RELIANCE INSURANCE COMPANY, Plaintiff and Respondent, v. Gerald JAMES, Jesse Elliott, Eugene K. Skeeters, Lois Skeeters, Don E. Montgomery and Alice Montgomery, Defendants and Appellant.
The sole issue is whether Gerald James, involved in an accident in which co-defendants Skeeters and Montgomery were hurt, owned the 1954 Hudson he was driving as the term ‘owned’ is used in an automobile liability insurance policy issued to him by plaintiff Reliance Insurance Company. Skeeters and Montgomery appeal from that portion of a declaratory judgment in favor of plaintiff insurance company decreeing that it did not have to afford liability insurance protection and coverage for their claims under its policy issued to James.
The matter was submitted to the trial court on an agreed statement of fact. Plaintiff issued to James an automobile insurance policy naming therein an Oldsmobile owned by him. Thereafter, on September 20, 1961, James also became registered and legal owner of a 1954 Hudson which, on October 1, 1961, was added to and described in the policy as a covered vehicle. On January 9, 1962, James orally agreed to sell the Hudson to Elliott for $175; Elliott paid him $40 cash on account and James delivered possession to him. The next day (January 10, 162) James requested Plaintiff to delete the Hudson from the policy; at no time thereafter was the Hudson ever named or described therein.
Although James delivered possession of the Hudson to Elliott, he retained the certificate of ownership (pink slip) and the same was never delivered by him to Elliott; Elliott's name at no time ever appeared on the certificate of ownership and the automobile was never registered in Elliott's name. Neither James nor Elliott ever notified the Department of Motor Vehicles of the agreement of sale or the transfer of possession, and no application was ever made to the Department for a change of registration to Elliott.
On February, 1, 1962, while James' Oldsmobile was being repaired, Elliott let him use the Hudson; on that day while operating it James was involved in a collision in which defendants Skeeters and Montgomery were injured. They assert that James is liable. Thereafter, on February 8, 1962, the Hudson was sold to a Mrs. White at a meeting of Elliott, James, Mrs. White and her son; she paid $175 in cash to Elliott who turned it over to James. James delivered the pink slip to Mrs. White at the office of the Department of Motor Vehicles, whereupon she immediately became the registered owner of the Hudson.
The policy covered James only under the following circumstances (1) while driving an automobile described in the policy as a covered automobile (the only vehicle named therein at the time of the accident was the Oldsmobile, the Hudson having long before been deleted from the policy at James' request); or (2) while driving a temporary substitute automobile not owned by him; or (3) while driving any other automobile not owned by him. Thus, by its terms, if James owned the Hudson at the time of the accident, he was not covered under the policy.
While James had entered into an oral agreement of sale with Elliott and delivered possession of the Hudson to him, under pertinent sections of the Vehicle Code James was still the registered and legal owner of the vehicle. It is undisputed that in the transaction the parties complied with none of the mandatory requirements set up in the Code for transfer of legal and registered ownership. James at no time, as legal and registered owner of the Hudson, endorsed the reverse side of the certificate of ownership issued for the vehicle (§§ 5750, 5751), nor did either party comply with other mandatory requirements. Section 5600 provides that no title to any vehicle registered under the Code shall pass, and no attempt to transfer shall become effective, until (a) the transferor has endorsed and delivered the certificate of ownership and the registration card to the transferee, and the transferee has delivered the certificate and card to the Department with the proper transfer fee and thereby made application for a transfer of the registration; or (b) the transferor has delivered to the Department the appropriate documents for the registration or transfer of registration of the vehicle pursuant to the sale or transfer—except—an owner who has made a sale and transferred the vehicle to the purchaser shall not be deemed the owner as to subject him to civil liability for its operation thereafter by another, when the owner in addition has (a) made proper endorsement and delivery of the certificate of ownership and delivered the certificate of registration or (b) when he has delivered to the Department either the notice as requested under section 5900 or 5901 or the appropriate documents for registration of the vehicle pursuant to sale or transfer (§ 5602). The parties having complied with none of the aforesaid transfer requirements and the same being mandatory to effect transfer of legal and registered ownership, under the terms of the Vehicle Code the oral agreement was ineffective to transfer any interest in the Hudson from James to Elliott.
