Howell v. Connecticut Fire Insurance

This suit was begun in the justice court on a policy of insurance for $200 which had been taken out to cover the loss by fire on a Chevrolet car. The case reached the circuit court on appeal and there a judgment was rendered for the defendant, from which an appeal is brought to this court.

The sole question to be determined here is, did the plaintiff have an insurable interest in the automobile at the time the policy was issued and at the time of the fire? If it be determined that he had, then the plaintiff should recover, and if he had no insurable interest then the judgment of the trial court must be affirmed.

The facts of the case are: On December 22, 1922, one S.G. Robertson was the owner of the automobile which is the subject of the insurance. He had paid the premium for a $200 policy of insurance to defendant's agent but the policy had not been delivered. On December 22, 1922, Robertson sold the automobile to the plaintiff and the policy, instead of being issued to Robertson, was made directly to the purchaser of the car, the plaintiff. On December 22nd, Robertson delivered to the plaintiff the policy sued on, the certificate of title which had been issued to him by the Secretary of State, a bill of sale which gave the purchaser and seller's name and address, set forth the consideration paid for the car, and described the car in the exact words and figures as it is described in the face of the State certificate, covenanted that it was free from encumbrance and that he had a legal right to dispose of same, and contained a warranty to defend the title against all claimants. The bill of sale was signed by S.G. Robertson; it was not acknowledged. On the 23nd day of December, 1922, the car burned, and after some negotiation with the insurance adjuster, liability was denied on the ground that the seller, S.G. Robertson, and the purchaser, J.P. Howell, had not conformed to the requirements of the law as set forth in the chapter on motor vehicles, found on page 76, Session Acts 1921, extra session, and particularly that portion of the law which relates to the transfer of cars and the certificates of title, found on page 90, which provides, among other things: "In the event of a sale or transfer of ownership of a motor vehicle or trailer for which a certificate of ownership has been issued, the holder of such certificate shall endorse on the same an assignment thereof, with warranty of title in form printed thereon, and prescribed by the commissioner, with a statement of all liens or encumbrances on said motor vehicle or trailer, and deliver the same to the buyer at the time of the delivery to him of said motor vehicle or trailer." Then follows the requirements of the buyer to present the certificate to the commissioner, pay $1, who shall, if everything is in proper form, issue a new certificate. The act also provides that the commissioner shall retain the old certificate as a record in his office, properly indexing the same, making it possible to trace the ownership of the motor vehicle described in the certificate.

It is further provided: "Four months after this law takes effect and thereafter, it shall be unlawful for any person to buy or sell in this State, any motor vehicle or trailer registered under the laws of this State, unless, at the time of the delivery thereof, there shall pass between the parties such certificate of ownership with an assignment thereof, as herein provided, and the sale of any motor vehicle or trailer registered under the laws of this State, without the assignment of such certificate of ownership, shall be fraudulent and void." The law further provides that "the commissioner shall determine the form in which application for such certificate of ownership and the assignment shall be made, in case forms differing from those used for individuals are, in his judgment, reasonably required."

The Act also provides penalties for various offenses, and contains the following blanket provision which would cover a failure to properly comply with the law in reference to the assignment of motor cars: "Any person who violates any of the other provisions of this act shall, upon conviction thereof, be punished by a fine of not less than five dollars ($5) or more than five hundred ($500) or by imprisonment in the county jail for a term not exceeding two years, or by both such fine and imprisonment."

The form which the commissioner prescribed for assignments, and which is written on the back of each certificate of title issued by his office, is as follows:

"Assignment of Title." "For value received I hereby sell, assign or transfer unto ____ (Name of Purchaser) (Address) ____, Missouri, the motor vehicle described on the reverse side of this Certificate, and I hereby warrant the title to said motor vehicle and certify that at the time of delivery the same is subject to the following liens or encumbrances, and none other:

Amount ____. Kind ____. Date ____. Favor of ____.

Signed, ____________ Assignor."

Following this assignment of title is a form for the assignor to acknowledge the execution of the assignment before a Notary Public. The point in this case upon which the defendant seeks to evade liability is that this blank form of assignment on the certificate of title was not signed by Robertson, the assignor, nor was it acknowledged at the time the sale of the car was made, at the time the insurance was written, and at the time of the fire. Respondent therefore points to the law which by its expressed terms requires that an assignment be executed in the form prescribed by the commissioner, and further provides that a failure to comply with this law renders the transaction "unlawful," "fraudulent and void," and a provision setting forth the penalty for such failure. The theory being that the law not having been complied with, with reference to the sale of motor vehicles, the sale from Robertson to plaintiff was unlawful, fraudulent and void, and that therefore the consideration for the purported sale being unlawful the transaction between the parties, as they undertook to carry out the sale, vested no title or interest whatever to the car in the plaintiff, and having no interest or title he could have no insurance.

