Present:   All the Justices

ALLSTATE INSURANCE COMPANY

v.   Record No. 992352

ATLANTA CASUALTY COMPANY
                                         OPINION BY
                              JUSTICE LAWRENCE L. KOONTZ, JR.
                                        June 9, 2000
NATIONWIDE MUTUAL INSURANCE COMPANY

v.   Record No. 992354

ATLANTA CASUALTY COMPANY, ET AL.


           FROM THE CIRCUIT COURT OF THE CITY OF NORFOLK
                    William F. Rutherford, Judge


      These appeals, which we have consolidated, involve a

dispute among three insurance companies concerning the potential

coverage of their respective motor vehicle liability and

uninsured/underinsured motorist insurance policies.   The

dispositive issue is whether, and to whom, ownership of a

particular automobile was transferred as the result of the owner

endorsing the certificate of title for that vehicle but leaving

the name of the transferee blank. 1




      1
      For this reason, it is unnecessary to relate in detail the
specific policy provisions of the insurance policies involved.
It is sufficient to simply note that these provisions are those
standard in the motor vehicle insurance industry.
                            BACKGROUND

     The parties do not dispute the principal facts.    Shannon

Scarborough (Scarborough) was at one time the owner of a 1982

Buick Regal automobile (the Buick).    The Buick had been

purchased for her by Lawrence Ferrell (Ferrell’s father), the

father of her boyfriend Sean P. Ferrell (Ferrell).   Scarborough

was living in the Ferrell household at the time.    Ferrell’s

father had the Buick titled in Scarborough’s name.   In December,

1996, Nationwide Mutual Insurance Company (Nationwide) issued a

motor vehicle liability insurance policy to Scarborough on the

Buick.

     According to Ferrell’s father, although the Buick was

purchased for Scarborough to drive “back and forth to work,” he

intended “to give the car to both Shannon and to [his] son.”

The Buick was “available for both of them to drive,” but was

titled in Scarborough’s name alone because his son’s driving

record would have resulted in a higher insurance rate for the

vehicle had it been titled in his son’s name.   Ferrell and

Scarborough each had a set of keys for the Buick, and Ferrell

drove the Buick “pretty much” whenever he wanted.

     In January 1997, Scarborough planned to move to Georgia to

live with her father.   Ferrell’s father “told her we were going

to sell [the Buick] and since it was in her name she’d have to

sign the title.”   Scarborough thought that “[t]he car didn’t

                                   2
belong to me . . . and once [I’d] gone [to Georgia] I’d go ahead

and sign the title over to [Ferrell’s father].”   While Ferrell’s

father “was out of town,” Ferrell and Scarborough “got into an

argument, and she signed [the certificate of title]” leaving it

and the Buick with Ferrell and moved to her sister’s house.

Regarding the circumstances of Scarborough’s signing the

certificate of title, according to Ferrell “[s]he said that she

was leaving and I asked her if she would sign the title over to

me because a friend of mine, . . . wanted to buy the [Buick].”

     Scarborough signed her name and entered the date on the

certificate of title.   However, she did not complete the

assignment of title by filling in the name of the intended

transferee in the space provided for that purpose on the

certificate.   Scarborough understood that she was not to receive

any money from the transfer of ownership of the Buick. 2

     After Scarborough signed the certificate of title to the

Buick and left the vehicle with him, Ferrell “[u]sed [the Buick]

when [he] needed to” without “ask[ing] anybody’s permission to

drive the car.”   According to Ferrell, his father had a set of

keys only to “move [the Buick] in our yard.”   Ferrell made



     2
      Although the certificate of title was not produced as an
exhibit at trial, it is undisputed that the space for entering
the transferee’s name remained blank at all times relevant to
these appeals.

                                   3
premium payments to Nationwide on Scarborough’s insurance policy

because “she didn’t want me to get caught driving [the Buick]

without insurance.”    Ferrell also “purchased a city sticker,

inspection sticker and paid the personal property tax and

everything in February so that it would still be legal.”

     On March 28, 1997, Ferrell, while operating the Buick, was

involved in an accident with a motor vehicle occupied by Steve

Vitek and Martha Vitek, resulting in alleged personal injuries

to the Viteks.   At that time, Ferrell was the named insured

under a motor vehicle liability insurance policy issued to him

by Atlanta Casualty Company (Atlanta Casualty) on his 1979

Plymouth Volare.   At that same time Allstate Insurance Company

(Allstate) was the issuer of an automobile liability insurance

policy, including uninsured/underinsured motorist coverage, on

the Viteks’ vehicle.   Martha Vitek filed a lawsuit against

Ferrell, alleging that he negligently caused the accident and

her injuries.    During the pendency of that lawsuit and in

anticipation of a potential lawsuit by Steve Vitek, Atlanta

Casualty filed a declaratory judgment suit against Ferrell, the

Viteks, Nationwide, and Allstate.   Atlanta Casualty sought a

declaration that it was not required to provide a defense to

Ferrell or to provide coverage for any liability he might incur

as a result of the accident.   Atlanta Casualty asserted that the

Buick was owned by Scarborough at the time of the accident and

                                    4
was not a qualified “non-owned vehicle or substitute vehicle

within the confines of the declaration of [Ferrell’s] policy”

with Atlanta Casualty.

