First Nat. Bank & Trust Co. of Lincoln v. Ohio Cas. Ins. Co.

Decision Date21 July 1976
Docket NumberNo. 40598,40598
Citation196 Neb. 595,244 N.W.2d 209
PartiesFIRST NATIONAL BANK & TRUST COMPANY OF LINCOLN, Appellee, v. OHIO CASUALTY INSURANCE COMPANY, Appellant.
CourtNebraska Supreme Court

Syllabus by the Court

1. Under the Nebraska Certificate of Title act, sections 60--102 to 60--117, R.R.S.1943, a certificate of title is the exclusive method provided by statute for the transfer of title to an automobile, but it is not conclusive of ownership.

2. A certificate of title to a motor vehicle conveys no greater interest than the grantor has.

3. A thief can acquire no title to an automobile stolen by him, nor can title to such vehicle be acquired through another's larceny or theft.

4. The Nebraska Certificate of Title Act does not prevent owners of stolen vehicles from reclaiming them; and rights acquired by subsequent bona fide purchasers of the stolen vehicles are subject to those of the true owners.

Con M. Keating, of Marti, Dalton, Bruckner, O'Gara & Keating, Lincoln, for appellant.

Ginsburg, Rosenberg, Ginsburg & Krivosha, James E. Gordon, Lincoln, for appellee.

Heard before WHITE, C.J., and SPENCER, BOSLAUGH, McCOWN, NEWTON, CLINTON and BRODKEY, JJ.

BRODKEY, Justice.

Ohio Casualty Insurance Company, hereinafter referred to as Ohio Casualty or the Insurance Company, appeals a District Court judgment against it in the amount of $5,500 and costs for the alleged conversion of a 1973 Cadillac automobile. The case was tried on the facts as stipulated by the parties. In its order, the District Court found that First National Bank and Trust Company of Lincoln, hereinafter referred to as First National or the Bank, acquired a lien on the automobile by virtue of an installment sales contract noted on the certificate of title, that was 'paramount to any interest claimed by the defendant.' One of Ohio Casualty's representatives, using self-help, removed the car from Nebraska without First National's consent, and the court found that Ohio Casualty had converted the car. We reverse.

The 1973 Cadillac automobile involved in this case was purchased in Oregon by Joseph J. and E. Joy Fernandez on or about October 26, 1972. On that same date, they applied for an Oregon certificate of title to the car, and received it on November 2, 1972. On or about December 10, 1972, the car was stolen from the Fernandezes in Burbank, California. Ohio Casualty was the Fernandezes' insurance carrier; and on January 9, 1973, it paid $8,400 to the Fernandezes to cover the car's loss, who at that time assigned their title certificate to the car to the insurance company. On July 20, 1973, Ohio Casualty made application to the State of Oregon for a certificate of title in its name, and received it on August 3, 1973.

Meanwhile, the county clerk of Scotts Bluff County, Nebraska, on December 26, 1972, issued a Nebraska certificate of title on the car to one William F. Handy based upon a forged Arizona certificate of title. The car was subsequently brought to Lincoln, where, on February 28, 1973, a certificate of title from Lancaster County was issued in the name of one Matthew John Brady. Misle Chevrolet Company purchased the Cadillac from a Matthew Brady, and obtained a certificate of title in its name in Lancaster County, on March 1, 1973. Later a Jerry Neva bought the car from Misle Chevrolet and obtained a certificate of title to the car on March 6, 1973. First National acquired a lien on the car by virtue of an installment sales agreement covering this sale. The lien was noted on the Nebraska certificate of title as required by law. Some time later, the Federal Bureau of Investigation which had been searching for the car stolen from the Fernandezes, located the car in Lincoln, Nebraska, and notified an agent of Ohio Casualty, who, on January 24, 1974, using only self-help, removed the vehicle from Lincoln to California, where appellant has its west coast office. The Cadillac was sold by the Insurance Company under sealed bids for $5,500.

The sole issue in this case is whether, under the Nebraska Certificate of Title Act, sections 60--102 to 60--117, R.R.S.1943, First National, having noted its lien on the Nebraska certificate of title acquired rights superior to Ohio Casualty, in view of the fact First National's chain of title originated in a thief. The District Court answered this question in the affirmative. We disagree and reverse.

