and seller.

Plaintiff asserts the trial court erred in these findings and ruling. He contends the certificate of title to an automobile is conclusive evidence of ownership except for purpose of determining whether the certificate holder is liable for damages to [255 Iowa 1377] others resulting from negligent operation of the automobile by another. He argues but for this exception, which is stated in the statute, by Code section 321.45(2), I.C.A., title remains in the registered owner until he assigns the certificate of title. It provides:

'321.45 Title must be transferred with vehicle. * * *

'2. Except as provided in section 321.50 and except for the purpose of section 321.493 no person shall acquire any right, title, claim or interest in or to any vehicle subject to registration under this chapter from the owner thereof except by virtue of a certificate of title issued or assigned to him for such vehicle or by virtue of a manufacturer's or importer's certificate delivered to him for such vehicle; nor shall any waiver or estoppel operate in favor of any person claiming title to or interest in any vehicle against a person having possession of the certificate of title or manufacturer's or importer's certificate for such vehicle for a valuable consideration. Except as provided in section 321.50 and except for the purpose of section 321.493, no court in any case at law or equity shall recognize the right, title, claim or interest of any person in or to any vehicle subject to registration sold or disposed of, or mortgaged or encumbered, unless evidenced by a certificate of title or manufacturer's or importer's certificate duly issued or assigned in accordance with the provisions of this chapter.'

Section 321.50 relates to lien provisions. Section 321.493 relates to the exception to liability for damages. Neither has any application here.

Soon after the enactment in 1953 of the Iowa Motor Vehicle Certificate of Title Law, of which section 321.45(2) is a part, Professor Richard S. Hudson of the Drake University College of Law wrote the first of his three excellent articles discussing the Iowa Act and other acts. Those articles are '1953 Iowa Motor Vehicle Certificate of Title Law', 3 Drake L.Rev. 3 (1953), 'Iowa Motor Vehicle Certificate of Title Law II', 4 Drake L.Rev. 86 (1954), and 'Iowa Motor Motor Vehicle Certificate of Title Law III', 5 Drake L.Rev. 31 (1955). At pages 3 and 4 of his first article he states:

'By action of the 55th General Assembly, Iowa has joined [255 Iowa 1378] the states with comprehensive motor vehicle certificate of title laws. This has been accomplished by amendments to specific sections of Chapter 321, Code of Iowa (1950). The net result is to give Iowa a certificate of title law substantially like those of Ohio and Nebraska. It is assumed

Page 123

that the purpose of the change from the existing registration system to a certificate of title law was to prevent theft of motor vehicles. The explanation attached to H.F. 260, 55th General Assembly (a bill identical with S.F. 181), states that the bill is designed to benefit the motor vehicle owner. * * *

'However, the essential feature of the system is that the certificate of title issued for each motor vehicle and other vehicles subject to registration will be part of a chain of title, as certificates are assigned and new certificates issued. It is designed to show ownership interests and incumbrances on the title certificate.'

Since the enactment of section 321.45(2) we have had but one case involving whether title to a motor vehicle has passed without an assignment of the title certificate. In Varvaris v. Varvaris, Iowa, 124 N.W.2d 163 (filed October 15, 1963) we held a gift inter vivos of two automobiles was not completed without assignment of title certificates under the statute.

Several other jurisdictions have construed their automobile title certificate statutes. The holdings are not uniform as might be expected. Facts and different statutory provisions account for what at first reading appears to be sharp conflicts. Ohio and Nebraska statutes are almost identical with Code section 321.45(2), I.C.A.

In Crawford Finance Co. v. Derby, 63 Ohio App. 50, 25 N.E.2d 306, a dealer had mortgaged an automobile to plaintiff finance company and gave it possession of the title certificate. Defendant Derby, without any knowledge of the chattel mortgage, purchased the automobile from the dealer and paid for it by transferring his used car and paying cash to the dealer. In a replevin action the Ohio court held for the finance company. It said:

'Section 6290-4, General Code, quite effectively precludes a would-be purchaser from acquiring any right or interest whatever[255 Iowa 1379] in a motor vehicle, except by way of an official certificate of...