     Thereafter, Nationwide filed its grounds of defense,

denying that Scarborough was the owner of the Buick at the time

of the accident.   Allstate filed an “answer,” asserting that it

should be dismissed from the proceedings because the motion for

declaratory judgment made no claim for relief against it.

     Following a hearing at which evidence in accord with the

above-recounted facts was received ore tenus by the chancellor,

the parties presented their respective positions to the

chancellor in oral argument supplemented by trial and letter

briefs.   In summary, Atlanta Casualty contended that the

attempted transfer of ownership of the Buick by Scarborough had

failed because no transferee’s name was entered on the

certificate of title.    Thus, because the Buick was a non-owned

vehicle regularly furnished for Ferrell’s use, it was subject to

an exclusion in his insurance policy with Atlanta Casualty, and

primary coverage rested with Nationwide as the insurer of the

Buick under Scarborough’s policy.   Nationwide contended that the

transfer of ownership was effective and, thus, that the Buick

was no longer owned by Scarborough, its named insured.    Allstate

maintained that regardless of whether the transfer of ownership

had been effective, the Buick qualified as a “non-owned vehicle”

                                    5
subject to coverage under Ferrell’s policy with Atlanta

Casualty.

     By letter opinion dated May 7, 1999 and subsequently

incorporated by reference in the final order, the chancellor

ruled that “the Buick . . . was owned at the time [of the

accident] by Shannon Scarborough.   She had failed to correctly

and fully endorse the title certificate.   Scarborough’s ‘gift’

of the car failed because of an unspecified donee.”

Accordingly, the chancellor ruled that Nationwide is responsible

for defending and indemnifying Ferrell for any and all claims

and lawsuits arising out of the March 28, 1997, motor vehicle

accident involving Ferrell and the Viteks.   The chancellor

further ruled that “the Atlanta [Casualty] policy has no

coverage in this case since the car was owned by Scarborough and

Ferrell was not using the Buick as a ‘temporary substitute

vehicle.’ ”

     Prior to the entry of the final order, Allstate sought

reconsideration by the chancellor of the issue whether coverage

under Atlanta Casualty’s policy was not also available.

Allstate asserted that the ineffective attempt to transfer

ownership of the Buick did not amount to permission by

Scarborough for regular use of the vehicle by Ferrell and, thus,

that his policy with Atlanta Casualty would afford coverage for

his casual use of the Buick.

                                    6
     In a final order dated July 13, 1999, the chancellor denied

Allstate’s motion to reconsider and entered judgment for Atlanta

Casualty in accord with the rulings of his May 7, 1999 letter

opinion.   We awarded appeals to both Nationwide and Allstate.

                             DISCUSSION

     The focus on the determination of the ownership of the

Buick by the parties here and in the trial court is for the

obvious reason that “[t]here is no insurance separate and

distinct from the ownership of the car.”    Nationwide Insurance

Company v. Cole, 203 Va. 337, 341, 124 S.E.2d 203, 206 (1962)

(citation omitted).    Accordingly, in its appeal, Nationwide

contends that the chancellor erred in ruling that Scarborough

remained the owner of the Buick after she signed the certificate

of title and surrendered possession and control of the vehicle.

Allstate contends that regardless of whether the transfer of

ownership was effective, Ferrell’s use of the Buick was only

casual and not expressly with the owner’s permission and, thus,

was not subject to the exclusion in his policy relied upon by

Atlanta Casualty.   As will become clear, we need address only

the first of these two issues regarding the ownership of the

Buick.