The pertinent statute, section 60--105, R.R.S.1943, provides in part: '(1) No person, except as provided in section 60--110, acquiring a motor vehicle, commercial trailer, semitrailer, or cabin trailer From the owner thereof, whether such owner be a manufacturer, importer, dealer, or otherwise, shall acquire any right, title, claim, or interest in or to such motor vehicle, commercial trailer, semitrailer, or cabin trailer until he shall have had delivered to him physical possession of such motor vehicle, commercial trailer, semitrailer, or cabin trailer and a certificate of title or a manufacturer's or importer's certificate duly executed in accordance with the provisions of this act, * * *.' (Emphasis supplied.)

First National urges that since Ohio Casualty has not complied with the provisions of section 60--105, it can have no recognizable claim to the automobile in question. This court has stated that the purpose of the Certificate of Title Act is to provide a means of identifying motor vehicles, ascertaining motor vehicle owners, and preventing theft of motor vehicles and fraud in the transfer of motor vehicles. State Farm Mut. Auto. Ins. Co. v. Drawbaugh, 159 Neb. 149, 65 N.W.2d 542 (1954); Snyder v. Lincoln, 150 Neb. 580, 35 N.W.2d 483 (1948). To achieve this end, the Legislature has provided that the exclusive means of transferring title was that provided by the statutory scheme. State Farm Mut. Ins. Co. v. Drawbaugh, supra; Snyder v. Lincoln, 156 Neb. 190, 55 N.W.2d 614 (1952). This method of transfer does not, however, create title where none exists, nor does it give a transferee greater title than that of his transferor. In Snyder v. Lincoln, 156 Neb. 190, at 195, 55 N.W.2d at 616, we stated: 'In Loyal's Auto Exchange, Inc. v. Munch, supra, we said, in effect, that a purchaser who receives possession of an automobile without obtaining a certificate of title thereto, in accordance with the statute, acquires no title or ownership therein. We did not say that the possession of a certificate of title was an absolute muniment of title. A thief with a certificate of title to a stolen automobile does not divest the owner of his right to take it wherever he can find it. A certificate of title is essential to convey the title to an automobile, but it is not conclusive of ownership. It is simply the exclusive method provided by statute for the transfer of title to a motor vehicle. It conveys no greater interest than the grantor actually possesses.'

The effect of a certificate of title has been stated in various ways by this court. The certificate has been found to be 'conclusive of ownership' under the circumstances of particular cases. Terry Bros. & Meves v. National Auto Ins. Co., 160 Neb. 110, 69 N.W.2d 361 (1955); Garbark v. Newman, 155 Neb. 188, 51 N.W.2d 315 (1952). In other cases, we have stated that the certificate is 'generally conclusive of ownership.' Forman v. Anderson, 183 Neb. 715, 163 N.W.2d 894 (1969); Turpin v. Standard Reliance Ins. Co., 169 Neb. 233, 99 N.W.2d 26 (1959); State Farm Mut. Auto. Ins. Co. v. Drawbaugh, supra. Yet, in other cases, the court has stated that the certificate is 'not conclusive of ownership.' Allstate Ins. Co. v. Enzolera, 164 Neb. 38, 81 N.W.2d 588 (1957); Burns v. Commonwealth Trailer Sales, 163 Neb. 308, 79 N.W.2d 563 (1956); Snyder v. Lincoln, 150 Neb. 580, 35 N.W.2d 483, 156 Neb. 190, 55 N.W.2d 614. We have never stated that the certificate of title is always conclusive of ownership. To hold that a certificate of title procured by theft, forgery, fraud, or misrepresentation is conclusive would defeat the very purpose of the legislation. Burns v. Commonwealth Trailer Sales, supra, 163 Neb. at 316, 79 N.W.2d 563.

When the property underlying the certificate of title has been obtained by illegal means, a distinction has been made between stolen property and that acquired by fraud. The distinction is set out in the three Snyder cases, 150 Neb. 580, 35 N.W.2d 483, 153 Neb. 611, 45 N.W.2d 749, 156 Neb. 190, 55 N.W.2d 614, and cited in later cases. One obtaining property by larceny cannot convey good title even to an innocent purchaser for value, but one obtaining property by fraud has a voidable title, and may convey that title to a bona fide purchaser who is then protected from claims of others. Enzolera, supra, 164 Neb. at 41, 81 N.W.2d 588; Snyder, 150 Neb. at 588, 35 N.W.2d 483, 153 Neb. at 620, 45 N.W.2d 749, 156 Neb. at 195, 55 N.W.2d 614. On the other hand, the right of an owner or an assignee of the owner to recover his stolen automobile remains open to him. Snyder, 156...

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