Garlick v. McFarland

• Decision Date: 03 June 1953
• Docket Number: 33215 and 33216,Nos. 33214,s. 33214
• Parties: , 50 O.O. 445 GARLICK v. McFARLAND et al. GLENN v. McFARLAND et al. (two cases)
• Court: Ohio Supreme Court

Page 539

159 Ohio St. 539

113 N.E.2d 92, 50 O.O. 445

GARLICK v. McFARLAND et al.

GLENN v. McFARLAND et al. (two cases)

Nos. 33214, 33215 and 33216.

Supreme Court of Ohio.

June 3, 1953.

Syllabus by the Court.

1. The words, 'owner' and 'ownership', as used in an insurance policy covering the liability of the insured as owner of an automobile for damages for bodily injuries and property damage 'caused by accident and arising out of the ownership, maintenance or use of the automobile,' are to be construed and applied as those words are defined in the statutes of this state relating to the title to automobiles, in the absence of language in such policy prescribing a different meaning of such terms.

2. Under the provisions of Section 6290-3, General Code (a part of the Certificate of Title Act), 'no person * * * shall sell or otherwise dispose of a motor vehicle without delivering to the purchaser or transferee thereof a certificate of title with such assignment thereon as may be necessary to show title in the purchaser, nor purchase or otherwise acquire a motor vehicle unless he shall obtain a certificate of title for the same in his name.'

3. Where an automobile is sold by the owner, with full payment of the agreed price and delivery of possession to the purchaser thereof but the assignment and delivery of the certificate of title are deferred, a change in the ownership of the automobile is not consummated in accordance with the provisions of the Ohio Certificate of Title Act and coverage of such automobile by an insurance policy issued to the owner thereof continues in force until the consummation of the sale by assignment and delivery of the certificate of title.

These three causes originated in the Court of Common Pleas of Cuyahoga County.

Cause No. 33214 is a wrongful-death action in behalf of the next of kin of Edyth Garlick who was a passenger in an automobile driven by the defendant William McFarland, a minor.

Causes Nos. 33215 and 33216 are, respectively, actions by Anna Mae Glenn and James E. Glenn, husband and wife, who were passenger and driver of another automobile which came into collision with the automobile driven by McFarland.

In cause No. 33214, a judgment was obtained against McFarland in the sum of $9,000 and costs.

In causes Nos. 33215 and 33216, answers were filed by a guardian ad litem for McFarland, and upon trial judgments were rendered for the plaintiff in the sum of $3,000 and costs in cause No. 33215 and for $7,000 and costs in cause No. 33216.

After the three judgments were obtained against McFarland, a supplemental petition was filed in each case by the respective plaintiffs under authority of section 9510-4, General Code, seeking to reach and apply the proceeds or benefits of certain insurance policies which had been issued to the alleged owner of the Plymouth automobile operated by McFarland.

In cause No. 33214, the supplemental petition made the Maryland Casualty company and the Home Indemnity Insurance Company of New York parties defendant, and in the other cases the Home Indemnity Insurance Company, hereinafter called Home, alone was named as a new party. The Maryland Casualty Company was dismissed as a defendant when it entered into a settlement on a 'covenant not to sue' basis. The cases proceeded to trial on the supplemental petitions in the Court of Common Pleas against Home, a single defendant.

Legal title to the Plymouth automobile was in one Donald Prosen, and Home had issued to Prosen, as the owner of the Plymouth automobile, a policy of liability insurance which provided coverage to him or any one using the car with his permission; and while Prosen had purported to sell the automobile to McFarland or to his mother, Gertrude M. McFarland, and had been paid the sales price, he had not assigned and delivered the title certificate. The plaintiffs have maintained that title to and ownership of the Plymouth automobile, at the time of the accident, were solely in Prosen by virtue of the provisions of the Ohio Certificate of Title Act, and that McFarland was operating the automobile at the time of the accident with the consent and permission of Prosen.

Trial on the supplemental petitions to a jury resulted in verdicts in favor of the three plaintiffs against Home, judgment being entered in favor of each in the amount representing the respective share of each in the total insurance coverage.

Upon appeals by Home, the Court of Appeals reversed the judgments of the Court of Common Pleas.

