No. 84-426
IN THE SUPREllE COURT OF THE STATE OF MONTANA
1985
SAFECO INSURANCE COMPANY,
Plaintiff and Respondent,
CLIVE 11. LAPP PROSPECTOR CHEVROLET
INC., a Montana corp., and
VIRGIL BENJAMIN, GLADYS I. BENJAMIN
and JfRE BENJAMIN, individually
!AI
and as co-personal representatives
of the ESTATE OF MERLIN VIRGIL
BENJAMIN,
Defendants and Appellants.
APPEAL FROM: District Court of the First Judicial District,
In and for the County of Lewis & Clark,
The Honorable Henry Loble, Judge presiding.
COUNSEL OF RECORD:
For Appellants:
William J. Krutzfeldt, (Benjamins), Miles City,
Montana
P. Keith Keller; Keller, Reynolds, Drake, Sternhagen
and Johnson, (Lapp), Helena, Montana
J. Dwaine Roybal; Keefer, Roybal, Hanson, Stacey
and Jarussi, (Prospector Chevrolet), Billings,
Montana
For Respondent: :
Gene I. Brown; Landoe, Brown, Planalp, Kornmers and
Johnson, Bozeman, Montana
- --
Submitted on Briefs: December 7, 1984
Decided: March 5, 1985
Filed: pfj/@, &.-c 1 Jj
Cg
r . Justice John C. Sheehy d-elivered the Opinion of the
Court.
Safeco Insurance Company brought this action in Lewis
and Cl-ark County District Court for a declaratory judgment to
determine its rights and obl-igations under a qarage liability
insurance policy that it issued to Prospector Chevrolet, Inc.
On cross-motions for summary judgment, the District Court
ruled that Safeco had no obligation to defend the lawsuit or
pay a judgment under the policv. Defendants appeal and we
affirm.
On September 16, 1981, a 1978 Chrysler Cordoba
~utomobi1.e driven by Clive H. Lapp allegedly crossed the
centerline of U.S. Interstate Highway 94 in Custer County,
Montana and collided with a 1972 Ford Pinto driven by Merlin
Virgil Benjamin. Merlin Benjamin was killed. On November 8 ,
7.982, the widow and other heirs of Benjamin filed a wrongful
death action in Custer County naming Clive H. Lapp and
Prospector Chevrolet, inc. as defendants.
Safeco insurance Compar.~issued a pol icy of Liahil.ity
insurance to Prospector that allegedly covers all vehicles
owned by Prospector. On August 12, 1983, Safeco filed this
action for decl aratory judgment to det-ermine its obligations
under its policy of insurance.
Clive H. Lapp purchased a 1-978 Chrysler Cordoba from
Prospector Chevrolet on July 24, 1980. Lapp pa-id cash for
the car and secured a temporary license sticker for it. He
drove the car around Helena for a couple of months, then
returned to Miles City.
Prospector did not forward the title documents for the
Cordoba to the County Treasurer's Office in Lewis and Clark
County where Lapp was temporarily resjding. The title
documents were sent by Prospector Chevrolet to Custer County
sometime in October 1980, over three months from the date of
purchase. These documents contained some errors. The
application for certificate of title had the name of a Mr.
and Mrs. Russel-I lined out and the name of Prospector
Chevrolet inserted on the line entitled purchasers. The name
of Holms Car Rental of Montana appears as seller. In the
space provided for the new purchaser, the names Olive H. Lapp
and/or Margaret Lapp appeared.
When Clive Lapp went to the Custer County Treasurer's
Office in October 1980, he was informed that title to the
automobile could not be transferred to him because the name
Olive Lapp instead of Clive Lapp appeared on the application
for title. Clive Lapp did not sicjn the defective
application. He did not notify Prospector of the difficulty
with the title instrument or take any other action to cause a
valid certificate of title to be issued to him. A
certificate of title wcs never issued to Clive Lapp or
Prospector Chevrolet. Record title has remained in the name
of Holms Car Rentals of Montana. Clive Lapp took the license
plates from a 1972 Rambler that he had previously owned and
placed them on the Cordoba. He illegally used these license
plates until the coll-isionwith Mr. Benjamin.
The only issue on appeal is whether Prospector
Chevrolet, Inc. was the owner within the meaninq of its
insurance policy with Safeco of the 1978 Chrysler Cordoba
driven by Clive Lapp on September 16, 1981.
Appellant contends that legal title remained in
Prospector because all of the steps required for transfer of
the motor vehicle under Title 61 of the Montana Code
Annotated were not completed. We think that the motor
vehicle statutes are relevant but not determinative.
Ownersl~ip for insurance purposes can be determined by the
intent of the parties and language of the insurance contract.
