Grant v. Bill Walker Pontiac-Gmc, Inc., PONTIAC-GM

• Decision Date: 30 September 1975
• Docket Number: PONTIAC-GM,74-2336,INC,Nos. 74-2335,s. 74-2335
• Citation: 523 F.2d 1301
• Parties: Vilma E. GRANT, Executrix of the Estate of Benjamin W. Grant, Plaintiff-Appellant, v. BILL WALKER, Defendant-Appellee. C. E. K. HOGAN and Deep Woods Camp for Boys, Inc., Defendants-Third-Party Plaintiffs-Appellants, v. FIREMAN'S FUND INSURANCE CO., Third-Party Defendant-Appellee.
• Court: U.S. Court of Appeals — Sixth Circuit

Page 1301

523 F.2d 1301

Vilma E. GRANT, Executrix of the Estate of Benjamin W.

Grant, Plaintiff-Appellant, v. BILL WALKER PONTIAC-GMC, INC., Defendant-Appellee.

C. E. K. HOGAN and Deep Woods Camp for Boys, Inc., Defendants-Third-Party Plaintiffs-Appellants, v. FIREMAN'S FUND INSURANCE CO., Third-Party Defendant-Appellee.

Nos. 74-2335, 74-2336.

United States Court of Appeals Sixth Circuit.

Argued April 15, 1975.

Decided Sept. 30, 1975.

Carl L. Wedekind, Jr., Stites, McElwain & Fowler, Louisville, Ky., for plaintiff-appellant and third-party defendant-appellee.

John G. Crutchfield, Ewen, Mackenzie & Peden, Louisville, Ky., for defendant-appellee and third-party defendant-appellee.

J. L. Richardson, Jr., Richardson & Richardson, Louisville, Ky., for C. E. K. Hogan and Deep Woods Camp for Boys.

Before PHILLIPS, Chief Judge, and EDWARDS and ENGEL, Circuit Judges.

ENGEL, Circuit Judge.

These are appeals from a summary judgment dismissing from a wrongful death action Bill Walker Pontiac-GMC, Inc., and his insurer the Fireman's Fund Insurance Company. The trial judge held that neither Walker nor his liability insurer were vicariously liable by reason of any relationship of Walker to either the driver or to the truck which was involved in the fatal accident. We affirm.

C. E. K. Hogan was the proprietor of Deep Woods Camp for Boys, Incorporated, which he operated in Brevard, North Carolina. Deep Woods was a North Carolina corporation and Hogan was a citizen of that state. In March 1972, while on a recruiting trip to Georgia, Hogan visited Bill Walker, president and sole stockholder of Bill Walker Pontiac in Brunswick, Georgia. The two were boyhood friends and they discussed at that time Hogan's expected need of a new truck for the boys' camp. On May 23, 1972, Hogan called Walker from Brevard and sought Walker's advice upon the type of truck he should buy. The two agreed upon a suitable type of truck meeting Hogan's specifications. Walker subsequently searched for such a truck through the General Motors locating system, since Walker himself did not have one in stock. Two were found, one in Lakeland, Florida and one at the General Motors factory at Pontiac, Michigan. After a further telephone call, it was agreed that Hogan would buy the truck in Pontiac since it was cheaper and he could further save an additional $200 if he picked it up himself at the factory. Accordingly, Walker made the necessary telephone calls to GM in Detroit and reserved a GMC two-ton truck for Walker. General Motor's sales price was charged to Walker's account.

By telephone Hogan and Walker agreed upon a price, and preliminary clearance was obtained through GMAC for Hogan's financing the balance after an agreed down payment. On the same day the sales manager of Bill Walker Pontiac wrote a letter of confirmation to Hogan and enclosed the preliminary billing and GMAC contract with instructions for Hogan to sign and return the same.

