Present: All the Justices
ALLSTATE INSURANCE COMPANY
v. Record No. 992352
ATLANTA CASUALTY COMPANY
OPINION BY
JUSTICE LAWRENCE L. KOONTZ, JR.
June 9, 2000
NATIONWIDE MUTUAL INSURANCE COMPANY
v. Record No. 992354
ATLANTA CASUALTY COMPANY, ET AL.
FROM THE CIRCUIT COURT OF THE CITY OF NORFOLK
William F. Rutherford, Judge
These appeals, which we have consolidated, involve a
dispute among three insurance companies concerning the potential
coverage of their respective motor vehicle liability and
uninsured/underinsured motorist insurance policies. The
dispositive issue is whether, and to whom, ownership of a
particular automobile was transferred as the result of the owner
endorsing the certificate of title for that vehicle but leaving
the name of the transferee blank. 1
1
For this reason, it is unnecessary to relate in detail the
specific policy provisions of the insurance policies involved.
It is sufficient to simply note that these provisions are those
standard in the motor vehicle insurance industry.
BACKGROUND
The parties do not dispute the principal facts. Shannon
Scarborough (Scarborough) was at one time the owner of a 1982
Buick Regal automobile (the Buick). The Buick had been
purchased for her by Lawrence Ferrell (Ferrell’s father), the
father of her boyfriend Sean P. Ferrell (Ferrell). Scarborough
was living in the Ferrell household at the time. Ferrell’s
father had the Buick titled in Scarborough’s name. In December,
1996, Nationwide Mutual Insurance Company (Nationwide) issued a
motor vehicle liability insurance policy to Scarborough on the
Buick.
According to Ferrell’s father, although the Buick was
purchased for Scarborough to drive “back and forth to work,” he
intended “to give the car to both Shannon and to [his] son.”
The Buick was “available for both of them to drive,” but was
titled in Scarborough’s name alone because his son’s driving
record would have resulted in a higher insurance rate for the
vehicle had it been titled in his son’s name. Ferrell and
Scarborough each had a set of keys for the Buick, and Ferrell
drove the Buick “pretty much” whenever he wanted.
In January 1997, Scarborough planned to move to Georgia to
live with her father. Ferrell’s father “told her we were going
to sell [the Buick] and since it was in her name she’d have to
sign the title.” Scarborough thought that “[t]he car didn’t
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belong to me . . . and once [I’d] gone [to Georgia] I’d go ahead
and sign the title over to [Ferrell’s father].” While Ferrell’s
father “was out of town,” Ferrell and Scarborough “got into an
argument, and she signed [the certificate of title]” leaving it
and the Buick with Ferrell and moved to her sister’s house.
Regarding the circumstances of Scarborough’s signing the
certificate of title, according to Ferrell “[s]he said that she
was leaving and I asked her if she would sign the title over to
me because a friend of mine, . . . wanted to buy the [Buick].”
Scarborough signed her name and entered the date on the
certificate of title. However, she did not complete the
assignment of title by filling in the name of the intended
transferee in the space provided for that purpose on the
certificate. Scarborough understood that she was not to receive
any money from the transfer of ownership of the Buick. 2
After Scarborough signed the certificate of title to the
Buick and left the vehicle with him, Ferrell “[u]sed [the Buick]
when [he] needed to” without “ask[ing] anybody’s permission to
drive the car.” According to Ferrell, his father had a set of
keys only to “move [the Buick] in our yard.” Ferrell made
2
Although the certificate of title was not produced as an
exhibit at trial, it is undisputed that the space for entering
the transferee’s name remained blank at all times relevant to
these appeals.
3
premium payments to Nationwide on Scarborough’s insurance policy
because “she didn’t want me to get caught driving [the Buick]
without insurance.” Ferrell also “purchased a city sticker,
inspection sticker and paid the personal property tax and
everything in February so that it would still be legal.”
On March 28, 1997, Ferrell, while operating the Buick, was
involved in an accident with a motor vehicle occupied by Steve
Vitek and Martha Vitek, resulting in alleged personal injuries
to the Viteks. At that time, Ferrell was the named insured
under a motor vehicle liability insurance policy issued to him
by Atlanta Casualty Company (Atlanta Casualty) on his 1979
Plymouth Volare. At that same time Allstate Insurance Company
(Allstate) was the issuer of an automobile liability insurance
policy, including uninsured/underinsured motorist coverage, on
the Viteks’ vehicle. Martha Vitek filed a lawsuit against
Ferrell, alleging that he negligently caused the accident and
her injuries. During the pendency of that lawsuit and in
anticipation of a potential lawsuit by Steve Vitek, Atlanta
Casualty filed a declaratory judgment suit against Ferrell, the
Viteks, Nationwide, and Allstate. Atlanta Casualty sought a
declaration that it was not required to provide a defense to
Ferrell or to provide coverage for any liability he might incur
as a result of the accident. Atlanta Casualty asserted that the
Buick was owned by Scarborough at the time of the accident and
4
was not a qualified “non-owned vehicle or substitute vehicle
within the confines of the declaration of [Ferrell’s] policy”
with Atlanta Casualty.
