Court Opinion

ID: 9769836
Source: CourtListenerOpinion
Date Created: 2023-08-29 15:03:03.356722+00
Date Added: 2024-06-11T07:31:08.466611
License: Public Domain

STUMBO, Justice,
dissenting.
The issue involves the question of when title to a motor vehicle passes from seller to buyer for the purposes of liability insurance coverage. The transaction was from a dealer to an individual. The Nantz and Smith cases arose from the same automobile accident.
Lexington Lincoln-Mercury-Subaru sold a 1982 Chevrolet to Delbert Roberts, d/b/a Roberts Used Cars, and provided Roberts with the title, a registration receipt, and a vehicle transaction record (VTR). Roberts, a licensed dealer who was not required to obtain a certificate of title because he held the car less than 15 days, as provided by KRS 186A.220(1), sold the car to Roger Simpson. Although Roberts provided Simpson with the appropriately endorsed certificate of title, a VTR, and a license receipt, Simpson did not file these documents with the county clerk. Nine months later, Simpson, who had never obtained insurance for the vehicle, was involved in a collision with a car owned by Daniel Smith, driven by Jimmy Smith, and occupied by Patricia Nantz. The Smiths and Nantz filed separate lawsuits against Roberts and his insurer and Lexington Lineoln-Mer-cury-Subaru and its insurer, claiming title never passed to Simpson. The circuit court granted a summary judgment in favor of the defendants. The Court of Appeals determined that the uninsured Simpson was the owner. This Court granted discretionary review.
Jimmy and Daniel Smith argue that the result reached by the Court of Appeals permits an uninsured buyer to defeat the public policy of the Commonwealth of Kentucky by merely failing or refusing to have the title transferred. The Smiths urge this Court to find a duty on the part of the seller to require titling of the vehicle prior to relinquishing possession of the automobile.
As noted by the majority, Nantz contends that the result in this case is in conflict with this Court’s decision in Potts v. Draper, Ky., 864 S.W.2d 896 (1993).
The public policy, as established by the legislature and expressed in Potts, supra, was to keep uninsured drivers off the highways of Kentucky. Potts stated that the statutes of Kentucky are clear and unambiguous that the owner of a motor vehicle is the titleholder in the absence of a valid conditional sale. Id. at 898.
In Potts, the dealer failed to transfer title to the van even after the transfer of possession of the vehicle, presumably in order to facilitate a future repossession in the event of a default in the payments. The dealer filed the VTR to effect transfer one week after the accident. Id. In Nantz and Smith, the dealer gave the necessary documents to the buyer, but took no steps to see that the buyer actually presented the paperwork to the county clerk. Consequently, the uninsured buyer was able to operate the vehicle on the *41highways of Kentucky for nine months before the accident occurred.
This Court recognizes that the legislature amended some of the pertinent statutes in 1994 in an attempt to alleviate some of the problems raised. However, the amendments do not resolve the question of a purchaser who ignores the requirement of the statute and fails to take the transfer documents to the county clerk so as to change the certificate of title in the automated system of the Commonwealth. The pre-1994 definition of owner applies in this case, and that definition states that in the absence of a conditional sale or lease, the “owner” is the person “who holds legal title to the vehicle.”
In Potts, this Court stated emphatically that the adoption of KRS 186A, in conjunction with the existing provisions of Chapter 186, had the effect of changing the law of Kentucky from an equitable title state to a certificate of title state for the purposes of determining ownership of the motor vehicle for liability insurance requirements. Id. at 900. Therefore, in the instant case, Simpson, who had only possession of the automobile, was not the owner of the vehicle because legal title had not been properly transferred to him. In accordance with the decision in Potts, I would hold that either Lexington Lincoln-Mercury-Subaru, or Delbert Roberts, d/b/a Roberts Used Cars, was the owner of the vehicle for liability insurance purposes.
We noted in Mitchell v. Kentucky Farm Bureau Mut. Ins. Co., Ky., 927 S.W.2d 343 (1996), that the public policy of Kentucky has been expressed by the legislature and confirmed by this Court to the effect that all vehicles on the public roadways must be covered by liability insurance. See also KRS 304.39-010; Potts, supra; Beacon Ins. Co. of America v. State Farm Mut. Ins. Co., Ky., 795 S.W.2d 62 (1990); Rees v. United States Fidelity & Guar. Co., Ky.App., 715 S.W.2d 904 (1986).
Lexington Lincoln-Mercury-Subaru follows the Court of Appeals’ rationale that any relief or explanation of this system must come from the Kentucky General Assembly. They rely on the fact that Roberts paid cash to Lexington Lincoln-Mercury-Subaru and received the title for the vehicle, an endorsed registration receipt, and a VTR, as well as accepted possession of the vehicle. Both Lexington Lincoln-Mercury-Subaru and Roberts are licensed automobile dealers in Kentucky. Lexington Lincoln-Mercury-Subaru had taken the vehicle in question more than fifteen days before selling it to Roberts. Lexington Lineoln-Mercury-Subaru maintains that once they sold the car to Roberts they had nothing to do with the vehicle thereafter. Roberts sold the used car at retail for cash to Simpson within two weeks after having acquired it from Lexington Lincoln-Mercury-Subaru. Hartford Accident & Indem. Co. v. Maddix, Ky.App., 842 S.W.2d 871 (1992), held that the transfer requirements in a dealer-to-dealer transaction did not require actual transfer of title to make the purchasing dealer responsible for liability insurance coverage on the vehicle. Id. at 872.
It would appear that KRS 186A.220 required, at the time of this transaction, that the purchaser for use shall take the documents to the courthouse and title the vehicle in his name. Even after the 1994 amendments to that statute, the duty remains with the purchaser unless he authorizes a dealer to do this, in which event the dealer withholds delivery of the vehicle until proof of insurance is produced. In the event the purchaser does not make the proper application and obtain the appropriate certificate, the risk of insurance liability falls to the last record owner in the automated system. Obviously, it behooves the seller to make sure that the proper changes of ownership have been made of record.
We next confront a problem arising out of KRS 186A.215(4) which in part says that “[i]f it comes to the attention of a transferor that a transferee did not promptly submit the necessary document within fifteen (15) calendar days to the county clerk as required by law in order to complete the transfer transaction .... ” Once again, we should apply the same reasoning, that the documents of legal title have not been properly submitted and the risk of loss falls to the entity who has the last record title.
*42Indeed, the provision of KRS 186A.215(4) that “as required by law in order to complete the transfer transaction” has not been properly complied with. The delivery and transfer of documents of title and other indicia of ownership does not entirely satisfy the requirement of a certificate of title. The legislature has designed, and this Court has endorsed, the concept of a certificate of title. Nothing short of strict compliance with the law can be tolerated under the legislative system now in place. Kentucky is no longer an equitable title state. The reason for this change was to make sure that uninsured motorists do not drive any vehicles on the highways of the state.
This decision .frustrates the intent of the legislature and rejects the prior decisions of this Court through an overly technical interpretation of the holdings. We should not change course so soon after the holding in Mitchell, supra.
LAMBERT and WINTERSHEIMER, JJ., join this dissenting opinion.