AUTO ACCEPTANCE CORPORATION, D/B/A J .D . BYRIDER, INC . ; AND AUTO- OWNERS INSURANCE COMPANY V T .I .G . INSURANCE COMPANY ; SHARON PEEGE ; AND WAYNE APPELANTS CHANDLER
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2000-SC-0822-DG
AUTO ACCEPTANCE CORPORATION,
D/B/A J.D. BYRIDER, INC . ; AND AUTOOWNERS INSURANCE COMPANY
V
APPELLANTS
ON REVIEW FROM COURT OF APPEALS
1999-CA-0766-MR
HARDIN CIRCUIT COURT NO . 1997-CI-0872
T.I .G . INSURANCE COMPANY ;
SHARON PEEGE; AND WAYNE
CHANDLER
APPELANTS
OPINION OF THE COURT BY JUSTICE JOHNSTONE
REVERSING AND REMANDING
At issue in this case is the identity, for insurance purposes, of the owner of a
vehicle involved in an accident . Relying primarily on Nantz v . Lexington Lincoln
Mercury Subaru , Ky., 947 S .W .2d 36 (1997), both the trial court and the Court of
Appeals determined that the "owner" was the seller of the car, Appellant, J.D. Byrider,
Inc . Because of an intervening revision to KRS 186A .220, we disagree and hold that
the owner was the purchaser, Appellee, Wayne Chandler.
Facts and Procedural History
On January 21, 1997, Chandler and J .D. Byrider executed both a retail sales
contract for the purchase of an Acura Integra automobile and a Kentucky application for
title and registration for the Acura. Concurrent with these events, Chandler presented
J .D. Byrider with proof of insurance for another vehicle . This insurance policy was
maintained with Appellee, the T .I .G . Insurance Company. The insurance policy
allowed Chandler to add a vehicle to his T.I .G. coverage within thirty (30) days of
becoming the vehicle's owner. J .D. Byrider then gave Chandler actual possession of
the Acura. But J .D . Byrider had yet to receive a certificate of title from the previous
owner of the vehicle . J .D . Byrider received the title to the Acura on January 30, 1997,
and, on February 4, 1997, J. D. Byrider presented the documents necessary to transfer
title to Chandler to the Hardin County Clerk .
On January 22, 1997 - one day after purchasing the vehicle - Chandler was
involved in a collision with a vehicle driven by Appellee, Sharon Peege. Some time
after Chandler reported the loss to T.I .G ., T.I .G. filed a petition for a declaration of
rights in the Hardin Circuit Court. In the petition, T .I .G . argued that it had no liability to
Peege because Chandler failed to add the Acura to his policy within thirty days as
required by Chandler's policy. In the alternative, T.I .G. argued that it had no liability
because J.D . Byrider, not Chandler, was the owner of the vehicle for insurance
purposes . Both T.I .G . and J .D . Byrider filed motions for summary judgment.
The trial court granted summary judgment to J .D . Byrider on December 10,
1998 . In so doing, the trial court found that Chandler was the owner of the vehicle for
insurance purposes . But the trial court subsequently reversed itself in response to
T .I .G .'s motion to vacate or set aside the December 10 order. The trial court
specifically found that J .D. Byrider was the owner of the vehicle for insurance purposes
at the time of the accident . The trial court vacated the summary judgment entered in
favor of J .D . Byrider and entered summary judgment in favor of T.I .G.
J .D. Byrider appealed and the Court of Appeals affirmed the trial court's order
granting T.I .G . summary judgment on June 30, 2000 . We granted discretionary review
on July 15, 2001, and heard oral arguments on February 14, 2002. After careful
consideration of the briefs and the arguments presented, we reverse the Court of
Appeals .
Discussion
At issue in Nantz v. Lexington Lincoln Mercury Subaru was "when title to a motor
vehicle passes from a commercial car dealer to a buyer under Kentucky's titling and
registration statutes . . . for the purpose of determining liability insurance coverage ."
Ky., 947 S .W .2d 36, 37 (1997) . In Nantz, the car dealer sold an automobile to one
Roger Simpson . Id. Concurrent with the sale, the car dealer supplied Simpson with all
the necessary documents, including the title, to transfer the vehicle's title into his name.
Id. Simpson failed to file the documents with the county clerk's office, failed to obtain
insurance for the vehicle, and was involved in an accident some nine months after the
sale of the vehicle . Id.