See National Farmers Union Property and Casualty Co. v.
Colbrese (9th Cir. 1966), 368 F.2d. 405, cert. denied (19671,
386 U.S. 991, 87 S.Ct. 1306, 18 L.Ed.2d 336. In ~ational
Farmers Union, the court rejected the notion that ownership
depend.ed solely on bare legal title and held that a driver
who had paid cash for a vehicle and exercised full dominion
and control over it for three years was the owner for
insurance purposes even though no proper certificate of title
was transferred.
Prior to 1971., the courts of Montana held that the Motor
Vehicle Code, and in particular, 5 53-109 (d), R.C.M. (1947)
determined ownership of motor vehicles. Section 53-109 (d),
F?... (1947) provided:
"Until said registrar shall have issued a
certificate of registration and certificate of
ownership and statement as hereinbefore provided,
delivery of any motor vehicle shall be deemed not
to have been made and title thereto shall not have
passed and said intended transfer shall be
incomplete and not be valid or effective for any
purpose. "
This section was held to control all transfers of title
or ownership of automobiles for the purpose of tort law and
liability coveraqe. Safeco Insurance Company of America v.
Northwestern Mutual Insurance Company (1963), 142 Mont. 155,
382 P.2d 174; Lrion v. Glens Falls Insurance Company (19691,
1.54 Mont. 156, 461 P.2d 199.
In 1971, the legislature deleted S 53-109(d) R.C.M.
(1947) from the Laws of Montana. At t.he same time, new
legislation setting forth the procedure to transfer and.
register motor vehicles was enacted. This new law is
primarily aimed at public regulation of automobiles and not
at determining legal ownership. Section 61-3-105, MCA,
creates a presumption of ownership in the registrant for the
purposes on Title 61. This evidentiary presumption can be
overcome by the facts in a particular case. Section
61--3-201, MCA, relied upon by the appell-ant, sets forth
requirements for transferring the certificate of ownership.
They are not requirements to transfer ownership itself
between two parties for insurance purposes.
Section 61-1-310, MCA, defines the "owner" of a motor
vehicle . An "owner" under that statute includes, among
others, one in whom is vested right of possession or control
of a vehicle "subject to a lease, contract or other legal
arrangement vesting right of possession or control." Under
that definition, although the certificate of title had not
transferred to him, Clive Lapp was nevertheless the owner of
the motor vehicle under his completed contract of purchase
with Prospector Chevrolet.
Other iurisdictions hold that in factual situations
si-mil-arto the one before us the provisions of the Uniform
Commercial Code on sales apply and their respective Motor
Vehicle Codes do not preempt the UCC. See Country Mutual
Insurance Co. v. Aetna Life and Casualty Tnsurance Co.
/3979), 69 Ill.App.3d 764, 387 N.E.2d 1037; American Mutual
Fire Insurance Company. v. Cotton States Mutua.1 Insurance
Company (1979), 149 Ga.App. 280, 253 S.E.2d 825; Hughes v. A1
Green Inc. (1981), 65 Ohio St.2d 110, 418 N.E.2d 1355.
The sale of an automobile is a transaction in goods
within the meaning of the Uniform Commercial Code which was
adopted in Montana and codified in Title 30 af the Montana
Code Annotated. Section 30-2-401, MCA, d.ea1s with passage of
title under the Commercial Code. In pertinent part, S
30-2-401, MCA, provides:
"Each provision of this chapter with regard to
rights, obligations and remedies of the seller,
buyer, purchasers or other third parties appl-ies
irrespective of title to the goods except where
provision refers to such title. Insofar as
situations are not covered by the other provisions
of this chapter and matters concerning title become
material the following rules apply:
(22) Unless otherwise explicitly agreed title
passes to the buyer at the time and, place at which
the seller completes his performance with reference
to physical delivery of the goods, despite
reservation of a security interest and even though
a document of title is to he delivered at a
different time and place;. . ."
Prospector Chevrolet, Inc. delivered the vehicle to
Clive H. Lapp in July 1980. The sale was complete and Lapp
became the owner of the vehicle. Lapp had the right to use
or dispose of the automobile as he wished. Prospector had
relinquished all its legal rights to the vehicle even though
it stil.1 had the statutory duties relating to transfer of
certificate of ownership. We hold the legal title to the
automobil-e passed to Cl-ive H. Lapp on the date of delivery.
The order of the District Court ruling that Safeco
Insurance Co. has no duty to defend Prospector Chevrolet from
any suit or obligation to pay any judgment arising from the
collision between Clive H. Lapp and Merlin Virgil Benjamin on
September 1.6, 1981 is affirmed.
Af firmed.
We Concur: