Canadian Indem. Co. v. Motors Ins. Corp.

• Decision Date: 02 January 1964
• Citation: 36 Cal.Rptr. 159,224 Cal.App.2d 8
• Court: California Court of Appeals Court of Appeals
• Parties: CANADIAN INDEMNITY COMPANY, Canadian Fire Insurance Company, and Linda Hall, Plaintiffs and Appellants, v. MOTORS INSURANCE CORPORATION, Defendant and Respondent. Civ. 21217.

Page 159

36 Cal.Rptr. 159

224 Cal.App.2d 8

CANADIAN INDEMNITY COMPANY, Canadian Fire Insurance Company, and Linda Hall, Plaintiffs and Appellants, v. MOTORS INSURANCE CORPORATION, Defendant and Respondent.

Civ. 21217.

District Court of Appeal, First District, Division 1, California.

Jan. 2, 1964.

Hearing Denied Feb. 26, 1964.

Edward A. Friend, San Francisco, for appellants.

Low, Ball & Norton, San Francisco, for respondent.

SULLIVAN, Justice.

Plaintiffs appeal from an adverse judgment rendered after a nonjury trial in an action for declaratory relief.

Plaintiff Linda Hall desired to purchase a Ford Thunderbird automobile of which the Bank of America, hereafter called the Bank, was legal owner and one Robert E. Ditsch, registered owner. On May 23, 1961, Mrs. Hall applied to the Bank for an approval of her credit to the end of financing her purchase of the car. On May 26, 1961 Ditsch gave Mrs. Hall physical possession of the Thunderbird and on May 29, 1961, the parties entered into a written agreement under the terms of which Ditsch transferred to her all of his equitable interest in the automobile. On the same day, May 29, Ditsch executed a power of attorney in favor of the Bank empowering the latter to execute in his name any certificate of ownership necessary to transfer any registration of said vehicle. The Bank did not use this power of attorney until June 2, 1961, after it had approved Mrs. Hall's credit at which time the Bank signed Ditsch's name at the place designated on the certificate of ownership ('pink slip') for release of ownership by the registered owner. On the same day, June 2, 1961, Mrs. Hall affixed her signature to the certificate of ownership at the place designated for application for transfer by new registered owner. The Bank remained the legal owner. The certificate properly executed was thereupon transmitted to the Department of Motor Vehicles.

In the meantime, on May 30, 1961, four days after she took possession of the car, Mrs. Hall while driving the Thunderbird became involved in an accident as a result of which said automobile was damaged to the extent of $349.26. On such date, Mrs. Hall was insured under a 'family combination automobile policy' issued to her by plaintiffs The Canadian Indemnity Company and The Canadian Fire Insurance Company (hereafter collectively called 'Canadian') and covering her Oldsmobile. The policy provided that Canadian would 'pay for loss caused by collision to the owned automobile or to a non-owned automobile' on a so-called $100 deductible basis. In an 'other insurance' clause, it also provided that 'the insurance with respect to a temporary substitute automobile or non-owned automobile shall be excess insurance over any other valid and collectible insurance.' (Emphasis added.)

Ditsch also was insured at the time of the accident by defendant Motors Insurance Corporation, hereafter called Motors. This policy covered the Thunderbird and, among other things, provided for collision coverage on a $50 deductible basis. It was cancelled effective June 23, 1961.

Mrs. Hall paid the $349.26 for the repairs to the Thunderbird. She and Canadian thereupon commenced the instant action. As disclosed by the pleadings and the pretrial conference order, plaintiffs' position is briefly this: Ditsch owned the Thunderbird at the time of the accident. At such time he had collision coverage for the car afforded by Motors. Mrs. Hall was an additional insured under the Motors' policy as a driver with Ditsch's express permission. Defendant Motors' position is that Ditsch was not the owner at the time of the accident and that consequently it was not liable under its policy to pay the damages.

The trial court found, so far as is here pertinent, that neither policy was cancelled until after May 30, 1961, the date of the accident; that Ditsch sold the Thunderbird to Mrs. Hall on May 29, 1961 'in compliance with the pertinent provisions of the Vehicle Code'; that the car was damaged to the extent of $349.26 while being operated by Mrs. Hall; and concluded that the policy issued by Motors 'did not cover the automobile, or any operator thereof, after May 29, 1961.' Judgment was rendered for defendant for costs.

