Reece v. Motors Ins. Corp.

• Decision Date: 23 October 1953
• Docket Number: Civ. No. 5533.
• Citation: 116 F. Supp. 394
• Parties: REECE v. MOTORS INS. CORP. (GENERAL MOTORS ACCEPTANCE CORP. third party defendant). WADE OLDSMOBILE CO. v. MADDEN.
• Court: U.S. District Court — Western District of Oklahoma

116 F. Supp. 394

REECE v. MOTORS INS. CORP. (GENERAL MOTORS ACCEPTANCE CORP. third party defendant).

WADE OLDSMOBILE CO. v. MADDEN.

Civ. No. 5533.

United States District Court, W. D. Oklahoma.

October 23, 1953.

Ozmun & Fullerton, Lawton, Okl., for plaintiff.

McClelland, Kneeland, Bailey & McClelland, Oklahoma City, Okl., Bledsoe, Nicklas & Chrisman and Burton & Jones, Lawton, Okl., for defendants.

WALLACE, District Judge.

The plaintiff, Mildred G. Reece, originally instituted this action against the defendant, Motors Insurance Corporation, to recover under the "theft provision" of a policy issued by Motors Insurance on plaintiff's Oldsmobile, a 1952-98 Model, Four-Door Sedan; said car was taken by some person, unknown to plaintiff, while the car was parked on a street in Lawton, Oklahoma, the evening of May 21, 1952.

Defendant Motors Insurance in answering admits the issuance of the policy but denies liability thereunder because: (1) plaintiff was not the sole and unconditional owner of the car at the time the policy was issued; (2) plaintiff had no insurable interest in the car at the time the policy was issued as well as at the time the loss occurred; (3) the taking of the car was not a "theft" under the terms of the issued policy inasmuch as such taking was by a third party under a bona fide claim of title and ownership.

Subsequent to Motors Insurance answer the plaintiff brought in Wade Oldsmobile Company of Lawton, Oklahoma, as an additional defendant, alleging that she bought the car new on a conditional sale contract from Wade Oldsmobile, who warranted the title to her and sold her conditional sale contract to General Motors Acceptance Corporation,¹ and asked in the alternative that she recover against Wade Oldsmobile for breach of warranty of title should the Court find a "theft" under the policy terms had not taken place. Thereafter, Wade Oldsmobile filed its answer and under third party practice brought in Clarence Madden, a used car dealer of Lawton, Oklahoma, doing business as Madden Motor Company, alleging that Madden had sold it the car in question upon a warranty of title. Madden answered and alleged that he was not liable to Wade Oldsmobile for breach of warranty for the reason that Madden could set up an estoppel against the Texas owners from whom Madden purchased the car. GMAC in its answer asserted that it was the owner by purchase of the conditional sale contract between plaintiff and Wade Oldsmobile, and that in purchasing said contract GMAC relied on the warranties therein and that the policy in question was purchased after the contract was bought. GMAC also filed its cross-claim against the plaintiff and asked to recover the due and unpaid balance at the time of filing the counterclaim on the conditional sale contract in the amount of $888.75, together with 15% attorney fee as provided in the contract.

From the introduced evidence it appears that the following transactions took place in connection with the transfer of physical possession of the instant car:

On January 23, 1952, the Oldsmobile Division of General Motors issued its Manufacturer's Certificate and delivered the car to the Raines Motor Company at Terrell, Texas, a new car agency; on January 25th, Helen Allmon Culbertson, wife of Ray Culbertson, a Texas used car dealer, purchased this car from Raines Motor in her maiden name, making payment by cashier's check; the car immediately after purchase was turned over to Culbertson; Culbertson in turn delivered the automobile to Johnny T. Camp at Tyler, Texas, a wholesale dealer in cars; on January 29th Camp delivered the car to Clarence Madden, doing business as Madden Motor Company in Lawton, Oklahoma; on February 12th Madden delivered the car to Wade Oldsmobile Company, which company, on the same day, delivered the car to the plaintiff; on the evening of May 21st the car was taken from the possession of plaintiff by a person whose identity is still unknown; however, within 24 hours of such taking the car arrived at the place of business of Culbertson in Dallas, Texas; from such time Culbertson asserted dominion over and retained possession of the car under a claim of ownership.

I In Whom did Legal Title Rest at the Time the Automobile was Taken from Plaintiff's Possession?

As the Court views it, this is the paramount issue in the case.

The defect in plaintiff's title, if any, occurred at the time of the transfer between Culbertson and Camp.

