Concord General Mutual Insurance Co. v. Sumner

Concord General Mutual Insurance Co. v. Sumner (99-450); 171 Vt. 572;
762 A.2d 849

[Filed 16-Oct-2000]


                                 ENTRY ORDER

                       SUPREME COURT DOCKET NO. 99-450

                            SEPTEMBER TERM, 2000


Concord General Mutual Insurance Company  }	APPEALED FROM:
                                          }
                                          }
     v.	                                  }	Rutland Superior Court
                                          }	
                                          }
Floyd Sumner	                          }	DOCKET NO. S0722-97 RcC

                                                Trial Judge: Mary Miles Teachout

             In the above-entitled cause, the Clerk will enter:


       This dispute between two insurance companies turns on which of two
  vehicle dealers -  Automaster Motor Co., which is insured by defendant
  Acadia Insurance Company, or Carey's Auto  Sales, which is insured by
  plaintiff Concord General Mutual Insurance Company - owned a certain  Honda
  automobile when it was in an accident in which an employee of Carey's was
  injured.  The trial  court ruled that the vehicle was owned by Carey's and,
  thus, that Concord was obligated to cover the  damages from the injuries to
  the employee.  We affirm.

       Automaster purchased the Honda vehicle from a private owner and sold
  it to Carey's.  Carey's  employee went to Automaster, provided a check for
  payment for the vehicle, put Carey's dealer's  plates on it and drove it
  away.  Although it apparently had the certificate of title at the time 
  possession of the vehicle was taken by Carey's employee, Automaster did not
  assign it to Carey's  until days later.  The accident occurred while the
  employee was driving the vehicle back to Carey's  lot.

       Although Concord's argument depends on the intricacies of the Vermont
  Motor Vehicle  Certificate of Title and Anti-Theft Act, 23 V.S.A. §§
  2001-2095, its position is that title did not pass  until either Automaster
  assigned the title certificate to Carey's or sent it to the Commissioner of 
  Motor Vehicles so a new certificate of title could be issued to Carey's. 
  Acadia responds, in essence,  that certificates of title are not issued to
  dealers and dealers always have 10 days after a sale to pass  the
  certificate of title.

       At the outset, we stress that all answers to ownership questions will
  not inevitably be found in  the Certificate of Title Act.  Concord argues
  that we so held in Stearns v. Dairyland Ins. Co., 154 Vt.  126, 573 A.2d 692 (1990).  See also Winn v. Becker, 163 Vt. 615, 660 A.2d 284 (1995)
  (mem.).  In  both Stearns and Winn, the appellant argued that violations of
  the Certificate of Title Act meant that  ownership remained in the dealer,
  even after a purchaser had taken possession of the vehicle and  paid for
  it, so that the dealer's insurance carrier was responsible for personal 

 

  injuries caused by the purchaser's use of the vehicle.  In each case, we
  found that the Act did not  support the argument, and in each we looked
  beyond the Act in doing so.  In Stearns, for example,  we found a technical
  violation of 23 V.S.A. § 2026 to be irrelevant to the ownership question 
  because the purchaser did not intend to register the vehicle for a time and
  the registration law did not  require a title certificate until
  registration occurred.  Stearns, 154 Vt. at 128, 573 A.2d  at 693.


       The Certificate of Title Act was enacted to prevent theft and protect
  creditors with a security  interest in a vehicle, not to determine
  ownership claims underlying insurance coverage disputes.  See,  e.g.,
  Semple v. State Farm Mut. Auto. Ins. Co., 215 F. Supp. 645, 646-47 (E.D.
  Pa. 1963).  It is  foreseeable, therefore, that it will not provide answers
  to such ownership claims in many cases.  We  find that to be true here.


       We agree with Acadia that a dealer need not obtain a certificate of
  title for a vehicle it holds  for sale, whether new or used.  See 23 V.S.A.
  § 2012(2).  Probably because no new certificate of title  will issue in a
  sale between dealers, none of the Act's many sections, as cited by the
  parties, apply  explicitly and directly to a sale between dealers.  We
  decline, for example, to apply the detailed  provisions of 23 V.S.A. §§
  2023 and 2024 because we conclude these sections apply to sales in  which
  at least one party is a non-dealer owner.  Our overall goal in statutory
  construction is to  implement the intent of the Legislature.  See Brennan
  v. Town of Colchester, 169 Vt. 175, 177, 730 A.2d 601, 603 (1999).  We
  conclude that the Legislature did not intend that the Certificate of Title 
  Act impose specific requirements on dealer-to-dealer transfers to determine
  whether title passed.


