National Farmers Union Property & Cas. Co. v. Colbrese

Citation368 F.2d 405
Decision Date08 December 1966
Docket NumberNo. 20550.,20550.
PartiesNATIONAL FARMERS UNION PROPERTY AND CASUALTY COMPANY, Appellant, v. Laurence COLBRESE, Jr., Appellee.
CourtUnited States Courts of Appeals. United States Court of Appeals (9th Circuit)

John C. Sheehy, of Wiggenhorn, Hutton, Schiltz & Sheehy, Billings, Mont., for appellant.

Louis R. Moore, of Crowley, Kilbourne, Haughey, Hanson & Gallagher, Billings, Mont., for appellee.

Before BARNES, JERTBERG and ELY, Circuit Judges.

ELY, Circuit Judge:

The appellant, defendant below, appeals from the District Court's denial of its motion for summary judgment and the entry of judgment in favor of appellee. The District Court's jurisdiction was based upon diversity of citizenship of the parties and the requisite amount in controversy, 28 U.S.C. § 1332, and our power of review is conferred by 28 U.S.C. § 1291.

On December 3, 1960, the appellee's son was killed in an automobile accident, and appellee instituted suit for alleged wrongful death in a Montana state court. In that suit, the defendant was Jerry Kinney, a minor who was operating the automobile in which the deceased was riding as a passenger at the time of the fatal accident. The appellant, which had issued automobile indemnity insurance policies to Jerry Kinney's father, denied obligation and refused to furnish assistance in defense of the state court action. The parties to that action agreed that the state court should enter a judgment for $18,850 in appellee's favor. Appellee then gave Jerry Kinney a satisfaction of the judgment in exchange for an assignment in which Jerry Kinney transferred his rights against appellant to the appellee. This action followed.

Jerry Kinney was not the "named insured" in any policy issued by the insurance company, nor was the car he was driving at the time of the fatal accident, a 1949 Ford, described in any of the company's insurance policies then in force. His alleged right to indemnity rests upon a clause appearing in each of two policies issued to Albert Kinney, Jerry's father. These policies provided coverage for periods which included the date of the accident and were identical except for the designation of the vehicle described as the "owned automobile" in each of the two policies. Each policy described one of two motor vehicles which were owned by Albert Kinney, neither of which, as has been said, was the particular automobile which was involved in the accident.

The policies were each entitled, "Family Automobile Policy," and each contained provisions defining those covered as "insureds." The provisions read,

"(a) With respect to the owned automobile,
(1) the named insured and any resident of the same household,
(2) any other person using such automobile, provided the actual use thereof is with the permission of the named insured;
(b) With respect to a non-owned automobile,
(1) the named insured,
(2) any relative, but only with respect to a private passenger automobile or trailer not regularly furnished for the use of such relative;
(c) Any other person or organization legally responsible for the use of:
(1) an automobile or trailer not owned or hired by such person or organization, or
(2) a temporary substitute automobile, provided the actual use thereof is by a person who is an insured under (a) or (b) above with respect to such automobile or trailer." (Emphasis supplied.)

The appellee contends that Jerry Kinney was insured under the provision, italicized above, as a "relative" of Albert Kinney, "the named insured," operating a "non-owned * * * private passenger automobile * * * not regularly furnished for the use of such relative."

A disputed fact question was resolved by the jury, which, in its answer to a special interrogatory, found that the 1949 Ford was "not regularly furnished for the use of" Jerry Kinney.

The determinative issue on this appeal is whether or not, at the time of the accident, the Ford was, with respect to the named insured, Albert Kinney, a "nonowned automobile." The district judge determined, as a matter of law, that it was.

