INA v. Bazylak, 68 N.Y.2d 633 (1986)
When ownership of a vehicle is transferred, the seller’s insurance company is generally not liable for accidents involving the vehicle after the transfer, even if the seller fails to remove the license plates, especially if the insurance coverage has already been transferred to a different vehicle.
Summary
This case addresses whether an insurance company (INA) remained liable for an accident involving a vehicle after its owner, Primavara, sold it to Bazylak. Primavara had already transferred his insurance coverage from the sold Chevrolet to a newly purchased Ford before the sale. The Court of Appeals held that INA was not liable. The court reasoned that the statutory obligation to remove the license plates rested on the seller, Primavara, not INA. Moreover, the policy had been transferred to the Ford, meaning imposing liability on INA would effectively mean insuring two vehicles when the policy only covered one.
Facts
On or about August 31, 1978, Primavara arranged for his insurance carrier, INA, to transfer his liability coverage from his 1956 Chevrolet to a Ford he had recently purchased.
Before October 1, 1978, Primavara obtained new license plates for the Ford.
On or about October 20, 1978, Primavara sold the Chevrolet to Bazylak, transferring ownership by signing over the registration stub in exchange for the purchase price. No certificate of title was required due to the vehicle’s age.
On December 10, 1978, the Chevrolet, now owned by Bazylak, was involved in an accident.
At the time of the accident, INA insured the Ford, not the Chevrolet.
Procedural History
The case originated from a dispute over insurance coverage following the accident on December 10, 1978.
The lower courts likely ruled on the issue of INA’s liability before the case reached the Court of Appeals.
The Court of Appeals reviewed the order of the Appellate Division and affirmed it in favor of Bazylak.
Issue(s)
Whether INA, Primavara’s insurance carrier, was liable for an accident involving the Chevrolet after Primavara had sold the vehicle to Bazylak and transferred his insurance coverage to another vehicle (the Ford).
Holding
Yes, the certified question should be answered in the affirmative, INA is not liable because Primavara transferred his insurance coverage to another vehicle before selling the Chevrolet, and the statutory obligation to remove the license plates rested on the seller, not the insurance company.
Court’s Reasoning
The Court relied on the language of Vehicle and Traffic Law § 420(1), which states that upon the transfer of ownership of a vehicle, its registration expires, and the seller must remove the number plates.
The Court emphasized that the obligation to remove the plates was placed on the seller, Primavara, not on his insurance carrier, INA. The court cited Phoenix Ins. Co. v. Guthiel, 2 N.Y.2d 584 to differentiate situations where an insurer unsuccessfully sought to avoid coverage despite a simple transfer from one owner to another for the same vehicle. In this case, the policy was transferred to a different vehicle entirely. The court reasoned that imposing liability on INA would be akin to imposing coverage on two vehicles when INA only undertook to insure one. The court stated that “the statutory obligation to do so, as indicated, was placed on “the seller”, here Primavara, and not on his liability carrier. Concordantly, even if we assume that he did not remove the plates, though this might estop him from asserting that he in fact had divested himself of ownership, such a consequence should not be visited on his carrier”. The Court found that the controlling fact was the transfer of coverage to the Ford, concluding that INA was only obligated to insure a single vehicle and had fulfilled that obligation by insuring the Ford at the time of the accident. The failure to remove the plates, while potentially creating an estoppel issue against Primavara, did not extend liability to INA.