The opinion of the court was delivered by: GRIM
This case, tried to the court without a jury, is a diversity action upon a policy of automobile liability insurance issued by defendant to Warren Witmer on his automobile. While the car was being operated by plaintiff, Thomas Semple, it struck and injured Don P. Brown, the intervening plaintiff. Brown got a $ 22,260 verdict against Semple in the Court of Common Pleas of Delaware County, Pennsylvania. The present action is for the amount of the verdict. Defendant refused to defend Semple in the Pennsylvania action and contends that its policy did not cover Semple at the time of the accident.
Witmer, who owned the car, agreed after some negotiations to sell it to Semple. Some days later, late at night, when the car was standing parked at Semple's place of employment, Semple paid Witmer the balance of the purchase price. At that time Witmer turned over to Semple the keys to the car and the Pennsylvania certificate of title, bearing Witmer's signature at the appropriate place. They agreed to appear some hours later (in the daytime) before a notary public for Semple to swear to the assignment of the certificate of title.
Witmer then departed, leaving the car at Semple's place of employment. Before the next day dawned, Semple drove the car and injured Brown. Since all these facts occurred in Pennsylvania and since the policy was delivered there, Pennsylvania law applies. Diversity arises from defendant's Illinois citizenship.
The automobile liability policy issued by defendant in this case contained the following provisions:
(Definitions) 'Named Insured -- means the individual so designated in the declarations * * *.' (Warren Witmer)
'Insured -- * * * the unqualified word 'insured' includes (1) the named insured, and also includes * * * (3) any other person while using the automobile, provided the actual use of the automobile is with the permission of the named insured. * * *'
(Policy Conditions) '6. Assignment. No interest in this policy is assignable unless the company's consent is endorsed hereon.' There is no endorsement of consent.
It is clear that since Witmer did not take the affidavit to the assignment of the title certificate prior to the happening of the accident, there was a failure, in this particular at least, to comply with the formalities required by the Pennsylvania Vehicle Code for transfer of the certificate of title. With respect to the significance of the certificate of title under that statute, the Pennsylvania Supreme Court said in Majors v. Majors, 349 Pa. 334, 338, 37 A.2d 528, 529 (1944):
The Braham case, in speaking of an earlier similar statute, said:
'It is clear that the primary purpose of the Act * * * was to protect the public against the theft of automobiles and their resale by the thief, and to facilitate the recovery of stolen automobiles. It was a police measure. * * *'
It appears from these holdings that in Pennsylvania a certificate of title does not constitute more than some evidence of ownership. Witmer's failure to take the affidavit to the assignment of the certificate did not operate to prevent actual transfer of ownership of the car. The car was a chattel, and the buyer and seller took all the steps necessary under § 2-401(2) of the Uniform Commercial Code, 12A P.S. § 2-401(2), to transfer ownership of the car to the buyer, Semple. This section provides:
'(2) Unless otherwise explicitly agreed title passes to the buyer at the time and place at which the seller completes his performance with reference to the physical delivery of the goods * * *.'
In this case the car ('the goods') was left at Semple's place of employment at a time when Semple was at that place, and at that time Witmer turned the keys over to him. This constituted physical delivery of the goods, and under § 2-401(2) title then passed to Semple. Even though the delivery of the keys might be considered a symbolic delivery, as in livery of seisen, they placed in Semple the power to operate the car.
At the time of the accident, therefore, the car was Semple's and not Witmer's. When Witmer transferred ownership to the car he also gave permission to Semple to drive it, but by parting with ownership Witmer divested himself of the power to determine who had permission to drive it. His power to give such permission was then no more than the power of any stranger to give permission. For this reason the 'permission' provision of the policy could not come into ...