Mercado v. Travelers Ins. Co.

• Decision Date: 28 March 1969
• Citation: 59 Tenn.App. 741,443 S.W.2d 819
• Parties: Bobbie Ruth MERCADO and Rebecca Sue Pulley, Complainants-Appellants, v. The TRAVELERS INSURANCE COMPANY, Defendant-Appellee.
• Court: Tennessee Court of Appeals

Page 819

443 S.W.2d 819

59 Tenn.App. 741

Bobbie Ruth MERCADO and Rebecca Sue Pulley, Complainants-Appellants, v. The TRAVELERS INSURANCE COMPANY, Defendant-Appellee.

Court of Appeals of Tennessee, Middle Section.

March 28, 1969.

Certiorari Denied by Supreme Court Aug. 1, 1969.

[59 Tenn.App 744] William J. Harbison and Joe P. Binkley, Nashville, for complainants-appellants.

Russell G. Lazenby, Jr., Glascow, Adams & Taylor, Nashville, for defendant- appellee.

OPINION

TODD, Judge.

Complainants have sued as injured third party beneficiaries of an automobile liability insurance policy. The chancellor denied relief and complainants have appealed.

In separate circuit court actions, complainants sued one William Clarence Stock for personal injuries and recovered judgments which are final and unpaid. In this joint suit in equity, complainants assert their rights to satisfaction of said judgments because of the existence of a policy of liability insurance issued by defendant to one James E. Fuller containing the following provision:

Persons Insured

The following are insureds under Part I:

(1) the named insured and any resident of the same household,

(2) any other person using such automobile with the permission of the named insured, * * *

It is insisted by complainants that at the time of their injury said Stack was driving the insured automobile with the permission of the insured Fuller within the meaning of the avove quoted policy provision and therefore that they are entitled to recover the amount of their previously obtained judgments from the defendant insurance company.

Defendant admits the injury of the complainants while riding in a vehicle being operated by Stack and insured to said James E. Fuller. The only defenses are, (1) that Stack was in fact the owner of the vehicle and his possession and use thereof were not covered by the above quoted policy provision, and (2) that there was a failure to give prompt notice of loss as required by the policy. In both the trial court and this Court, the first defense has presented the major issue.

The only witness to testify before the chancellor was James E. Fuller. The substance of his testimony is as follows:

During 1963, Fuller was in the trucking business. He had a driver named William Clarence Stack, who desired to buy a 1956 Cadillac but could not do so because of his credit rating. Fuller undertook to assist Stack in buying the car. Fuller purchased the Cadillac in his own name, trading in Stack's old car, paying $400.00 cash furnished by Stack, and signing a lien note for the balance of $450.00 The note was assigned to a finance company, and Stack was to pay the installments to the finance company as they came due.

Fuller had possession of the car only briefly. Promptly after being purchased in July 1963, the car was turned over to Stack who retained possession until October 25, 1963, the date of the injury of complainants. Fuller executed and delivered to Stack what he describes as a bill of sale, witnessed by two of his employees. There is no evidence of the contents of this instrument, however Fuller testified as follows:

'Q You say you have made, but you don't now have, a handwritten bill of sale?

A No.

Q But you understood the title was going to remain in your name until the note was paid off, and the insurance would remain in your name until the note was paid off?

A That's right.

Q And Mr. Stack understood that, too, I guess.

A That's right.

Q Well, what I wanted to ask you is, he just bought a car, but actually, as far as Patterson Motors were concerned, it was you that had bought a car, is that right?

A Yes.

Q And did they give you a bill of sale?

A No, not at the time, was not no bill of sale anywhere, it went to the finance company.

Q Did Gay pay you?

A I don't know how they done the deal. I stood good for the car. In other words, I wasn't involved in the trade. I just was standing good for the boy's credit, at the time he was working for me.

Q Who had the title papers? Did the Thrift Corporation have those, or did you have them?

A They had them.

Q Well, now, what had you all done, if anything, about transferring the title to the car?

A Couldn't transfer it because he hadn't paid it off.

Q How was the title at that time?

A It was in my name.

Q In your name?

A Yes.

Q How about insurance?

A I insured it, myself, to make sure if anything happened I was clear.

Q You took out a policy immediately?

A That's right.

Q I didn't know--you had other cars and you just added this one to it?

A Yes, I had other cars.

Q You added to the existing policy?

A Yes, sir.

Q That was with Travelers?

