State Farm Mut. Auto. Ins. Co. v. Fitzgerald, 81-914

Citation214 Neb. 226,334 N.W.2d 168
Decision Date06 May 1983
Docket NumberNo. 81-914,81-914
PartiesSTATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY and Mark A. Kwasnieski, Appellees, v. Rance Lynn FITZGERALD and Michael Massey, Appellants, and American Family Insurance Group, Appellee.
CourtNebraska Supreme Court

Syllabus by the Court

1. Motor Vehicles: Certificate of Title. In accordance with the provisions of Neb.Rev.Stat. § 60-105(1) (Reissue 1978), no person acquiring a motor vehicle from the owner thereof shall acquire any right, title, claim, or interest in or to such motor vehicle until he shall have had delivered to him physical possession of such motor vehicle and a certificate of title duly executed.

2. Motor Vehicles: Certificate of Title. While it may be true that a certificate of title is not conclusive evidence of ownership, it is likewise true that absent a duly executed certificate of title, ownership may not be established.

3. Motor Vehicles: Certificate of Title. A purchaser who receives possession of an automobile without obtaining the certificate of title thereto, as required by our statute, acquires no title or ownership therein.

4. Motor Vehicles: Certificate of Title. Where a purchaser contracts to buy an automobile and takes possession thereof without objection and uses the automobile, such use is a use with the permission of the owner until such time as a certificate of title thereto is issued to the purchaser.

Timothy J. Pugh of Boland, Mullin & Walsh, Omaha, for appellant Fitzgerald.

Cynthia G. Irmer of Matthews, Cannon & Riedmann, P.C., Omaha, for appellant Massey.

Donald D. Schneider of Ray C. Simmons, P.C., Fremont, for appellees State Farm and Kwasnieski.

KRIVOSHA, C.J., BOSLAUGH, McCOWN, and HASTINGS, JJ., and BRODKEY, J., Retired.

KRIVOSHA, Chief Justice.

This appeal presents to the court what appears to be a case of first impression. The question presented is, when does the seller of an automobile cease to be its owner within the meaning of a standard automobile insurance policy which provides coverage to both the named insured and those operating the vehicle with the named insured's permission? The trial court, concluding that the question was one of fact, submitted the issue to the jury, which found for the appellee State Farm Mutual Automobile Insurance Company (State Farm). For reasons more particularly set out in this opinion, we believe that the question in this case was one of law and not of fact and should have been decided against State Farm. We must therefore reverse the decision of the trial court.

Appellee State Farm filed a declaratory judgment action naming itself and its insured, Mark A. Kwasnieski, as plaintiffs. The defendants were Rance Lynn Fitzgerald and Fitzgerald's automobile carrier, American Family Insurance Group (American Family). Also named as a party defendant was Michael Massey, who was seriously injured as the result of an accident involving Fitzgerald who, at the time of the accident, was driving a pickup truck he was purchasing from Kwasnieski. The record establishes without conflict that on Wednesday, October 4, 1978, Kwasnieski who was the owner of a certain 1975 Chevrolet pickup truck insured by State Farm, agreed to sell the pickup to Fitzgerald for $5,500. On Friday, October 6, 1978, Fitzgerald went to Kwasnieski's home and gave to Kwasnieski a two-party bank check. The two filled out and signed a sales tax certificate, an odometer certificate, and the back of the certificate of title to the pickup truck. Both Fitzgerald and Kwasnieski testified that they realized their signatures needed to be notarized but that no notary was present. Instead, both agreed that Kwasnieski's father could take the certificate of title the following Monday to a notary public with whom he worked. The parties agreed that Fitzgerald would pick up the certificate of title on Monday night after it had been notarized. After the two signed the certificate of title they left it on a table in the Kwasnieski home. Later that evening Kwasnieski and his father put it on a shelf where they normally place the mail. There is no testimony about handing the title to the father or to Fitzgerald. Kwasnieski testified that after Fitzgerald left with the truck, Kwasnieski still had the registration and certificate of title in his home and that both were accessible to him.

After the documents were signed and the check exchanged, Kwasnieski handed the keys to the pickup to Fitzgerald and said, "Here you go." Nothing was said by either party about giving Fitzgerald permission to drive the pickup or about restricting the scope of his use.

