Glens Falls Insurance Co. v. Irion

• Decision Date: 15 December 1970
• Docket Number: Civ. No. 736.
• Citation: 323 F. Supp. 1164
• Parties: GLENS FALLS INSURANCE CO., a New York Corporation, Plaintiff, v. Helen Y. IRION and Robert Washington, Jr., J. O. Washington, Jr., Farmers Insurance Co., a California Corporation, Harlan Irion and Hartford Insurance Co., a Connecticut Corporation, Defendants.
• Court: U.S. District Court — District of Montana

323 F. Supp. 1164

GLENS FALLS INSURANCE CO., a New York Corporation, Plaintiff, v. Helen Y. IRION and Robert Washington, Jr., J. O. Washington, Jr., Farmers Insurance Co., a California Corporation, Harlan Irion and Hartford Insurance Co., a Connecticut Corporation, Defendants.

Civ. No. 736.

United States District Court, D. Montana, Billings Division.

December 15, 1970.

COPYRIGHT MATERIAL OMITTED

Charles A. Bradley, Billings, Mont., and Michael Mines, of Hullin, Roberts, Mines, Fite & Riveland, Seattle, Wash., for plaintiff.

Michael J. Hughes, Helena, Mont., and Colgrove & Brown, Miles City, Mont., for Helen Y. Irion and Harlan Irion.

Lucas & Jardine and Thomas M. Monaghan, Miles City, Mont., for Robert Washington, Jr., and J. O. Washington, Jr.

Crowley, Kilbourne, Haughey, Hanson & Gallagher, Billings, Mont., for Hartford Ins. Co.

ORDER and OPINION

JAMESON, District Judge.

This is a declaratory judgment action in which all of the remaining parties have moved for summary judgment.¹

In its amended complaint plaintiff alleged that it had issued three policies of insurance to Plaza Chrysler-Plymouth, Inc. (Plaza), Kenneth Ulstad, and Robert O. Washington, respectively, and sought a determination of its "rights, duties and responsibilities, if any, * * * to the named Defendants under the terms and conditions of the said three insurance policies * * *." The liability of the plaintiff depends in large part upon the ownership of a 1957 Mercury automobile on November 14, 1965, when it was operated by the defendant J. O. Washington, Jr., and collided with a vehicle owned by the defendant Harlan Irion in which the defendant Helen Y. Irion was riding as a passenger. The question of ownership in turn depends upon the construction of Section 53-109, R.C.M. 1947.²

Section 53-109 was construed by the Supreme Court of Montana in Safeco Insurance Company of America v. Northwestern Mutual Ins. Co., 1963, 142 Mont. 155, 382 P.2d 174, and by the Court of Appeals for the Ninth Circuit in National Farmers Union Property & Cas. Co. v. Colbrese, 1966, 368 F.2d 405. Alleging that Safeco and Colbrese announced "different rules of law", plaintiff contended that Colbrese set forth the "correct rule of law and the rule of law that should be applied to the facts" in this case. The defendants contended that "Safeco and Colbrese were distinguishable, and that in an event the decision of the Supreme Court of Montana in Safeco was controlling."³

On the basis of the pleadings and briefs filed by all of the parties, and following a hearing on November 6, 1968, this court concluded that the question should be certified to the Supreme Court of Montana pursuant to Rule 1 of the rules of that court.⁴ All parties were given an opportunity to submit a proposed statement of facts to be certified to the Montana court.

Both plaintiff and the defendants Irion and Washington submitted proposed statements, plaintiff's proposal concluding: "The question upon which determination is sought herein is: `Who owned the 1957 Mercury on November 14, 1965?'" The proposals submitted by the respective parties formed the basis of the certificate of facts and issues entered by this court on March 25, 1969.

Pursuant to application of defendants Irion and Washington, the Supreme Court of Montana accepted jurisdiction to hear and determine "an original declaratory judgment action as the facts and issues" were presented and certified by this court.

Declaratory judgment was entered by the Montana Supreme Court on November 14, 1969, in Irion v. Glens Falls Insurance Company, 154 Mont. 156, 461 P.2d 199. The facts contained in the certificate of this court and forming the basis of the declaratory judgment of the Montana Supreme Court were well summarized in the court's opinion as follows:

"One Sherley M. Shelton had been the owner of the Mercury automobile, and held the Montana certificate of title thereto. On August 12, 1965, he purchased a new automobile from Plaza Chrysler-Plymouth, Inc., a licensed dealer in new and used motor vehicles at Billings, (hereinafter referred to as `Plaza') and traded in the Mercury. Between August 25, 1965, and September 1, 1965, he delivered his certificate of title to Plaza after executing the assignment of title on the reverse side thereof in blank before a notary public. The Midland National Bank of Billings, Montana had a recorded lien on the vehicle and Plaza took care of getting an instrument from the bank which would authorize the Registrar of Motor Vehicles to release the lien. Shelton also delivered the current Montana Certificate of Registration and Tax Receipt for the Mercury to Plaza.

