Nantz v. Lexington Lincoln Mercury Subaru
| Citation | 947 S.W.2d 36 |
| Decision Date | 19 June 1997 |
| Docket Number | Nos. 95-SC-455-D,95-SC-449-DG,s. 95-SC-455-D |
| Parties | Patricia NANTZ, Appellant, v. LEXINGTON LINCOLN MERCURY SUBARU; Universal Underwriters Insurance Company; Delbert Roberts, d/b/a Roberts Used Cars; and Liberty Mutual Insurance Company, Appellees. Jimmy D. SMITH and Daniel Smith, Appellants, v. LEXINGTON LINCOLN MERCURY SUBARU; Universal Underwriters Insurance Company; Delbert Roberts, d/b/a Roberts Used Cars; and Liberty Mutual Insurance Company, Appellees. |
| Court | United States State Supreme Court (Kentucky) |
This appeal arises from a decision of the Court of Appeals which affirmed the Leslie Circuit Court's granting of a summary judgment in favor of the appellees herein. The central issue in the present case focuses on when title to a motor vehicle passes from a commercial car dealer to a buyer under Kentucky's titling and registration statutes, KRS 186A.010, et seq., for the purpose of determining liability insurance coverage.
This case originated when Lexington Lincoln Mercury Subaru [hereinafter "Lexington"], a commercial dealer, sold an automobile to Delbert Roberts, also a commercial dealer. As part of the transaction, Lexington provided Roberts with the vehicle's title, a registration receipt and a vehicle transaction record [hereinafter "VTR"]. Roberts, who held the car less than 15 days, sold the car to Roger Simpson. Although Roberts provided Simpson with the appropriately endorsed certificate of title, a VTR, and a license receipt, Simpson failed to file these documents with the county court clerk's office. Nine months later, Simpson, who had never obtained insurance for the vehicle, was involved in a collision with a car owned by Daniel Smith, driven by Jimmy Smith, and occupied by Patricia Nantz. Consequently, the Smiths and Nantz filed separate lawsuits against Roberts and his insurer and Lexington and its insurer, claiming title to the car never passed to Simpson.
All defendants moved for summary judgment asserting that neither Roberts nor Lexington was the legal owner of the automobile. As previously mentioned, the Leslie Circuit Court granted summary judgment and plaintiffs appealed. Subsequently, the Court of Appeals affirmed the circuit court's judgment and this Court granted discretionary review.
Appellants urge this Court to find a duty on the part of a seller to require titling of a vehicle prior to relinquishing possession of it. Specifically, Appellants argue that the result reached by the courts below is in conflict with this Court's decision in Potts v. Draper, Ky., 864 S.W.2d 896 (1993). We disagree.
In determining the "owner" of a vehicle, KRS 186A.345 dictates that we utilize the definition of "owner" as set forth in KRS 186.010. KRS 186.010(7) defines an "owner" as "a person who holds the legal title of a vehicle." Moreover, two statutes, KRS 186A.215 and 186A.220, delineate the procedure to be followed when ownership to a motor vehicle is transferred. KRS 186A.215(1), the general requirements for transfer of vehicle ownership, provides that one may transfer title to a motor vehicle simply by completing the assignment and warranty of title portion of the certificate of title form and by filling in the federally-required odometer statement. Additionally, if "the owner's certificate of title fails to meet Kentucky's requirements for a lawful conveyance of title or ... the owner's certificate of title fails to meet the requirements for the owner to execute an odometer disclosure statement ...," the transferor must further complete and deliver a VTR. KRS 186A.215(1). Furthermore, KRS 186A.215(2) provides:
Except as otherwise provided in this chapter, the transferee shall, promptly after delivery to him of the vehicle, execute the application for a new certificate of title and registration by executing the applicable portions of a vehicle transaction record. If a vehicle transaction record is required by subsection (1) of this section, the transferee shall execute the applicable portions of the vehicle transaction record provided to him by his transferor. Any unexpired registration shall remain valid upon transfer of said vehicle to the transferee.
(emphasis added). Thus, according to KRS 186A.215, a transfer of title takes place when the seller completes and signs the assignment of title section of the title certificate and delivers it to the buyer.
