Case Title: State v. General Insurance Company of America

Citation: 179 N.W.2d 123

Docket Number: 8613

State: north-dakota

Court: North Dakota Supreme Court

Date: 1970-08-27T00:00:00Z

Document:
179 N.W.2d 123 (1970) STATE of North Dakota for the Use and Benefit of FIRST AMERICAN BANK AND TRUST COMPANY, Plaintiff and Respondent, v. GENERAL INSURANCE COMPANY OF AMERICA, Defendant and Appellant. Civ. No. 8613. Supreme Court of North Dakota. August 27, 1970. Pearce, Engebretson, Anderson, Schmidt & Thames, Bismarck, for defendant and appellant. Conmy, Conmy, Rosenberg & Lucas, Bismarck, for plaintiff and respondent. ERICKSTAD, Judge. General Insurance Company of America, as defendant, appeals to this court from a judgment entered in this action on the second day of August, 1969, in favor of the plaintiff, the State of North Dakota for the use and benefit of First American Bank *124 and Trust Company, in the sum of $10,024.50. The General Insurance Company of America will hereinafter be referred to as the bonding company, and the First American Bank and Trust Company will be referred to as the bank. For purposes of this appeal the parties have stipulated to the facts. The pertinent part of the stipulation reads: The pertinent part of the order referred to as Exhibit B in the stipulation of facts reads as follows: In the opinion referred to as Exhibit C in the stipulation of facts the trial court said: The latter reference relates to the trial court's disposition of the first action, wherein the bank initiated an action on the bond on its own behalf. From the trial court's memorandum opinion of May 27, 1969, we learn the court's reasoning behind its order for judgment, upon which order the judgment appealed from is based. It is the trial court's view that the persons who were unable to secure certificates of title (the purchasers of the new automobiles) because of their inability to secure certificates of origin are within the class of persons protected under the bond and Chapter 39-22, N.D.C.C., and that accordingly when, upon the order of the bankruptcy court, the bank involuntarily surrendered the certificates of origin to the purchasers it became subrogated to the rights of the purchasers. The bonding company in this appeal asserts first that the bank is not a proper claimant under Section 39-22-05, N.D.C.C., and second that it cannot prevail as a party subrogated to the rights of the purchasers. The pertinent statute is Section 39-22-05, N.D.C.C.: It is the bonding company's contention that the bond in light of that statute is intended solely for the protection of purchasers of motor vehicles and is not intended for the protection of financial institutions floor-planning automobile dealers' inventories. In support of this view it cites the following: It is to be noted, however, that in citing from American Jurisprudence 2d the bonding company omitted the crucial preliminary statement to its quotation. The full quotation from that source reads: This would indicate that a statutory bond is to be more liberally construed than a bond privately given without any qualifying laws. In any case, since our rule of statutory construction requires that our statutes be liberally construed with a view to effecting their objectives, and, as the bond in this case is a statutory bond, the bond, as well as the statute, must be liberally construed with a view to effecting its objectives. Accordingly, we do not construe the bond or Section 39-22-05, N.D.C.C., as narrowly as the bonding company would have them construed, or as narrowly as it is contended the trial court construed such bond and statute. It is our view that although the statute contemplates that purchasers are the ones to be primarily protected by the statute and the bond, they are not the only ones that may benefit from the statute and the bond called for by the statute. In the instant case it is contended that because the purchasers of the automobiles were buyers in the ordinary course of business under Section 41-09-28, Subsection 1, of the North Dakota Century Code, which is equivalent to Section 9-307, Subsection 1, of the Uniform Commercial Code, the purchasers of the automobiles acquired title to the automobiles free of the bank's security interest and that, accordingly, the bank had no right to retain the certificates of origin. In support of this position the bonding company refers us to the following quotation from Uniform Laws Annotated, Master *127 Edition, Volume 3, West, Section 9-307, at page 185, which reads: In this case there is no contention that the purchasers did not act in good faith and it is apparently conceded by the bank that the purchasers, on proper demand, were entitled to a surrender of the certificates of origin. The effect of that section of the Uniform Commercial Code upon this case, however, is in dispute. In light of the fact that there would appear to be little need for a bond if Section 39-22-05, N.D.C.C., the statute providing for the bond, were to be as narrowly construed as the bonding company would have it construed, and further in light of the fact that the Legislature could have very easily specifically restricted the benefit of the bond to purchasers had they so intended, it is our conclusion that Section 39-22-05, N.D.C.C., protects the bank in this case, notwithstanding the provisions of Section 41-09-28, Subsection 1, N.D.C.C. This holding is consistent with the liberal construction placed upon another type of statutory bond by the court recently. See Giese v. Engelhardt, 175 N.W.2d 578 (N.D.1970). Accordingly, the judgment is affirmed. PAULSON, STRUTZ and KNUDSON, JJ., concur. TEIGEN, C. J., concurs in the result.