Late Saturday night, October 7, 1978, Fitzgerald, while driving the pickup truck, was involved in an accident in which Massey was injured. The record discloses that at the time of the accident Fitzgerald and the pickup truck were covered by an insurance policy issued by American Family, which Fitzgerald had procured before he went to the Kwasnieski home.

On Monday morning, October 9, 1978, Kwasnieski's father took the title certificate to his office, where it was notarized. That same morning, Kwasnieski called his State Farm agent and told him to cancel his policy of insurance retroactive to 12:01 a.m., Saturday, October 7. The certificate of title was actually picked up by Fitzgerald on Tuesday night, October 10, 1978. Massey subsequently filed suit against Fitzgerald, and Fitzgerald or American Family asked State Farm to defend the suit, but State Farm refused. The declaratory judgment action was then brought by State Farm for the purpose of determining whether State Farm's coverage applied to the accident and whether State Farm was under any obligation to defend.

As we have already indicated, the trial court, concluding that the question of ownership was a question of fact, submitted to the jury special findings. The jury was requested to make two findings. The first question submitted was: "Who was the owner of the pickup at the time of the accident between Fitzgerald and Massey?" A second question was submitted to the jury regarding whether the vehicle was being driven by Fitzgerald with permission from Kwasnieski. Because, however, the jury found that Fitzgerald was the owner of the vehicle at the time of the accident, the jury did not address the second question.

As we have already indicated, this appears to be a question of first impression in this jurisdiction, and, while logic and reason might compel one to reach the same conclusions reached by both the trial court and the jury, it appears that the statutes and case law of the State of Nebraska compel us to reach a contrary conclusion.

The State Farm policy is a standard form automobile policy and provides that it will "pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of (A) bodily injury sustained by other persons, and (B) property damage, caused by accident arising out of the ownership ... of the owned motor vehicle; and to defend ... any suit against the insured alleging such bodily injury or property damage ...." The policy defines the insured to be "the named insured" and "any other person using the owned motor vehicle, PROVIDED THE OPERATION AND THE ACTUAL USE OF SUCH VEHICLE ARE WITH THE PERMISSION OF THE NAMED INSURED OR SUCH SPOUSE AND ARE WITHIN THE SCOPE OF SUCH PERMISSION ...." The provisions of the American Family insurance policy owned by Fitzgerald are identical to the State Farm policy. The State Farm policy further provides: "The definition of insured does not apply to Use of Non-Owned Automobiles."

State Farm argues that the pickup truck was not owned by its insured, Kwasnieski, at the time of the accident on Saturday evening and therefore the coverage of the policy does not apply. To answer that question, however, we must look beyond the terms of the policy and examine the laws in effect, which form a part of the policy as if they were expressly referred to and incorporated in the policy. See Turpin v. Standard Reliance Ins. Co., 169 Neb. 233, 99 N.W.2d 26 (1959).

Unless it can be said as a matter of law that the attempt by Kwasnieski to transfer title to Fitzgerald on Friday, October 6, 1978, was ineffective, it seems clear that the parties intended ownership to transfer. We are afraid that the laws of the State of Nebraska, as written and as previously interpreted by this court, prevented the transfer of ownership from taking place until a duly executed and properly notarized certificate of title was delivered by Kwasnieski to Fitzgerald. Neb.Rev.Stat. § 60-105(1) (Reissue 1978) provides in part as follows: "No person ... acquiring a motor vehicle ... from the owner thereof ... shall acquire any right, title, claim, or interest in or to such motor vehicle ... until he shall have had delivered to him physical possession of such motor vehicle ... and a certificate of title ... duly executed in accordance with the provisions of this act .... No court in any case at law or in equity shall recognize the right, title, claim, or interest of any person in or to any motor vehicle ... sold or disposed of ... unless there is compliance with this section." (Emphasis supplied.) The form which the certificate of title must take is provided by statute in Neb.Rev.Stat. § 60-114 (Reissue 1978), and notarization of the signatures is one of the requirements. Reading § 60-114 together with § 60-105, it is clear that a "duly executed" certificate of title requires the seller's signature to be notarized and that absent such notarization the document has not been "duly executed." See Loyal's Auto Exchange, Inc. v. Munch, 153 Neb. 628, 45 N.W.2d 913 (1951). It must follow, therefore, that a purchaser who receives possession of an automobile without also obtaining a certificate of title properly notarized and duly executed...

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