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June 9, 2000

Record No. 992352




June 9, 2000

Record No. 992354




From the Circuit Court of the City of Norfolk

William F. Rutherford, Judge

Present: All the Justices


These appeals, which we have consolidated, involve a dispute
among three insurance companies concerning the potential coverage
of their respective motor vehicle liability and
uninsured/underinsured motorist insurance policies. The
dispositive issue is whether, and to whom, ownership of a
particular automobile was transferred as the result of the owner
endorsing the certificate of title for that vehicle but leaving
the name of the transferee blank.[1]


The parties do not dispute the principal facts. Shannon
Scarborough (Scarborough) was at one time the owner of a 1982
Buick Regal automobile (the Buick). The Buick had been purchased
for her by Lawrence Ferrell (Ferrell’s father), the father
of her boyfriend Sean P. Ferrell (Ferrell). Scarborough was
living in the Ferrell household at the time. Ferrell’s
father had the Buick titled in Scarborough’s name. In
December, 1996, Nationwide Mutual Insurance Company (Nationwide)
issued a motor vehicle liability insurance policy to Scarborough
on the Buick.

According to Ferrell’s father, although the Buick was
purchased for Scarborough to drive "back and forth to
work," he intended "to give the car to both Shannon and
to [his] son." The Buick was "available for both of
them to drive," but was titled in Scarborough’s name
alone because his son’s driving record would have resulted
in a higher insurance rate for the vehicle had it been titled in
his son’s name. Ferrell and Scarborough each had a set of
keys for the Buick, and Ferrell drove the Buick "pretty
much" whenever he wanted.

In January 1997, Scarborough planned to move to Georgia to
live with her father. Ferrell’s father "told her we
were going to sell [the Buick] and since it was in her name
she’d have to sign the title." Scarborough thought that
"[t]he car didn’t belong to me . . . and once
[I’d] gone [to Georgia] I’d go ahead and sign the title
over to [Ferrell’s father]." While Ferrell’s
father "was out of town," Ferrell and Scarborough
"got into an argument, and she signed [the certificate of
title]" leaving it and the Buick with Ferrell and moved to
her sister’s house. Regarding the circumstances of
Scarborough’s signing the certificate of title, according to
Ferrell "[s]he said that she was leaving and I asked her if
she would sign the title over to me because a friend of mine,
. . . wanted to buy the [Buick]."

Scarborough signed her name and entered the date on the
certificate of title. However, she did not complete the
assignment of title by filling in the name of the intended
transferee in the space provided for that purpose on the
certificate. Scarborough understood that she was not to receive
any money from the transfer of ownership of the Buick.[2]

After Scarborough signed the certificate of title to the Buick
and left the vehicle with him, Ferrell "[u]sed [the Buick] when [he] needed to" without "ask[ing] anybody’s
permission to drive the car." According to Ferrell, his
father had a set of keys only to "move [the Buick] in our
yard." Ferrell made premium payments to Nationwide on
Scarborough’s insurance policy because "she didn’t
want me to get caught driving [the Buick] without
insurance." Ferrell also "purchased a city sticker,
inspection sticker and paid the personal property tax and
everything in February so that it would still be legal."

On March 28, 1997, Ferrell, while operating the Buick, was
involved in an accident with a motor vehicle occupied by Steve
Vitek and Martha Vitek, resulting in alleged personal injuries to
the Viteks. At that time, Ferrell was the named insured under a
motor vehicle liability insurance policy issued to him by Atlanta
Casualty Company (Atlanta Casualty) on his 1979 Plymouth Volare.
At that same time Allstate Insurance Company (Allstate) was the
issuer of an automobile liability insurance policy, including
uninsured/underinsured motorist coverage, on the Viteks’
vehicle. Martha Vitek filed a lawsuit against Ferrell, alleging
that he negligently caused the accident and her injuries. During
the pendency of that lawsuit and in anticipation of a potential
lawsuit by Steve Vitek, Atlanta Casualty filed a declaratory
judgment suit against Ferrell, the Viteks, Nationwide, and
Allstate. Atlanta Casualty sought a declaration that it was not
required to provide a defense to Ferrell or to provide coverage
for any liability he might incur as a result of the accident.
Atlanta Casualty asserted that the Buick was owned by Scarborough
at the time of the accident and was not a qualified
"non-owned vehicle or substitute vehicle within the confines
of the declaration of [Ferrell’s] policy" with Atlanta

Thereafter, Nationwide filed its grounds of defense, denying
that Scarborough was the owner of the Buick at the time of the
accident. Allstate filed an "answer," asserting that it
should be dismissed from the proceedings because the motion for
declaratory judgment made no claim for relief against it.

