Riley v. Motorists Mut. Ins. Co., 38092

• Citation: 176 Ohio St. 16,197 N.E.2d 362
• Decision Date: 18 March 1964
• Docket Number: No. 38092,38092
• Parties: , 26 O.O.2d 294 RILEY, Appellee, v. MOTORISTS MUTUAL INS. CO., Appellant.
• Court: United States State Supreme Court of Ohio

Page 16

176 Ohio St. 16

197 N.E.2d 362, 26 O.O.2d 294

RILEY, Appellee, v. MOTORISTS MUTUAL INS. CO., Appellant.

No. 38092.

Supreme Court of Ohio.

March 18, 1964.

Syllabus by the Court

1. The undefined term, 'theft,' as used in an automobile insurance policy insuring against such contingency comprehends the willful taking of the insured's automobile by another for the latter's unauthorized use and disposition, wrongfully, without justification, and without claim or color of right.

2. There is no 'theft' of an automobile within the meaning of an insurance contract, where a resident of another state, having a valid, subsisting and recorded mortgage lien thereon, summarily repossesses the same in Ohio in accordance with the conditions of such lien.

This action was instituted in the Zanesville Municipal Court by Frank M. Riley against the Motorists Mutual Insurance Company, his insurer, to recover the value of his insured automobile under the 'theft' clause of his automobile insurance policy. Apparently, the term, 'theft,' was not defined in such policy.

The basis is Riley's action is that the automobile, which he acquired under a clear Ohio certificate of title, was 'stolen' by the agent of a Texas automobile dealer, which dealer held a defaulted mortgage lien of record on the automobile in the state of Texas.

Riley recovered a judgment against his insurer for approximately $1,849.

On an appeal on questions of law to the Court of Appeals, such judgment was affirmed.

A motion in this court to require the Court of Appeals to certify the record was allowed, and the cause is now here for decision on the merits.

The facts are that on April 20, 1959, the C. S. Hamilton Motor Company of Dallas, Texas, sold a 1958 model automobile to one Mitchell, who executed a promissory note and a chattel mortgage to secure the amount due, payable in installments. Such recorded mortgage gave the seller-mortgagee the right without demand to repossess the automobile upon default in payment, to sell it and to apply the proceeds on the mortgage debt. A Texas certificate of title was transferred to Mitchell, showing on its face a lien in favor of the C. S. Hamilton Motor Company in the sum of $2,136.

Mitchell paid one installment of $89, disappeared with the automobile, and defaulted as to further payments. An Alabama title to the automobile was obtained, without notation of the Texas lien. A resident of Alabama sold the automobile to one Reed of Granville, Ohio, who thereupon secured an Ohio certificate of title. There was a subsequent sale and transfer of title in Ohio, and the automobile then came into the possession of White Chevrolet of Zanesville on February 1, 1960. Riley bought the car from White on April 2, 1960, and the Ohio certificate of title issued to him showed no liens or encumbrances. In May 1960, Riley parked the car on a Zanesville street, left it, and, when he returned, it was gone. He reported its disappearance to the police, notified his insurer, Motorists Mutual, of his loss and demanded payment from it under the 'theft' clause of the policy, in a sum representing the claimed value of the automobile. Such demand was refused, and the present action resulted.

At the trial in the Zanesville Municipal Court, the insurer introduced in evidence, among other exhibits, the promissory note and the recorded chattel mortgage executed by Mitchell to the C. S. Hamilton Motor Company and a certified copy of the recorded Texas certificate of title which was issued to Hamilton and transferred to Mitchell and which showed the lien in favor of Hamilton for $2,136. These exhibits, with others, are included in the bill of exceptions.

Meyer, Johnson & Kincaid, Zanesville, for appellee.

Leasure & Micheli, Zanesville, for appellant.

ZIMMERMAN, Judge.

It is important to bear in mind that the single question for determination is whether there was a 'theft' of the Riley automobile within the meaning, intent and coverage of the 'theft' clause of the insurance policy, so as to entitle Riley to recover the value of the automobile from his insurer.

In the case of Toms v. Hartford Fire Ins. Co. etc., 146 Ohio St., 39, 63 N.E.2d 909, it is said in the third paragraph of the syllabus:

'In an insurance contract insuring against the 'theft' of an automobile, the term 'theft' comprehends the wilful taking or appropriation of one person's automobile by another wrongfully, without justification and with the design to hold or make use of the vehicle in violation of the rights of the owner * * *.' (Emphasis supplied.)

In similar vein, is the statement in 45 C.J.S. Insurance § 886, pp. 952, 953, which reads:

'Subject to any definitions set forth in the policy, the words 'theft,' 'robbery,' * * * 'larceny,' * * * or the like, as used in a policy of insurance as descriptive of the perils insured against, are to be given their commonly understood meanings. 'Theft' has a very general meaning, and includes any wrongful deprivation of property of another, provided the taking is without claim or color of right.' (Emphasis supplied.)

5 Appleman, Insurance Law and Practice, 356, Section 3211, is authority for the statement that 'loss arising from a taking by a former owner under a claim of ownership has been held not covered under such a policy [theft], nor is the taking by any person acting under an honest belief that he is entitled to its possession, even though he resorts to a trick or device to obtain it.'

Language of like import is found in 5 Couch, Cyclopedia of Insurance Law, 4203, Section 1176a.

It is generally recognized that when the buyer of an automobile is in default in the payment of any sum due under a conditional sales contract or a chattel mortgage and by the terms of such instruments a breach has been expressly made a ground for the retaking of the car, the seller may rightfully retake possession thereof, and such action may not be placed within the category of a theft. Such a situation comes within the rule that one is not chargeable with larceny or theft if in good faith he takes property of another, believing it to be legally his own and believing that he has a legal right to its possession. South Carolina Ins. Co. v. Jackson, 103 Ga.App. 3, 117 S.E.2d 878

Other cases enunciate the same principle. For example, see Talasek v. Travelers Fire Ins. Co. (C.C.A.5), 242 F.2d 748; Reece v. Motors Ins. Corp. (D.C.Okl.), 116 F.Supp. 394; Bigus v. Pacific Coast Casualty Co., 145 Mo.App. 170, 129 S.W. 982; Glens Falls Ins. Co. v. Stewart, 127 Misc. 353, 216 N.Y.S. 149 (affirmed, 219 App.Div. 817, 220 N.Y.Supp. 858).

In the instant case, the C. S. Hamilton Motor Company had a bona fide and recorded chattel mortgage on the automobile it sold to Mitchell. A certificate of title transferred and delivered to Mitchell in Texas bore the notation of such chattel mortgage and the amount due thereunder. Mitchell defaulted, and it may fairly be inferred from the evidence that he was a crook; that he took the automobile to Alabama and by chicanery and fraud obtained an Alabama title to the car which falsely showed it to be free and clear of encumbrance; that he thereupon sold the car to an Alabama resident, who in turn sold it to an Ohio resident; and that by succeeding transfers of title it came into Riley's possession. From the defensible standpoint of the C.S. Hamilton Motor Company, it still had a valid claim of record on the automobile, and, under the authorities cited, its action in repossessing it may not be classed as a 'theft.'

Both Riley and the Court of Appeals cite and rely on Kelley Kar Co. v. Finkler, 155 Ohio St. 541, 99 N.E.2d 665. However, in that case there was a court proceeding in whihc it was held by a divided vote of this court that under the Ohio Certificate of Title Act the holder in good faith of an Ohio certificate of title to an automobile showing no...