State Farm Mutual Automobile Insurance Co. v. MFA Mutual Insurance Co.

485 S.W.2d 397, 1972 Mo. LEXIS 841

Opinions

PER CURIAM.

This case reached this court by way of transfer pursuant to Article V, § 10, Constitution of Missouri, and Civil Rule 84.05(a) (now Rule 83.03), V.A.M.R.

This action for a declaratory judgment¹ was instituted by State Farm Mutual Automobile Insurance Company (State Farm) in the Circuit Court of Butler County against Sue Smart (Smart), Harold Lee Hisaw, Sr. (Hisaw), and MFA Mutual Insurance Company (MFA) to ascertain the liability of the two insurers in a damage suit brought by Smart against Hisaw following an accident which occurred in Poplar Bluff on November 20, 1964. The circuit court declared that State Farm was solely responsible for the defense of Hisaw in the damage suit and was obligated, by reason of an agreement between it and MFA, to reimburse MFA the $4,000 MFA had paid to Smart in settlement of her demands in the tort case.

State Farm appealed to the Springfield Court of Appeals (now The Missouri Court of Appeals, Springfield District) where the judgment was affirmed in an opinion by Titus, P. J. Supplemental briefs were filed in this court after the transfer. Thereafter, the case was argued by counsel and submitted. We reach the same general result reached by the court of appeals. In doing so, we adopt as the opinion of this court the major part of the opinion filed in the court of appeals.

MFA had issued an automobile liability insurance policy to Gordie White (White) wherein the described automobile was a 1961 Rambler. This contract, inter alia, insured White and his permittees against bodily injury and property damage liability “caused by accident and arising out of the ownership, maintenance, or use of the described automobile.” The policy additionally furnished “Automatic Insurance For Newly Acquired Automobiles” by providing that “The insurance afforded by this policy with respect to the described automobile applies to any other automobile of which the named insured or spouse acquires ownership if it replaces the described automobile . . ..”

State Farm, by its policy issued to Hi-saw, insured Hisaw, among other things, against liability for bodily injury and property damage while he was driving an automobile owned by another. State Farm’s contract stipulated, however, that “The insurance with respect to a . . . non-owned automobile shall be excess over other collectible insurance.”

The trial court determined this action upon an agreed statement of facts wherein it was stipulated that at the time of the November 20, 1964, accident, Hisaw was driving a 1958 Ford pickup truck with the permission of White. State Farm contends (as it did in the Circuit Court) that the Ford was a replacement of the Rambler automobile described in MFA’s policy issued to White and that by reason of the provision for “Automatic Insurance For Newly Acquired Automobiles” contained in MFA’s policy, MFA’s contract afforded primary coverage to Hisaw. State Farm additionally asserts that MFA, because of its conduct noted anon, was estopped to deny liability coverage to Hisaw.

The Missouri certificate of title to the Ford pickup involved in the accident had initially been issued to one W. H. Davis who later made an “Assignment of Title” to Bluff City Motors, a registered dealer. Subsequently, Bluff City Motors, by duly executing and acknowledging before a notary public the “Reassignment By Registered Dealer Only” form on the certificate and by delivering the certificate, transferred ownership of the truck to Howard Selvidge Auto Company (Selvidge), also a registered dealer. On November 16, 1964, White gave the 1961 Rambler described in MFA’s policy to Selvidge on an even trade (“no money involved”) for the Ford pickup and received in exchange possession of the truck, a copy of a “Used Car Order”,² and the certificate of title to the Ford. The certificate bore another form entitled: “To Be Used By Registered Dealer Only When Previous Reassignment On Title Is Made To ‘Selling’ Registered Dealer — Reassignment By Registered Dealer.” White’s name was inserted in this form as the transferee and it was signed by Selvidge, but the assignment was not dated and Selvidge’s signature was never acknowledged before or by a notary public as required by the form. The parties stipulated that because the transaction occurred “at night” when a notary public was not available,. White was advised to take the certificate to a designated “notary public who did all of Selvidge’s acknowledgments . . . and that she would ‘notarize’ or acknowledge the signature of Sel-vidge for White; but White failed to do so.” After White obtained possession of the Ford he attached to it the Missouri license plate previously issued to him for the Rambler. White never made application for a title to the pickup. “On December 12, 1964, [following the accident of November 20, 1964] Hisaw purchased the . . Ford pick-up from White and because White had not registered it, White and Hisaw had Selvidge execute another ‘Reassignment By Registered Dealer’ to Hisaw.” Hisaw thereafter applied for and was issued a certificate of title to the Ford pickup by the director of revenue.