The causes are before this court following the allowance of motions to certify the records of the Court of Appeals.

Payer, Bleiweiss, Crow & Mollison and Roland E. Reichert, Cleveland, for appellants.

McConnell, Blackmore, Cory & Burke, S. Burns Weston and Louis Paisley, Cleveland, for appellees.

MATTHIAS, Judge.

Was the Court of Appeals correct when it reversed the judgments for the plaintiffs on the supplemental petitions entered on the verdicts in the Court of Common Pleas and rendered final judgments for Home?

The reversal by the Court of Appeals was based solely on its interpretation of the applicable provisions of the policy of insurance issued by Home to Prosen. The court held that, regardless of whether, under the Ohio Certificate of Title Act, the seller or the purchaser could claim a completed sale or assert any rights thereunder in an action between themselves, the provisions of the policy constituted the only obligation of Home, and its liability to the plaintiffs must be determined solely from an interpretation of the provisions of that policy.

The insurance policy was issued by Home to Prosen as named insured, covering the 1934 Plymouth automobile which was involved in the accident. The policy, effective October 7, 1946, covered bodily-injury liability to the extent of $5,000 for each person and $10,000 for each accident and property damage liability up to $5,000 for each accident.

Item 10 of the policy declares as follows:

'(a) Except with respect to bailment lease, conditional sale, mortgage or other encumbrance the named insured is the sole owner of the automobile: (b) During the past year no insurer has cancelled any automobile insurance issued to the named insured: No exceptions.'

The insurance company under article I, coverage A and B, agreed with the insured, subject to the limits of libility, exclusions, conditions and the terms of the policy, as follows:

'Coverage A--Bodily injury liability.

'To pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of bodily injury, sickness or disease, including death at any time resulting therefrom sustained by any person, caused by accident and arising out of the ownership, maintenance or use of the automobile.

'Coverage B--Property damage liability.

'To pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of injury to or destruction of property including the loss of use thereof, caused by accident and arising out of the ownership, maintenance or use of the automobile.'

By III (Definition of insured) the policy declares:

'With respect to the insurance for bodily injury liability and for property damage liability the unqualified word 'insured' includes the named insured and also includes any person while using the automobile and any person or organization legally responsible for the use thereof, provided the actual use of the automobile is by the named insured or with his permission. * * *'

The facts out of which this controversy arises are substantially as follows:

In April 1947, McFarland discussed with Prosen the purchase of his 1934 Plymouth automobile which was not then in running condition. An offer of $90 was made for it by McFarland provided he could put the automobile in running condition. After several weeks of work upon it and the addition of some parts purchased by McFarland, on Thursday, May 8, 1947, he paid Prosen the sum of $90. It was contemplated that the car could be made to operate by Saturday, May 10, and on that day by the combined efforts of Prosen and McFarland the car was pushed until it started.

There was some conversation between Prosen and McFarland in regard to the transfer of the certificate of title to McFarland's mother, but, no notary public being available, it was arranged that McFarland would return on Monday at which time Prosen was to transfer the certificate of title to Gertrude McFarland. Prosen retained the certificate of title in his own possession without having executed the assignment clause. The accident in question occurred early Monday morning, May 12, 1947, at a time when the title of the car was still in Prosen. Such assignment and delivery of the certificate to Gertrude McFarland or William McFarland had not then been made and were not made until several days thereafter.

The primary and, as we conclude, the determinative question presented is whether under these facts Prosen was the owner of the Plymouth automobile within the terms of the insurance policy covering it and further, if so, whether McFarland was operating the automobile with the permission of Prosen, the insured.

In arriving at its decision, the Court of Appeals recognized the existence of an equitable title to the automobile in Gertrude McFarland by reason of the payment of the purchase price and the delivery of possession by Prosen to McFarland. That court then concluded that since there was title in Gertrude McFarland the use thereof was made under a claim of right and not under permission granted by the insured, and, consequently, that the insurance policy did not cover the driver of the automobile at the time of the collision. The effect of such holding would be to authorize, for the purpose of the insurance policy in question, an owner to transfer title of his automobile without compliance in any respect with the requirements of the Ohio Certificate of Title Ac...