Basically the question which we face is this: Was Ditsch the owner of the Thunderbird at the time of the accident? Plaintiffs contend that he was because he had not complied with the provisions of sections 5600 and 5602 of the Vehicle Code. ¹ It is argued that while Ditsch delivered possession of the vehicle to Mrs. Hall, he had neither endorsed and delivered the certificate of ownership nor notified the Department of Motor Vehicles prior to the occurrence of the accident. The facts underlying this argument are not disputed. On May 26, 1961, Ditsch delivered possession of the car to Mrs. Hall. On May 29, 1961, he signed a document purporting to transfer his equity therein to her. Although he also executed on May 29 a power of attorney authorizing the Bank to endorse the certificate of ownership, such transferor's endorsement was not made and Mrs. Hall's signature as transferee was not affixed until June 2, 1961. It is beyond contradiction that prior to the occurrence of the accident on May 30, 1961, neither of the requirements prescribed by section 5600 of the Vehicle Code had been fulfilled and no transfer of title pursuant to such section effectuated. ² The above evidence is not in conflict and not reasonably susceptible of conflicting inferences. Since the only reasonable inference therefrom is that the statutory requirements were not complied with, the trial court's finding that a sale was made 'in compliance with the pertinent provisions of the Vehicle Code' is unwarranted and not binding on this court. (Hicks v. Reis (1943) 21 Cal.2d 654, 660-661, 134 P.2d 788; Isenberg v. California Employment Stabilization Commission (1947) 30 Cal.2d 34, 40, 180 P.2d 11.)

Nevertheless although section 5600 had not been complied with, there was an actual sale of the car as between the vendor (Ditsch) and the vendee (Mrs. Hall). The provisions of the Vehicle Code relating to the registration of title and ownership, including those requirements prescribed by section 5600, 'were enacted in the interest of the public welfare to protect innocent purchasers and afford identification of vehicles and persons responsible in cases of accident and injury.' (Henry v. General Forming, Ltd. (1948) 33 Cal.2d 223, 227, 200 P.2d 785, 787; Stoddart v. Peirce (1959) 53 Cal.2d 105, 117, 346 P.2d 774, 780; Venne v. Standard Accident Ins. Co. (1959) 171 Cal.App.2d 242, 247, 340 P.2d 30.) In the Stoddart case, supra, the court declared that the language found at the beginning of former section 186 ³ (now section 5600) 'should not be construed in a strict or literal sense.' We quote further from Stoddart: 'Insofar as the legal title of the party failing to comply with the statutory requirement, or his liability to a third person is concerned there is little doubt that the quoted language means just what it says. But this does not mean that no equitable title passes * * *. It would also defeat the obvious legislative intent to hold that, as between the parties, the law recognized no transfer of a financial interest merely because one or more of the parties failed to comply with the registration statutes.' (Pp. 116-117 of 53 Cal.2d, p. 780 of 346 P.2d.)

It is clear that Mrs. Hall, the plaintiff in the instant action, does not fall within the class of persons for the protection of whom the above statute was designed. She makes no claim that she has been defrauded as an innocent purchaser from Ditsch. Nor does her involvement in an accident bring her under the protection afforded by the statute. The primary purpose of the statute is to afford relief to third persons who suffer damage as a result of the driver's negligence and not to the driver who is himself responsible for the accident.

There is a close analogy between the instant case and Venne v. Standard Accident Ins. Co., supra, 171 Cal.App.2d 242, 340 P.2d 30. In that case Celeste Venne was the owner of an Oldsmobile covered by an insurance policy issued to her by the defendant insurance company. The policy provided coverage to persons using the car with the permission of the insured. On June 29, 1956, Celeste made a bona fide sale of the car to her brother, Raymond Venne, plaintiff therein, and at that time delivered to him possession of the automobile, the endorsed certificate of ownership and the certificate of registration. Notice of the transfer however was not received by the Department of Motor Vehicles until July 6, 1956. On June 30, 1956, the day following the sale, Raymond was involved in a traffic accident, for which he had his own insurance coverage. As a result of the accident, an action was commenced against Celeste and Raymond. Demand made on Standard (Celeste's carrier) to defend Raymond was rejected by that company. Thereafter in a declaratory relief action commenced by Raymond and his insurance company against Standard, the court determined that the Standard policy covered the accident on a pro rata basis. Standard appealed contending as defendant does here that, as there was a sale of the car to Raymond, the latter was not using it at the time of the accident with Celeste's permission but as his own property. Plaintiffs in Venne contended on the other hand, as plaintiffs herein do, that, as certain provisions of the Vehicle Code were not complied with, there was no effective transfer of ownership, that Celeste remained the owner and that Raymond was a permissive user.

The appellate court held that while by delivering possession of the car, the endorsed certificate of ownership and the registration card to the vendee, the vendor complied with former section 178 (now section 5602, see footnote 1, ante) and relieved herself of potential civil liability, there was nevertheless under the clear facts of the case no...