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AYRES v. AMERICAN MUTUAL INSURANCE COMPANY (11/13/63)

November 13, 1963

AYRES
v.
AMERICAN MUTUAL INSURANCE COMPANY, INC., APPELLANT.



Appeal, No. 64, Oct. T., 1963, from judgment of Court of Common Pleas No. 5 of Philadelphia County, Dec. T., 1961, No. 2631, in case of Horace Ayres v. American Mutual Insurance Company, Inc. Judgment affirmed; second reargument refused.

COUNSEL

Sheldon Tabb, for appellant.

Herbert L. Olivieri, with him Martin B. Pitkow, and Olivieri & Pitkow, for appellee.

Before Rhodes, P.j., Ervin, Wright, Woodside, Watkins, Montgomery, and Flood, JJ.

Author: Montgomery

[ 203 Pa. Super. Page 253]

OPINION BY MONTGOMERY, J.

Viewing the evidence in a light favorable to the plaintiff and giving him the benefit of all reasonable inferences therefrom, as we are required to do since he is the holder of the decision, the facts may be stated as follows. In May of 1960 plaintiff-appellee purchased a truck in used condition for $4,000 from F. W. Emmett, Sr. and thereafter improved and equipped it to the extent of $1,800 to $2,000. On May 26, 1960 appellee secured a loan of $4,310.59, for the purpose of buying a truck, through the personal credit department of the Fidelity-Philadelphia Trust Company

[ 203 Pa. Super. Page 254]

    on a note signed by himself and his wife. At that time or thereafter he delivered to the bank the titles to two trucks, one of which now concerns us, under two security agreements which are not in evidence. The bank marked on the titles the word "Encumbrance", and according to the testimony of the bank's assistant manager this was done "For the sole purpose so that he would not be able to borrow any money from any other establishment for the truck" (R. 113a). The bank expressly waived insurance on the truck by stamping "Insurance Waived" on the folder. This was done "... because of the good credit record of Mr. Ayres and also the equity he has in his property, and there is no need to have anything to hold any more security on" (R. 114a). Had it been a loan based upon the purchase of an automobile the bank would have insisted on insurance and held it. The bank is claiming no interest in the proceeds of this policy and did not register any encumbrance with the Pennsylvania Bureau of Motor Vehicles or have the certification of any encumbrance noted by the bureau on the titles.

The issuance of the policy was admitted by defendant, and it does contain an exclusionary clause against encumbrances. However, since we are led to the conclusion that no encumbrance existed, we need not review the other facts involving the waiver of such provision by defendant. Whether an encumbrance did or did not exist was for the trial judge since in the absence of the security agreement previously referred to the evidence was entirely oral. However, we have previously ruled on a similar situation in Zaffuto v. Northern Ins. Co. of N.Y., 109 Pa. Superior Ct. 376, 167 Atl. 298, wherein we held that unpaid purchase money on the sale of a car is not a lien or mortgage within a similar provision of a policy which must be construed most strongly against the insurer. The

[ 203 Pa. Super. Page 255]

    fact that the certificate of title may denominate such unpaid purchase money an "encumbrance" does not make it so, if, in fact, the sale is a straight one on credit. The same reasoning applies here. If Judge REIMEL found the loan to be a personal one, the bank having held the two titles merely to prevent the debtors from becoming indebted to someone else, and claiming no right to the trucks or the proceeds of insurance on them, which is a reasonable inference to be taken from his decision, then this appellant, in the position of having the policy construed most strongly against it, cannot successfully contend that the loan was such as was covered by its exclusionary clause.

Appellant's position in the present case is weaker than the Zaffuto case, supra. Therein the encumbrance was noted on the certificate of title by the Highway Department in accordance with statutory regulations. In the present case The Vehicle Code procedure was not followed, the bank merely writing the word "Encumbrance" on the title. Consequently, there was not lien established in the bank's favor in the manner set forth in Mellon National Bank & Trust Company v. Cabin, 177 Pa. Superior Ct. 417, 110 A.2d 888, viz., having a lien noted ...


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