Travelers Indemnity Company v. Nationwide Mutual Insurance Company

• Decision Date: 21 March 1964
• Docket Number: Civ. A. No. 1291.
• Citation: 227 F. Supp. 958
• Parties: The TRAVELERS INDEMNITY COMPANY v. NATIONWIDE MUTUAL INSURANCE COMPANY and Nina S. Powell, Executrix of the Estate of Robert J. Powell, deceased.
• Court: U.S. District Court — Western District of Virginia

227 F. Supp. 958

The TRAVELERS INDEMNITY COMPANY v. NATIONWIDE MUTUAL INSURANCE COMPANY and Nina S. Powell, Executrix of the Estate of Robert J. Powell, deceased.

Civ. A. No. 1291.

United States District Court W. D. Virginia, Roanoke Division.

March 21, 1964.

Carroll D. Rea, Roanoke, Va., for Travelers Indemnity Co.

William B. Poff, Roanoke, Va., for Nationwide Mut. Ins. Co.

Tom Stockton Fox, Roanoke, Va., for Nina S. Powell.

DALTON, Chief Judge.

At approximately 7:30 P.M. on the evening of October 3, 1962, Mr. Shirley D. Crowder, accompanied by his wife, arrived in his 1962 Corvair automobile at the place of business of Scott-Powell Motor Company, a partnership operated by Robert J. Powell and Thomas A. Scott, Jr., with the intention of selling his automobile to that concern. Prior to that time Crowder had negotiated with Scott-Powell Motor Co. about the terms of the sale, and he carried his Virginia certificate of title with him so that the sale could be consummated that evening. Robert J. Powell met them in the company's office, and a final agreement regarding the sale was made. Powell wrote and delivered a check to Crowder in the amount of $1800.00, and Crowder signed his name on the back of his title certificate as assignor, with Scott-Powell Motor Co. designated as assignee, and delivered the title certificate to Powell. Powell told Crowder that he was a notary public and that he could take Crowder's acknowledgment of his signature. Counsel for Travelers argues that Crowder did not actually acknowledge his signature, but his deposition testimony on that point¹ when coupled with Powell's handwritten notations on the certificate² indicate so convincingly that he did acknowledge that I must conclude that there is no genuine issue of fact on this issue, and this Court so finds, concluding that Crowder did indeed acknowledge his signature before Powell, who was a notary public. However, for some reason which will never be explained, Powell failed to sign his name on the title certificate as the notary public before whom the acknowledgment was made.

Having concluded the transaction, Crowder and Powell looked about for a screwdriver to take the tags off the 1962 Corvair but none was readily available, and because it was also raining Powell stated that he would take the tags off in the morning and save them for Crowder, who intended to get a refund for them from the State. Crowder testified that he "didn't dream he (Powell) was going to take the car out with (Crowder's) * * * tags on it." But shortly after Crowder left, presumably on foot, Powell did take the Corvair out and was killed in a collision with one Paul Junior Saunders, an uninsured motorist.

Crowder called his insurance agent upon his arrival at home and cancelled his liability insurance contract. But it is impossible to prove that this call preceded the accident.

Crowder was insured by Nationwide Mutual Insurance Company under a conventional liability policy which carried the Virginia Uninsured Motorist Endorsement entitled Family Protection Against Uninsured Motorists. Scott-Powell Motor Company carried a garage policy with The Travelers Indemnity Company. This policy also included a Virginia Uninsured Motorist Endorsement applicable on a "Specified Car Basis".

Nina S. Powell, Executrix of the Estate of Robert J. Powell, threatened to bring suit against Saunders, the uninsured motorist, and Travelers instituted this declaratory judgment action against Nationwide and Nina Powell to have the responsibilities of the two companies adjudicated with regard to the imminent wrongful death action by Nina Powell. Although the complaint alleges that Nationwide is totally responsible for defending Saunders and paying any judgment rendered against him because title to the 1962 Corvair had not passed to Scott-Powell for insurable interest purposes, Travelers now admits that regardless of whether title to the automobile passed or not its policy offers uninsured motorist coverage.³

Nationwide's Uninsured Motorist Endorsement provides that "The unqualified word `Insured' means * * * (2) any other person while occupying an insured automobile" and that "The term `insured automobile' means: (1) an automobile which is registered in Virginia which is owned by the Named Insured or by his spouse if resident in the same household; * * *" provided the automobile is being "used by or with permission of the Named Insured or his spouse if a resident in the same house-hold." (Emphasis added) Thus, whether Nationwide offers coverage is directly dependent on whether Crowder still owned the automobile at the time of the accident. Nationwide of course maintains that he did not, while Travelers vigorously contends that because of Crowder's failure to comply with the provisions of Virginia's Motor Vehicle Act, particularly Va.Code Ann. § 46.1-87⁴, no title to the 1962 Corvair passed to Scott-Powell, that Powell was driving with Crowder's permission, and hence Nationwide's coverage is applicable and to be prorated with Travelers.⁵

The questions involved in the case are five in number:

(1) Regardless of the status of legal title, was Powell using the automobile with Crowder's permission within the meaning of Nationwide's policy?

