Webb v. Union Ins. Co.
| Decision Date | 21 October 1996 |
| Docket Number | No. 19650,19650 |
| Citation | 1996 SD 141,556 N.W.2d 669 |
| Parties | Bret WEBB, Plaintiff and Appellant, v. UNION INSURANCE COMPANY, Defendant and Appellee. . Considered on Briefs |
| Court | South Dakota Supreme Court |
E. Steeves Smith of Tinan, Smith & Bucher, Mitchell, for plaintiff and appellant.
Gary J. Pashby and Lisa Hansen Marso of Boyce, Murphy, McDowell & Greenfield, Sioux Falls, for defendant and appellee.
¶1 Bret Webb (Webb) appeals a declaratory judgment that an insurance policy issued by Union Insurance Company (Union) did not cover Craig Beyer (Beyer) at the time of his motor vehicle accident with Webb. We affirm.
¶2 Gus's Amoco (Amoco) owned a 1979 Jeep insured by Union. Amoco sold the Jeep to Beyer and Beyer took possession the same day. However, Amoco could not immediately locate the certificate of title to the Jeep and, for that reason, did not transfer title to Beyer on the day of the sale. Amoco ultimately located the title and transferred it to Beyer some two weeks after the sale. It was nearly three months after the sale before the state issued a certificate of title to the Jeep in Beyer and his wife's name. In addition, the Jeep was not deleted from the Union insurance policy until approximately two months after the sale.
¶3 In the meantime, only a week after purchasing the Jeep, Beyer was involved in an automobile accident with Webb. At the time of the accident it was covered by a policy of insurance with Greatway Insurance Company (Greatway) purchased by Beyer. Webb claimed injuries as a result of the accident and brought suit against Beyer. Greatway paid Webb the limits of its policy. However, Webb claimed damages in excess of the amount paid by Greatway and brought a declaratory judgment action against Union arguing that Beyer was merely a permissive operator of the motor vehicle insured by Union. As a result, Webb claimed Beyer was insured under the terms of the Union policy issued to Amoco. 1
¶4 The case was submitted to the trial court under a stipulation of facts. The trial court issued findings of fact, conclusions of law and a declaratory judgment that the Union policy did not cover Beyer at the time of his accident with Webb. Webb appeals.
¶5 Whether Union's insurance policy with Amoco covered Beyer at the time of the accident because Amoco failed to transfer title to the jeep to Beyer before the accident?
¶6 At the time of the accident, the Union insurance policy issued to Amoco provided coverage to the following insureds:
(1) You [i.e., Amoco] for any covered "auto."
(2) Anyone else while using with your permission a covered "auto" you own, hire or borrow[.] (emphasis added).
Webb argues that, at the time of the accident, Beyer was using, with Amoco's permission, a covered auto owned by Amoco. Therefore, Webb contends that Beyer was an insured under the terms of Union's policy with Amoco.
¶7 Webb rests his contention that Amoco still owned the Jeep at the time of the accident on the fact that Amoco did not transfer title to the Jeep to Beyer until after the accident. In support of his contention, Webb relies principally on the plain language of SDCL 32-3-10 emphasized below:
No person, except as provided in this chapter, obtaining or acquiring possession of a motor vehicle, trailer or semitrailer acquires any right, title, claim or interest in or to the motor vehicle, trailer or semitrailer, until he has been issued a certificate of title to the motor vehicle, trailer or semitrailer or has received a manufacturer's statement of origin or a manufacturer's certificate of origin for the same. No waiver or estoppel may be operated in favor of such person against a person having possession of the certificate of title or a manufacturer's statement of origin or a manufacturer's certificate of origin for such motor vehicle, trailer or semitrailer. (emphasis added).
As additional support for his argument, Webb also relies on this Court's holding in Schroeder v. Herbert C. Coe Trust, 437 N.W.2d 178, 184 (S.D.1989) that, "[l]egal ownership of a vehicle does not pass unless title to the vehicle is issued in the owner's name."
¶8 Webb's argument requires this Court to resolve what constitutes "ownership" of an automobile within the meaning of the Union automobile insurance policy. This is a question of law reviewed de novo. Colonial Ins. Co. of Cal. v. Lundquist, 539 N.W.2d 871, 873 (S.D.1995).
¶9 Webb would link the meaning of the term "ownership" in the Union policy with possession of legal title to a vehicle. However, there is a significant division of authority on this very point. As is well-summarized in 7 AmJur2d Automobile Insurance § 134 (1980):
The term "ownership", as used in automobile insurance policies, defies precise construction or definition, and the determination of whether ownership exists in an insured depends primarily on the factual situation involved in each case. Nevertheless, the courts have set forth certain principles in construing the term. It has been held that it is not necessary that the title transfer formalities, established by state law relating to registration of automobile titles, be completed in order for the ownership of an automobile to shift from the seller to the buyer. But the contrary view also has been taken, and it has been held that legal title is essential to the "ownership" of a motor vehicle, with respect to automobile insurance coverage. (emphasis added).
¶10 The foregoing split of authority appears to be resolved in South Dakota by the provisions of SDCL 32-3-11:
A certificate of title issued under this chapter shall be evidence or indicia of ownership of the motor vehicle, trailer or semitrailer described on the title. From the time of delivery of possession of a motor vehicle, trailer or semitrailer to a person acquiring the vehicle or any right of interest therein, the vehicle shall be at the risk of the person acquiring the vehicle. Such person together with any other person holding any lien or interest therein, shall have insurable interest in the motor vehicle, trailer or semitrailer and may enforce lawful contracts of insurance upon or affecting the motor vehicle, trailer or semitrailer or its maintenance, operation or use. (emphasis added).
Notwithstanding this statute's initial reaffirmation that ownership of a motor vehicle goes hand in hand with legal title to the vehicle, the last two sentences appear to be a legislative attempt to reallocate risks normally associated with ownership from a title-holder to a purchaser where a purchaser takes possession of a motor vehicle before obtaining legal title, i.e., the very scenario presented in this case. In this limited context, therefore, the South Dakota statutes on the transfer of motor vehicle titles appear to separate the concepts of ownership and title. This appears to be somewhat unique to South Dakota law.
¶11 While not identical to SDCL 32-3-11, Iowa law has a similar statutory provision that shifts liability for damages from the title-holder of a vehicle to a person who makes a bona fide purchase of the vehicle and takes possession. The statute was interpreted and applied in Hartman v. Norman, 253 Iowa 694, 112 N.W.2d 374 (1962), a case almost identical to the matter at hand. In Hartman, a buyer agreed to purchase a car and made a down payment. Possession of the car was delivered and the buyer took and retained possession. Seven days later, the buyer was involved in a collision with his newly purchased automobile. For whatever reason, the title documents to the vehicle remained in the possession of the salesman and were not delivered until after the collision. At the time, the Iowa Code provided:
In all cases where damage is done by any motor vehicle by reason of negligence of the driver, and driven with the consent of the owner, the owner of the motor vehicle shall be...
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