We are unsure of the intendment of State Farm’s bifurcated asseveration designed to induce a finding that the Ford pickup was a “newly acquired automobile” and thereby primarily covered by MFA’s insurance policy issued to White. One tine of the argument points toward an assertion that White acquired “ownership” of the Ford because the provisions of § 301.200³ “covering sales by dealers does not contain the strict requirements set out in § 301.210;”⁴ the other tine, with a contradictory thrust, directs us to the sweeping conclusion “that for liability coverage, as contrasted to property coverage, it is unnecessary to have an insurable interest [i. e., ownership] in the automobile.” The fallacy in the first portion of this argument is that Subsec. 2 of § 301.200 (quoted marginally) applies only to the sale by dealers of new automobiles or those for which a certificate of ownership has never been issued,⁵ and Subsec. 1 of § 301.200 (quoted marginally) has nothing to do with the sale or transfer of motor vehicles from a dealer to an individual. The Ford pickup truck which concerns us was a used motor vehicle or one for which a certificate of ownership had been issued before it came into the possession of dealer Selvidge. Buyers of used automobiles who are not registered dealers are required by Subsec. 2 of § 301.210 to present the certificate of ownership assigned to them to the director of revenue and obtain a new certificate. “However, in the case of dealers, the statutory requirement [of Subsec. 1 of § 301.-200] is only that a dealer must [for every used motor vehicle in his possession] have ‘a separate certificate of ownership, either of such dealer’s immediate vendor, or of the dealer himself’ ... so that when a dealer is the buyer [of a used automobile], while he must take an assignment directly. to himself, he may make a reassignment direct to his vendee without getting a new title certificate in his own name as required in the case of sales between individuals.” Pearl v. Interstate Securities Co., 357 Mo. (banc) 160, 164-165, 206 S.W.2d 975, 978.

The sale or transfer o-f used motor vehicles or those “for which a certificate of ownership has been issued,” is governed by § 301.210 (heretofore quoted marginally). Stephen Burns, Inc. v. Trantham, Mo.App., 305 S.W.2d 66, 69; Vetter v. Browne, 231 Mo.App. 1147, 1150, 85 S.W.2d 197, 198. It has been repeatedly held, by reason of § 301.210, that even though accompanied by full payment and physical delivery of possession, the attempted sale of a used automobile is fraudulent and void and passes no title whatever, legal or equitable [Kelso v. Kelso, Mo., 306 S.W.2d 534, 538(5), 71 A. L.R.2d 258, 265(4); Robertson v. Central Manufacturers’ Mut. Ins. Co., 239 Mo.App. 1169, 1174(1), 207 S.W.2d 59, 61(1)], unless, as a reasonably contemporaneous part of the transaction, the previously issued certificate of ownership with a properly completed and acknowledged assignment thereof by the seller is delivered to the buyer,⁶ and this is so whether1 the purported sale be from one non-dealer to another ⁷ or from a dealer to an individual.⁸ Although the provisions of § 301.210 which require that there be an assignment of the certificate of ownership “in form printed thereon, and prescribed by the director of revenue,” do not specify that there be an acknowledgment of the assignment by the seller before a notary public, it has been ruled that the statute is broad enough to authorize the director to require such an acknowledgment and that an unacknowledged assignment is insufficient to vest title or ownership in the purported buyer.⁹

In applicable instances, “The ownership of an autmobile is irrelevant to the validity of an insurance policy covering only liability for bodily injuries and property damages” [State Farm Mut. Auto. Ins. Co. v. Central Sur. & I. Corp., Mo.App., 405 S.W.2d 530, 534(3)],¹⁰ but that principle is not germane to the circumstances in this case or under the terms of the involved insurance contract. Since Hisaw (driver of the Ford) was not the named insured in the policy that MFA issued to White, in order for Hisaw to be a person insured by MFA it was required that he be using the vehicle described in that policy “with the permission of the named insured,” White. Also, in order that the coverage afforded by MFA “with respect to the described automobile” be applied to a “newly acquired automobile,” it was necessary that the latter vehicle be an “automobile of which the named insured or spouse acquires ownership if it replaces the described automobile .” Therefore, whether or not at the time of the accident MFA’s policy afforded coverage to the permittee-driver of the Ford pickup as a “newly acquired automobile” depended upon whether or not White, the named insured, had acquired ownership of that truck (Moore v. State Farm Mutual Automobile Ins. Co., supra, 381 S.W.2d at 164), or as stated in Beck Motors, Inc. v. Federal Mutual Insurance Co., Mo.App., 443 S.W.2d 200, 203 (quoting State Farm Mutual Automobile Ins. Co. v. Shaffer, 250 N.C. 45, 108 S.E.2d 49, 54), “It is our opinion that the replacement vehicle is one the ownership of which has been acquired after the issuance of the policy.” (Our emphasis). “[A] prerequisite under the automatic coverage provision is that the named insured own the new vehicle,”¹¹ and the word “ownership” as used in the contract must be construed in connection with the provisions of § 301.210 which establish the requirements of proof of ownership for used motor vehicles in actions at law or in equity. Garlick v. McFarland, 159 Ohio St. 539, 113 N.E.2d 92, 95(3); Velkers v. Glens Falls Insurance Co., 93 N.J.Super. 501, 226 A.2d 448, 457(11). The Ford pickup truck was not a “newly acquired automobile” within the terms of MFA’s policy; it was not an automobile of which White acquired “ownership” because the purported sale of the Ford by Selvidge to White was fraudulent and void and passed no title to White under § 301.210 and the cases heretofore cited in footnotes 6 to 9, inclusive. Furthermore, it is evident from the events previously detailed, that the parties themselves considered the transaction to be a nullity insofar as it undertook to legally vest any ownership of the truck in White. MFA’s policy was not effective for the benefit of Hisaw at the time of the accident and State Farm’s coverage, while its insured Hisaw was driving a non-owned automobile, was primary because (so far as the record discloses) there was no “other collectible insurance” on the Ford or its operator.

