Opinion
No. 38092
Decided March 18, 1964.
Insurance — Automobile theft policy — "Theft" construed — No theft where repossessed by mortgagee in accordance with lien.
1. The undefined term, "theft," as used in an automobile insurance policy insuring against such contingency comprehends the willful taking of the insured's automobile by another for the latter's unauthorized use and disposition, wrongfully, without justification, and without claim or color of right.
2. There is no "theft" of an automobile within the meaning of an insurance contract, where a resident of another state, having a valid, subsisting and recorded mortgage lien thereon, summarily repossesses the same in Ohio in accordance with the conditions of such lien.
APPEAL from the Court of Appeals for Muskingum County.
This action was instituted in the Zanesville Municipal Court by Frank M. Riley against the Motorists Mutual Insurance Company, his insurer, to recover the value of his insured automobile under the "theft" clause of his automobile insurance policy. Apparently, the term, "theft," was not defined in such policy.
The basis of Riley's action is that the automobile, which he acquired under a clear Ohio certificate of title, was "stolen" by the agent of a Texas automobile dealer, which dealer held a defaulted mortgage lien of record on the automobile in the state of Texas.
Riley recovered a judgment against his insurer for approximately $1,849.
On an appeal on questions of law to the Court of Appeals, such judgment was affirmed.
A motion in this court to require the Court of Appeals to certify the record was allowed, and the cause is now here for decision on the merits.
The facts are that on April 20, 1959, the C.S. Hamilton Motor Company of Dallas, Texas, sold a 1958 model automobile to one Mitchell, who executed a promissory note and a chattel mortgage to secure the amount due, payable in installments. Such recorded mortgage gave the seller-mortgagee the right without demand to repossess the automobile upon default in payment, to sell it and to apply the proceeds on the mortgage debt. A Texas certificate of title was transferred to Mitchell, showing on its face a lien in favor of the C.S. Hamilton Motor Company in the sum of $2,136.
Mitchell paid one installment of $89, disappeared with the automobile, and defaulted as to further payments. An Alabama title to the automobile was obtained, without notation of the Texas lien. A resident of Alabama sold the automobile to one Reed of Granville, Ohio, who thereupon secured an Ohio certificate of title. There was a subsequent sale and transfer of title in Ohio, and the automobile then came into the possession of White Chevrolet of Zanesville on February 1, 1960. Riley bought the car from White on April 2, 1960, and the Ohio certificate of title issued to him showed no liens or encumbrances. In May 1960, Riley parked the car on a Zanesville street, left it, and, when he returned, it was gone. He reported its disappearance to the police, notified his insurer, Motorists Mutual, of his loss and demanded payment from it under the "theft" clause of the policy, in a sum representing the claimed value of the automobile. Such demand was refused, and the present action resulted.
At the trial in the Zanesville Municipal Court, the insurer introduced in evidence, among other exhibits, the promissory note and the recorded chattel mortgage executed by Mitchell to the C.S. Hamilton Motor Company and a certified copy of the recorded Texas certificate of title which was issued to Hamilton and transferred to Mitchell and which showed the lien in favor of Hamilton for $2,136. These exhibits, with others, are included in the bill of exceptions.
Messrs. Meyer, Johnson Kincaid, for appellee.
Messrs. Leasure Micheli, for appellant.
It is important to bear in mind that the single question for determination is whether there was a "theft" of the Riley automobile within the meaning, intent and coverage of the "theft" clause of the insurance policy, so as to entitle Riley to recover the value of the automobile from his insurer.
In the case of Toms v. Hartford Fire Ins. Co., 146 Ohio St. 39, 63 N.E.2d 909, it is said in the third paragraph of the syllabus:
"In an insurance contract insuring against the `theft' of an automobile, the term `theft' comprehends the wilful taking or appropriation of one person's automobile by another wrongfully, without justification and with the design to hold or make use of the vehicle in violation of the rights of the owner * * *." (Emphasis supplied.)
In similar vein, is the statement in 45 Corpus Juris Secundum, 952, 953, Insurance, Section 886, which reads:
"Subject to any definitions set forth in the policy, the words `theft,' `robbery,' * * * `larceny,' * * * or the like, as used in a policy of insurance as descriptive of the perils insured against, are to be given their commonly understood meanings. `Theft' has a very general meaning, and includes any wrongful deprivation of property of another, provided the taking is without claim or color of right." (Emphasis supplied.)
