Detroit Dealer Wins Lawsuit Based On Car Title

By Catherine C. Worthington September 13, 2022

It would make sense to think that the party whose name is on a car's certificate of title is the car's owner, but that's not always what state law provides. In a recent case, a court was asked to decide whether a dealership was the owner of a car that was being driven by an uninsured buyer and was involved in an accident before the dealership had filed with the state the application to transfer title to the buyers. Let's see what happened.

On December 4, 2018, Monifa Rogers and Margaret Humphrey went to a car dealership, University Auto Repair, Inc., and bought a car together. They took possession of the car that same day. University Auto, Rogers, and Humphrey signed an application for title on January 2, 2019. On February 13, 2019, the application for title was filed with the Michigan Secretary of State, and a certificate of title was issued to Rogers and Humphrey the next day.

On January 7, 2019, Rogers was involved in a car accident with Zakariya Alhariri, who was seriously injured. Rogers was uninsured at the time of the accident. Alhariri sued Rogers, University Auto, and Fremont Insurance Company, Alhariri's insurance carrier. University Auto moved for summary judgment, arguing that it could not be liable as the "owner" of the vehicle at the time of the accident under Michigan's owner's liability statute, Michigan Compiled Laws § 257.401, because it had transferred the vehicle's title to Rogers and Humphrey five days before the accident occurred. The trial court granted University Auto's motion, and Alhariri appealed.

The Court of Appeals of Michigan affirmed the trial court's decision in favor of University Auto. MCL § 257.401(1) provides that the "owner of a motor vehicle is liable for an injury caused by the negligent operation of the motor vehicle." Under MCL § 257.37(b), the term "owner" includes "a person who holds legal title of a vehicle." MCL § 257.233(9) provides: "Upon the delivery of a motor vehicle and the transfer, sale, or assignment of the title or interest in a motor vehicle by a person, including a dealer, the effective date of the transfer of title or interest in the vehicle is the date of signature on either the application for title or the assignment of the certificate of title by the purchaser, transferee, or assignee." Therefore, legal title is transferred upon: (1) the delivery of the vehicle, and (2) the signing of the application for title. In 2007, the Michigan Supreme Court held that mailing or delivery of the application for title to the Secretary of State is not necessary to transfer title. Accordingly, the appellate court found that title transferred to Rogers and Humphrey on January 2, 2019, when they signed the application for title, despite the fact that the application had not been filed with the Secretary of State when the accident occurred. Therefore, University Auto was not the owner of the vehicle at the time of the accident and could not be held liable.

Keep in mind that this case was based on Michigan law, and state laws on the transfer of title vary. For example, some states have laws requiring proof of insurance before delivering possession of a vehicle and would deem the dealership the owner of the vehicle if it failed to require the buyer to provide proof of proper insurance. Make sure you are knowledgeable about the titling laws in your state and comply with them when transferring title to a vehicle.

 

Catherine C. Worthington is a Managing Editor at CounselorLibrary.com

 

©CounselorLibrary.com 2020, all rights reserved. Based on an article from Spot Delivery. Single print publication rights only to Used Car News."

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Last modified on Tuesday, 13 September 2022 13:18