Universal Underwriters Ins. Co. v. Wilson, 1333

• Decision Date: 20 September 1976
• Docket Number: No. 1333,1333
• Parties: UNIVERSAL UNDERWRITERS INSURANCE COMPANY et al. v. Samuel A. WILSON, Jr.
• Court: Court of Special Appeals of Maryland

Page 36

33 Md.App. 36

363 A.2d 627

UNIVERSAL UNDERWRITERS INSURANCE COMPANY et al. v. Samuel A. WILSON, Jr.

No. 1333.

Court of Special Appeals of Maryland.

Sept. 20, 1976.

George D. Solter and B. Ford Davis, Baltimore, for appellants.

Robert E. Powell, Baltimore, with whom were Smith, Somerville & Case, Baltimore, on the brief, for appellees.

Argued before J. Dudley Digges ^*, Solomon Liss, ^** and Charles E. Edmondson, ^***, JJ.

LISS, Judge.

On December 21, 1972, Samuel A. Wilson, Jr. (hereinafter referred to as 'Wilson') was involved in an automobile accident with Linwood V. Uhler and Janet C. Uhler, his wife (hereinafter referred to as 'Uhlers'), in which the Uhlers sustained personal injuries and property damage to their automobile.

Wilson, on November 29, 1971, was the manager of Bittorf Ford Sales, Inc. (hereinafter, 'Bittorf'), an automobile dealership. On that date, he purchased from Bittorf for $750 a 1967 Buick LeSabre, which Bittorf had received in trade from a customer who had assigned the title in blank to Bittorf. Wilson made a down payment of $50 and executed a conditional contract of sale to Executive Cars, Inc., another Bittorf controlled company, for the balance; Bittorf retained the paper title as additional security. Bittorf permitted Wilson to use its dealer's tags during the period in which payments were to be made. Wilson used the car for his personal affairs and occasionally for Bittorf's business until mid-September of 1972, when his employment with Bittorf terminated. Final payment on the car was made on October 10, 1972; however, Wilson continued to use Bittorf's dealer's tags, and they were still being used and displayed on the vehicle when the accident occurred.

The Uhlers filed suit for damages in the Circuit Court for Howard County against Wilson and Bittorf; and thereafter, the case was removed to the Circuit Court for Carroll County. A motion for summary judgment was filed and granted in favor of Bittorf on the ground that there was no evidence of any agency relationship between Wilson and Bittorf at the time of the accident.

Universal Insurance Company (hereinafter, 'Universal') had issued to Bittorf a garage, bodily injury and property damage liability policy, the omnibus clause of which provided coverage for 'any other person while actually using an automobile covered with this policy with the permission of the named insured.'

Wilson filed in the Circuit Court for Carroll County this suit for declaratory judgment in which he petitioned the court to find that he was entitled to be furnished a defense by Universal in the Uhler suit against him and that he was further entitled to coverage under the liability policy.

Testimony disclosed the facts hereinbefore recited and, in addition, disclosed a dispute between Bittorf and Wilson as to the events after the final payment of the purchase price on October 10, 1972: Wilson contended that on that date, he requested the title from Mr. Bittorf but did not receive it. Mr. Bittorf said he told Wilson that as soon as his check cleared, the title would be mailed to him; he further stated that in accordance with his promise, he mailed the title to Wilson, who denied ever receiving it. The evidence further disclosed that Wilson was required to apply for a duplicate title some six months after the final payment. Mr. Bittorf also testified that both he and his son demanded the return of the dealer's tags on numerous occasions between the date of final payment (October 10, 1972) and the date of the accident (December 21, 1972), but the tags were not returned. Wilson claimed he believed the automobile was covered by Bittorf's insurance company; Mr. Bittorf said he believed the automobile was insured under Wilson's personal automobile insurance. It is unfortunate for all the parties that Wilson had no such insurance.

In order to secure his dealer's tags, Bittorf had certified to the Motor Vehicle Administration that any vehicle displaying its dealer's tags would be covered by insurance in the amount required by the Maryland Financial Responsibility laws and that he was insured by Universal.

The law governing transactions of this nature is found in the Motor Vehicle Code. The pertinent portions are set out in Art. 66 1/2, Sec. 3-113(a) and (c) of the Annotated Code of Maryland:

'Transfer to or from dealer; records.

(a) Certificate of title to be retained by dealer.-If the transferee of a vehicle is a registered dealer who holds the vehicle for sale, he shall retain the certificate of title in his possession. The certificate of title shall have thereon an assignment and warranty of title executed by the former owner, and must be in the possession of the dealer within 10 days of the date of transfer to the registered dealer and remain therein until the further sale or transfer of ownership of the vehicle. All certificates covering vehicle held for sale shall be available for inspection by representatives of the Department and by police officers during regular business hours.'

'(c) Transfer to one other than another dealer.-If ownership of a vehicle held by a registered dealer for sale is transferred to someone other than another registered dealer who holds the vehicle for sale, the transferring dealer shall execute and acknowledge an assignment and warranty of title in the manner and upon the former prescribed by the Department, and in addition shall comply with the following:

1. If the vehicle is a Class A vehicle which is to be registered and titled in this State, the transferring dealer shall obtain from the transferee the written application for a certificate of title and the prescribed fee therefor, and forward the same, together with all other documents required by § 3-104, to the Department within 10 days from the date of delivery of the vehicle; . . .'

It was conceded that Bittorf did not comply with the requirements of this statute and that at the time of the accident, the paper title to the vehicle was still registered at the Motor Vehicles Administration in the name of the prior owner with Bittorf having in its possession an assignment in blank of that title.

The trial court in its Order found that because of Bittorf's failure to comply with the requirements of the Code, it was left with an interest in the vehicle, which entitled Wilson to hold Universal responsible under the terms of the omnibus clause of Bittorf's policy for a defense and liability coverage. Thereafter, a Motion for Reconsideration was filed and granted, and memoranda were submitted. The trial court reaffirmed its original finding; and, in addition, it ruled that Universal was bound by the certification filed by Bittorf which required Bittorf to have financial responsibility insurance on any vehicle displaying its dealer's tags. It is from these orders that the appellants have filed their appeal.

The issues to be determined in this appeal are:

1) Did Bittorf at the time of the accident retain sufficient interest in or control over the vehicle on which its tags were displayed to hold Universal liable under the omnibus clause of its policy? and

2) Is Universal bound by Bittorf's certification-required by the Motor Vehicle Administration-that any vehicle upon which the dealer's registration plate is displayed will be covered by liability insurance?

The trial court, in its Order, cited a number of cases to support its conclusions. One of the cases cited was Clouse v American Mutual Liability Insurance Co., 344 F.2d 18 (1965), a South Carolina case, in which the 4th Circuit of the United States Court of Appeals reversed a District Court jdugment and held that when an automobile dealer failed to comply with the statutory requirements for transferring the title of an automobile to the purchaser, the dealer was left with an interest in the vehicle which entitled the plaintiff to hold the insurer responsible under the omnibus clause of the dealer's insurance policy. The Clouse decision was followed in the District Court of South Carolina, Aiken Division, in Security General Ins. Co. v. Bill Vernon Chevrolet and Universal Underwriters, 263 F.Supp. 74 (1967), where a dealer failed to comply with the statutory requirements for transfer of title to a purchaser, and the dealer's insurer was held primarily liable for any judgment against the purchaser and was required to furnish a defense.

In Clouse, supra, however, the Court had left itself a fallback position. It said at page 21 of its opinion:

'Regrettably, the Supreme Court of South Carolina has had no opportunity to pass upon the broad question of state policy which is now before us. Decisions from other jurisdictions...