The evidence indicates that Helen Allmon (Mrs. Culbertson), the original purchaser of the car, bought the car on January 25th with a cashier's check, the money for which was furnished by her husband, who in turn had received the money from his business associate, Mr. Piper. At the time of this purchase Helen Allmon signed an application for a Texas Title;² the application was sworn to on January 28th and was filed with the Tax Collector of Kaufman County, January 29th.

Culbertson upon immediately getting possession of the car telephoned Camp in order to consummate the transaction.³ In this telephone conversation Culbertson advised Camp that the car was a Texas car upon which he would have to get a Texas title and that said title would be forwarded to Camp just as soon as the title was obtained by Culbertson.⁴ The car was delivered to Camp immediately after the telephone conversation was concluded.

On February 1st Culbertson deposited a draft dated January 25, 1952, in the amount of $3,500, drawn on the Standard Auto Sales through People's Bank of Waldo, Arkansas,⁵ and attached a letter signed by E. M. Piper, dated January 31, 1952,⁶ which guaranteed a Texas Certificate of Title on the automobile. When this draft had not been paid by February 7th, Camp gave Culbertson a check for $3,500 in lieu of the draft; on February 8th Culbertson endorsed the Camp check and it was deposited by Piper in Piper's account with the Mercantile National Bank at Dallas;⁷ on about February 15th, Culbertson, of the opinion the Camp check had had time to clear through banking channels, mailed the Texas Certificate of Title which was originally issued to Helen Allmon, to Camp along with a draft drawn in regard to another transaction. However, on February 20th the check of Camp was returned unpaid; the check was promptly redeposited but was again returned on February 25th. Thereupon, on February 26th or 27th Culbertson went to Tyler, Texas, to straighten out not only the payment for the car in question, but also payments totaling some $6,500 owed Culbertson by Camp on other cars. Culbertson regained possession of the Texas Certificate of Title to the car in question, which Certificate was still unassigned, and also obtained some $6,500 in checks given Camp by third persons in regard to car purchases from Camp. Camp never made good the purchase price on the car in question although Camp had delivered the car to Madden Motor Company on January 29th or 30th and notwithstanding Madden had paid Camp $3,500 at the time of delivery.

Under these recited facts the Court is of the opinion that title to this car under the applicable Texas law, never passed from Camp to Madden.

The Texas title statute clearly provides that after a final "first sale" of a car in Texas, title can only be passed by the regular transfer and assignment of the Texas Title Certificate.⁸ However, a practical difficulty arises in regard to determining just when a final first sale has taken place. Obviously, if a final first sale has not been consummated the general rule under common law in regard to the passing of title would govern inasmuch as the statute in question by its own terms only requires the certificate of title where "subsequent sales" are in view.⁹

Defendant Madden urges that inasmuch as the Texas Court in Motor Investment Company v. Knox City stated,¹⁰

"Reading the Act as a whole, we think it clear that every transfer of a motor vehicle, regardless of the number thereof, from manufacturer to dealer, dealer to dealer, and from dealer to `owner,' as defined in the Act, constitutes a `first sale,' and that it is not necessary that the vehicle be registered and a certificate of title thereto obtained as a condition precedent to the validity of such `first sale',"

that a certificate of title was not essential to the transfer of title in the instant case for the reason that in reality only dealers were involved up to the time the car was finally sold to the plaintiff Reece, and that Reece was the first "owner" as defined in the statute.¹¹ However, admitting that Culbertson, Camp, Madden and Wade were all dealers, such does not bring the instant case within the rule announced in the Knox City case, supra. In the Knox City case the Court held that where only the manufacturer and a series of subsequent dealers were involved it was "not necessary that the vehicle be registered and a certificate of title thereto obtained as a condition precedent to the validity of such `first sale.'" Nonetheless, this wording does not stand for the proposition that where the vehicle has been registered and a Certificate of Title obtained that dealers can promiscuously pass title without an assignment of the certificate.¹² As mentioned in Section 7 of the Texas Act:

"The term `First Sale' means the bargain, sale, transfer, or delivery with intent to pass an interest therein, * * *; and such a bargain, sale, transfer or delivery, accompanied by registration or licensing of said vehicle in this State or elsewhere, shall constitute the first sale of said vehicle, irrespective of where such bargain, sale, transfer, or delivery occurred. * * *" (Emphasis supplied.)

Section 8 goes on to say:

"The term `Subsequent Sale' means the bargain, sale, transfer, or delivery, with intent to pass an interest therein, other than a lien, of a motor vehicle which has been registered or licensed within this State or elsewhere, save and except when such vehicle is not required under law to be registered or licensed

...