Thereafter, Nationwide filed its grounds of defense,
denying that Scarborough was the owner of the Buick at the time
of the accident. Allstate filed an “answer,” asserting that it
should be dismissed from the proceedings because the motion for
declaratory judgment made no claim for relief against it.
Following a hearing at which evidence in accord with the
above-recounted facts was received ore tenus by the chancellor,
the parties presented their respective positions to the
chancellor in oral argument supplemented by trial and letter
briefs. In summary, Atlanta Casualty contended that the
attempted transfer of ownership of the Buick by Scarborough had
failed because no transferee’s name was entered on the
certificate of title. Thus, because the Buick was a non-owned
vehicle regularly furnished for Ferrell’s use, it was subject to
an exclusion in his insurance policy with Atlanta Casualty, and
primary coverage rested with Nationwide as the insurer of the
Buick under Scarborough’s policy. Nationwide contended that the
transfer of ownership was effective and, thus, that the Buick
was no longer owned by Scarborough, its named insured. Allstate
maintained that regardless of whether the transfer of ownership
had been effective, the Buick qualified as a “non-owned vehicle”
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subject to coverage under Ferrell’s policy with Atlanta
Casualty.
By letter opinion dated May 7, 1999 and subsequently
incorporated by reference in the final order, the chancellor
ruled that “the Buick . . . was owned at the time [of the
accident] by Shannon Scarborough. She had failed to correctly
and fully endorse the title certificate. Scarborough’s ‘gift’
of the car failed because of an unspecified donee.”
Accordingly, the chancellor ruled that Nationwide is responsible
for defending and indemnifying Ferrell for any and all claims
and lawsuits arising out of the March 28, 1997, motor vehicle
accident involving Ferrell and the Viteks. The chancellor
further ruled that “the Atlanta [Casualty] policy has no
coverage in this case since the car was owned by Scarborough and
Ferrell was not using the Buick as a ‘temporary substitute
vehicle.’ ”
Prior to the entry of the final order, Allstate sought
reconsideration by the chancellor of the issue whether coverage
under Atlanta Casualty’s policy was not also available.
Allstate asserted that the ineffective attempt to transfer
ownership of the Buick did not amount to permission by
Scarborough for regular use of the vehicle by Ferrell and, thus,
that his policy with Atlanta Casualty would afford coverage for
his casual use of the Buick.
6
In a final order dated July 13, 1999, the chancellor denied
Allstate’s motion to reconsider and entered judgment for Atlanta
Casualty in accord with the rulings of his May 7, 1999 letter
opinion. We awarded appeals to both Nationwide and Allstate.
DISCUSSION
The focus on the determination of the ownership of the
Buick by the parties here and in the trial court is for the
obvious reason that “[t]here is no insurance separate and
distinct from the ownership of the car.” Nationwide Insurance
Company v. Cole, 203 Va. 337, 341, 124 S.E.2d 203, 206 (1962)
(citation omitted). Accordingly, in its appeal, Nationwide
contends that the chancellor erred in ruling that Scarborough
remained the owner of the Buick after she signed the certificate
of title and surrendered possession and control of the vehicle.
Allstate contends that regardless of whether the transfer of
ownership was effective, Ferrell’s use of the Buick was only
casual and not expressly with the owner’s permission and, thus,
was not subject to the exclusion in his policy relied upon by
Atlanta Casualty. As will become clear, we need address only
the first of these two issues regarding the ownership of the
Buick.
In order to complete the sale of a motor vehicle, it is
essential that the owner deliver to the transferee a proper
assignment of title. Thomas v. Mullin, 153 Va. 383, 391, 149
7
S.E.2d 494, 497 (1929). Code § 46.2-628 governs the manner in
which a proper assignment of title is made and provides, in
pertinent part, that “[t]he owner of a motor vehicle . . . when
transferring or assigning his title . . . shall fully and
correctly endorse the assignment and warranty of title on the
certificate of title of the motor vehicle . . . to its purchaser
. . . and shall deliver the certificate to the purchaser or
transferee at the time of delivering the motor vehicle.” 3
However, Code § 46.2-630 further provides that “[t]he
transferee shall write his name and address in ink on the
certificate of title and . . . shall within thirty days forward
the certificate to the Department with an application for the
registration of the motor vehicle . . . and for a certificate of
title.” 4 (Emphasis added.) Accordingly, it is the
3
Code § 46.2-629 also requires the owner to enter the
vehicle’s odometer reading on the certificate of title at the
time of transfer. Failure by an owner to comply with Code
§ 46.2-629 can result in criminal liability and can prohibit the
transferee from obtaining a new certificate of title. The
certificate of title to the Buick was not produced as an exhibit
at trial and the record is silent as to whether the odometer
reading was recorded thereon. However, as the issue was not
raised before the chancellor, we do not consider it on appeal.
