Opinion
No. 1-015 / 00-0343.
Filed June 29, 2001.
Appeal from the Iowa District Court for Linn County, David S. Good, Judge.
Plaintiffs appeal from a district court ruling granting summary judgment in favor of defendant McGrath on their respective personal injury and consortium claims. AFFIRMED.
Michael L. Mollman of Mollman Law Office, Cedar Rapids, for appellant Gamble.
Gary Shea of Shea Law Offices, Cedar Rapids, for appellant Nelsons.
Richard A. Stefani and Thomas F. Ochs of Gray, Stefani Mitvalsky, P.L.C., Cedar Rapids, for appellees.
Considered by Huitink, P.J., and Vogel and Mahan, JJ.
I. Background Facts and Proceedings . Plaintiffs appeal a decision of the district court granting summary judgment to a car dealership on their claims arising from an automobile accident. They claim the district court erred by determining the dealership was not the owner of the automobile at the time of the accident. We affirm on appeal.
In March 1997 Troy Jones became interested in purchasing a black 1993 Mitsubishi Eclipse at McGrath Leasing, doing business as Buyer's Choice Auto (McGrath). Jones was unable to purchase the vehicle outright and needed to obtain financing. On March 13, 1997, he went to the dealership and filled out a credit application. Later the same day he was informed his credit application was approved by Triad Financial Corporation.
Jones returned to the dealership that evening where he signed a document agreeing to pay $10,295 for the vehicle, with a $1000 down payment. Jones and Patrick Ingram, McGrath's manager, signed a Motor Vehicle Purchase Agreement. In addition, Jones signed an Iowa Vehicle Retail Installment Contract-Security Agreement, Note and Disclosure Statement, Warranty Disclaimer, Odometer Disclosure Statement, Iowa Damage Disclosure Statement, Triad Agreement to Furnish Insurance, and an Iowa Department of Transportation Application for Certificate of Title and/or Registration of a Vehicle. Jones gave McGrath a $500 check postdated to March 29, 1997, drawn on the account of his girlfriend, Jennifer Risk. McGrath removed the dealer's license plate and inserted a paper license plate identifying Jones as the owner. Jones was given possession of the Eclipse.
Some of these documents were also signed by McGrath's officer manager, Amy Spangelo.
Jones returned to McGrath on Friday, March 14, 1997, and paid the remainder of his down payment as $500 cash. He informed a salesman he was unable to obtain insurance that day, but would return on Monday with proof of insurance. Proof of insurance was necessary for his financing.
On Sunday, March 16, 1997, Jones spent the day with his friends, Michael Nelson and Ivory Gamble. They decided to take a short trip in Jones's new car from Cedar Rapids to Anamosa, where they each had several drinks. On the way back to Cedar Rapids, Nelson encouraged Jones to see how fast the car could go. Jones lost control of the vehicle, and it went into the ditch. As a result of the accident Nelson was killed, and Gamble and Jones were injured.
After the accident Risk stopped payment on the postdated check. Triad was notified the vehicle had been totaled, and it did not proceed with financing the vehicle sale. McGrath obtained a default judgment against Jones for the purchase price of the vehicle.
Gamble filed suit against Jones and McGrath. Nelson's estate, his children, and wife (Nelsons), also filed suit against Jones and McGrath. Plaintiffs in both suits alleged McGrath was the owner of the Eclipse at the time of the accident and should be liable for damages under Iowa Code section 321.493 (1995 Supp.), the Iowa Owners' Responsibility Law.
Both suits also included dram shop claims against businesses where Jones, Nelson, and Gamble purchased liquor. The dram shop claims are not part of this appeal.
McGrath filed a motion for summary judgment in each suit, claiming there had been a bona fide sale of the Eclipse to Jones. Plaintiffs filed cross-motions for summary judgment, asking that McGrath be found to be the owner of the vehicle. The two cases were consolidated for consideration of the motion. The district court granted the motions for summary judgment. The court found the fact Jones made a down payment and McGrath transferred possession of the vehicle was sufficient to constitute a bona fide sale. The court found the sales agreement was a separate contract from the financing agreement, and even though Jones needed to provide some documents to Triad to complete the financing agreement, that did not invalidate the sales agreement. The court concluded McGrath was not the owner of the vehicle and was not liable for damages under section 321.493. Plaintiffs appealed.
II. Scope of Review .
We review a district court's summary judgment for errors at law. Sampson v. American Standard Ins. Co., 582 N.W.2d 146, 149 (Iowa 1998). Under Iowa Rule of Civil Procedure 237, summary judgment is appropriate only when no genuine issue of material fact exists and the moving party is entitled to judgment as a matter of law. Howell v. Merritt Co., 585 N.W.2d 278, 280 (Iowa 1998). We review the record in the light most favorable to the party opposing the motion. Ranney v. Parawax Co., 582 N.W.2d 152, 153 (Iowa 1998). The burden of showing the nonexistence of a material fact is upon the moving party. Tenney v. Atlantic Assocs., 594 N.W.2d 11, 14 (Iowa 1999).
