Pacific Ins. Co. v. Oregon Auto. Ins. Co.

• Decision Date: 24 November 1971
• Docket Number: No. 5028,5028
• Citation: 490 P.2d 899,53 Haw. 208
• Parties: PACIFIC INSURANCE COMPANY, LIMITED, Appellant, v. OREGON AUTOMOBILE INSURANCE COMPANY, Appellee.
• Court: Hawaii Supreme Court

Page 899

490 P.2d 899

53 Haw. 208

PACIFIC INSURANCE COMPANY, LIMITED, Appellant, v. OREGON AUTOMOBILE INSURANCE COMPANY, Appellee.

No. 5028.

Supreme Court of Hawai'i.

Nov. 24, 1971.

Syllabus by the Court

1. In the presence of statutory ambiguity, the purpose of the act justifies departure from the strict letter of the statute, when adherence to the letter of the statute will lead to absurdity or palpable injustice.

2. Even in the absence of statutory ambiguity, departure from literal construction is justified when such construction would produce an absured and unjust result and the literal construction in the particular action is clearly inconsistent with the purposes and policies of the act.

3. Statutory language must be read in the context of the entire statute and construed in a manner consistent with the purpose of the statute.

4. The phrase 'for any purpose' is not all-encompassing but is restricted to a reasonable construction by the context of the entire statute and the purposes of the act.

David L. Fairbanks, Jenks, Kidwell, Goodsill & Anderson, Honolulu, for plaintiff.

Peter G. Wheelon, Honolulu (Dennis E. W. O'Connor, Honolulu, with him on the briefs; Anthony, Waddoups, Hoddick & Brown, Honolulu, of counsel), for defendant.

Before RICHARDSON, C. J., and MARUMOTO, ABE, LEVINSON and KOBAYSHI, JJ.

RICHARDSON, Chief Justice.

The sole question before us is whether a statute should be given a construction which will effect an absurd and unjust result if limited by its plain and obvious language.

On July 22, 1965, Mr. Gary Koja agreed to sell an automobile to Mr. Clarence Taira. On the same day, Mr. Taira gave to Mr. Koja a bank draft for the purchase price and Mr. Koja transferred possession of the automobile to Mr. Taira pursuant to their agreement of sale. On July 28, 1965, Mr. Koja endorsed the certificate of ownership in favor of Mr. Taira and the endorsed certificate was submitted to the Treasurer of the City and County of Honolulu for registration.

On August 1, 1965, while operating the subject automobile, Terry Taira, son of Mr. Clarence Taira, was involved in a traffic accident with a police motorcycle operated by Peter Kauahi III.

On August 2, 1965, new certificates of ownership and registration were issued to Mr. Charence Taira.

On the date of the accident Mr. Koja had in effect an automobile insurance policy issued by Oregon Automobile Insurance Company and Mr. Taira was covered by an automobile insurance policy issued by Pacific Insurance Company. Subsequent to the accident, upon demand by Mr. Taira that it extend coverage for the accident, Oregon Automobile Insurance Company denied coverage.

Actions for damages were filed against Terry Taira, Clarence Taira and Lillian Taira by the City and County of Honolulu on July 18, 1967, and by Peter Kauahi III on July 31, 1967.

Pacific Insurance Company filed on December 26, 1967, an action against Oregon Automobile Insurance Company for wrongful refusal to extend coverage in defense of the suit filed by Peter Kauahi III on July 31, 1967. This case was submitted to this court on an agreed statement of facts pursuant to HRS § 631-1 (1968).

At the time of the accident the statute providing for the registration of motor vehicles provided that an 'intended transfer shall be deemed to be incomplete and not to be valid or effective for any purpose' until the Treasurer has issued the new certificate of registration and certificate of ownership. ¹

A general rule of statutory construction is that if a statutory ambiguity is present the purpose of the act justifies departure from the strict letter of the statute when adherence to the letter of the statute will lead to absurdity or palpable injustice. Credit Assoc. v. Montilliano,51 Haw. 325, 328, 460 P.2d 762 (1969); Harrington v. Harrington, 41 Haw. 89, 103 (1955); Chang v. Meagher, 40 Haw. 96, 102 (1953); Rathburn v. Kaio,23 Haw. 541, 544 (1916); Shillaber v. Waldo, 1 Haw. 31 (1848). In the present case the language of the statute is plain and unambiguous. However, a literal construction of the statute would produce an unjust and absured result. The consequence of giving the statute a literal construction in the instant case would mean that a party who entered into a valid agreement to sell an automobile and surrendered physical possession of such automobile to the buyer ² would be required to assume civil liability for the negligent operation of the automobile by the buyer merely because the Treasurer had not yet issued new certificates of ownership and registration.

A better rule is that, even in the absence of statutory ambiguity, departure from literal construction is justified when such construction would produce an absurd and unjust result and the literal construction in the particular action is clearly inconsistent with the purposes and policies of the act. County of Sacramento v. Hickman, 66 Cal.2d 841,50 Cal.Rptr. 609, 428 P.2d 593, 598 (1967); Holy Trinity Church v. United States, 143 U.S. 457, 458, 460, 12 S.Ct. 511, 36 L.Ed. 226 (1892). The same reasons which underlie the rule which requires that ambiguity be a condition precedent to construction which rejects an absurd and unjust result are equally compelling in support of the rule which does not require the presence of a statutory ambiguity. Typically, courts require an ambiguity before departing from the plain and obvious language of a...