Plaintiffs Philip Friedman and Elaine R. Friedman, his wife, bring this action against the defendant insurance carriers seeking damages by reason of defendants refusing to compensate plaintiffs for theft of a motor vehicle insured by defendants. Defendants deny liability, asserting with respect to the vehicle that plaintiffs did not have legal ownership, had no insurable interest and had not obtained a proper certificate of title. Plaintiffs have now moved for summary judgment.
Plaintiff Philip Friedman purchased the motor vehicle in New York City in the Spring of 1972 from a private person, previously a stranger, who had become known to him from a newspaper advertisement listing the vehicle for sale. As a consequence of negotiations between Friedman
and the seller it was agreed that Friedman would purchase it for $6200, to be paid in cash. Subsequently, on or about June 15, 1972, the sale was completed with the seller delivering to Friedman the vehicle as well as a bill of sale and New York State registration certificate. The following day Friedman registered the car in New Jersey. Application was simultaneously made for a New Jersey certificate of title. In response to plaintiff's request their insurance agent immediately included the vehicle on their existing automobile policy with defendants. On August 10, 1972 the car was stolen while parked on a street in Brooklyn. After the theft plaintiffs were advised by the Division of Motor Vehicles of New Jersey that a New Jersey title certificate would not be issued as it was suspected that the New York registration had been fraudulent. The certificate has never been issued. But no person has ever come forward to claim that plaintiffs had unlawfully even in a civil way acquired his property.
Plaintiffs argue that under Savarese v. Hartford Fire Ins. Co. , 99 N.J.L. 435 (E. & A. 1924), they are entitled to summary judgment. In Savarese a bona fide purchaser of a stolen vehicle was held entitled to recover on a theft policy when the vehicle was in turn stolen from him. The Court of Errors and Appeals held that the purchaser had good title against everyone except the rightful owner and consequently had an insurable interest in the vehicle. Plaintiffs argue that their position as owners of a vehicle with perhaps a fraudulent instrument in their chain of title should be no less favorable than the owner of the stolen vehicle in Savarese. But defendants, citing Norris v. Allstate Ins. Co. , 34 N.J. 437 (1961); Merchants Indemnity Corp. v. Eggleston , 68 N.J. Super. 235 (App. Div. 1961), aff'd 37 N.J. 114 (1962); Eggerding v. Bicknell , 20 N.J. 106 (1955), and Velkers v. Glen Falls Ins. Co. , 93 N.J. Super. 501 (Ch. Div. 1967), aff'd 98 N.J. Super. 166 (App. Div. 1967), urge that total compliance with the title certificate
requirements of N.J.S.A. 39:10-1 (hereinafter called "the act") is prerequisite to recovery and that since plaintiffs have never had the certificate of ownership required by N.J.S.A. 39:10-6 they are barred. Particular reference is made by defendants to the interpretation of Eggerding v. Bicknell, supra , by the court in Velkers v. Glens Falls Ins. Co., supra , as follows:
Eggerding is authority for the proposition that in order to effectively transfer title to a motor vehicle for insurance purposes, there must be strict compliance with the statutory directions. Whether or not an insured is the "owner" of a motor vehicle depends on whether the statutory prerequisites relating to the transfer of title have been satisfied. [93 N.J. Super. at 516]
Defendants further note that the policy by its terms applies only to a vehicle "ownership of which is acquired by the named insured during the policy period." It is contended that ownership contemplates a transfer to the insured in compliance with the act. Defendants further argue that the circumstances under which plaintiffs obtained the vehicle preclude the court from determining that there is no dispute of fact as to whether plaintiffs were bona fide purchasers of the vehicle.
Though the language of the opinions cited lends support to defendants' position with respect to strict enforcement of the act this court believes them distinguishable and not declaratory of the rule for this case. In Eggerding v. Bicknell, supra , the court held that a car dealer who had collected the full consideration for the sale of a car was still the owner so that its vendee, who had obtained possession of the car though not complying with the transfer provisions of the act, was protected by the dealer's liability insurance policy. Norris v. Allstate Ins. Co., supra , ruled that on the record presented a second automobile acquired by an insured qualified for automatic insurance coverage on an existing policy. In Merchants Indemnity Corp. v. Eggleston, supra , the Appellate Division held that a person in whose name a vehicle
was registered even though not paying the consideration could be considered the owner for insurance purposes so that the person paying the actual consideration and driving with the registered owner's consent would be covered by a policy listing the titled owner as owner. In Velkers v. Glens Falls Ins. Co., supra , the court held that a person who had traded in a car to a motor vehicle dealer remained the owner of the car pending compliance with the act. The effect of the decision was that the operator of the car, the son of the transferor who borrowed it back from the dealer, had liability coverage from the transferor's carrier, Indemnity Insurance Company of North America, notwithstanding the valid disclaimer by the dealer's carrier, General Accident, Fire & Life Insurance Corporation, Ltd., for lack of notice. Additionally, the driver had obtained his own coverage from Glens Falls ...