Scollan v. Government Employees Insurance

VAN DYKE, J.* This is an appeal from a judgment rendered in an action for declaratory relief. Defendant, Martin J. Fuerst, insured by appellant Government Employ[183]ees Insurance Co3npany, hereinafter called “Government,” sold an automobile to W. B. Seollan, Jr., and two other minors, all of them being 15 years of age. Respondent W. B. Seollan, Sr., father of Seollan, Jr., was insured by appellant Travelers Insurance Company, hereinafter called “Travelers.” The physical transfer of the vehicle was accompanied by a transfer of the duly endorsed pink certificate of ownership and the white certificate of registration. Thereafter, and within proper time, Fuerst mailed to the Department of Motor Vehicles a notice of transfer of interest, setting forth that he had sold the automobile to one of the minors, being the one who had negotiated the purchase for the group, all of whom were present. Following the sale Seollan, Jr., arranged to have the vehicle registered in his name. Four days after the sale Seollan, Jr., was driving the automobile when it was involved in a collision with an automobile driven by defendant Antelman who thereafter brought action for damages. Questions having arisen as to coverage, Seollan, Sr., and Seollan, Jr., brought this action against the carriers of the insurance, along with Antelman and Fuerst, to have the liability of the carriers judicially declared. The minors dis-affirmed the contract of sale shortly after the accident. The trial court basing its action upon the disaffirmance and what was conceived to be the legal results flowing therefrom found that at the time of the accident Fuerst was the owner of the vehicle; that Seollan, Jr., was his permittee driver,- and that primary coverage was chargeable to Government with secondary to Travelers. Government appeals and Travelers also appeals, stating that it does so, however, osfiy to protect its rights if the judgment should be reversed.

Disaffirmance of a contract by a minor, executed or executory, whether declared before or after majority, has the effect of a rescission. (Warner Bros. Pictures, Inc. v. Brodel, 31 Cal.2d 766 [192 P.2d 949, 3 A.L.R.2d 691].) The effect of a rescission is to void the contract db initio. (Long v. Newlin, 144 Cal.App.2d 509 [301 P.2d 271].) “When a contract is rescinded it is extinguished. ... The contract becomes a nullity; it and each of its terms and provisions cease to be subsisting or enforceable against the other party. • • • Upon the rescission and after the notice and offer to restore, the law supplies a promise of repayment by the party against whom the contract is rescinded.” (12 Cal. Jur.2d, Contracts, § 206.) The foregoing is familiar law. It is conceded here that Government’s policy affords no protection