KRS 186A.220 also addresses the requirements an automobile dealer must follow to achieve a proper transfer. In pertinent part it states:
(1) Except as otherwise provided in this chapter, when any motor vehicle dealer licensed in this state buys or accepts such a vehicle in trade, which has been previously registered or titled for use in this or another state, and which he holds for resale, he shall not be required to obtain a certificate of title for it, but shall within fifteen (15) days after acquiring such vehicle, notify the county clerk of the assignment of the motor vehicle to his dealership and pay the required transferor fee.
(2) Upon purchasing such a vehicle or accepting it in trade, the dealer shall obtain from his transferor, properly executed, all documents required by KRS 186A.215, to include the odometer disclosure statement thereon, together with a properly assigned certificate of title.
....
(5) When he assigns the vehicle to a purchaser for use, he shall deliver the properly assigned certificate of title, and a properly executed vehicle transaction record, to such purchaser, who shall make application for registration and a certificate of title thereon.
Our decision in Potts, supra, appropriately followed the same requirements prescribed by the aforementioned language in KRS Chapter 186A. Potts concerned the sale of an automobile in which a commercial car dealer failed to transfer title to the buyer of a van at the time the buyer took possession of it because the dealer had not yet received the certificate of title from the previous owner. Id. at 898. When the dealer did file the VTR to effectuate transfer, an accident involving the van had already occurred. Id. Our decision in Potts determined that Kentucky's titling statutes are clear and unambiguous that "the owner of a motor vehicle is the title holder" in the absence of a valid conditional sale. Id. We further emphasized the public policy of this state, as expressed in KRS 304.39-010(1), to keep uninsured motorists off Kentucky's roads. Id. at 900.
Specifically, we stated in Potts:
[T]he real practical effect will merely be that licensed motor vehicle dealers will be required to obtain insurance coverage for motor vehicles they sell until they transfer title by executing the appropriate legal documents in the absence of a conditional sale ... The purpose of the statute is to require the seller of a motor vehicle to take statutory steps to properly complete the sale and until this is done the seller will be considered the owner for the purposes of liability insurance. The result will be that all the public will be protected from uninsured motorists. That was the original intention of the statute and it must be supported.
864 S.W.2d at 899-900 (emphasis added). Ultimately, Potts correctly concluded that unless a conditional sale is involved, the dealer's insurance covers a vehicle "until" appropriate legal documents are given to the buyer. Id.
Similarly, in Rogers v. Wheeler, Ky., 864 S.W.2d 892, 895 (1993), we asserted:
Whether one pays cash for a vehicle or pays for the vehicle over time, be it one month or six months, the dealer must execute the necessary paperwork and deliver it to the buyer to complete the transfer of title.
(emphasis added). See also Hartford Accident & Indem. Co. v. Maddix, Ky.App., 842 S.W.2d 871 (1992).
The Court of Appeals also addressed this issue in Cowles v. Rogers, Ky.App., 762 S.W.2d 414 (1988). Applying KRS Chapter 186A to a conditional sales agreement between a dealer and a buyer, the court noted:
[T]he legislature by enacting KRS Chapter 186A, the automated motor vehicle registration titling system, intended to prevent the absolute sale of an automobile from becoming legally effective until such time as the seller executes and delivers a certificate of title for the vehicle to the buyer.
Id. at 415. In Cowles, the court determined that ownership for purposes of liability insurance had not passed based on KRS 186A.215(1) because a conditional sale was involved and no delivery of the documents of title had taken place. Id.
Essentially Potts and Cowles establish that when the proper legal documents are transferred from the dealer to the buyer, the responsibility for insurance coverage on the part of the dealer ceases. Our main concern in Potts was that the dealer totally disregarded Kentucky's titling and registration statutes by giving the buyer the title papers to the vehicle after the transfer of vehicle possession. Thus, the buyer was totally foreclosed from filing the title documents at the county clerk's office. In contrast, the dealer in the present case gave the buyer the necessary title documents before transferring possession of the vehicle. Consequently, when Lexington sold the car to Roberts, it proffered all of the paperwork needed to transfer title to the vehicle. Likewise, Roberts...
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