       Acadia argues, in contrast, that the governing rule for this case can
  be found in the Uniform  Commercial Code § 2-401(2), 9A V.S.A. § 2-401(2),
  which provides:

    (2) Unless otherwise explicitly agreed title passes to the buyer
    at the  time and place at which the seller completes his
    performance with  reference to the physical delivery of the goods,
    despite any  reservation of a security interest and even though a
    document of title  is to be delivered at a different time or place
    . . . .

  Concord responds that the general provision of the U.C.C. is superseded as
  to motor vehicles by the  specific provisions of the Certificate of Title
  Act, an argument that is necessarily rejected by our  holding above that
  there are no specific provisions in the Act which govern this case.  


       We also reject Concord's further argument that the governing U.C.C.
  section is 2-401(3), not  2-401(2) because no movement of goods was
  involved in delivery.  Subsection (3) provides that  "where delivery is to
  be made without moving the goods" and "the seller is to deliver a document
  of  title," then title passes when the document is delivered.  9A V.S.A. §
  2-401(3).  Courts that have  based ownership on application of 2-401(3)
  have done so where the buyer already had possession of  the vehicle prior
  to the sale and there was no movement of goods.  See, e.g., Fireman's Fund
  Ins.  Companies v. Blais, 438 N.E.2d 360, 363 (Mass. App. Ct. 1982); Grange
  Mut. Cas. Co. v. Smith,  609 N.E.2d 585, 588 (Ohio Ct. App. 1992).  In
  essence, Concord argues that 2-401(3) applies  whenever delivery is made at
  the seller's place of business because the seller 

 
 
  will not move the goods to make delivery.  Assuming, arguendo, that a motor
  vehicle certificate of  title qualifies as a "document of title"under §
  1-201(15), we disagree with Concord's broad reading of  section 2-401(3). 
  As the official comment states, "[t]he factual situations in subsections
  (2) and (3)  upon which passage of title turn actually base the test upon
  the time when the seller has finally  committed himself in regard to
  specific goods."  9A V.S.A. § 2-401 cmt. 4.  Here Automaster  identified
  the specific vehicle involved and delivered possession to Carey's employee
  who moved it  off the lot.  See 9A V.S.A. § 2-308 (unless otherwise agreed,
  place of delivery is seller's place of  business). 

       Other states have faced this same issue and have decided that
  application of 2-401(2) is the  better course.  See  Dairylea Co-op, Inc.
  v. Rossal, 473 N.E.2d 251, 256-57 (N.Y. 1984) (choosing to  apply U.C.C. §
  2-401(2) instead of 2-401(3) because 2-401(3) applies only where goods
  remain in  seller's possession); Smith v. Nationwide Mut. Ins. Co., 524 N.E.2d 507, 508-09 (Ohio 1988)  (choosing to apply U.C.C. § 2-401(2) over
  state motor vehicle title act).  Furthermore, according to  2-401(1), the
  only interest Automaster could retain in the Honda after delivery to
  Carey's employee  was limited to a security interest.  See Heinrich v.
  Titus-Will Sales, Inc., 868 P.2d 169, 177 n.7  (Wash. Ct. App. 1994)
  (interpreting U.C.C. § 2-401(1) to limit seller's rights to a security
  interest  even where parties explicitly contract that seller will retain
  title to goods delivered to buyer).  We  hold that § 2-401(2) applies.

       We agree with Acadia that the plain meaning of U.C.C. § 2-401(2)
  covers this case and  provides that title passed when Carey's employee paid
  for the vehicle and took possession of it,  irrespective of when the
  certificate of title was actually assigned to Carey's.  Because Carey's was
  the  owner of the vehicle when the accident occurred, the superior court
  correctly ruled that Concord was  responsible to cover the damages incurred
  by Carey's employee.


       Affirmed.


                                       BY THE COURT:

                                       _______________________________________
                                       Jeffrey L. Amestoy, Chief Justice

                                       _______________________________________
                                       John A. Dooley, Associate Justice

                                       _______________________________________
                                       James L. Morse, Associate Justice

                                       _______________________________________
                                       Denise R. Johnson, Associate Justice

                                       _______________________________________
                                       Marilyn S. Skoglund, Associate Justice