III. Summary Judgment . Plaintiffs contend the district court erred by granting summary judgment to McGrath. They claim there had not been a bona fide sale of the vehicle because all of the conditions for the sale had not been fulfilled. They point out a portion of the down payment had been paid by a postdated check. They also point out that Jones had not obtained insurance for the vehicle and proof of insurance was necessary before Triad gave final approval for financing. They state Jones did not complete the requirements for financing and financing was necessary for the sale to be completed.
The Iowa Owners' Responsibility Law provides, "In all cases where damage is done by any motor vehicle by reason of negligence of the driver, and driven with the consent of the owner, the owner of the motor vehicle shall be liable for such damage." Iowa Code § 493(1). The section also provides:
2. A person who has made a bona fide sale or transfer of the person's right, title, or interest in or to a motor vehicle and who has delivered possession of such vehicle to the purchaser or transferee shall not be liable for any damage thereafter resulting from negligent operation of such motor vehicle by another, but the purchaser or transferee to whom possession was delivered shall be deemed the owner. The provisions of subsection 2 of section 321.45 shall not apply in determining, for the purpose of fixing liability hereunder, whether such sale or transfer was made.
Section 321.45(2) concerns the transfer of the certificate of title to a vehicle.
Generally, an automobile dealer who sells a motor vehicle under a conditional or installment sales agreement is not an owner for purposes of section 321.493. Griffith v. Farm City Ins. Co., 324 N.W.2d 327, 330 (Iowa 1982). The purpose for the exception in section 321.493(2) is to avoid the imposition of liability upon a prior owner merely for failing to effect a transfer of the title certificate to the new owner. Peterson v. Ford Motor Credit Co., 448 N.W.2d 316, 320 (Iowa 1989). Our supreme court has stated:
Iowa Code section 321.493 is clear in that a seller shall not be accountable for any damage resulting from the negligent operation of the vehicle by another, and that the purchaser shall be deemed the owner for purposes of fixing liability. This exception does not simply preclude third parties from seeking redress against the seller, it prevents the buyer from denying ownership and avoiding responsibility for his actions.
Western States Ins. Co. v. Continental Ins. Co., 602 N.W.2d 360, 363 (Iowa 1999).
There are two Iowa cases that deal with issues similar to that presented in the present case. In Hartman v. Norman, 253 Iowa 694, 698, 112 N.W.2d 374, 377 (1961), a buyer, Charles Coy, entered into a written agreement with a dealership to purchase a 1949 Ford. Coy paid a down payment and agreed to pay the remainder of the purchase price in installments. Hartman, 253 Iowa at 698, 112 N.W.2d at 377. Coy took possession of the vehicle. Id., 112 N.W.2d at 377. About one week later, Coy was involved in a collision with James Hartman, who filed suit against the dealership and Coy. Id.at 699, 112 N.W.2d at 377. In discussing section 321.493, the supreme court stated:
It is not who may owe for the purchase price or how the indebtedness is evidenced. If there was a bona fide sale and delivery of possession, the statute relieves the seller from liability for subsequent negligence of the operator.
* * *
In the case before us the uncontradicted evidence shows that defendant Coy by written instrument agreed to purchase the car in question. There was a bona fide sale. The down payment was made. Possession was delivered. Coy took and retained possession. Under the statute he was the owner for the purpose of determining liability. Under the statute defendants were not liable.Id. at 704, 112 N.W.2d at 380. The court concluded there was no issue of fact for the jury under the facts presented, and determined a directed verdict should have been entered for the dealership. Id., 112 N.W.2d at 380.
We addressed a slightly different set of facts in Desy v. Rhue, 462 N.W.2d 742 (Iowa Ct. App. 1990). In Desy, Randy Rhue was interested in buying a Jeep Wagoneer. Id. at 743. The dealership stated it would only sell him the vehicle if his father signed as a co-buyer. Id. Rhue signed a purchase agreement, but the dealership did not sign it. Id. Rhue left his old vehicle as a trade-in, and took possession of the Jeep. Id. Rhue left to obtain his father's signature on the proposed purchase agreement when he was in a collision with Dennis Desy. Id. Desy filed suit against Rhue, Rhue's father, and the dealership. Id. at 744. We stated that in order for there to be a bona fide sale under section 321.493, "a purchaser must, at a minimum, possess enforceable rights against the purported seller." Id. at 745. We concluded, "a contract should be a prerequisite to imposing liability upon appellant." Id. at 746. We determined that under the facts in Desy, there was no enforceable contract at the time of the accident and Rhue and his father were not the owners of the vehicle. Id. at 746-47.
We determine the facts in the present case are more in line with Hartman than Desy. Here, Jones and the dealership's manager signed the purchase agreement. Jones paid a down payment, although part of it was by a postdated check. Jones took possession of the vehicle. We find that on March 13, 1997, when the documents were signed, Jones had enforceable rights against the seller. Certainly McGrath had enforceable rights against Jones, as evidenced by the fact it obtained a judgment against him for the purchase price of the vehicle. Jones and McGrath had an enforceable contract, and thus there was a bona fide sale of the vehicle. Under these facts section 321.493(2) applies, and McGrath is not liable to plaintiffs for damages.
We affirm the decision of the district court granting summary judgment to McGrath.
AFFIRMED.