Maryland Cas. Co. v. American Family Ins. Group of Madison, Wis., 44762
| Citation | 199 Kan. 373,429 P.2d 931 |
| Decision Date | 12 July 1967 |
| Docket Number | No. 44762,44762 |
| Parties | MARYLAND CASUALTY COMPANY, a Corporation, Appellee and Cross Appellant, v. AMERICAN FAMILY INSURANCE GROUP OF MADISON, WISCONSIN, a Corporation, Appellant and Cross Appellee. |
| Court | United States State Supreme Court of Kansas |
Syllabus by the Court
1. Under the provisions of K.S.A. 8-135(c)(6), it is unlawful for any person to buy or sell in this state any vehicle required to be registered in accordance with the Registration of Motor Vehicles Act unless at the time of delivery thereof there shall pass between the parties a properly assigned certificate of title; and the sale of any vehicle registered under the laws of this state without the assignment of such certificate of title is fraudulent and void.
2. As a matter of public policy, the foregoing statute should be strictly enforced for the protection of third persons who suffer injury at the hand of a buyer who has obtained possession and control of an automobile from the seller but has not received an assigned certificate of title.
3. In the conditional sale of an automobile, wherein the seller fails to assign and deliver the certificate of title as required by K.S.A. 8-135, the buyer does not become the owner of the automobile so as to relieve the seller's insurer from liability coverage with respect to an 'owned automobile' under the omnibus clause of its policy.
4. It is not essential that the driver of an automobile have an independent insurable interest therein in order for him to be an additional insured under an omnibus clause in the owner's policy.
5. In order for a person's use and operation of an automobile to be within the meaning of an omnibus clause extending liability coverage to one using the same with the permission of the named insured, the latter must own the vehicle, or have such an interest in it, that he is entitled to the possession and control thereof, and thus be in a position to grant such permission.
6. When a sale of an automobile is void because of noncompliance with K.S.A. 8-135, the purported seller remains the owner thereof and has the power to grant permission to the buyer to use the vehicle, thus bringing the buyer within the seller's omnibus clause as an additional insured.
7. Where an owner's policy provides for pro rata coverage with other insurance against a loss, and the policy of the driver who is involved in a collision while driving the automobile with the permission of the owner contains a similar provision, and additionally an 'excess insurance' clause with respect to a 'non-owned automobile,' the owner's insurer is primarily liable within the limits of its policy for such loss.
8. Under both equitable principles and subrogation rights as contained in the policy, a secondary insurer who is compelled to pay a loss because of a refusal, or failure after demand, of the primary insurer to pay such loss has the right to recover the amount paid from the insurer primarily liable to the extent of the latter's policy limits.
9. A secondary insurer of a driver has a contractual duty with its insured to defend a lawsuit instituted by an injured party, and such duty is personal and distinct from indemnification; hence, such insurer has no right to recover from the primary insurer its attorneys' fees and expenses in making such defense.
Charles L. Davis, Jr., Topeka, argued the cause, and Byron M. Gray and Robert D. Hecht, Topeka, were with him on the brief, for appellant and cross appellee.
James C. Wright, Topeka, argued the cause, and Warren Shaw, William Hergenreter and Carl W. Quarnstrom, Topeka, were with him on the brief, for appellee and cross appellant.
This action involves a dispute between the plaintiff, Maryland Casualty Company, and the defendant, American Family Insurance Group, and presents for determination the question of coverage, if any, under the defendant's policy on a 1953 Plymouth automobile.
The facts giving rise to this dispute have been stipulated. On May 9, 1963, the defendant's insured, LaMotte Shaw, owner of the Plymouth, and plaintiff's insured, Tom Willis, whose mother owned a 1948 Volkswagen, agreed to trade automobiles. As additional consideration Willis gave Shaw a promissory note for $100 due May 15, 1963. It was agreed that the certificate of title to the Plymouth was to be retained by Shaw to insure payment of the note, and upon satisfaction thereof the certificate of title was to be properly endorsed and delivered to Willis. Shaw turned the Plymouth and the keys thereto over to Willis, and Willis placed his license plate from the Volkswagen onto the Plymouth. About three hours after the trade was accomplished, Willis, while driving the Plymouth, collided with another automobile being driven by one Joanne Benson. Shortly after the collision, Willis, a minor, repudiated his deal with Shaw. The $100 was never paid, nor was the certificate of title to the Plymouth ever endorsed and delivered to Willis.
Thereafter, suit was brought in Shawnee county district court by Joanne Benson against both Shaw and Willis. Plaintiff and defendant undertook defense of their respective insureds, and eventually plaintiff negotiated a settlement with Joanne Benson for personal injuries and damages sustained by her in the collision. The settlement for $5,150 was within the applicable policy limits of the plaintiff's policy as well as the defendant's policy. Plaintiff's attorney orally made demand on defendant's counsel to pay the settlement, but the demand was refused.
