State Farm Mut. Auto. Ins. Co. v. Royal Ins. Co. of America

• Decision Date: 21 February 1986
• Docket Number: No. 84-772,84-772
• Citation: 382 N.W.2d 2,222 Neb. 13
• Parties: STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Corporation, Appellee, v. ROYAL INSURANCE COMPANY OF AMERICA, a Corporation, Appellant, Maxine M. Todd and Jeanne Dennison, Special Coadministrators of the Estate of Jack C. Todd, Deceased, et al., Appellees.
• Court: Nebraska Supreme Court

Page 2

382 N.W.2d 2

222 Neb. 13

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Corporation, Appellee, v. ROYAL INSURANCE COMPANY OF AMERICA, a Corporation, Appellant Maxine M. Todd and Jeanne Dennison, Special Coadministrators of the Estate of Jack C. Todd, Deceased, et al., Appellees.

No. 84-772.

Supreme Court of Nebraska.

Feb. 21, 1986.

Syllabus by the Court

1. Motor Vehicles: Certificate of Title: Assignments. A purchaser who receives possession of an automobile without also obtaining from the owner an assignment of the certificate of title properly notarized and duly executed in accordance with the statutes then in effect acquires no right, title, claim, or interest in or to a motor vehicle and does not thereby become the owner of the vehicle in question.

2. Insurance: Contracts. An insurance contract should be considered as any other contract and should be given effect according to the ordinary sense of the terms used.

3. Insurance: Contracts. When provisions of an insurance contract are ambiguous or are susceptible of two constructions, the policy must be liberally construed in favor of the insured.

4. Attorney Fees. It is the practice in this state to allow the recovery of attorney fees only in such cases as are provided for by law, or where the uniform course of procedure has been to allow such recovery. As a general rule of practice in this state, attorney fees are allowed to the successful party in litigation only where such allowance is provided by statute.

5. Judgments: Appeal and Error. A proper judgment will not be reversed even if the trial court did not give the right reasons.

John F. Simmons of Wright, Simmons & Selzer, Scottsbluff, for appellant.

James M. Mathis of Holtorf, Kovarik, Nuttleman, Ellison, Mathis & Javoronok, P.C., Gering, for appellee State Farm.

Benjamin M. Shaver, Scottsbluff, for appellees Special Coadministrators.

BOSLAUGH, CAPORALE, and GRANT, JJ., and WOLF, District Judge, and COLWELL, District Judge, Retired.

COLWELL, District Judge, Retired.

This is a declaratory judgment action to determine the rights and obligations of two liability insurance companies arising out of a separate pending wrongful death action brought by the coadministrators of the estate of Jack C. Todd, deceased, who died as the result of a pedestrian-auto accident. The uninsured driver of the auto, defendant Michael A. Robinson, was driving it with the permission of defendant Original Equipment Co., doing business as Aulick Truck & Trailer (Aulick), insured by Royal Insurance Company of America. Defendant Richard E. Robinson, the father of Michael, was insured by plaintiff, State Farm Mutual Automobile Insurance Company, providing liability coverage for a nonowned vehicle by a resident of his household, who was Michael. The issue is whether the auto was covered by Aulick's garage policy. The trial court found that both companies were obligated to provide coverage, but Royal's responsibility was primary. Costs were assessed against Royal, including a $7,000 attorney fee allowed to the Todd estate. Royal appeals.

The determination of factual issues in a declaratory judgment action, which would otherwise be an action at law, will be treated in the same manner as if a jury had been waived. Hence a trial court's findings have the effect of a jury verdict and will not be set aside unless clearly wrong.

Roth v. School Dist. of Scottsbluff, 213 Neb. 545, 549, 330 N.W.2d 488, 491 (1983).

Michael was employed as a truckdriver by Aulick Leasing Corp., an unrelated enterprise not insured by Royal. Sometime after 6 p.m. on October 4, 1982, at the Aulick premises, Michael approached Shane Aulick with a request to drive a car home and to return it the next day. He had done so two or three times before. Shane, the manager of Aulick, consented to Michael's taking a 1978 International Scout (Scout) without any other restrictions. Michael left in the Scout en route to his residence, and the accident occurred shortly thereafter. Michael owned an uninsured pickup truck.

Aulick was in the business of auto sales and repair in Scottsbluff, Nebraska, insured by Royal under a garage policy, later discussed in detail. Royal denies coverage under the garage policy because the Scout was neither an "owned auto" nor a "covered auto" as provided in the policy. The trial court found that Aulick owned the Scout.

Royal assigns four errors: (1) That the court erred in finding that Royal had coverage; (2) and (3) (considered together) That the court erred in finding that Aulick owned the Scout; and (4) That the court erred in the allowance of the $7,000 attorney fee.