Since Hogan was himself to pick up the truck and would be driving it back to North Carolina and not to Georgia, he would not be able to use dealer's plates. Consequently Walker advised Hogan that he should use the plates from an old truck which the boys' camp owned and which was to be retired by the new truck in any event. Hogan flew to Detroit and on the morning of May 24 presented himself to the General Motors Fleet Carrier office in Detroit to pick up the truck. Since General Motors would not sell directly to a customer, it insisted that if Hogan was to pick up the truck, he must do so as agent for Walker Pontiac, an authorized dealer. Further telephone calls between Walker Pontiac and General Motors accomplished this result and at about 1 o'clock that afternoon the truck was released to Hogan with a gate pass, and Hogan in turn signed a receipt for the truck as agent for Walker Pontiac. A certificate of origin was to be sent later to Walker Pontiac which would then be transmitted, probably to the GMAC office near Hogan in North Carolina, which in turn would present it for the issuance by appropriate North Carolina authorities for a certificate of registration in that state.

The accident which took the life of plaintiff's decedent occurred in the early morning of May 25, 1972 on I-75 in Rock Castle County, Kentucky as Hogan was driving the truck home to North Carolina. Hogan apparently fell asleep at the wheel. He has admitted his liability for the death.

Plaintiff commenced this diversity action in the United States District Court for the Western District of Kentucky, originally naming as defendants Hogan, the Deep Woods Boys Camp, Inc., General Motors, GMAC and Bill Walker Pontiac. The earlier dismissal of General Motors and GMAC has not been appealed. The complaint sought damages for the wrongful death of plaintiff's decedent and also a declaratory judgment to adjudicate the ownership of the truck at the time of the accident. The complaint alleged that at the time of the accident Hogan was acting "as the duly authorized agent, servant or employee of one or more of these said defendants". Thereafter Hogan and the Deep Woods Camp filed in the district court a third-party complaint against Fireman's Fund Insurance Company as liability insurer of Bill Walker Pontiac, seeking a declaration that Deep Woods and Hogan were covered by Bill Walker Pontiac's insurance policy and asking for indemnification from their potential liability to plaintiff to the extent of the coverage under the policy.

Cross motions for summary judgment raised the issues of ownership of the truck driven by Hogan and of the vicarious liability of Walker Pontiac and Fireman's Fund.

In a memorandum opinion, District Judge Rhodes Bratcher ruled that Kentucky law applied and that under the Kentucky law, particularly the Kentucky Uniform Commercial Code, KRS 355.2-401, Hogan was considered the owner of the truck at the time of the accident. Judge Bratcher further held that having taken delivery of the truck in Pontiac, Hogan, under Kentucky law, must be deemed to have been acting on his own behalf and for his own benefit and that "There is no showing of agency between the seller Walker and the customer Hogan".

Judge Bratcher also ruled that the result would be no different even if, as urged by appellants, the law of North Carolina were applicable to decide the question of ownership of the truck.

Since in a diversity action a federal district court sits as a state trial court, Erie R.R. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938); Klaxon Co. v. Stentor Co., 313 U.S. 487, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941), the district court here correctly concluded that Kentucky's conflict of laws rules would apply. While Kentucky purports at least to follow the significant contacts rule in determining which law to apply, see Foster v. Leggett, 484 S.W.2d 827 (Ky.1972), we think it clear that the district judge was correct in concluding that "Kentucky strongly favors the application of its own law when it is the forum whenever it can be justified".

An analysis of the significant contacts favors the application of Kentucky law: The accident occurred in Kentucky, the forum is in Kentucky and plaintiff's decedent was a citizen and resident of Kentucky at the time of his demise.

With respect to the vicarious liability of third parties, appellants take issue with the district court's ruling that Kentucky law should govern the question of whether Hogan was the owner of the truck at the time of the accident. They point to the Section 355.1-105(1) of Kentucky's Uniform Code which provides:

"Except as provided hereafter in this section, when a transaction bears a reasonable relation to this state and also to another state or nation the parties may agree that the law either of this state or of such other state or nation shall govern their rights and duties. Failing such agreement this chapter applies to transactions bearing an appropriate relation to this state."

Arguing that the transaction whereby Hogan was to purchase the truck from Walker bore a "reasonable relation only to the State of North Carolina, and none whatever to the State of Kentucky", appellants urge that the law of North Carolina, therefore, governs the question of ownership (see Big Four Mills v. Commercial Credit Co., 307 Ky. 612, 211 S.W.2d 831 (1948)) and that under North Carolina law, title to the truck would not have passed to Hogan or the boys' camp until there...