Plaintiff paid the settlement and then brought the present action against the defendant to recover the amount of the settlement, costs and attorney's fees. The case was submitted to the district court on stipulated facts, and the court entered judgment in favor of plaintiff for the amount of the settlement, and costs, from which judgment the defendant appeals. The court denied plaintiff's request for allowance of attorneys' fees, and this forms the basis of a cross appeal by the plaintiff.
In a lengthy memorandum opinion the district court found: (1) The purported sale without assignment of the certificate of title was void under K.S.A. 8-135(c)(6); (2) Shaw remained the owner and was covered under defendant's policy; (3) Willis was using the automobile with Shaw's permission, and therefore came within the omnibus clause of defendant's policy; and (4) defendant's policy afforded primary coverage.
Defendant raises numerous points of error, and they will be considered in due course.
We must first determine whether or not Shaw, the seller, was the owner of the Plymouth automobile at the time of the collision within the meaning of the 'owned automobile' coverage afforded by defendant's policy, and if so, whether under the omnibus clause Willis was using such automobile with Shaw's permission. If as a result of the transaction Shaw was no longer the owner, defendant's policy would offer no coverage, for Shaw would not be in a position either to give or withhold his permission or consent to the use of the automobile by Willis, the new owner.
Portions of defendant's policy pertinent to this point are as follows:
'Liability Coverage
'To pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of bodily injury or property damage arising out of the ownership, maintenance or use of an owned automobile or the use of a non-owned automobile, * * *
'Persons Insured
'1. The following are insureds under the Liability Coverage:
(Emphasis added.)
Plaintiff seeks to sustain the decision of the lower court by relying on K.S.A. 8-135(c)(6):
'It shall be unlawful for any person to buy or sell in this state any vehicle required to be registered hereunder, unless, at the time of delivery thereof there shall pass between the parties such certificate of title with an assignment thereof, as herein provided, and the sale of any vehicle registered under the laws of this state, without the assignment of such certificate of title, shall be fraudulent and void.'
and contends that since the certificate of title was not assigned by Shaw to Willis at the time of the transfer of the possession of the automobile, the sale was fraudulent and void, and thus, Shaw remained the owner under defendant's policy. Defendant, on the other hand, urges that the transaction was a conditional sale, that Shaw, having only a security interest, was no longer the owner, and that the mentioned statute is inapplicable.
In support of its position, defendant directs our attention to Weaver v. Hartford Fire Ins. Co., 168 Kan. 80, 211 P.2d 113, and Brown v. Tri-State Ins. Co., 177 Kan. 7, 274 P.2d 769. A detailed analysis of these cases is justified. In Weaver, plaintiff was the owner of a 1939 Ford truck insured by the defendant. Defendant's policy contained an automatic insurance clause that provided coverage on a replacement vehicle, and an exclusionary clause if plaintiff had other valid and collectible insurance to cover losses to the vehicle. Plaintiff traded the Ford truck for a new White truck. The balance of the purchase price for the new truck was financed, and plaintiff executed a conditional sales contract. After taking possession of the White truck, plaintiff obtained a new policy of insurance on the truck from another company. Before the bill of sale for the new truck was delivered, the truck was damaged in an explosion. Defendant was duly notified of the loss, and also of the purchase of the replacement vehicle. This court held that for the purposes of the new insurance taken out on the...
To continue reading
Request your trial
-
School Dist. No. 1, Multnomah County v. Mission Ins. Co.
...Cir. 1972); United States Fidelity & Guar. Co. v. Tri-State Ins. Co., 285 F.2d 579 (10th Cir. 1960); Maryland Cas. Co. v. American Family Ins. Group, 199 Kan. 373, 429 P.2d 931 (1967), many courts have held that an excess carrier is entitled to subrogation. See Liability Assur. Corp. v. Ind......
-
Continental Casualty Co. v. Fireman's Fund Insurance Co.
...fees, costs and expenses, among other cases that might be advanced for that purpose, Maryland Casualty Company v. American Family Insurance Group of Madison, Wisconsin, 199 Kan. 373, 429 P.2d 931. It is here recognized that in various courts within the United States, including courts of fin......
-
Belmer v. Nationwide Mut. Ins. Co.
...insurer for costs of defense, recognizing that the primary insurer also had a duty to provide a defense, Maryland Casualty Co. v. American Family Ins. Group, 199 Kan. 373, 429 P.2d 931; cf. Iowa Nat. Mutual Ins. Co. v. Universal, 276 Minn. 362, 150 N.W.2d 233; U.S. Fidelity & Guarantee v. T......
-
Bedivere Ins. Co. v. Blue Cross & Blue Shield of Kan., Inc.
...coverage in the underlying suit or whether [insurer] might have a valid affirmative defense"); Md. Cas. Co. v. Am. Fam. Ins. Grp. of Madison, Wis. , 199 Kan. 373, 429 P.2d 931, 934, 939–41 (1967) (where two insurers "undertook defense of their respective insureds," and one insurer paid the ......