It is admitted that the plaintiff must have an insurable interest in order to recover on an insurance policy, but it is contended by the plaintiff that what was done in the acquisition of this car by him was a substantial compliance with the law, which vested title to the car in him and therefore gave him an insurable interest in it. On the other hand, the defendant contending that the failure on the part of the parties to comply with the statute renders the transaction unlawful, fraudulent and void, and therefore plaintiff acquired no interest or title by reason thereof to the car which was burned.

The law as settled in Missouri seems to be that a disregard or a violation of positive law cannot be a consideration for a valid contract and that such contracts will not be enforced in our courts, and this whether the act which is forbidden either at common law or by statutory law is malum in se or merely malumprohibitum. The following cases we think sustain the above statement of law: Downing v. Ringer, 7 Mo. 585; Pulitzer v. McNichols, 170 Mo. App. 709, 153 S.W. 562; Tri-State Am. Co. v. Forest Park H. Am. Co., 192 Mo. 404, 90 S.W. 1020; O'Bannon v. Widick, 198 S.W. 432, written by this court, adopted by the Supreme Court in 220 S.W. 583; Tandy v. Elmore-Cooper Com. Co., 113 Mo. App. 409, 87 S.W. 614; Haggerty v. St. Louis I. S. Co., 143 Mo. 238, 44 S.W. 1114; Kitchen v. Greenbaum, 61 Mo. 110.

With the exception of penalties provided merely as fiscal expedients or revenue excise regulations, the courts of Missouri have declared that contracts, the performance of which is a violation of law, are void, even though there is no express declaration in the statute declaring such transactions void. The Missouri cases on this subject are reviewed in an exhaustive opinion by WARRINGTON, Circuit Judge, in Reichardt v. Hill, 236 F. 817. We must, therefore, hold that if the parties to this transaction violated the Missouri law with reference to the sale of this automobile, then under the Missouri authorities the sale to the plaintiff was a nullity and void and he acquired no insurable interest in the car because if his failure to follow the regulations was a substantial violation of this law, such is declared in the act itself as "fraudulent and void" and subject to a fine or penalty.

As a reading of the Missouri cases will show, we have not followed the rule which has been followed in the United States Supreme Court and Federal Courts and in a number of States, which is that unless the act forbidden in expressed terms declares contracts void, the mere fixing of a penalty will not render the contract void. That line of cases holds that where the Legislature having merely fixed a punishment or penalty for the forbidden act, it is not within the province of the courts to go farther and add an additional penalty by mere implication, that is the additional penalty of declaring contracts void. A notable case holding along this line is that of Harris v. Runnels, by the Supreme Court of the United States, 13 Law Ed. 901. It will further be noted that in the last paragraph of that opinion it is shown that had there been a declaration in the statute declaring contracts in contravention of it as void, the decision would have been otherwise. We in the instant case have such declaration in the statute, "fraudulent and void." This question is discussed at length by SANBORN, C.J., in the case of Dunlap v. Mercer, 156 F. 545, and it will be found on page 557 in that opinion that he there calls attention to the fact that the statute there had not prescribed that contracts entered into in violation of the statute had been in expressed terms declared void. [See, also, Biggs v. Reliance Life Ins. Co., 195 S.W. 174; Lane v. Henry, 141 P. 365.]

Of course, in all of these cases holding that contracts had been rendered void unless there was an expressed declaration in the statute to that effect, the thing sought to be performed under the contract was not immoral or deleterious to the public good.

Appellant cites us to the case of Travis v. Continental Insurance Co., reported first in 32 Mo. App. 198, and again in47 Mo. App. 482, which holds that a husband has an insurable interest in personal property which had been acquired with his wife's property, although he had not complied with section 7328, Revised Statutes 1919, which provides that to reduce to possession requires the express assent of the wife to be in writing. We do not deem this case to be of any authority here because the act of the husband there was not a violation of public law, no penalty was prescribed, and it nowhere declared such a transaction to be fraudulent and void; and besides, the statute was intended to merely fix the rights between two individuals and was not a statute for the general public safeguard and welfare, such as is the motor vehicle statute we are now dealing with.

Reiterating, we may say that if the parties, both the assignor of the car and the plaintiff, the assignee, failed to comply substantially with the motor vehicle law, the transaction between them was unlawful, fraudulent and void and therefore not one that could pass title or insurable interest to the plaintiff. We are, however, of the opinion that the parties to this transaction did substantially comply with every requirement of the law. This law was passed as a general welfare safeguard to prevent the trafficking in stolen cars, and in order to prevent that evil which had become prevalent, the Legislature saw fit to require that parties dealing in motor cars comply with certain regulations. The statute is not only a statute for the general welfare but incidentally is one for the raising of revenue, and the law requires that before a transaction shall be valid in the purchase of a motor car, accompanying the delivery of the vehicle must be the title certificate issued by the Secretary of State. This was done in this case. The defendant knew that this car had been sold to plaintiff and issued its policy to him as the owner. In making this statement we are not deciding this case on the question of estoppel, as we doubt seriously whether there could be an estoppel arise out of an unlawful act. But to go farther, the form of assignment which is prescribed by the commissioner, printed on the back of the title sheet, was not signed, neither was it acknowledged. In this connection we may state that the statute calls for an assignment as shall be prescribed by the commissioner but nowhere does it specifically call for an acknowledgment. The acknowledgment in this case, as in practically all others, is merely a matter of evidence; it is evidence of the genuineness of the signature and the execution of the instrument which is to be deposited with some recording or filing officer. The acknowledgment ordinarily forms no part of the substance of the instrument or conveyance, but as stated before is merely evidence or required for the purpose of furnishing proof for the record. It does not affect the force of the instrument, and instruments which are otherwise in proper form are held valid as between the parties and title passes with such unacknowledged conveyance or instrument. [See 1 R.C.L., sees. 10 and 11, page 257; Elsea v. Smith, 273 Mo. 396, l.c. 411, 202 S.W. 1071.]