State Farm’s last point is that MFA is estopped to deny liability coverage to Hisaw. This point is bottomed on State Farm’s position that the facts are that MFA undertook to defend Hisaw in the Smart damage suit and took complete charge and control of that suit for twenty-one months before denying coverage, all the while knowing there was no coverage under its policy because White had not acquired ownership of the Ford truck being driven by Hisaw at the time of the accident. Of course, if these were the facts, MFA would be estopped from denying coverage. In Místele v. Ogle, Mo., 293 S.W.2d 330, 334, this court said: “It is defending an action with knowledge of noncoverage under a policy of liability insurance without a nonwaiver or reservation of rights agreement that precludes the insurer from subsequently setting up the fact and defense.” See also-: Helm v. Inter-Insurance Exchange for Automobile Club of Missouri, 354 Mo. 935 (banc), 192 S.W.2d 417, where the insurer withdrew from defense of a personal injury action immediately after it learned a fact under which its policy would not afford coverage. The difficulty with State Farm’s position is that the facts are not what it says. The stipulation of facts is that MFA discovered on July 1, 1966, that the Ford truck had been registered in the name of Hisaw, had never been registered in the name of White, and that MFA thereafter notified Hisaw that its policy did not cover him and that it and its counsel would withdraw from his defense. It is implicit in the finding and judgment of the trial court that the facts are that MFA had no knowledge before July 1, 1966, that White had not acquired ownership of the Ford truck and that it immediately thereafter withdrew from the defense of Hisaw. Under these facts MFA is not estopped to deny liability coverage to Hisaw.

The judgment is affirmed.

FINCH, C. J., and DONNELLY, HOLMAN and HENLEY, JJ., concur. SEILER, 'J., dissents in separate dissenting opinion filed. MORGAN and BARDGETT, JJ., dissent and concur in dissenting opinion of SEILER, J.

1 . Rule 87.01, et seq.; § 527.010, et seq. All references herein to rules and statutes are to Missouri Supreme Court Rules of Civil Procedure, V.A.M.R., and to RSMo 1969, V.A.M.S.

2 . This apparently is a form devised by the dealer as it is not a form prescribed by either the statutes or the director of revenue regulating the sale or transfer of used motor vehicles.

3 . § 301.200: “1. In the case of dealers, a separate certificate of ownership, either of such dealer’s immediate vendor, or of the dealer himself, shall he required in the case of each motor vehicle in his possession, and the director of revenue shall determine the form in which application for such certificates of ownership, and assignments shall be made, in ease forms differing from those used for individuals are, in his judgment, reasonably required ; provided, however, that no such certificates shall be required in the case of new motor vehicles or trailers sold by manufacturers to dealers. 2. Dealers shall execute and deliver bills of sale in accordance with forms prescribed by the director of revenue for all new cars sold by them. On the presentation of a bill of sale, executed in the form prescribed by the director of revenue, by a manufacturer or a dealer for a new car sold in this state, a certificate of ownership shall be issued.”