After reviewing the applicable titling statutes and relevant case law, the Nantz
Court concluded that "when the proper legal documents are transferred from the dealer
to the buyer, the responsibility for insurance coverage on the part of the dealer
ceases ." Id . at 38-39, citing Potts v. Draper, Ky., 864 S .W .2d 896 (1993) and Cowles v .
Rogers , Ky . App., 762 S.W .2d 414 (1988) . Additionally, Nantz states :
Our decision in Potts determined that Kentucky's titling
statutes are clear and unambiguous that "the owner of a
motor vehicle is the title holder" in the absence of a valid
conditional sale . . . . We further emphasized the public
policy of this state, as expressed in KRS 304.39-010(1), to
keep uninsured motorists off Kentucky's roads .
Id . at 38.
Both the trial court and the Court of Appeals correctly determined that, under
Nantz, J.D . Byrider was the owner of the Acura for insurance purposes because it
retained the title to the vehicle . But apparently both courts failed to take into account
the revision made to KRS 186A.220 by the General Assembly in 1994 .
The pre-1994 version of KRS 186A .220 applied in Nantz . See id . at 41 (Stumbo,
J ., dissenting) . The 1994 revision changed KRS 186A .220(5) to read :
When he assigns the vehicle to a purchaser for use, he
shall deliver the properly assigned certificate of title, and a
properly executed vehicle transaction record, to such
purchaser, who shall make application for registration and a
certificate of title thereon . The dealer may, with the consent
of the purchaser, deliver the assigned certificate of title, and
the executed vehicle transaction record of a new or used
vehicle, directly to the county clerk, and on behalf of the
purchaser, make application for registration and a certificate
of title . In so doing, the dealer shall require from the
purchaser proof of insurance as mandated by KRS
304.39-080 before delivering possession of the vehicle .
Notwithstanding the provisions of KRS 186.020, 186A .065,
186A.095, 186A .215, and 186A .300, if a dealer elects to
deliver the title documents to the county clerk and has not
received a clear certificate of title from a prior owner, the
dealer shall retain the documents in his possession until the
certificate of title is obtained .
(Emphasis added) . (Section 5 has been subsequently revised since 1994, but none of
the revisions affect the substance of the 1994 revision for the purposes of this case) .
Nantz explains in dicta why the additional, above-emphasized language was
added to Section 5 :
Clearly, the legislature contemplated whether the
commercial dealer should have a duty to require titling of the
vehicle prior to relinquishing possession of it and has left
such a determination to the vehicle dealer .
Nantz, 947 S.W .2d at 39 . We read the purpose of the revision correctly in Nantz.
The 1994 revision created an exception to the general statutory scheme that
makes the title holder the owner of a vehicle for insurance purposes. But a car dealer
can only take advantage of the exception by first verifying that the buyer has a valid
and current insurance policy that covers the purchased vehicle . This exception is
consistent with the important public policy of keeping uninsured vehicles off Kentucky
highways, roads, and streets .
For the reasons stated above, we hold that Chandler was the owner of the
vehicle for insurance purposes and, therefore, reverse the Court of Appeals. Further,
we remand this case to the trial court with instructions to vacate its order granting
T.I .G .'s motion to vacate or set aside the December 10 order and to reinstate the
summary judgment in J .D . Byrider's favor.
Lambert, CJ ; Cooper, Graves, Stumbo and Wintersheimer, JJ., concur . Keller,
J., concurs by separate opinion.
COUNSEL FOR APPELLANT,
AUTO ACCEPTANCE CORPORATION,
DIBIA J.D . BYRIDER, INC . :
Guy Colson
Michael E. Liska
Fowler, Measle & Bell
Kincaid Towers, Suite 650
300 West Vine Street
Lexington, KY 40507-1660
COUNSEL FOR APPELLANT,
AUTO-OWNERS INSURANCE COMPANY :
Thomas L . Travis
Clark, Ward & Cave
401 West Main Street
Suite 301
Lexington, KY 40507
COUNSEL FOR APPELLEE,
T .I .G . INSURANCE COMPANY :
William D . Kirkland
Julie Cobble
J . Bradford Derifield
McBrayer, McGinnis, Leslie & Kirkland
300 State National Bank Building
P. O. Box 1100
Frankfort, KY 40601-1100
COUNSEL FOR APPELLEE,
SHARON PEEGE :
Alan M. Hall
Manty, Hall & Associates
30 Public Square
Elizabethtown, KY 42701
COUNSEL FOR APPELLEE,
WAYNE CHANDLER :
Stephen R. Chappell
Landrum & Shouse
P. O. Box 951
Lexington, KY 40588
RENDERED : NOVEMBER 21, 2002
TO BE PUBLISHED
,*ixyrtmt C~aixrf -of ~tufurkV
2000-SC-0822-DG
AUTO ACCEPTANCE CORPORATION,
D/B/A J .D . BYRIDER, INC . ; AND AUTO
OWNERS INSURANCE COMPANY
V.
