Dennis Dillon Oldsmobile, GMC, Inc. v. Zdunich, s. 17886
| Decision Date | 20 July 1983 |
| Docket Number | Nos. 17886,18262 and 18263,s. 17886 |
| Citation | 668 P.2d 557 |
| Parties | DENNIS DILLON OLDSMOBILE, GMC, INC., Plaintiff and Respondent, v. Frank T. ZDUNICH, dba Mountain View Motors, Occidental Fire & Casualty Company, Curtis W. Wilkin and Western Surety Company, Defendants and Appellants. AMERICAN MANUFACTURERS MUTUAL, Plaintiff and Respondent, v. RESORT CAMPERS, LTD., Des Townsend, Glen Hatch, Roger T. Russell, Tom Vogel, Lewis Ted Cowley, Dale Christiansen, John W. Whiteley, Gwyn D. Davidson, and United Bank, a Utah corporation, Defendants and Appellants. |
| Court | Utah Supreme Court |
R. Mont McDowell, Salt Lake City, for defendants and appellants.
Steven B. Elggren, Salt Lake City, for plaintiff and respondent.
This action involves two cases which were consolidated on appeal, each of which requires a determination of the nature and extent of a surety's liability under a motor vehicle dealer's bond issued pursuant to U.C.A., 1953, § 41-3-16(1). In Dennis Dillon Oldsmobile, GMC, Inc. v. Zdunich (the "Dillon " case), the trial court held that there was no aggregate limitation on the surety's liability on the bond, finding instead that the surety's potential liability was a maximum of $20,000 per claim. In American Manufacturers Mutual v. Resort Campers, Ltd. (the "AMM " case), the trial court held that the surety's aggregate liability was limited to $20,000 for all claims arising in a specific annual period, commencing with the bond's issuance and continuing thereafter with each annual renewal of the bond. We affirm the judgment of the trial court in the Dillon case and reverse that in the AMM case.
In the Dillon case, the surety, Occidental Fire and Casualty Company ("Occidental"), issued a motor vehicle dealer's bond on April 28, 1977. The bond listed Frank T. Zdunich dba Mountain View Motors as the principal and was in the penal sum of $20,000. On June 11, 1979, Dennis Dillon Oldsmobile, GMC, Inc., purchased an automobile from Mountain View Motors. Mountain View Motors never transferred title. On November 30, 1979, Dennis Dillon Oldsmobile GMC, Inc., filed suit against Mountain View Motors and Occidental. Occidental defended the action on the ground that a prior payment of $20,000 to another claimant relieved Occidental of any further liability under the bond. In granting a motion for summary judgment in favor of Dennis Dillon Oldsmobile, GMC, Inc., the trial court found that:
[T]he limit of liability on the part of the surety under such bond is $20,000 per claim, and the payment by the surety of one such claim in the amount of $20,000 does not relieve said surety of liability on any other such claim.
Occidental now appeals that ruling, claiming that the trial court erred in not holding that its aggregate liability for all claims is limited to $20,000.
In the AMM case, the surety, American Manufacturers Mutual Insurance Company ("American"), issued a motor vehicle dealer's bond on October 31, 1978. The bond listed Dick and LaVonne Noren dba Central R.V. Sales as the principal and was in the penal sum of $20,000. Several purchasers filed claims against Central R.V. Sales, the total of which exceeded $20,000. On May 28, 1981, American filed a declaratory action requesting a ruling by the trial court that its aggregate liability for all claims was limited to $20,000, and that a deposit of $20,000 with the clerk of the court would extinguish or satisfy American's liability under the bond. On December 24, 1981, the trial court issued a Memorandum Decision in which it held that: (1) the language of the bond was ambiguous and therefore the provisions of the statute must be read together with the language of the bond, and (2) under the terms of the statute and the bond, American's aggregate liability for all claims arising during a specific annual period was limited to $20,000 for each annual period, commencing with the bond's issuance and continuing thereafter with each annual renewal. The various claimants on the bond appeal that decision.
Of the various claims of error asserted by the parties on appeal, the issue which is determinative of both cases is as follows: Is the language of the bonds in the present case more comprehensive with respect to the sureties' liability than is required by § 41-3-16(1) and, if so, is the extended coverage under the bonds inconsistent with the statute?
The present version of § 41-3-16(1) states:
(1) New Motor Vehicle Dealer's and Used Motor Vehcle Dealer's Bond: Before a new motor vehicle dealer's license or used motor vehicle dealer's license is issued the applicant shall file with the administrator a good and sufficient bond in the amount of $20,000 with corporate surety thereon, duly licensed to do business within the state, approved as to form by the attorney general, and conditioned that the applicant will conduct business as a dealer without fraud or fraudulent representation, and without violation of this chapter. The bond may be continuous in form, and the total aggregate liability on the bond shall be limited to the payment of $20,000.
U.C.A., 1953, § 41-3-16(1) (emphasis added). 1 None of the parties contends that the statute does not limit a surety's aggregate liability on a bond to $20,000. However, the present dispute focuses on the effect of the language of the bonds used in the present cases, which differs from and does not track the exact language of the statute.
The language of the bonds in the Dillon and AMM cases is identical and reads as follows:
....
NOW, THEREFORE, if the above bounden principal shall obtain said license to do business ... and shall well and truly observe and comply with all the requirements and provisions of ... Chapter 3, Title 41, Utah Code Annotated, 1953, and indemnify any and all persons, firms and corporations for any loss suffered by reason of the fraud or fraudulent representations ... and shall pay all judgments and costs adjudged against said principal on account of fraud or fraudulent representations and for any violation or violations of said law during the time of said license and all lawful renewals thereof, then the above obligation shall be null and void, otherwise to remain in full force and effect.
(Emphasis added.)
In a similar case, this Court has stated as a general proposition that:
In situations where a bond has been given in compliance with some statutory provision the provisions of the statute are read in connection with the provisions of the bond to determine the nature and extent of the surety's liability. Home Indemnity Co. v. State of Missouri, 8 Cir., 78 F.2d 391, 393, where the court held: "The scope of the surety's obligation under such a statutory bond is prescribed by the statute in compliance with which it is given and by the language employed in the bond defining it." (citing numerous cases.) [sic]
Zele v. Industrial Commission, 102 Utah 164, 167, 128 P.2d 751, 752 (1942). That opinion also said:
But where a bond is by its terms more comprehensive than required by the statute the surety is liable to the full extent of the bond.
Id. at 167, 128 P.2d at 752 (citations omitted). The rule enunciated by the Zele case is in accord with that of numerous other jurisdictions and appears to be the general rule. See, e.g., ...
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