5 Appleman, Insurance Law and Practice, 356, Section 3211, is authority for the statement that "loss arising from a taking by a former owner under a claim of ownership has been held not covered under such a policy [theft], nor is the taking by any person acting under an honest belief that he is entitled to its possession, even though he resorts to a trick or device to obtain it."
Language of like import is found in 5 Couch, Cyclopedia of Insurance Law, 4203, Section 1176a.
It is generally recognized that when the buyer of an automobile is in default in the payment of any sum due under a conditional sales contract or a chattel mortgage and by the terms of such instruments a breach has been expressly made a ground for the retaking of the car, the seller may rightfully retake possession thereof, and such action may not be placed within the category of a theft. Such a situation comes within the rule that one is not chargeable with larceny or theft if in good faith he takes property of another, believing it to be legally his own and believing that he has a legal right to its possession. South Carolina Ins. Co. v. Jackson, 103 Ga. App. 3, 117 S.E.2d 878.
Other cases enunciate the same principle. For example, see Talasek v. Travelers Fire Ins. Co. (C.C.A. 5), 242 F.2d 748; Reece v. Motors Ins. Corp. (D.C. Okla.), 116 F. Supp., 394; Bigus v. Pacific Coast Casualty Co., 145 Mo. App., 170, 129 S.W. 982; Glens Falls Ins. Co. v. Stewart, 127 Misc. 353, 216 N.Y. Supp., 149 (affirmed, 219 App. Div. 817, 220 N.Y. Supp., 858).
In the instant case, the C.S. Hamilton Motor Company had a bona fide and recorded chattel mortgage on the automobile it sold to Mitchell. A certificate of title transferred and delivered to Mitchell in Texas bore the notation of such chattel mortgage and the amount due thereunder. Mitchell defaulted, and it may fairly be inferred from the evidence that he was a crook; that he took the automobile to Alabama and by chicanery and fraud obtained an Alabama title to the car which falsely showed it to be free and clear of encumbrance; that he thereupon sold the car to an Alabama resident, who in turn sold it to an Ohio resident; and that by succeeding transfers of title it came into Riley's possession. From the defensible standpoint of the C.S. Hamilton Motor Company, it still had a valid claim of record on the automobile, and, under the authorities cited, its action in repossessing it may not be classed as a "theft."
Both Riley and the Court of Appeals cite and rely on Kelley Kar Co. v. Finkler, 155 Ohio St. 541, 99 N.E.2d 665. However, in that case there was a court proceeding in which it was held by a divided vote of this court that under the Ohio Certificate of Title Act the holder in good faith of an Ohio certificate of title to an automobile showing no liens or encumbrances is entitled to prevail over an out-of-state holder of a subsisting conditional sales contract on the automobile who sought to regain its possession by an action in replevin. The pending case poses an entirely different problem, as pointed out in the first paragraph of this opinion.
Since its announcement, the Kelley Kar case has been recognized more in its breach than in its observance. See Peters Motors, Inc., v. Rodgers, 161 Ohio St. 480, 120 N.E.2d 80; Shaw v. Wearley Motor Co., 173 Ohio St. 185, 180 N.E.2d 823; and Atlantic Finance Co., Inc., v. Fisher, 173 Ohio St. 387, 183 N.E.2d 135, in the writer's opinion inadvisedly overruled in Commercial Credit Corp. v. Pottmeyer (this day decided), 176 Ohio St. 1.
And it was held in Automobile Finance Co. v. Munday, 137 Ohio St. 504, 30 N.E.2d 1002, that, where a certificate of title is obtained by the false representations of the applicant therefor, it is fraudulent and void ab initio, and no reliance may be placed thereon by anyone.
In summation, under the facts narrated, there was no "theft" of the motor vehicle within the terms of the insurance contract insuring against such contingency, when Hamilton, having a valid, subsisting and recorded mortgage lien on such motor vehicle and in accordance with the conditions of the lien, summarily repossessed the same in Ohio.
Ordinarily, where an insured loses his automobile by having it summarily removed from his possession, as here, a natural inclination is to protect the insured if it can be done on any tenable basis.