(2) Under Virginia law is an acknowledgment by the assignor of his signature on an automobile title certificate properly delivered to the assignee required to transfer ownership as between the assignor and his assignee for the purposes of insurable interest?

Assuming the answer to question (2) is affirmative,

(3) Did Crowder actually acknowledge his signature before Powell?

(4) If Crowder did actually acknowledge his signature, does the absence of the notary's signature on the certificate of acknowledgment incorporated in the certificate of title form vitiate the acknowledgment for the purpose of passing title to the automobile between the parties?

(5) If the acknowledgment was otherwise sufficient to allow title to pass between the parties, did Powell's position as a partner in the buying firm make him incompetent to take Crowder's acknowledgment?

Question One: In order to grant permission to use an automobile within the meaning of an omnibus clause in an insurance policy, the named insured must have such relation to or control over the car that he has a right to give or withhold his permission to use it. Virginia Auto Mutual Insurance Co. v. Brillhart, 187 Va. 336, 46 S.E.2d 377 (1948); Nationwide Mutual Insurance Co. v. Cole, 203 Va. 337, 124 S.E.2d 203 (1962). In the present case Crowder had divested himself of all authority and control over the Corvair in the course of his transaction with Powell. At its conclusion he was impotent to either grant anyone permission to use the car in the first place or to prevent Powell from operating it by withdrawing his "permission". Therefore, I must conclude that Powell was not at the time of the accident operating the Corvair with permission of Crowder within the meaning of Nationwide's liability policy but was instead operating it upon his own authority exclusively, and entirely independently of Crowder's ability to allow or prevent such operation.

Question Two: There is no question that the Supreme Court of Appeals of Virginia has adopted a very strict attitude in construing Virginia's motor vehicle registration laws. Nationwide Ins. Co. v. Storm, 200 Va. 526, 106 S.E.2d 588 (1959); Sauls v. Thomas Andrews & Co., 163 Va. 407, 175 S.E. 760 (1934); Thomas v. Mullins, 153 Va. 383, 149 S.E. 494 (1929). This Court itself has given recognition to this attitude in the past United States Fidelity and Guaranty Co. v. Trusell et al., D.C., 208 F.Supp. 154, 159 (1962), as has the Fourth Circuit Court of Appeals. Eureka-Security Fire & Marine Ins. v. Maxwell, 276 F.2d 132 (4th Cir. 1960); Staunton Industrial Loan Corp. v. Wilson, 4 Cir., 190 F.2d 706 (1951). And it is this line of cases on which Travelers relies in arguing that absolute compliance with § 46.1-87 is required in order to relieve a seller of ownership of an automobile for any and all purposes. Or, to put the matter another way, Travelers argues that failure to absolutely comply with § 46.1-87 results in an absolutely void and ineffectual transaction. In light of our obligation under the Erie doctrine to follow state law as it is enunciated by the highest court of the state, Erie R. Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938), the argument is a strong one indeed.

However, the facts of our case go beyond anything the Virginia Supreme Court of Appeals has yet had to decide, and for that reason we feel justified in examining the rationale and scope of that Court's mandate regarding transfer of title under Virginia's Motor Vehicle Acts. In Nationwide v. Storm, supra, the Court was dealing with a complete failure to deliver the title certificate of an automobile in an attempted sale. In that case the buyer was paying for the car in installments and operated it with the permission of the owner from the day of the first payment. The buyer made the final payment on a Saturday and both parties agreed to transfer the title certificate on the following Monday when they could go to the office of the Division of Motor Vehicles. The buyer had an accident on Sunday, and the Virginia Supreme Court of Appeals held that for insurance purposes, the seller was still the owner of the car.

Although the question of the requirement of delivery of an endorsed title certificate to effect a transfer of ownership for insurable interest purposes in Virginia is settled under Storm, it is interesting to note that in reaching their decision the Virginia court relied almost exclusively on the Ohio case of Garlick v. McFarland, 159 Ohio St. 539, 113 N. E.2d 92 (1953), saying simply that Ohio has a transfer statute "similar to ours. See Ohio General Code, § 6290-3." Nationwide v. Storm, supra, 200 Va. at 528, 106 S.E.2d 589. It is true that the facts...