Worley v. Schaefer, 86-297

• Citation: 228 Neb. 484,423 N.W.2d 748
• Decision Date: 13 May 1988
• Docket Number: No. 86-297,86-297
• Parties: , 6 UCC Rep.Serv.2d 710 Melvin O. WORLEY, Appellee, v. Henry F. SCHAEFER II et al., Appellees, John Kraft Chevrolet, Inc., A Foreign Corporation, et al., Appellants.
• Court: Nebraska Supreme Court

Page 748

423 N.W.2d 748

228 Neb. 484, 6 UCC Rep.Serv.2d 710

Melvin O. WORLEY, Appellee, v. Henry F. SCHAEFER II et al., Appellees John Kraft Chevrolet, Inc., A Foreign Corporation, et al., Appellants.

No. 86-297.

Supreme Court of Nebraska.

May 13, 1988.

Syllabus by the Court

1. Motor Vehicles: Sales. Proof of possession of a vehicle, together with a bill of sale which complies with Neb.Rev.Stat. § 60-1417 (Reissue 1978), is sufficient to prove ownership of the vehicle under Neb.Rev.Stat. § 60-105 (Reissue 1984).

2. Statutes. Statutes in pari materia should be construed together so as to give force and effect to each whenever possible, but where plain and unavoidable repugnancy exists between the statutes, the latest will control.

P. Shawn McCann and Edward Noethe of Sodoro, Daly & Sodoro, Omaha, for appellants.

Barbara Thielen of Taylor, Fabian, Thielen & Thielen, Omaha, for appellee Melvin O. Worley.

HASTINGS, C.J., and BOSLAUGH, WHITE, CAPORALE, SHANAHAN, GRANT, and FAHRNBRUCH, JJ.

WHITE, Justice.

On Saturday, August 21, 1982, Melvin O. Worley and Henry F. Schaefer II were involved in an automobile-motorcycle accident. The car operated by Worley was a 1973 Plymouth station wagon which he had purchased from Paul Yates, doing business as Paul's Auto Sales (Yates), on August 18, 1982. On that day Worley paid cash for the car, took possession of it, and received a bill of sale for the car. Yates had purchased the car from John Kraft Chevrolet, Inc., on the day before Yates sold it to Worley. At the time of the accident John Kraft Chevrolet had not delivered a title to the vehicle to Yates, and, consequently, Yates had not delivered title to Worley.

Schaefer brought a tort action against Worley, seeking damages for injuries which were alleged to have been caused by Worley's negligence. Worley then filed an action for declaratory judgment to determine whether John Kraft Chevrolet, as holder of title to the automobile, and its insurer, American Alliance Insurance Company, were responsible for any judgment arising out of the Schaefer tort action. Ruling on Worley's motion for partial summary judgment, the district court determined that John Kraft Chevrolet was the owner of the vehicle at the time of the accident. After partial summary judgment was entered, Worley moved for summary judgment on the remaining issue of insurance coverage. The district court determined that Worley was covered under John Kraft Chevrolet's insurance policy and ordered American Alliance Insurance Company to provide a legal defense to Worley for the pending tort action between Schaefer and Worley. The defendants American Alliance Insurance Company, a capital stock corporation of the Great American Insurance Companies, and its insured, John Kraft Chevrolet, have appealed to this court.

In Dugdale of Nebraska v. First State Bank, 227 Neb. 729, 732, 420 N.W.2d 273, 276 (1988), this court for the first time acknowledged that "the provisions of Neb.U.C.C. art. 2 (Reissue 1980) governing sales are applicable to the sale of a motor vehicle." Until Dugdale, cases involving motor vehicle sales disputes were resolved solely by application of the relevant, and sometimes not so relevant, provisions of the Nebraska certificate of title act. See, generally, Boren v. State Farm Mut. Auto. Ins. Co., 225 Neb. 503, 406 N.W.2d 640 (1987); The Cornhusker Bank of Omaha v. McNamara, 205 Neb. 504, 288 N.W.2d 287 (1980); Dyas v. Morris, 194 Neb. 773, 235 N.W.2d 636 (1975). Thus, by recognizing that motor vehicles are "goods" within the definition provided by Neb.U.C.C. art. 2 (Reissue 1980), Dugdale set the stage for future cases which necessarily involve competing and conflicting clauses and provisions of the Uniform Commercial Code and the title act.