A Yes, that was to be on the short term deal, until he paid it off.

Q Did you tell Travelers this?

A No.

Q You never did tell Stack you had liability insurance?

A No, I didn't tell him nothing. As far as he's concerned, he just bought a car.

Q You all discussed this?

A Yes, sir. We didn't discuss no insurance on Stack now. All I discussed with him was this note. Was not nothing said about no insurance.

The chancellor's memorandum opinion contains the following:

'From the above evidence it is my judgment that there had been a completed sale of the automobile in question and the case of Garrett vs. American Mutual Liability Insurance Company is controlling. From the proof I think it is clear that it was the intention of Fuller and stack that ownership passed to Stack and that Fuller retained title as security for payment on the notes.'

The final decree contains the following:

'* * * it appears to the Court that the automobile described in the bill was, prior to October 25, 1963, sold by James E. Fuller to William Clarence Stack and, therefore, was not covered under the policy of insurance issued by Travelers Insurance Company * * *'

'ORDERED, ADJUDGED AND DECREED by the Court that the complainants' suit be and the same is hereby dismissed at the cost of complainants.'

The sole assignment of error is:

'The Chancellor erred in finding and holding that there had been 'a completed sale' of the automobile in question, and that the insurance coverage purchased and taken out by Fuller was not in force and effect as to this automobile on the date of the accident.'

Complainants insist that the transaction by which Stack received possession of the Cadillac was nothing more than an executory agreement to sell the car and that the parties deliberately withheld the transfer of ownership until all payments had been made. The chancellor found otherwise, and the above quoted testimony supports his finding. Since the enactment of the motor Vehicle Title Registration Law, there has been considerable ambiguity and confusion of verbiage relation to the ownership of automobiles. Traditionally, the word 'title' has meant the right to or ownership in land, however, the word 'title ' has also come to mean the evidence of ownership. See Black's Law Dictionary, Fourth Edition, p. 1665. Thus the certificate evidencing registration of ownership of an automobile is now frequently referred to as 'the title', and one who has physical possession of that certificate is said to 'have the title', even though he might own no interest in the automobile.

The testimony of Mr. Fuller, quoted above, must be interpreted in the light of the foregoing confusion of meaning of words. When he said the finance company 'had the title', he evidently referred to the title papers and some form of lien to secure the debt. When he said 'I had the title', he evidently referred to the registration of the title on State records in his name. When he said he wrote out a bill of sale, his clear meaning was that he conveyed to Stack, albeit informally, all of the rights of ownership which he had in the car. A bill of sale is a written agreement * * * by which one person assigns or transfers his right to or interest in goods and personal chattels to another. Black's Law Dictionary, Fourth Edition, p. 211.

Complainants urge that since there is no evidence of the contents of the 'bill of sale', the Court must depend upon what the parties intended the instrument to mean. This is true. The chancellor found, and this Court agrees, that Fuller never intended to own the automobile, that he merely 'bought it for' Stack, and that both he and Stack intended and understood that the bill of sale would transfer to Stack all of the insterest or ownership of Fuller in the car, subject only to the lien of the finance company, and and completion of the record title in Stack after payment of the lien debt.

Compliance with the formal requirements of the Tennessee Motor Vehicle Title and Registration Law is not a prerequisite to transfer of ownership. Hunter v. Moore, 38 Tenn.App. 533, 538, 276 S.W.2d 754, 756 (1954). In Hayes v. Hartford Acc. & Indem. Co., 57 Tenn.App. 254, 417 S.W.2d 804 (1967) in a case similar to the present case, this Court quoted the Uniform Sales of Goods Act and the Uniform Commercial Code and held that a transfer of ownership had occurred in spite of failure to comply with the Motor Vehicle Title and Registration Law.

This Court agrees with the chancellor that Mr. Fuller intended to transfer all his interest in the car by his 'bill of sale' to Mr. Stack, that it was legally possible for him to do so by such means, and that he did in fact do so.

Complainants urge that the purchase of liability insurance was inconsistent with intent to part with ownership, or that it was intended that the insurance be for the benefit of Mr. Stack. The peril of being sued simply because the title was registered in his name is sufficient explanation of the purchase of the insurance. The lack of technical legal knowledge as to his exact legal liability in such a case is also an adequate explanation for his desire and effort to protect himself from the unknown perils of holding record title to the vehicle.

Mr. Fuller testified that he procured the insurance solely for his own protection. He told Stack nothing of the...