Nelson v. Merchants Bonding Co.

425 N.W.2d 433, 1988 Iowa App. LEXIS 40, 1988 WL 69158
CourtCourt of Appeals of Iowa
DecidedApril 20, 1988
DocketNo. 87-268
StatusPublished
Cited by4 cases

This text of 425 N.W.2d 433 (Nelson v. Merchants Bonding Co.) is published on Counsel Stack Legal Research, covering Court of Appeals of Iowa primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Nelson v. Merchants Bonding Co., 425 N.W.2d 433, 1988 Iowa App. LEXIS 40, 1988 WL 69158 (iowactapp 1988).

Opinion

SCHLEGEL, Judge.

The plaintiff appeals an adverse district court ruling in an action on a motor vehicle dealer’s bond. Because this case was tried at law, our review is for the correction of errors at law rather than de novo. Iowa R.App.P. 4. We affirm.

On June 25, 1980, the defendant Merchants Bonding Company (Merchants) issued a motor vehicle dealer bond to William N. Habhab, doing business as Fort Dodge Trucking Exchange, Inc. (Habhab). On approximately March 17, 1983, Habhab acquired parts to a 1976 Kenworth truck-tractor from R.G. Farrell in Southfield, Michigan for $8,000. Habhab received an affidavit of foreclosure of garagekeeper’s lien and a bill of sale. Habhab then sold the unit to William Lamb for $8,000. The parts sold by Habhab to Lamb consisted of a cab, frame, chassis, front axle, and rear axle housing. The parts missing included the engine, transmission, both rear-end assemblies, drive shaft, wheels and tires, exhaust system, gear box, fuel tanks, and batteries.

On April 11,1983, Lamb sold the parts to the plaintiff, Thomas Nelson, for $10,000. Lamb then transferred parts from a truck-tractor owned by Nelson to the unit that Lamb had sold Nelson. The rebuilt truck-tractor was then delivered to Nelson.

On May 4, 1983, the rebuilt truck-tractor was seized by the Iowa Department of Transportation under the belief that it was stolen. Subsequently, this action was brought by Nelson against Habhab’s surety on a motor vehicle dealer’s bond, seeking damages suffered during the period the truck was seized. Nelson claimed damages due to Habhab’s alleged failure to provide the certificate of title to Lamb. Nelson brought the suit against Merchants as the assignee of any claim Lamb might have had against Habhab.

The issue on appeal is whether the assembly of truck parts sold by Habhab to Lamb constituted a “vehicle,” thereby requiring Habhab to make application for a certificate of title pursuant to Iowa Code section 321.48(2). Several statutes are relevant to this case. The action brought by Nelson claiming indemnity from Habhab’s surety was based on section 322.4(7) of the Iowa Code which provides:

Before the issuance of a motor vehicle dealer’s license to a dealer engaged in the sale of vehicles for which a certificate of title is required under chapter 321, the applicant shall furnish a surety bond executed by the applicant as principal and executed by a corporate surety company, licensed and qualified to do business within this state, which bond shall run to the state of Iowa, be in the amount of twenty-five thousand dollars and be conditioned upon the faithful compliance by the applicant as a dealer with all of the statutes of this state regulating or applicable to the business of a dealer in motor vehicles, and indemnifying any person who buys a motor vehicle from the dealer from any loss or damage occasioned by the failure of the dealer to comply with any of the provisions of chapter 321 and this chapter, including, but not limited to, the furnishing of a [435]*435proper and valid certificate of title to the motor vehicle involved in a transaction. The bond shall be filed with the department prior to the issuance of a license. The aggregate liability of the surety, however, shall not exceed the amount of the bond, (emphasis added).

The Iowa Code also requires that when transferring a vehicle by sale, one must deliver the certificate of title as well:

No person, except as provided in sections 821.23 and 321.45 shall sell or otherwise dispose of a registered vehicle or a vehicle subject to registration without delivering to the purchaser or transferee thereof a certificate of title with such assignment thereon as may be necessary to show title in the purchaser.

Iowa Code § 321.67(1) (1983) (emphasis added). A certificate of title is also required for specially constructed, reconstructed, or foreign vehicles:

In the event the vehicle to be registered is a specially constructed, reconstructed, or foreign vehicle, such fact shall be stated in the application. A fee of two dollars shall be paid by the person making such application upon issuance of a certificate of title by the county treasurer. With reference to every specially constructed or reconstructed motor vehicle subject to registration the application shall be accompanied by a statement from the department authorizing such motor vehicle to be titled and registered in this state. The department shall cause a physical inspection to be made of all specially constructed or reconstructed motor vehicles, upon application therefor by the owner thereof, to determine whether such motor vehicle is in a safe operating condition and that the integral component parts thereof are properly identified and that the rightful ownership is established before issuing such owner the authority to have the motor vehicle registered and titled as herein provided. With reference to every foreign vehicle which has been registered heretofore outside of this state the owner shall surrender to the treasurer all registration plates, registration cards, and certificates of title, or, if vehicle to be registered is from a nontitle state, such evidence of foreign registration and ownership as may be prescribed by the department except as provided in subsection 2 hereof.

Iowa Code § 321.23(1) (1983) (emphasis added). Dealers must also obtain a certificate of title for vehicles acquired for resale:

Any foreign registered vehicle purchased or otherwise acquired by a dealer for the purpose of resale shall be issued a certificate of title thereto by the county treasurer of the dealer’s residence upon proper application therefor as provided in this chapter and upon payment of a fee of two dollars and such dealer shall be exempt from the payment of any and all registration fees for such vehicle. Such application for certificate of title shall be made within forty-eight hours after said vehicle comes within the border of the state.

Iowa Code § 321.48(2) (1983) (emphasis added).

The common feature of all of the above statutes is that there must be a “vehicle” or “motor vehicle” involved. These terms are defined by Iowa Code sections 321.1(1) and (2) as follows:

1. “Vehicle” means every device in, upon, or by which any person or property is or may be transported or drawn upon a highway. “Vehicle” does not include:
a. Any device moved by human power.
b. Any device used exclusively upon stationary rails or tracks.
c. Any integral part of a truck tractor or road tractor which is mounted on the frame of the truck tractor or road tractor immediately behind the cab and which may be used to transport persons and property but which cannot be drawn upon the highway by the truck tractor or another motor vehicle.
d. Any steering axle, dolly, auxiliary axle or other integral part of another vehicle which in and of itself is incapable of commercially transporting any person or property but is used primarily to support another vehicle.

Free access — add to your briefcase to read the full text and ask questions with AI

Related

In Re Bailey
326 B.R. 750 (S.D. Iowa, 2004)

Cite This Page — Counsel Stack

Bluebook (online)
425 N.W.2d 433, 1988 Iowa App. LEXIS 40, 1988 WL 69158, Counsel Stack Legal Research, https://law.counselstack.com/opinion/nelson-v-merchants-bonding-co-iowactapp-1988.