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March 7, 1957


The opinion of the court was delivered by: John E. Miller, District Judge.

This action is before the Court upon plaintiff's motion for summary judgment in its favor and upon defendant's motion for summary judgment in its favor. The parties have filed briefs in support of their respective contentions, and the motions are now ready for final disposition.

The pleadings, stipulations, and depositions on file disclose the following undisputed facts:

The plaintiff is a Virginia corporation; the defendant is an Arkansas corporation, having its principal place of business in the Fayetteville Division of the Western District of Arkansas; and the amount involved, exclusive of interest and costs, exceeds the sum of $3,000.

Prior to August, 1954, B.A. Meshell owned several trucks, including a 1953 Ford 2-ton truck, which he apparently had purchased under a conditional sales contract that had been assigned to Universal C.I.T. In any event, Meshell was making monthly payments to Universal C.I.T. on the truck. Meshell had possession of the pink slip (registration slip) on the truck, but Universal C.I.T. retained possession of the certificate of title issued by the State of Arkansas.

On January 8, 1954, the defendant, Southwest Casualty Company, issued its standard liability insurance policy with a combination fleet schedule to Meshell, describing the above mentioned Ford truck as one of the vehicles covered thereby. The effective period of the policy was one year from date of issue. Among other things the policy provided:

    "Item 6. (a) Except with respect to bailment lease,
  conditional sale, mortgage or other encumbrance the
  named insured is the sole owner of the automobile.
"*   *   *   *   *   *
    "The company agrees with the insured, named in the
  declarations made a part hereof, in consideration of
  the payment of the premium and in reliance upon the
  statements in the declarations and subject to the
  limits of liability, exclusions, conditions and other
  terms of this policy:

"Insuring Agreements

    "I. Coverage A — Bodily Injury Liability: To
  pay on behalf of the insured all sums which the
  insured shall become legally obligated to pay as
  damages because of bodily injury, sickness or
  disease, including death at any time resulting
  therefrom, sustained by any person, caused by
  accident and arising out of the ownership,
  maintenance or use of the automobile.
"*   *   *   *   *   *
    "II. Defense, Settlement, Supplementary Payments:
  As respects the insurance afforded by the other terms
  of this policy under coverages A and B the company
    "(a) defend any suit against the insured alleging
         such injury, sickness, disease or destruction
         and seeking damages on account thereof, even
         if such suit is groundless, false or
"*   *   *   *   *   *
    "III. Definition of Insured: With respect to the
  insurance for bodily injury liability and for
  property damage liability the unqualified word
  `insured' includes the named insured and also
  includes any person while using the automobile and
  any person or organization legally responsible for
  the use thereof, provided the actual use of the
  automobile is by the named insured or with his
"*   *   *   *   *   *
    "VIII. Policy Period, Territory, Purposes of Use:
  This policy applies only to accidents which occur and
  to direct and accidental losses to the automobile
  which are sustained during the policy period, while
  the automobile is within the United States of
  America, its territories or possessions, Canada or
  Newfoundland, or is being transported between ports
  thereof, and is owned, maintained and used for the
  purposes stated as applicable thereto in the

The maximum liability of the defendant under the policy was $5,000 for bodily injury to each person and $10,000 for each accident.

During the early part of August, 1954, Meshell sold the Ford truck to Leo Harper. Harper paid either $400 or $450 to Meshell and assumed the payments to Universal C.I.T. The payments were approximately $114 a month, and seven or eight payments were still due at the time. The total purchase price of the truck was about $1,250.

Apparently the parties did not have a specific agreement that Meshell would retain title to the truck until the purchase price was paid. However, in his deposition Meshell testified as follows in answer to a question concerning what he would have done if Harper had failed to finish making the payments on the truck:

    "A. I couldn't have done anything else but taken
  the truck just

  as you or anybody else would have done.

"Q. You would have taken ...

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