As stated by Judge THOMPSON, in the case of First Nat. Bank v. Hughes, 10 Mo. App. 7, l.c. 18: "The officer's certificate is merely the prescribed evidence of the fact. It is in the nature of a formal historical statement of a thing done." The only purpose that the acknowledgment of the assignment could have under the motor vehicle law was to evidence the genuineness of the signature of the assignor of a motor vehicle and to further evidence the execution of that instrument containing the necessary provisions, and is evidence to him not for the purpose of transferring the title because the assignment itself does that, but for the purpose of enabling him to safely issue another certificate to the assignee, because such assignee has become the owner of the motor vehicle by virtue of such assignment.

The purpose of acquiring a new certificate by the purchaser of the car is twofold. First, to evidence his ownership, to be used by him in case he resells, and second, to raise revenue for the State.

We must, therefore, hold that the failure to acknowledge the assignment does not defeat the assignment, sale or transfer of title to the purchaser. It serves the office merely of evidencing such fact to the Secretary of State who, when such evidence is produced accompanied with $1, will issue a new certificate and retain the old certificate for record in his office.

This disposes of everything except the failure of the assignor to sign the assignment of title which was printed on the back of the certificate which was delivered to the purchaser. Undoubtedly an assignment is required by the law, and the failure to give an assignment would be a violation of the law, but we do not understand that the assignment must necessarily be made on any particular paper, that is to say that the whole thing is in violation of the law unless the assignment is filled out on the printed form prescribed by the commissioner which is printed on the back of the certificate of title. It seems to us that it is perfectly apparent that any written assignment made by the person to whom the certificate was issued, setting forth the requisites as prescribed in the form on the back of the certificate of title and delivered to the assignee together with the title sheet would be sufficient to pass the title to the car. Turning to the evidence in the record we find that there was delivered with this certificate of title the following bill of sale, which of course is merely another name for an assignment:

"Bill of Sale" "This Bill of Sale, made on the 22nd day of December, A.D. 1922, by and between S.G. Robertson of Republic, Missouri, as Grantor, and J.P. Howell, of Republic, Missouri, as Grantee.

"WITNESSETH: That the said Grantor, in consideration of the sum of $374 to him paid, the receipt of which is hereby acknowledged, does hereby sell, assign, transfer, set over and deliver unto the said Grantee, the following described personal property, to-wit:

"One (1) Chevrolet Touring Car, Year 1918, Engine No. 12247, H.P. 22, Bore 3 11-16. Also, one (1) Ford Truck, Model ____ made 1918.

"TO HAVE AND TO HOLD said personal property unto said Grantee, and unto his heirs, executors, administrators and assigns forever. The said Grantor covenants that said property is free from encumbrances, none, and that he has the lawful right to sell and dispose of the same; and that he will warrant and defend the title thereto against all claimants whomsoever.

"IN WITNESS WHEREOF, I have hereunto set my hand and seal this the 22nd day of December, A.D. 1922.

(Signed) S.G. ROBERTSON."

This bill of sale describes in the same words and figures the automobile that is described in the face of the certificate of title; it gives the parties and their addresses; it states that there are no liens or encumbrances; it is duly signed. In addition to the requirement printed on the back of the certificate it gives the consideration, and in addition it warrants to defend the title. We, therefore, see that everything that would have been contained in the form prescribed by the commissioner as printed on the back of the certificate of title, and more, is contained in the bill of sale, and merely because it was not written on the same sheet of paper would not, in our opinion, render these parties guilty of violating the law or failing to comply with the necessary requirements in order to pass title. We, therefore, hold that the plaintiff in this case has substantially complied with the motor vehicle law so far as acquiring title to the car which defendant had insured. The object of the law is to prevent dealing in stolen automobiles, and the delivery of the certificate of title by the owner to the plaintiff together with the bill of sale which contained everything that the assignment prescribed by the commissioner would have contained had it been filled out, threw around the transaction the same safeguard against the evil intended to be suppressed as would have been accomplished by the blank form on the back of the certificate had it been filled out and signed instead. We therefore, hold that the plaintiff had an insurable interest in this car, and that the defendant cannot escape liability because the plaintiff had violated the motor vehicle law in respect to the purchase of the car. The judgment is reversed and the cause remanded. Cox, P.J., and Bradley, J., concur.