Appellants argue that the term ‘owner’ as used in the policy should not be given the narrow interpretation demanded by noncompliance with the registration requirements of the Vehicle Code, because failure to effect a change of registration thereunder does not necessarily determine true ownership. (McClary v. Concord Avenue Motors, 202 Cal.App.2d 564, 21 Cal.Rptr. 1.) Referring to Vehicle Code sections, the court in Traders and General Insurance Company v. Pacific Employers Insurance Company, 130 Cal.App.2d 158, 278 P.2d 493, ruled that ‘all applicable law enters into and is part of every contract by inference [12 Cal.Jur.2d 348], and this is no exception.’ (130 Cal.App.2d p. 164, 278 P.2d p. 497.) And accordingly our courts hold that, inasmuch as the applicable sections of the Vehicle Code make the seller who fails to comply with the formalities of transfer the ‘owner,’ under the same circumstances he is deemed to be the ‘owner’ for purposes of any policy of public liability insurance issued to the seller. (Harbor Insurance Company v. Paulson, 135 Cal.App.2d 22, 286 P.2d 870; Traders and General Insurance Company v. Pacific Employers Insurance Company, 130 Cal.App.2d 158, 278 P.2d 493; Truck Insurance Exchange v. Torres, 193 Cal.App.2d 483, 14 Cal.Rptr. 408; Venne v. Standard Accident Insurance Company, 171 Cal.App.2d 242, 340 P.2d 30.) As stated in Traders and General Insurance Company v. Pacific Employers Insurance Company, 130 Cal.App.2d 158, 167, 278 P.2d 493, 497 and cited in Truck Insurance Exchange v. Torres, 193 Cal.App.2d 483, 488, 14 Cal.Rptr. 408, “it would be paradoxical indeed if under these circumstances one is held to be the owner under the law but not under his insurance contract.” Thus, a seller having failed to comply with the transfer requirements of the Vehicle Code is deemed to be the ‘owner’ under the ‘omnibus' clause of a standard automobile liability insurance policy issued to him as to subject him thereunder to sole liability for its operation by another for injury to third persons, and liability to some extent under the permissive use doctrine. (Harbor Insurance Company v. Paulson, 135 Cal.App.2d 22, 286 P.2d 870; Traders and General Insurance Company v. Pacific Employers Insurance Company,130 Cal.App.2d 158, 278 P.2d 493.) Conversely then, and for consistency and equity, the term ‘owner’ should be similarly construed in other parts of the policy even though such construction may result in relieving the insurance company from liability. As pointed out by the trial court: ‘If insurance companies are to be held on the theory that an insured who fails to register an automobile transfer remains the ‘owner’ under the policy as to injured persons, then the law should work both ways, and the company should have the benefits from the theory as well as the detriments. Any other rule would have to interpret the insurance policy inconsistently. If James is an owner when his permitee is driving, he must be held an owner when he drives himself.'
Moreover, it appears from their conduct that both parties, at all times in their transaction for the Hudson, intended that its ownership be retained by James to be transferred to Elliott only upon receipt by James of the full purchase prive. (§ 1738, Civil Code.) Indicative of this intention is the failure of the parties to change the records in the Department of Motor Vehicles or to record the agreement to sell or the transfer of possession, and the failure of James to transfer any documents to Elliott; and no writing setting up their understanding was ever executed. Under these circumstances James was the owner of the Hudson under his insurance policy irrespective of noncompliance with the code sections. (Schmidt v. State Farm Mutual Auto. Ins. Company, 184 Cal.App.2d 296, 298, 8 Cal.Rptr. 179.)
Appellants also argue, citing McClary v. Concord Avenue Motors, 202 Cal.App.2d 564, 21 Cal.Rptr. 1, to the effect that there may be more than one owner of an automobile at a given time, that although the parties failed to comply with transfer requirements under the Vehicle Code, Elliott might be held to be an ‘owner’ had the Hudson been driven by someone other than James with Elliott's permission. While such an argument might establish Elliott to be an owner, it does not eliminate James as an owner, for even if ownership could be found in Elliott, James would also still be an owner both for liability purposes under the law and for insurance coverage purposes. (Truck Insurance Exchange v. Torres, 193 Cal.App.2d 483, 488, 14 Cal.Rptr. 408.)
For the foregoing reasons the judgment is affirmed.
WOOD, P. J., and FOURT, J., concur.