Auto Procurement, Inc. v. Westgate California Insurance

Opinion

DEVINE, J.*

A portion of section 4157 of the Vehicle Code must be interpreted for the first time on this appeal. That section reads as follows:

[861]“In the absence of the regularly required supporting evidence of ownership upon application for registration or transfer of a vehicle, the department may accept an undertaking or bond which shall be conditioned to protect the department and all officers and employees thereof and any subsequent purchaser of the vehicle, any person acquiring a lien or security interest thereon, or the successor in interest of such purchaser or person against any loss or damage on account of any defect in or undisclosed claim upon the right, title, and interest of the applicant or other person in and to the vehicle.” The question is whether the words “any subsequent purchaser” mean one who buys the vehicle following favorable action on registration and transfer by the Department of Motor Vehicles (DMV), or any person who buys the vehicle following the issuance of the undertaking or bond.

The Facts

On January 26, 1973, Donna Neptune offered to sell a 1971 Chevrolet station wagon to respondent Auto Procurement, Inc. This establishment specialized in purchases of out-of-state cars, having found them highly profitable, and its advertisements were directed toward such purchases. Mrs. Neptune produced a registration card from Alabama, but the owner of Auto Procurement, Mr. O’Donnell, found this insufficient to protect him as a dealer. Mrs. Neptune told him that she had bought the vehicle from a private party, the bill of sale had been lost, and that the private party was not available for execution of another bill of sale. (A bill of sale written on scratch paper was produced at the DMV. It was dated Jan. 10, 1973, from a William Messer of Mobile, Alabama.) Mr. O’Donnell brought the vehicle to the department which checked the vehicle identification number physically with the registration certificate. Mr. O’Donnell then telephoned to Alabama and ascertained that the registration was in order and examined papers which convinced him that Mrs. Neptune was who she said she was. This was the extent of his investigation.

On the same day, Mr. O’Donnell and Mrs. Neptune visited a broker who accepted a premium for a foreign vehicle ownership bond. A premium of $53.40 was paid. The bond was applied for because of demand by the department under section 4307 of the Vehicle Code which reads as follows: “In the event application is made in this State for registration of a vehicle and the department is not satisfied as to the ownership of the vehicle or the existence of foreign liens thereon, then the department may register the vehicle and issue a registration card of a