Rule 5:25.
4
Code § 46.2-631 provides an express exception to the
requirement of Code § 46.2-630 for a transferee who is “a dealer
who holds [the vehicle] for resale and operates it only for
sales purposes under a dealer's license plate.” Similarly, a
dealer or other person may receive an unendorsed title along
with the transferor’s “power of attorney . . . for the purpose
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responsibility of the transferee, not the owner, to enter on the
received certificate of title the name in which the new
certificate of title will be issued. Common experience tells us
that the purchaser or transferee of a motor vehicle often will
desire to have the vehicle titled, either jointly or separately,
in the name of another. Indeed, that is what occurred in this
case when Ferrell’s father purchased the Buick and had it titled
in Scarborough’s name. Thus, Scarborough’s failure to complete
the assignment of title by entering the name of the transferee
on the certificate of title does not, per se, defeat the
transfer of her ownership of the Buick. Accordingly, we must
look to the specific circumstances in this case to determine if,
and to whom, Scarborough’s ownership of the Buick was
transferred.
In order to effect a transfer of the ownership of a motor
vehicle, two things are required: (1) the owner must actually
deliver the endorsed certificate of title to the transferee, and
(2) the owner must deliver possession of the vehicle to the
transferee. See Nationwide Insurance Company v. Storm, 200 Va.
526, 528-29, 106 S.E.2d 588, 589-90 (1959)(holding that delivery
of assigning the transferor’s interest.” Code § 46.2-629.
Accordingly, we emphasize that the views expressed in this
opinion do not apply to transfers of motor vehicles to dealers
or to the delivery of an unendorsed certificate of title to an
attorney-in-fact.
9
of possession of vehicle without delivery of certificate of
title did not transfer ownership even though full payment had
been received). Although Scarborough testified that the Buick
“didn’t belong to” her, the record is clear that she was the
sole owner of the Buick, as evidenced by the certificate of
title, even though Ferrell’s father had actually purchased the
car and “intended to give the car to both [her] and to [his]
son.” Accordingly, only Scarborough could transfer ownership of
the Buick. Therefore, the subsequent desire of Ferrell’s father
to have the Buick sold and Scarborough’s acquiescence at the
time he told her “she’d have to sign the title” are not
relevant.
It is clear on this record that following an argument with
Ferrell, Scarborough desired to leave the Ferrell household and
Ferrell “had her sign the title.” Scarborough knowingly signed
and dated the certificate of title as the owner of the Buick,
delivered the certificate of title to Ferrell, and left the
Buick in his sole possession and control. In doing so,
Scarborough’s signature constituted the required owner’s
endorsement under Code § 46.2-628. Her delivery of the
certificate of title to Ferrell so endorsed at the time she also
left the Buick with Ferrell satisfied the further requirements
of that statute. Accordingly, Scarborough effected a transfer
of ownership of the Buick to Ferrell. Thereafter, it was
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Ferrell’s responsibility under Code § 46.2-630 to complete the
blank space designed for the transferee on the certificate of
title.
The evidence in the record supports the further conclusion
that Ferrell fully understood that ownership of the Buick had
transferred to him. Ferrell thereafter treated the Buick as his
own. He drove the Buick whenever he needed to and without
seeking permission to do so. Ferrell also paid property taxes
and a local licensing fee on the Buick, had the vehicle
inspected as required by law, and paid the inspection fee. He
also attempted to maintain insurance on the vehicle by paying
premiums on Scarborough’s insurance policy. It is true that he
failed to apply for a new certificate of title within the time
period required by law; however, while this might subject him to
criminal liability, the failure to apply for a new certificate
of title does not void the transfer of ownership of a motor
vehicle.
CONCLUSION
For these reasons, we hold that the chancellor erred in
ruling that Scarborough remained the owner of the Buick because
her “‘gift’ of the car failed because of an unspecified donee.”
Thus, we will reverse the chancellor’s determination that
Nationwide has a duty to defend Ferrell and provide coverage for
any liability he might incur as a result of the accident.
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Ferrell’s ownership of the Buick moots any inquiry into
Allstate’s contention that the “non-owned vehicle” coverage in
Ferrell’s insurance policy with Atlanta Casualty would apply.
Because the chancellor did not consider whether Atlanta Casualty
would have a duty to defend Ferrell and provide liability
coverage under his insurance policy if he were the owner of the
Buick, we will remand the case for further proceedings
consistent with the views expressed in this opinion.
Reversed and remanded.
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