Following a hearing at which evidence in accord with the
above-recounted facts was received ore tenus by the
chancellor, the parties presented their respective positions to
the chancellor in oral argument supplemented by trial and letter
briefs. In summary, Atlanta Casualty contended that the attempted
transfer of ownership of the Buick by Scarborough had failed
because no transferee’s name was entered on the certificate
of title. Thus, because the Buick was a non-owned vehicle
regularly furnished for Ferrell’s use, it was subject to an
exclusion in his insurance policy with Atlanta Casualty, and
primary coverage rested with Nationwide as the insurer of the
Buick under Scarborough’s policy. Nationwide contended that
the transfer of ownership was effective and, thus, that the Buick
was no longer owned by Scarborough, its named insured. Allstate
maintained that regardless of whether the transfer of ownership
had been effective, the Buick qualified as a "non-owned
vehicle" subject to coverage under Ferrell’s policy
with Atlanta Casualty.

By letter opinion dated May 7, 1999 and subsequently
incorporated by reference in the final order, the chancellor
ruled that "the Buick . . . was owned at the time
[of the accident] by Shannon Scarborough. She had failed to
correctly and fully endorse the title certificate.
Scarborough’s ‘gift’ of the car failed because of
an unspecified donee." Accordingly, the chancellor ruled
that Nationwide is responsible for defending and indemnifying
Ferrell for any and all claims and lawsuits arising out of the
March 28, 1997, motor vehicle accident involving Ferrell and the
Viteks. The chancellor further ruled that "the Atlanta
[Casualty] policy has no coverage in this case since the car was
owned by Scarborough and Ferrell was not using the Buick as a
‘temporary substitute vehicle.’ "

Prior to the entry of the final order, Allstate sought
reconsideration by the chancellor of the issue whether coverage
under Atlanta Casualty’s policy was not also available.
Allstate asserted that the ineffective attempt to transfer
ownership of the Buick did not amount to permission by
Scarborough for regular use of the vehicle by Ferrell and, thus,
that his policy with Atlanta Casualty would afford coverage for
his casual use of the Buick.

In a final order dated July 13, 1999, the chancellor denied
Allstate’s motion to reconsider and entered judgment for
Atlanta Casualty in accord with the rulings of his May 7, 1999
letter opinion. We awarded appeals to both Nationwide and


The focus on the determination of the ownership of the Buick
by the parties here and in the trial court is for the obvious
reason that "[t]here is no insurance separate and distinct
from the ownership of the car." Nationwide Insurance
Company v. Cole
, 203 Va. 337, 341, 124 S.E.2d 203, 206 (1962)
(citation omitted). Accordingly, in its appeal, Nationwide
contends that the chancellor erred in ruling that Scarborough
remained the owner of the Buick after she signed the certificate
of title and surrendered possession and control of the vehicle.
Allstate contends that regardless of whether the transfer of
ownership was effective, Ferrell’s use of the Buick was only
casual and not expressly with the owner’s permission and,
thus, was not subject to the exclusion in his policy relied upon
by Atlanta Casualty. As will become clear, we need address only
the first of these two issues regarding the ownership of the

In order to complete the sale of a motor vehicle, it is
essential that the owner deliver to the transferee a proper
assignment of title. Thomas v. Mullin, 153 Va. 383, 391,
149 S.E.2d 494, 497 (1929). Code ? 46.2-628 governs the
manner in which a proper assignment of title is made and
provides, in pertinent part, that "[t]he owner of a motor
vehicle . . . when transferring or assigning his title
. . . shall fully and correctly endorse the assignment
and warranty of title on the certificate of title of the motor
vehicle . . . to its purchaser . . . and
shall deliver the certificate to the purchaser or transferee at
the time of delivering the motor vehicle."[3]

However, Code ? 46.2-630 further provides that "[t]he
shall write his name and address in ink on the
certificate of title and . . . shall within thirty days
forward the certificate to the Department with an application for
the registration of the motor vehicle . . . and for a
certificate of title."[4] (Emphasis added.) Accordingly,
it is the responsibility of the transferee, not the owner, to
enter on the received certificate of title the name in which the
new certificate of title will be issued. Common experience tells
us that the purchaser or transferee of a motor vehicle often will
desire to have the vehicle titled, either jointly or separately,
in the name of another. Indeed, that is what occurred in this
case when Ferrell’s father purchased the Buick and had it
titled in Scarborough’s name. Thus, Scarborough’s
failure to complete the assignment of title by entering the name
of the transferee on the certificate of title does not, per se,
defeat the transfer of her ownership of the Buick. Accordingly,
we must look to the specific circumstances in this case to
determine if, and to whom, Scarborough’s ownership of the
Buick was transferred.

