Cowles v. Rogers, 87-CA-2277-DG

• Decision Date: 23 November 1988
• Docket Number: No. 87-CA-2277-DG,87-CA-2277-DG
• Citation: 762 S.W.2d 414
• Parties: Stephanie COWLES, Appellant, v. Gerald ROGERS; Rogers Motors Company; and New Hampshire Insurance Company, Appellees.
• Court: Kentucky Court of Appeals

Page 414

762 S.W.2d 414

Stephanie COWLES, Appellant, v. Gerald ROGERS; Rogers Motors Company; and New Hampshire Insurance Company, Appellees.

No. 87-CA-2277-DG.

Court of Appeals of Kentucky.

Nov. 23, 1988.

Rehearing Denied Jan. 9, 1989.

Robert B. Wade, Morgantown, for appellant.

Steven O. Thornton, Elizabeth Y. Downing, Bowling Green, for appellees.

Before HOWERTON, C.J., and GUDGEL and WILHOIT, JJ.

GUDGEL, Judge:

This case is before us on discretionary review from an order entered by the Butler Circuit Court affirming a summary judgment granted by the Butler District Court. Appellant contends that the court erred by finding that the driver of an automobile involved in a collision was not insured within the meaning of an omnibus clause of a liability insurance policy issued by appellee New Hampshire Insurance Company. We disagree. Hence, we affirm.

On August 9, 1984, appellant was involved in a collision with a vehicle driven by one Randall D. Evans. Title to the vehicle Evans was operating was held by appellee Gerald Rogers, owner and proprietor of Rogers Motors. Evans purchased the vehicle from Rogers on August 2, 1984, but pursuant to an oral agreement, title to the vehicle was not to be transferred to Evans until he paid the $62 balance owed on the purchase price. At the time of the collision with appellant's vehicle, Evans was uninsured. However, Rogers had a garageman's liability insurance policy on the vehicle which was in full force and effect. This policy included an omnibus clause which provided coverage for vehicles owned by Rogers and being operated with his permission by another person.

Initially, appellant filed an action for damages against Evans and subsequently obtained a judgment. After the execution issued on that judgment was returned unsatisfied, appellant instituted a new proceeding seeking an adjudication that Rogers' insurer was liable for the amount of the judgment. Eventually, the district court rendered a summary judgment on the issue of coverage in favor of Rogers' insurer. On appeal to the circuit court, the district court's judgment was affirmed. We granted appellant's subsequent motion for discretionary review.

The initial issue we must address in this appeal is whether the legislature, by enacting KRS Chapter 186A, the automated motor vehicle registration and titling system, intended to prevent the absolute sale of an automobile from becoming legally effective until such time as the seller executes and delivers a certificate of title for the vehicle to the buyer. Appellant argues that this was the legislature's intent and that since Rogers did not deliver a certificate of title for the vehicle he sold before permitting Evans to drive it, Evans must be deemed an insured under the omnibus clause of Rogers' insurance policy.

In response, appellee insurer argues, citing Lexington Mack, Inc. v. Miller, Ky. 555 S.W.2d 249 (1977), Hicks v. Kentucky Farm Bureau Mutual Insurance Company, Ky., 455 S.W.2d 52 (1970), and Motors Insurance Corporation v. Safeco Insurance Company of America, Ky., 412 S.W.2d 584 (1967), that this jurisdiction adheres to the view that a sale of an automobile is complete for purposes of insurance coverage at the time the vehicle is delivered to the buyer regardless of whether it is agreed that title for the vehicle will not be immediately transferred. Indeed, the Motors Insurance Corporation case is factually indistinguishable from the instant action. There a dealer sold a vehicle pursuant to a conditional sales contract whereby the buyer was given immediate possession of the vehicle with the title papers to the vehicle to be transferred after the purchase price was paid in full. The buyer subsequently was involved in a collision, and a dispute arose as to whether the dealer's insurer or the buyer's insurer was liable for the loss. The court held that the buyer's insurer was liable because, pursuant to the Uniform Commercial Code provisions governing sales, title to the vehicle passed at the time and place of delivery to the buyer even though title papers were to be delivered later. The latter fact, the court concluded, did not require the dealer to be considered an owner within the meaning of its insurance policy because that issue was required to be determined by the general law of sales.

Three years later, the court addressed a similar title issue in Hicks. In that case, the vehicle had been delivered to the buyer and the purchase price paid in full before the loss occurred. However, the bill of sale for the vehicle had not yet been executed or filed. The court held, following the Motors Insurance Corporation decision, that the seller was not the owner of the vehicle within the meaning of the seller's insurance policy. In distinguishing two foreign decisions cited by the buyer, the court stated:

Both Virginia and Ohio are so-called "title" states and by specific statutory enactment do not regard the...