At some time before February 25, 1957, one Ehart had owned the Ford, and a Montana certificate of title had been issued to him. Ehart died on the last mentioned date, leaving Robert McCormick as his sole heir. McCormick died later in 1957, leaving all his property to his wife. Mrs. McCormick then, in 1957,1 agreed to sell the Ford to Albert Kinney. She was paid the whole agreed consideration by Kinney, and she delivered to Kinney the keys and the Montana registration certificate. Kinney was, with the registration certificate, enabled to purchase a Montana license for the car in his own name. No certificate of ownership was executed or transferred to him. Since the purchase in 1957, both Mrs. McCormick and Albert Kinney have regarded the automobile as being the property of Kinney. He repaired it and restored it to operating condition in 1958. He maintained possession of it and purchased insurance to cover its operation. He insured it with the defendant company as the "owned automobile" under "family" policies from September 2, 1958, to September 2, 1960. The car then ceased to function properly, and the insurance was not renewed. Despite numerous requests by Kinney to the attorney handling the Ehart estate, no certificate of title had been furnished to him or obtained by him. As a result, the only outstanding certificate of title to the Ford at the time of the accident was that which had been issued to Ehart in June, 1951.

The relevant provisions of the Montana statute relating to sale and transfer of automobiles are as follows:

"(a) Upon a transfer of any title or interest of an owner or owner in or to a motor vehicle registered under the provisions of this act as hereinbefore required, the person or persons whose title or interest is to be transferred shall write their signatures with pen and ink upon the certificate of ownership issued for such vehicle, in the appropriate space provided upon the reverse side of such certificate, and such signature shall be acknowledged before a notary public.
(b) Within ten (10) days thereafter, the transferee shall forward both the certificate of ownership so endorsed and the certificate of registration, together with the information required under section 53-107, to the registrar, who shall file the same upon receipt thereof and no certificate of ownership and certificate of registration shall be issued by the registrar of motor vehicles until the outstanding certificates are surrendered to that office or their loss established to his reasonable satisfaction.
(d) Until said registrar shall have issued a certificate of registration and certificate of ownership and statement as hereinbefore provided, delivery of any motor vehicle shall be deemed not to have been made and title thereto shall not have passed and said intended transfer shall be incomplete and not be valid or effective for any purpose.
(e) In the event of a transfer by operation of law of any title or interest of an owner of the legal title or owner in and to a motor vehicle registered under the provisions of this act, as upon inheritance, devise or bequest, order in bankruptcy or insolvency, execution sale, repossession upon default in the performance of the terms of a lease or executory sales contract, or otherwise than by voluntary act of the person whose title or interest is so transferred, the executor, administrator, receiver, trustee, sheriff or other representative or successor in interest of the person whose title or interest is so transferred shall forward to the registrar of motor vehicles an application for registration in the form required for an original application for registration, together with a verified or certified statement of the transfer of such title or interest which statement shall set forth the reason for such involuntary transfer, the title or interest so transferred, the name or names of the person or persons to whom such title or interest is to be transferred, the process of procedure effecting such transfer and such other information as may be requested by the registrar and with such statement shall be furnished such evidence and instruments as may otherwise be required by law to effect a transfer of legal or equitable title to or an interest in chattels as may be required in such cases, and in the event the registrar shall be satisfied that such transfer is regular and that all formalities as required by law have been complied with, he shall cause to be sent to the owner, conditional sales vendors, lessors, mortgagees and other lienors, as shown by his records notice of such intended transfer and thereafter, but not less than five (5) days thereafter, shall register such motor vehicle and shall issue a new certificate of ownership and certificate of registration to the person or persons entitled thereto. The notice herein required shall be deemed complied with by deposit in the post office in Deer Lodge, Montana, such notice, postage prepaid, addressed to such person or persons at the respective addresses shown on his records." Section 53-109, R.C.M. 1947. (Emphasis supplied.)

The district judge determined, under section 53-109(d), italicized above, that the attempted transfer of ownership from Mrs. McCormick to Albert Kinney was a nullity. He concluded that he was compelled by the decision of the Supreme Court of Montana in Safeco Insurance Co. of America v. Northwestern Mutual Ins. Co., 142 Mont. 155, 382 P.2d 174 (1963), to hold that the Ford was, in its relation to Albert Kinney, a "non-owned automobile," because no certificate of title in Kinney's name had ever been issued.

Appellant must admit, and it does, that there was no compliance with section 53-109(a) and (b), if such was required, and appellee concedes that section 53-109(d) applies, by its own terms, only to transactions which are required to be formalized pursuant to the procedures "hereinbefore" prescribed, that is,...

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