Facts similar to those in the present case were presented to this court in State Farm Mut. Auto. Ins. Co. v. Fitzgerald, 214 Neb. 226, 334 N.W.2d 168 (1983). In Fitzgerald, plaintiff Kwasnieski, an individual who was not a dealer in automobiles, agreed to sell his 1975 Chevrolet pickup truck to defendant Fitzgerald. The two signed the back of the certificate of title to the pickup, but agreed to leave the title with Kwasnieski so that his father could arrange to have the signatures notarized. Fitzgerald took possession of the truck and on the next day was involved in an accident in which a third party was injured. Kwasnieski and his insurer, State Farm Mutual Automobile Insurance Company, brought a declaratory judgment action against Fitzgerald and his insurer for determination of whether Kwasnieski's policy applied to the accident.

In Fitzgerald, we said:

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." [Citation omitted.] 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 in accordance with the statutes then in effect acquires no "right, title, claim, or interest in or to" a motor vehicle [citations omitted], and does not thereby become the owner of the vehicle in question.

214 Neb. at 231, 334 N.W.2d at 171. The court held that at the time of the accident in question, Kwasnieski was still the owner of the pickup truck and that, as a matter of law, Fitzgerald was operating the truck with Kwasnieski's permission. The provisions of the seller's policy were therefore held to apply.

A similar result was reached in Boren v. State Farm Mut. Auto. Ins. Co., supra. The facts in Boren are similar to those in Fitzgerald except that in Boren the seller was a licensed dealer, Misle Chevrolet Company, and the two parties executed a purchase agreement. The significance of this fact will be discussed later in this opinion.

Although it is not clear from the record in this case, the district court apparently relied on Fitzgerald in concluding that John Kraft Chevrolet was the owner of the 1973 Plymouth station wagon at the time of the accident and in ruling that, as a matter of law, John Kraft Chevrolet permitted Worley to operate the car. The appellants have asked this court to reexamine Fitzgerald and its progeny in light of the apparent conflict between § 2-401(2) and the passing of title requirements of the certificate of title act.

Section 2-401 provides that, in those instances not governed by other provisions of article 2 and as to which title is "material," "title passes to the buyer at the time and place at which the seller completes his performance with reference to the physical delivery of the goods ... even though a document of title is to be delivered at a different time or place...." The parties may, however, explicitly agree that title will pass otherwise. This provision represents a significant shift away from the prior role that "title" played in the transaction of goods. Article 2 "deals with the issues between seller and buyer in terms of step by step performance or non-performance under the contract for sale and not in terms of whether or not 'title' to the goods has passed." § 2-401, comment 1.

Appellants rely on a recent Montana Supreme Court case, Safeco Ins. Co. v. Lapp, --- Mont. ---, 695 P.2d 1310 (1985), for the proposition that "as between the parties, and for purposes of determining insurance coverage, ownership of a motor vehicle should be governed by the Nebraska Uniform Commercial Code, and not by the Nebraska certificate of title act." Brief for Appellants at 7. In Safeco, the defendant Lapp purchased an automobile from Prospector Chevrolet. Before title to the automobile was transferred, Lapp was involved in a collision with another vehicle which killed the driver of the other vehicle. Safeco brought a declaratory judgment action to determine its rights and obligations under a garage liability policy that it issued to Prospector.

The lower court entered a judgment in favor of Safeco. On appeal Lapp asserted that legal title remained in Prospector because all of the steps required for transfer of title under the Montana certificate of title act were not completed. The Montana Supreme Court agreed that the motor vehicle statutes were relevant, but did not think they were determinative on the issue of ownership. The court noted that the Montana Legislature had recently deleted a provision in the motor vehicle code which required judicial invalidation of any motor vehicle transfer when the parties have not fully complied with the statutory...