APPELLANTS
ON REVIEW FROM COURT OF APPEALS
1999-CA-0766-MR
HARDIN CIRCUIT COURT NO . 1997-CI-0872
T.I .G . INSURANCE COMPANY ;
SHARON PEEGE; AND WAYNE
CHANDLER
APPELANTS
CONCURRING OPINION BY JUSTICE KELLER
While I concur in the majority's ultimate conclusion that summary judgment for
Appellee T.I .G . Insurance Company was improper and that this case must be reversed
and remanded for the trial court to enter summary judgment for Appellants, the path I
follow to that conclusion diverges substantially from the one,taken by the majority.
my opinion, this Court "lost its way" almost a decade ago in Potts v. Draper' when it
dismissed, with little explanation other than that the Court found it "unpersuasive," a
sound argument that "K-R Chapter 186A . . . has little to do with determining
.
.S
'Ky., 864 S .W.2d 896 (1993).
In
ownership for insurance purposes"' and adopted the reasoning of Cowles v. Rogers ,' in
which the Court of Appeals held that "since the effective date of KRS 186A, the
provisions of that statute . . . govern the issue of who owns a motor vehicle for purposes
of insurance coverage . "4 In my opinion, when this Court is asked to determine the
"owner" of a motor vehicle for insurance purposes it should do so by applying the
definition of "owner"' found in the Motor Vehicle Reparations Act subtitle of the
Insurance Codes -- an act adopted with a stated purpose of "requir[ing) owners . . . of
motor vehicles in the Commonwealth to procure insurance covering basic reparation
benefits and legal liability arising out of ownership . . . of such motor vehicles' ,7 -- rather
than the one KRS Chapter 186A uses in connection with provisions establishing an
automated motor vehicle registration system designed for entirely different purposes
like logistical efficiency, the inhibition of trafficking in stolen vehicles, and easier
collection of taxes and licensing fees . $
2 Id . at 899.
3Ky.App ., 762 S .W .2d 414 (1989) .
4 Id . at 416-417 . See Potts v. Draper, supra note 1 at 899 .
5KRS 304 .39-020(12) ("'Owner' means a person, other than a lienholder or
secured party, who owns or has title to a motor vehicle or is entitled to the use and
possession of a motor vehicle subject to a security interest held by another person."
(emphasis added)).
6See KRS 304 .39-010 - 304.39-340 .
7KRS 304.39-010(1) .
8See KRS 186A.010(1):
An automated motor vehicle and trailer registration and
titling system shall be developed and implemented as
expeditiously as practicable in all counties of the
(continued . . .)
Thus, in the case at bar, I believe that the trial court should have granted
summary judgment for Appellants because, at the time of the accident, J . D . Byrider,
Inc. neither owned the motor vehicle -- it had, after all, sold the vehicle to Chandler the
day before -- nor possessed title to it, and thus, applying the KRS 304.39-020(12)
definition, J .D. Byrider, Inc . was not the "owner" of the vehicle responsible for insuring it.
Although I recognize that the majority's analysis tracks existing precedent, I believe that
precedent to be inherently flawed, and I would overrule Potts v. Draper so that, in future
cases, Kentucky courts may determine ownership for insurance purposes under
statutory provisions germane to that inquiry .
s( . . . continued)
Commonwealth . The automated motor vehicle and trailer
registration system shall be designed to enable Kentucky's
county clerks to produce motor vehicle and trailer certificates
of registration in their offices, and certificates of title in
Frankfort, by automated means utilizing telecommunication
terminals and associated devices supplied by the
Commonwealth, to inhibit registration and transfer of stolen
motor vehicles or trailers, to improve the capability of
detecting and recovering such vehicles, to ensure
development of a common vehicle information database to
improve efficiency in auditing motor vehicle usage tax,
license fee collections, and in collecting personal property
tax to provide information to the traffic record system, and to
provide improved security interest protection to potential
creditors throughout Kentucky while simultaneously reducing
the number of forms that must be processed and stored
each year in Kentucky.
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