In order to effect a transfer of the ownership of a motor
vehicle, two things are required: (1) the owner must actually
deliver the endorsed certificate of title to the transferee, and
(2) the owner must deliver possession of the vehicle to the
transferee. See Nationwide Insurance Company v. Storm,
200 Va. 526, 528-29, 106 S.E.2d 588, 589-90 (1959)(holding that
delivery of possession of vehicle without delivery of certificate
of title did not transfer ownership even though full payment had
been received). Although Scarborough testified that the Buick
"didn’t belong to" her, the record is clear that
she was the sole owner of the Buick, as evidenced by the
certificate of title, even though Ferrell’s father had
actually purchased the car and "intended to give the car to
both [her] and to [his] son." Accordingly, only Scarborough
could transfer ownership of the Buick. Therefore, the subsequent
desire of Ferrell’s father to have the Buick sold and
Scarborough’s acquiescence at the time he told her
"she’d have to sign the title" are not relevant.

It is clear on this record that following an argument with
Ferrell, Scarborough desired to leave the Ferrell household and
Ferrell "had her sign the title." Scarborough knowingly
signed and dated the certificate of title as the owner of the
Buick, delivered the certificate of title to Ferrell, and left
the Buick in his sole possession and control. In doing so,
Scarborough’s signature constituted the required
owner’s endorsement under Code ? 46.2-628. Her
delivery of the certificate of title to Ferrell so endorsed at
the time she also left the Buick with Ferrell satisfied the
further requirements of that statute. Accordingly, Scarborough
effected a transfer of ownership of the Buick to Ferrell.
Thereafter, it was Ferrell’s responsibility under Code
? 46.2-630 to complete the blank space designed for the
transferee on the certificate of title.

The evidence in the record supports the further conclusion
that Ferrell fully understood that ownership of the Buick had
transferred to him. Ferrell thereafter treated the Buick as his
own. He drove the Buick whenever he needed to and without seeking
permission to do so. Ferrell also paid property taxes and a local
licensing fee on the Buick, had the vehicle inspected as required
by law, and paid the inspection fee. He also attempted to
maintain insurance on the vehicle by paying premiums on
Scarborough’s insurance policy. It is true that he failed to
apply for a new certificate of title within the time period
required by law; however, while this might subject him to
criminal liability, the failure to apply for a new certificate of
title does not void the transfer of ownership of a motor vehicle.


For these reasons, we hold that the chancellor erred in ruling
that Scarborough remained the owner of the Buick because her
"‘gift’ of the car failed because of an
unspecified donee." Thus, we will reverse the
chancellor’s determination that Nationwide has a duty to
defend Ferrell and provide coverage for any liability he might
incur as a result of the accident. Ferrell’s ownership of
the Buick moots any inquiry into Allstate’s contention that
the "non-owned vehicle" coverage in Ferrell’s
insurance policy with Atlanta Casualty would apply. Because the
chancellor did not consider whether Atlanta Casualty would have a
duty to defend Ferrell and provide liability coverage under his
insurance policy if he were the owner of the Buick, we will
remand the case for further proceedings consistent with the views
expressed in this opinion.

Reversed and remanded.


[1] For this reason, it is
unnecessary to relate in detail the specific policy provisions of
the insurance policies involved. It is sufficient to simply note
that these provisions are those standard in the motor vehicle
insurance industry.

[2] Although the certificate of
title was not produced as an exhibit at trial, it is undisputed
that the space for entering the transferee’s name remained
blank at all times relevant to these appeals.

[3] Code ? 46.2-629 also
requires the owner to enter the vehicle’s odometer reading
on the certificate of title at the time of transfer. Failure by
an owner to comply with Code ? 46.2-629 can result in
criminal liability and can prohibit the transferee from obtaining
a new certificate of title. The certificate of title to the Buick
was not produced as an exhibit at trial and the record is silent
as to whether the odometer reading was recorded thereon. However,
as the issue was not raised before the chancellor, we do not
consider it on appeal. Rule 5:25.

[4] Code ? 46.2-631 provides
an express exception to the requirement of Code ? 46.2-630
for a transferee who is "a dealer who holds [the vehicle] for resale and operates it only for sales purposes under a
dealer’s license plate." Similarly, a dealer or other person
may receive an unendorsed title along with the transferor’s
"power of attorney . . . for the purpose of assigning the
transferor’s interest." Code ? 46.2-629.
Accordingly, we emphasize that the views expressed in this
opinion do not apply to transfers of motor vehicles to dealers or
to the delivery of an unendorsed certificate of title to an