"Meanwhile, Plaza had delivered the Mercury to Kenneth Ulstad, operator of a body and paint shop. Ulstad was not a licensed automobile dealer but occasionally took used automobiles from dealers at an agreed price in partial satisfaction of claims he had against such dealers for work he had performed for the dealers, performed such repairs as he deemed advisable, and resold them. In this instance, he credited Plaza's account with $95 for the Mercury. Plaza subsequently delivered Shelton's Certificate of Title, Certificate of Registration and Tax Receipt, together with the bank's lien release to Ulstad.

"On September 15, 1965, Kenneth Ulstad sold the Mercury to Robert O. Washington, Jr., who paid him $295 therefor; Ulstad then delivered the Shelton Certificate of Title, Certificate of Registration and lien release to him.

"Neither Plaza, Ulstad, nor Robert O. Washington, Jr., ever took any steps to have a new certificate of title issued.

"Robert O. Washington, Jr. and his brother, J. O. Washington, Jr., resided in the same household with their parents, Mr. and Mrs. Robert O. Washington. J. O. Washington, Jr. owned an automobile which was insured by Farmers Insurance Co. The senior Robert O. Washington had a so-called `Family Automobile Policy' issued by Glens Falls Insurance Company, (hereinafter called `Glens Falls') but which did not specifically describe the Mercury as an insured vehicle.

"On November 14, 1965, Robert O. Washington, Jr. permitted his brother to drive the Mercury. While he was doing so, it collided with the Irion vehicle inflicting injuries and damage. Irion's collision insurer was Hartford Insurance Co. and upon payment of the collision loss, it became subrogated to Irion's claim against J. O. Washington, Jr. for the property damage.

"In addition to the Family Automobile Policy issued to Robert O. Washington, Glens Falls also had in effect on November 14, 1965, two garage liability policies which it had issued to Plaza and to Ulstad.

"J. O. Washington, Jr. gave prompt notice of the accident of November 14, 1965, to Glens Falls, but it asserted it had no obligation with respect to said accident and that J. O. Washington, Jr. was not insured by it.

"Helen Y. Irion commenced an action against J. O. Washington, Jr. to recover damages for her injuries on January 12, 1966. At first Glens Falls refused to defend this action, It then, on April 24, 1968, commenced a declaratory judgment action in federal court seeking a determination that it was not obliged to do so and attempted unsuccessfully to have the federal court enjoin the prosecution of the personal injury action until this determination was made. It then made an unsuccessful attempt to have this Court do the same thing. See State ex rel. Glens Falls Insurance Company v. District Court, Mont., 440 P.2d 269 (1968). Finally, on the morning the case was set for trial, counsel for Glens Falls appeared and took over the defense of J. O. Washington, Jr. under an oral unilateral reservation of rights. Trial resulted in a judgment in favor of Helen Y. Irion for $140,000.

"Meanwhile, the Irions and their collision insurer, Hartford Insurance Co., filed suit against Robert Washington, Jr. and J. O. Washington, Jr. for damages to the Irion vehicle and Harlan Irion filed suit against J. O. Washington, Jr. for damages for his personal injuries." 154 Mont. at 159-161, 461 P.2d at 201, 202.

On the basis of the foregoing facts, this court submitted the following question to the Supreme Court of Montana:

"The question upon which determination is sought is whether, on November 14, 1965, at the time of the collision between the 1957 Mercury automobile driven by J. O. Washington, Jr., and the motor vehicle driven by Harlan Irion in which Helen Y. Irion was a passenger, the 1957 Mercury automobile was owned by Plaza Chrysler-Plymouth, Inc., by reason of the failure by it, by Kenneth Ulstad, by Robert Washington, Jr., or by any other person, to cause a change in the certificate of ownership covering said 1957 Mercury automobile, as shown by Exhibit `A', by making application for a change of registration as provided in Section 53-109, R.C.M.1947, and, if said 1957 Mercury automobile was owned by Plaza Chrysler-Plymouth, Inc., on said date, by reason of such failure, whether Glens Falls Insurance Company insured J. O. Washington, Jr., against liability imposed by law for injuries to the persons and property of Harlan Irion and Helen Y. Irion arising out of his operation of said 1957 Mercury automobile at the time of the collision on November 14, 1965, under either its Policy No. PCL 639587 issued to Plaza Chrysler-Plymouth, Inc., Exhibit `F', or its Policy No. GA 4-23-39 issued to Kenneth Ulstad, Exhibit `E', or both thereof.

"This question involves an interpretation of Section 53-109, R.C.M.1947, and its bearing upon automobile insurance policies issued in Montana, upon which there is a substantial difference of opinion, and the answer thereto is controlling in the above entitled action and adjudication thereof by the Montana Supreme Court will materially advance the ultimate termination of this action."

With respect to the proper interpretation of Section 53-109, R.C.M.1947, the Supreme Court of Montana said:

"Subsection (c) of section 53-109, R.C. M.1947, contemplates that when an

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