Keating v. Universal Underwriters Ins. Co.

• Decision Date: 20 January 1958
• Docket Number: No. 9543,9543
• Citation: 320 P.2d 351,133 Mont. 89
• Parties: Mark D. KEATING, d/b/a Livingston Motor Company, Plaintiff and Respondent, v. UNIVERSAL UNDERWRITERS INSURANCE CO., Defendant and Appellant.
• Court: Montana Supreme Court

Page 351

320 P.2d 351

133 Mont. 89

Mark D. KEATING, d/b/a Livingston Motor Company, Plaintiff and Respondent, v. UNIVERSAL UNDERWRITERS INSURANCE CO., Defendant and Appellant.

No. 9543.

Supreme Court of Montana.

Submitted Nov. 13, 1957.

Decided Jan. 20, 1958.

Vilroy C. Miller, Livingston, Keller & Magnuson, Helena, Paul T. Keller, argued orally, for appellant.

Gibson & Berg, Livingston, Ben. E. Berg, argued orally, for respondent.

PHILIP C. DUNCAN, District Judge, sitting in place of BOTTOMLY, Justice.

This is an appeal from a judgment of the district court of Park County in favor of the plaintiff in an action brought to recover the sum of $2,541 resulting from defendant's denial of coverage of a loss on an automobile under a garage liability insurance policy wherein plaintiff is the insured and defendant is the insurer.

The case was tried upon an agreed statement of facts to the effect that:

Plaintiff is an Oldsmobile dealer and the operator of a repair shop and storage garage at Livingston, and defendant is conducting a general insurance business in Montana under proper authority;

On November 21, 1952, defendant issued to plaintiff a garage liability insurance policy, incorporated in full in the agreed statement of facts by way of attached exhibit thereto, (as are the bill of sale, promissory note and trust receipt hereinafter mentioned) having a period from November 22, 1952, to November 22, 1953, and which was in full force and effect on January 28, 1953, whereby defendant agreed by Coverage D '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 of others of a kind customarily left in charge of garages, including the loss of use thereof, caused by accidental collision or upset of such property while in charge of the named insured in connection with his automobile dealer, repair shop, service station, storage garage or public parking place operations.' but defendant provided for a number of exclusions from this coverage, two of such exclusions being:

'(a) to liability assumed by the insured under any contract or agreement except a warranty of goods or products;'

'(h) under coverage D, to injury or destruction caused directly by fire or theft; or to injury or destruction of (1) property owned or loaned or rented to the named insured, or (2) automobiles being driven or transported from the factory or other wholesale distributing point to the purchaser or for storage.'

On December 18, 1952, the Oldsmobile Division of General Motors Corporation executed and delivered to General Motors Acceptance Corporation a bill of sale covering a new 1953 Oldsmobile automobile, but the Acceptance Corporation never had possession of the automobile;

On January 2, 1953, the plaintiff executed and delivered to General Motors Acceptance Corporation his promissory note for $3,180.19 with interest at 4 per cent per annum payable on demand;

On January 7, 1953, the plaintiff executed and delivered to General Motors Acceptance Corporation a trust receipt acknowledging delivery and possession of the automobile under certain conditions and for certain purposes, including: that title thereto remains in the Acceptance Corporation as security until the note is fully paid; that the automobile is in possession of the plaintiff 'as his (its their) sole risk of all loss or injury for the purpose of storing and exhibiting same preliminary to and in procuring the sale thereof'; that the automobile was not to be used or operated for demonstrating or otherwise without express permission of the Acceptance Corporation; that the automobile was not to be sold or otherwise disposed of until payment of the amount of the note;

Neither the bill of sale nor the promissory note nor the trust receipt was ever filed or placed of record anywhere or at all in the State of Montana;

On January 7, 1953, upon the execution of the note and trust receipt, the Oldsmobile Division of General Motors Corporation delivered to plaintiff the new automobile and he drove it to his place of business in Livingston where he stored, demonstrated and attempted to sell it;

On January 28, 1953, the automobile was wrecked in an upset while being driven, within the scope of his employment and as a proximate result of his negligence, by plaintiff's employee salesman who was returning the car to Livingston from White Sulphur Springs where he had driven and exhibited it for the purpose of procuring its sale at the direction of plaintiff but without permission of the General Motors Acceptance Corporation;

On January 29, 1953, plaintiff gave defendant written notice of the accident and loss, and on February 2, 1953, the General Motors Acceptance Corporation demanded of plaintiff that he pay the note; that defendant refused to pay for the damages done to the automobile on the grounds that such damages were not covered by the provisions of the garage liability insurance policy; that thereafter plaintiff amicably settled the note by paying to the General Motors Acceptance Corporation on February 13, 1953, the sum of $3,190, being the balance, principal and interest owing on the note; that the sum of $3,180.19 was the reasonable value of the automobile on January 28, 1953, immediately prior to the injury, and the reasonable salvage value of the car as wrecked on January 28, 1953, was the sum of $650, for which amount plaintiff sold the salvage to Overvold Motors, Inc., Fargo, North Dakota.

Thus, the ultimate questions are whether the insured is responsible to General Motors Acceptance Corporation, independently of contractual liability, for loss of the car within the meaning of the insuring clause, '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 of others of a kind customarily left in charge of garages * * * caused by accidental collision or upset of such property while in charge of the named insured in connection with his automobile dealer * * * operations'; and whether the automobile was 'property owned' by plaintiff within the meaning of the exclusion clause of the insurance policy.

It will be observed from the statement of facts that the transaction that occurred between the Oldsmobile Division of General Motors, the General Motors Acceptance Corporation, and plaintiff automobile dealer constituted what has been described as a tripartite or true orthodox trust receipt transaction where the financier advances funds for the purchase of the chattel, purchases it and receives title to it from the manufacturer, and delivers possession to the dealer, who gives his trust receipt to the financier, and that it is not what is referred to as a bipartite trust receipt transaction where the dealer has title and gives his receipt to the financier. 89 C.J.S., p. 698; 53 Am.Jur., Trust Receipts, Sec. 2, pp. 961, 962.

Much is said in the briefs of opposing counsel concerning the nature of the relationship between the parties created by the trust receipt transaction we have before us, that is, as to whether between the financier, the General Motors Acceptance Corporation, and plaintiff dealer there is a principal and agent, bailor and bailee, pledgor and pledgee, chattel mortgage, conditional sale, or some new independent relationship, upon all of which there appears to be a considerable diversity of opinion among the courts, even those of the same jurisdiction. Annotations in 49 A.L.R. 282, 87 A.L.R. 302, 101 A.L.R. 453, 168 A.L.R. 352.

The defendant urges the view that the transaction more closely resembles a chattel mortgage than anything else, but that under the Montana Uniform Trust Receipts Act, Secs. 65-201 through 65-219, R.C.M.1947, it is not actually such nor a conditional sale or pledge, but a separate arrangement whereby all that the financier has is a security interest and title for all purposes in dealing with third persons is in the trustee, the plaintiff here.

The plaintiff distinguishes between the tripartite or true orthodox trust receipt transaction and the bipartite trust receipt transaction, and urges the view that since this one was tripartite the title never passed to the trustee plaintiff, and the relationship in this specific case is either that of conditional sale or bailment for sale, with title in either case remaining in the financier General Motors Acceptance Corporation.

Whichever may be the correct position, it appears that all of the cases cited as supporting one or the other involve creditors of or buyers from the trustee and some miscellaneous situations, and none of the cases cited, or which we have been able to discover, involve the first problem here posed, that is, whether or not the car was the 'property of others' or 'owned (by) the named insured' within the...