Errors Nos. (2) and (3) are first discussed. The policy provided that there was coverage for all owned autos. The ownership question is complicated by five separate certificate of title (title) transactions and two separate chains of car title.

1. "Colorado title." No. M 372060 issued May 11, 1978, to International Harvester Company, showing the previous title number as MSO (manufacturer's statement of origin). This title was assigned to "Aulick Truck & TLR" on September 12, 1978.

2. "Aulick 1979 title." No. 21F 44156 issued to Aulick Truck & Trailer on March 1, 1979, showing the previous title number as Co.M 372060.

3. "Chuck Meyer title." On September 8, 1980, Aulick sold the Scout to Chuck Meyer, and title No. 21F 66822 was issued to him, showing the previous title number as Ne 21F 44156 (Aulick 1979 title). The Meyer title was forthwith delivered to International Harvester Credit Corp. (IHCC) as security for a loan to Meyer. That title was still with IHCC at the time of the accident, although Meyer had traded the Scout back to Aulick on September 15, 1981.

4. "Aulick 1983 title." No. 21G 41810 issued to Aulick Truck & Trailer on November 23, 1983, after the accident, showing the previous title number as COLO M 372060 (the Colorado title). For some unexplained reason Aulick still retained the original Colorado title, which was used again to secure its 1983 title. Apparently, the county clerk had failed to retain the Colorado title when the Aulick 1979 title was issued.

5. "Haley title." Issued to Frank Haley on March 29, 1984, when Aulick sold the Scout to him.

A purchaser who receives possession of an automobile without also obtaining from the owner an assignment of the certificate of title properly notarized and duly executed in accordance with the statutes then in effect acquires no "right, title, claim, or interest in or to" a motor vehicle and does not thereby become the owner of the vehicle in question. State Farm Mut. Auto. Ins. Co. v. Fitzgerald, 214 Neb. 226, 334 N.W.2d 168 (1983).

Title to the Scout was registered in the name of Meyer when it was sold to him on September 8, 1980, on an installment sale contract with recourse, which was noted as a lien on the title when delivered to IHCC, where the Meyer title remained at the time of the accident. When Meyer traded the Scout back to Aulick on September 15, 1981, the IHCC loan had not been paid, and no arrangements were made to get the title assigned. Shane Aulick suggested to Meyer that some paperwork would be required in the future for Meyer to assign the title to Aulick. Without resolving the authenticity of the Aulick 1983 title, we are here concerned with the Scout title at the time of the accident.

Appellees coadministrators of the estate urge that during the September 15, 1981, to November 23, 1983, period, Aulick claimed and exercised ownership of the Scout along with its possession by using it as a utility shop car, driving it 19,776 miles, by including it in its inventory of cars owned for sale, and by holding it out for sale. At the time of the accident it bore dealer's plates. The evidence shows that both Meyer and Aulick understood and intended that Aulick should have full ownership of the Scout; however, it is noted that the same intention was present in Fitzgerald.

In addition to the evidence supporting Aulick's claim of ownership, it is urged that as a licensed dealer Aulick was not required to obtain a title, citing Neb.Rev.Stat. § 60-106(6) (Reissue 1978), which provides in part: "[L]icensed dealers need not apply for certificates of title for motor vehicles ... in stock or acquired for stock purposes, but upon transfer of the same they shall give the transferee a reassignment of the certificate of title on such motor vehicle...." (Emphasis supplied.) Section 60-106 describes general procedures for obtaining titles. Section 60-106(6) is a special procedure for the benefit of licensed dealers to avoid the paper formality of a dealer obtaining a title for each vehicle held for sale. It does not avoid the requirement discussed in Fitzgerald and provided in Neb.Rev.Stat. § 60-105(1) (Reissue 1984), that in order for a person, which includes a dealer, to claim ownership of a vehicle, the dealer must obtain a duly executed assignment of the certificate of title for a vehicle when it is acquired as part of the stock held for sale. Thereafter, that same certificate can be reassigned, § 60-106(6), by the dealer upon sale. Aulick never acquired an assignment of the Meyer title.

Although the application of the Fitzgerald rule to Aulick's auto sales and auto repair business may seem impractical in an auto sales business, considering the regular daily transfer of car titles and customer use of cars, lost titles, delayed assignment and delivery of titles from customers, and other inoffice business details, nevertheless existing statutes such as § 60-105(1) must be strictly observed, and it is possible for the insured and insurer to formulate and tailor the details of insurance coverage to meet their business needs and responsibilities. Fitzgerald is dispositive of the ownership question; we agree with Royal that Aulick was not the owner of the Scout at the time of the accident, and the court erred in so finding.

That leaves unanswered the first assignment of error,...