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MCDOWELL v. GOOD CHEVROLET-CADILLAC (09/28/59)

September 28, 1959

MCDOWELL, APPELLANT,
v.
GOOD CHEVROLET-CADILLAC, INC.



Appeal, No. 80, Jan. T., 1959, from decree of Court of Common Pleas of Blair County, No. 1679, Equity, 1954, in case of Robert F. McDowell et al. v. Good Chevrolet-Cadillac, Inc., formerly known as Good Chevrolet, Inc. Decree affirmed. Equity proceeding. Decree entered dismissing complaint, opinion by KLEPSER, P.J. Plaintiffs appealed.

COUNSEL

H. F. Dowling, with him Robert C. Haberstroh, and Dowling and Dowling, for appellants.

James W. Nelson, with him George H. Hafer, and Nelson & Campbell, and Hull, Leiby and Metzger, for appellee.

Before Jones, C.j., Bell, Musmanno, Jones, Cohen, Bok and Mcbride, JJ.

Author: Jones

[ 397 Pa. Page 238]

OPINION BY MR. JUSTICE BENJAMIN R. JONES

Appellants, fire and casualty insurance agents,*fn1 instituted an equity action in the Court of Common Pleas of Blair County to enjoin Good Chevrolet-Cadillac, Inc., a corporation engaged in the sale of motor vehicles, from selling fire and casualty insurance in connection

[ 397 Pa. Page 239]

    with sales of motor vehicles on an installment basis and receiving therefrom a commission, it being alleged that such actions constituted a violation of the anti-rebate sections of the Insurance Department Act of 1921.*fn2 After various pleadings were filed, the parties finally agreed that the matter be submitted to the court in the nature of a case stated. After the parties had stipulated as to the facts and legal arguments were presented, the court below dismissed the complaint. From that action this appeal was taken.

Appellee, a Pennsylvania corporation, holds two licenses: a license to engage in business as an installment seller of motor vehicles under the Motor Vehicle Sales Finance Act*fn3 and a license issued by the Insurance Department to act as an agent for insurance companies in the solicitation of applications for insurance policies insuring persons having an insurable interest therein against loss or damage to motor vehicles. Appellee sells motor vehicles to persons who desire to purchase motor vehicles on an installment plan basis and the financing thereof is arranged for by appellee through the General Motors Acceptance Corporation (herein called finance company). The buyer enters into a conditional sales contract with appellee, the relevant terms of which are: (1) "for the purpose of securing payment of the obligation ..., the seller reserves title, and shall have a security interest, in said property until said amount is fully paid in cash"; (2) if the "seller" - i.e., motor vehicle dealer - transfers his right in the contract, "seller" then refers to the "subsequent holder" or transferee; (3) the buyer has the option of securing his own insurance on the motor vehicle or of securing such insurance through

[ 397 Pa. Page 240]

    appellee;*fn4 (4) if appellee obtains insurance for the buyer the cost of such insurance is paid by the buyer and included in the finance charges. Upon the execution of this contract appellee then assigns its rights thereunder to the finance company which pays the appellee an amount equal to the difference between the cash selling price of the motor vehicle and the buyer's down payment; the buyer pays the amount of this difference plus the finance charges, in installments, to the finance company. If the buyer indicates that he desires that appellee arrange for the required insurance, the latter acting as agent for Motors Insurance Corporation (herein called insurance company), applies for a policy of insurance which is issued at standard rates and names the buyer and the finance company as the insureds. The finance company pays the amount of the premium to the insurance company and includes the amount thereof in the charges to be paid by the buyer. Appellee is neither named as an insured in the policy nor does it pay any part of the premium. As agent for the insurance company appellee receives and retains the usual commission paid to insurance agents on policies of physical damage insurance issued by the insurance company.

Appellants contend that when appellee receives this commission its receipt constitutes a violation of Sections 635 and 636 of the Insurance Department Act of 1921, ...


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