Opinion ID: 457834
Heading Depth: 1
Heading Rank: 1

Heading: appeal of occidental

Text: 1 Occidental Fire and Casualty Company of North Carolina (Occidental) brought this declaratory judgment action in federal court on the basis of diversity jurisdiction to determine its duty to defend and indemnify Joseph L. Brocious for an accident that occurred on August 15, 1983 when the tractor-trailer that Brocious was operating struck and killed Christopher S. Gonzalez, a 15-year old, while he was riding his bicycle. 1 2 The tractor-trailer was the subject of a conditional sales agreement between Brocious, the buyer, and William B. Tobias, the seller, dated August 25, 1982. 2 This agreement provided that Tobias agrees to sell and convey to [Brocious] who ... agrees to purchase the tractor-trailer subject to certain conditions. One of the specified conditions was that Tobias would retain the title until the full purchase price of $14,000, payable in monthly installments of $500 each, had been paid. Another was that Brocious was responsible for all maintenance and insurance for the tractor-trailer. The agreement did not expressly provide which party would retain possession during the pay out, but no one disputes that, in fact, Brocious had possession of the vehicle during that period. 3 Pursuant to his obligations under the agreement and under the Pennsylvania No-Fault Motor Vehicle Insurance Act mandating omnibus liability insurance coverage, 40 Pa.Cons.Stat.Ann. Sec. 1009.104(a) (Purdon Supp.1975) (repealed 1984), Brocious contacted an insurance broker. Brocious provided the broker with complete and accurate information as to the conditional sales agreement. After a series of intermediate steps through another broker and then to Occidental's agent and home office, Occidental issued a policy covering the tractor-trailer which listed Tobias, the title owner, as the named insured, and named Brocious in the section identifying all possible drivers. 4 Following discovery, Occidental moved for summary judgment on the ground, inter alia, that Brocious was not a person insured under the omnibus clause of the policy. 3 That clause covers any other person using an owned automobile ... with the permission of the named insured. An owned automobile was defined as an automobile which is owned by the named insured.... Occidental maintained in the district court, as it does here, that as a result of the sales agreement, Brocious, not Tobias, owned the tractor-trailer and therefore Brocious was not driving a vehicle owned by the named insured with the named insured's permission. 5 The district court denied Occidental's motion, holding that Brocious was insured under the policy and that Occidental was obligated to indemnify and defend Brocious on the claim made against him by Gonzalez' estate. After the court subsequently determined the respective obligations of Occidental and another insurer who intervened, to be discussed infra, both insurers appealed.
6 In arguing that Brocious was not an insured under the terms of its policy, Occidental maintains that Brocious, not Tobias, was the owner of the tractor-trailer. It is undisputed, however, that the certificate of title and registration of the vehicle with the appropriate Pennsylvania authorities were in the name of Tobias. Albeit not conclusive, this is some indicia of ownership, see Semple v. State Farm Mutual Automobile Insurance Co., 215 F.Supp. 645, 647 (E.D.Pa.1963). 7 The Pennsylvania Vehicle Code defines owner as: 8 A person, other than a lienholder, having the property right in or title to a vehicle. The term includes a person entitled to the use and possession of a vehicle subject to a security interest in another person, but excludes a lessee under a lease not intended as security. 9 75 Pa.Cons.Stat.Ann. Sec. 102 (Purdon 1977). Significantly, the statute had included conditional vendees in its earlier versions, but was amended in 1976, inter alia, to delete the reference to conditional vendee. 4 Although we can find no legislative history regarding this change, we cannot assume that the state legislature deleted the reference to conditional vendees without any purpose. 10 Occidental argues, however, that Tobias should be regarded as a lienholder, defined in the statute as a person holding a security interest in a vehicle. 75 Pa.Cons.Stat.Ann. Sec. 102 (Purdon 1977). A security interest is an interest in a vehicle reserved or created by agreement which secures payment.... Id. Sec. 102. However, Tobias did not follow the procedure provided by the Vehicle Code to create a security interest in vehicles. 5 It is clear from both Brocious' and Tobias' depositions that the parties understood that Tobias was not retaining title as a security interest but instead that he would remain the owner until the final payment was made. App. at 35, 363. 11 The parties' intent is the most important factor in the determination of ownership of a vehicle that is the subject of a conditional sales agreement. Hahn v. Andrews, 370 Pa. 65, 67, 87 A.2d 284, 285 (1952). Thus, this case is similar to Benton v. State Farm Mutual Automobile Insurance Co., 306 F.2d 179, 180-81 (6th Cir.1962), in which the court held that the title owner, who had agreed to sell and give the buyer possession but retained title pending receipt of a substantial amount of the purchase price, still owned the vehicle for insurance purposes. 12 Occidental relies on Witkofski v. Daniels, 329 Pa. 452, 198 A. 19 (1938), as support for its position that Brocious was the owner. We find the situation in this case distinguishable. In Witkofski, plaintiff, who was injured while a passenger in an automobile driven by Henry Daniels, sought to recover on an insurance policy issued to the title owner, Charles Daniels, Henry's brother. That policy, originally covering a 1931 car, was later changed by endorsement to cover a 1934 car. Unknown to the insurance company, the 1934 car, which was involved in the accident, was rented to Henry who used Charles' 1931 car as a downpayment and undertook to pay the additional amount due in monthly installments. The Court held that the insurance policy was invalidated because the named insured, Charles, failed to follow the requirement of the policy to notify the insurance company both that he owned the new car, which was encumbered, in a different manner than he had owned the old car, which was fully paid, and of an assignment of interest or change in the legal status. 13 At the time of the Witkofski case, the Pennsylvania Motor Vehicle Code, 1929 Pa.Laws 909 (current version at 75 Pa.Cons.Stat.Ann. Sec. 102 (Purdon 1977)) included a conditional vendee like Henry in the definition of owner. As noted above, the current Vehicle Code no longer includes conditional vendees in its definition of owner. Moreover, in the case before us, there was no misrepresentation, change of circumstances, or failure to disclose a relationship that arose after acquisition of the policy. Although Occidental maintains that had it known of the conditional sales agreement, it would have evaluated Brocious, not Tobias, it is undisputed that Brocious fully informed the independent broker/agent with whom he dealt. Since Occidental has chosen to issue policies initiated in this way, it cannot complain if the information provided by Brocious was not passed on to it. 14 It is difficult to imagine what additional steps Brocious could have taken to acquire a valid policy. Occidental has not suggested that it would not have issued a policy naming Brocious as owner. Since it was concededly on notice that Brocious would be a driver of the car, its risk was not increased by construing Brocious as an insured under the policy. In view of the fact that Occidental received premiums from Brocious for the policy, which was renewed after the first year for an additional year, we believe it is unlikely that Pennsylvania, which reads any uncertainties created by policy language against the insurer, see, e.g., Motley v. State Farm Mutual Insurance Company, 502 Pa. 335, 340, 466 A.2d 609, 611 (1983), would hold that there was no policy covering Brocious during this period. We conclude that the district court correctly found that Brocious was insured under the Occidental policy.