However, upon the controlling determination that no "theft" of the automobile in Riley's possession occurred within the coverage of his insurance policy, the judgment of the Court of Appeals is reversed and final judgment rendered for the defendant insurer.
Judgment reversed.
MATTHIAS, O'NEILL and GRIFFITH, JJ., concur.
TAFT, C.J., HERBERT and GIBSON, JJ., dissent.
In this case the plaintiff-insured has instituted an action against his insurer, the defendant, for the value of a 1958 Chevrolet automobile, which was admittedly the subject of a policy of insurance against the hazards of "theft, robbery or pilferage". The policy of insurance is not in evidence; therefore, any contractual definition of the words, "theft", "robbery" or "pilferage," is not before this court.
This court in Toms v. Hartford Fire Ins. Co. (1945), 146 Ohio St. 39, stated in the syllabus the rules governing this controversy as follows:
"1. A contract of insurance prepared and phrased by the insurer is to be construed liberally in favor of the insured and strictly against the insurer, where the meaning of the language used is doubftul, uncertain or ambiguous.
"2. Where the term `theft' is employed but not defined in an automobile insurance contract, it is to be given the usual meaning and understanding accorded it by persons in the ordinary walks of life.
"3. In an insurance contract insuring against the `theft' of an automobile, the term `theft' comprehends the wilful taking or appropriation of one person's automobile by another wrongfully, without justification and with the design to hold or make use of the vehicle in violation of the rights of the owner, and recovery by the insured for loss due to `theft' may be had where a taking or appropriation of the insured automobile * * * is shown."
Undoubtedly the insurance contract in the instant case was prepared by the insurer. The usual meaning and understanding accorded to the word, "theft," is broader in scope than the strict legal concept of "larceny". 3 Bouvier's Law Dictionary (Rawles 3d Rev.), 3267. In the absence of proof of a different contractual meaning of the term, "theft," it is assumed that the broader ordinary meaning was intended by the contracting parties. This assumption is in conformity with the pronouncement in Peterson, Admr., v. National Mutual Ins. Co., 175 Ohio St. 551, wherein Judge Zimmerman said:
"An established principle of insurance law, recognized in many decisions of this court, is that an insurance contract, in case of doubt as to the meaning and intent thereof, is to be interpreted against the insurer, the one who drew it and who is responsible for the language employed, and in favor of the insured."
Section 4505.04, Revised Code, provides in pertinent part that no Ohio court in any case at law or in equity shall recognize the right, title, claim or interest of any person in or to any motor vehicle sold or disposed of, or mortgaged or encumbered, unless evidenced by a certificate of title or by admission in the pleadings or stipulation of the parties. This court in Kelley Kar Co. v. Finkler (1951), 155 Ohio St. 541, in Brewer v. DeCant (1958), 167 Ohio St. 411, and again, within this term of court, in Commercial Credit Corp. v. Pottmeyer (this day decided), 176 Ohio St. 1, and in State, ex rel. Ohio Auto Truck Wrecking Assn., Inc., v. Mainwaring, Registrar (1964), 175 Ohio St. 497, has declared that only a person who holds an Ohio certificate of title in his own name can be recognized as having claim or interest in such motor vehicle. In the light of the legislative mandate and the well established precedents of this court, it is clear the C.S. Hamilton Motor Company which through self-help took possession of the automobile in this case could not have done so through legal action in the courts of this state. If possession of the automobile could not have been obtained through the courts of Ohio, it is difficult to see how it can be said that the automobile was taken other than wrongfully, without justification and without claim or color of right.
Obviously, the insurer should be able to and did rely upon the insured's Ohio certificate of title as establishing his title and interest in the motor vehicle when the policy of insurance was issued. The insurer should not be permitted now to deny the same evidence of the insured's title and interest in the motor vehicle.
To hold that there was no theft where the C.S. Hamilton Motor Company through self-help repossessed the automobile in Ohio under a subsisting and recorded Texas mortgage lien thereon is (1) to recognize the claim or interest of a person in or to a motor vehicle who does not hold an Ohio certificate of title, and (2) to construe the insurance contract liberally in favor of the insurer instead of the insured, all contrary to well established Ohio law.
For the above reasons, I would affirm the judgment of the Court of Appeals.
TAFT, C.J., concurs in the foregoing dissenting opinion.