4 .Pertinent parts of § 301.210 state: “1. In the event of a sale or transfer of ownership of a motor vehicle . for which a certificate of ownership has been issued the holder of such certificate shall indorse on the same an assignment thereof, with warranty of title in form printed thereon, and prescribed by the director of revenue . . . and deliver the same to the buyer at the time of the delivery to him of said motor vehicle . . .. 4. It shall be unlawful for any person to buy or sell in this state any motor vehicle . . . registered under the laws of this state, unless at the time of the delivery thereof, there shall pass between the parties such certificate of ownership with an assignment thereof, as herein provided, and the sale of any motor vehicle . . . registered under the laws of this state, without the assignment of such certificate of ownership, shall be fraudulent and void.”

5 .Consolidated Underwriters v. Pennsylvania T. & F. Mut. Cas. Ins. Co., 8 Cir., 324 F.2d 21, 23; Federated Mutual Imp. & Hardware Ins. Co. v. M.F.A. Mut. Ins. Co., W.D.Mo., 211 F.Supp. 247, 249, 250(2) ; Galemore v. Mid-West National Fire & Cas. Ins. Co., Mo.App., 443 S.W.2d 194, 197-198; Inland Discount Corp. v. St. Louis Auto Auction Barn, Mo.App., 303 S.W.2d 185, 187(1) ; Mallory Motor Company v. Overall, Mo.App., 279 S.W.2d 532, 534.

6 . Greer v. Zurich Insurance Company, Mo., 441 S.W.2d 15, 25(5) ; Still v. Travelers Indemnity Company, Mo., 374 S.W.2d 95, 99(1); McIntosh v. White, Mo.App., 447 S.W.2d 75, 80(13) ; Galati v. New Amsterdam Casualty Company, Mo.App., 381 S.W.2d 5, 7(1) ; Bordman Invest. Co. v. Peoples Bank of Kansas City, Mo.App., 320 S.W.2d 72, 78(7).

7 . State v. Glenn, Mo., 423 S.W.2d 770, 774(1-3) ; State ex rel. Connecticut Fire Ins. Co. of Hartford, Conn. v. Cox, 306 Mo. 537, 552, 268 S.W. 87, 90(3), 37 A.L.R. 1456, 1464; Public Finance Corp. of Kansas City v. Shemwell, Mo.App., 345 S.W.2d 494, 497-498(2) ; Haynes v. Linder, Mo.App., 323 S.W.2d 505, 511(10).

8 . Sabella v. American Indemnity Company, Mo.(bane), 372 S.W.2d 36, 40(2) ; Citizens Discount & Investment Corp. v. Wood, Mo.App., 435 S.W.2d 717, 721 (1) ; Ferm v. Miller Pontiac Company, Mo.App., 407 S.W.2d 55, 57-58(2) ; Moore v. State Farm Mutual Automobile Ins. Co., Mo.App., 381 S.W.2d 161, 164 — 165(1, 2) Allstate Insurance Co. v. Hartford Accident & Ind. Co., Mo.App., 311 S.W.2d 41, 46(3).

9 . Pearl v. Interstate Securities Co., supra, 206 S.W.2d at 978(9-10) ; Peper v. American Exchange Nat. Bank in St. Louis, 357 Mo. 652, 657, 210 S.W.2d 41, 44(2) ; Commercial Credit Corporation v. Blau, Mo., 393 S.W.2d 558, 563(1-2) ; Kahn v. Lockhart, Mo.App., 392 S.W.2d 30, 34, 36, 37(7) ; Wills v. Shepherd, 241 Mo.App. 102, 231 S.W.2d 843, 846.

10 . E. g. Under an omnibus clause affording protection to any person using the described vehicle with permission of the named insured — Western Casualty & Surety Co. v. Herman, 8 Cir., 318 F.2d 50, 1 A.L.R.3d 1184; Sabella v. American Indemnity Co., supra, Mo., 372 S.W.2d 36; Haynes v. Linder, supra, Mo.App., 323 S.W.2d 505; Dealer under automobile sales and service policy insuring any automobile “in charge of named insured” — Kahn v. Lockhart, supra, Mo.App., 392 S.W.2d 30: Named insured under policy insuring against liability instead of loss — Hall v. Weston, Mo., 323 S.W.2d 673; Named insured operating a non-owned or temporary substitute automobile — Linenschmidt v. Continental Casualty Co., 356 Mo. 914, 204 S.W.2d 295; Bivins v. Ace Wrecking & Excavating Co., Mo., 409 S.W.2d 97.

11 . Hopkins v. Martinez, 73 N.M. 275, 387 P.2d 852, 855(6) ; and cases there cited; Robinson v. Georgia Casualty & Surety Co., 235 S.C. 178, 110 S.E.2d 255, 261; 45 C.J.S. Insurance § 829, at p. 888; 12 Couch on Insurance 2d § 45:187, p. 237; 7 Appleman, Insurance Law & Practice, § 4293, at pp. 91-92.