     In order to complete the sale of a motor vehicle, it is

essential that the owner deliver to the transferee a proper

assignment of title.    Thomas v. Mullin, 153 Va. 383, 391, 149

                                    7
S.E.2d 494, 497 (1929).    Code § 46.2-628 governs the manner in

which a proper assignment of title is made and provides, in

pertinent part, that “[t]he owner of a motor vehicle . . . when

transferring or assigning his title . . . shall fully and

correctly endorse the assignment and warranty of title on the

certificate of title of the motor vehicle . . . to its purchaser

. . . and shall deliver the certificate to the purchaser or

transferee at the time of delivering the motor vehicle.” 3

     However, Code § 46.2-630 further provides that “[t]he

transferee shall write his name and address in ink on the

certificate of title and . . . shall within thirty days forward

the certificate to the Department with an application for the

registration of the motor vehicle . . . and for a certificate of

title.” 4   (Emphasis added.)   Accordingly, it is the



     3
      Code § 46.2-629 also requires the owner to enter the
vehicle’s odometer reading on the certificate of title at the
time of transfer. Failure by an owner to comply with Code
§ 46.2-629 can result in criminal liability and can prohibit the
transferee from obtaining a new certificate of title. The
certificate of title to the Buick was not produced as an exhibit
at trial and the record is silent as to whether the odometer
reading was recorded thereon. However, as the issue was not
raised before the chancellor, we do not consider it on appeal.
Rule 5:25.
     4
      Code § 46.2-631 provides an express exception to the
requirement of Code § 46.2-630 for a transferee who is “a dealer
who holds [the vehicle] for resale and operates it only for
sales purposes under a dealer's license plate.” Similarly, a
dealer or other person may receive an unendorsed title along
with the transferor’s “power of attorney . . . for the purpose
                                     8
responsibility of the transferee, not the owner, to enter on the

received certificate of title the name in which the new

certificate of title will be issued.    Common experience tells us

that the purchaser or transferee of a motor vehicle often will

desire to have the vehicle titled, either jointly or separately,

in the name of another.   Indeed, that is what occurred in this

case when Ferrell’s father purchased the Buick and had it titled

in Scarborough’s name.    Thus, Scarborough’s failure to complete

the assignment of title by entering the name of the transferee

on the certificate of title does not, per se, defeat the

transfer of her ownership of the Buick.   Accordingly, we must

look to the specific circumstances in this case to determine if,

and to whom, Scarborough’s ownership of the Buick was

transferred.

     In order to effect a transfer of the ownership of a motor

vehicle, two things are required: (1) the owner must actually

deliver the endorsed certificate of title to the transferee, and

(2) the owner must deliver possession of the vehicle to the

transferee.    See Nationwide Insurance Company v. Storm, 200 Va.

526, 528-29, 106 S.E.2d 588, 589-90 (1959)(holding that delivery




of assigning the transferor’s interest.” Code § 46.2-629.
Accordingly, we emphasize that the views expressed in this
opinion do not apply to transfers of motor vehicles to dealers
or to the delivery of an unendorsed certificate of title to an
attorney-in-fact.
                                    9
of possession of vehicle without delivery of certificate of

title did not transfer ownership even though full payment had

been received).    Although Scarborough testified that the Buick

“didn’t belong to” her, the record is clear that she was the

sole owner of the Buick, as evidenced by the certificate of

title, even though Ferrell’s father had actually purchased the

car and “intended to give the car to both [her] and to [his]

son.”    Accordingly, only Scarborough could transfer ownership of

the Buick.    Therefore, the subsequent desire of Ferrell’s father

to have the Buick sold and Scarborough’s acquiescence at the

time he told her “she’d have to sign the title” are not

relevant.

        It is clear on this record that following an argument with

Ferrell, Scarborough desired to leave the Ferrell household and

Ferrell “had her sign the title.”    Scarborough knowingly signed

and dated the certificate of title as the owner of the Buick,

delivered the certificate of title to Ferrell, and left the

Buick in his sole possession and control.    In doing so,

Scarborough’s signature constituted the required owner’s

endorsement under Code § 46.2-628.    Her delivery of the

certificate of title to Ferrell so endorsed at the time she also

left the Buick with Ferrell satisfied the further requirements

of that statute.    Accordingly, Scarborough effected a transfer

of ownership of the Buick to Ferrell.     Thereafter, it was

                                     10
Ferrell’s responsibility under Code § 46.2-630 to complete the

blank space designed for the transferee on the certificate of

title.

       The evidence in the record supports the further conclusion

that Ferrell fully understood that ownership of the Buick had

transferred to him.   Ferrell thereafter treated the Buick as his

own.   He drove the Buick whenever he needed to and without

seeking permission to do so.   Ferrell also paid property taxes

and a local licensing fee on the Buick, had the vehicle

inspected as required by law, and paid the inspection fee.    He

also attempted to maintain insurance on the vehicle by paying

premiums on Scarborough’s insurance policy.   It is true that he

failed to apply for a new certificate of title within the time

period required by law; however, while this might subject him to

criminal liability, the failure to apply for a new certificate

of title does not void the transfer of ownership of a motor

vehicle.

                             CONCLUSION

       For these reasons, we hold that the chancellor erred in

ruling that Scarborough remained the owner of the Buick because

her “‘gift’ of the car failed because of an unspecified donee.”

Thus, we will reverse the chancellor’s determination that

Nationwide has a duty to defend Ferrell and provide coverage for

any liability he might incur as a result of the accident.

                                    11
Ferrell’s ownership of the Buick moots any inquiry into

Allstate’s contention that the “non-owned vehicle” coverage in

Ferrell’s insurance policy with Atlanta Casualty would apply.

Because the chancellor did not consider whether Atlanta Casualty

would have a duty to defend Ferrell and provide liability

coverage under his insurance policy if he were the owner of the

Buick, we will remand the case for further proceedings

consistent with the views expressed in this opinion.

                                           Reversed and remanded.




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