Michigan Supreme Court; Docket No. 98440; Published
Opinion by Justice Riley; Unanimous
Official Michigan Reporter Citation: 449 Mich 1; Link to Opinion 
STATUTORY INDEXING:
Not Applicable
TOPICAL INDEXING:
Motor Vehicle Code (Registration and Title Requirements) (MCL 257.201, et seq.)
CASE SUMMARY:
In this unanimous Opinion interpreting the statutory provisions of MCLA 257.219(2)(a) concerning alleged defects in the transfer of title to a vehicle by a dealer, the Supreme Court reversed the Court of Appeals and reinstated summary disposition granted in favor of the dealer, holding that the vehicle code did not require that the dealer verify and send a copy of the vehicle purchaser's certificate of insurance in order to make the transfer of title effective.
Greenfield Jeep Eagle sold a vehicle to a purchaser, who claimed that he had insurance for the vehicle. Jeep Eagle did not obtain verification or require presentation of the certificate of insurance. Jeep Eagle issued the purchaser a temporary 10-day registration and filed the necessary forms with the Secretary of State's office indicating that the car was insured and stating that the policy was new, without listing a policy number. Based upon this information, the Secretary of State issued a certificate of title to the purchaser. Thereafter, an accident occurred seriously injuring the plaintiff. The purchaser of the vehicle had never obtained insurance coverage and later filed bankruptcy to discharge plaintiff s judgment. Plaintiff brought suit against Jeep Eagle claiming that because Jeep Eagle had failed to comply with the statutes providing for a transfer of ownership, and because Jeep Eagle had erroneously completed the forms, ownership of the vehicle was never effectively transferred. The Court of Appeals reversed the trial court grant of summary disposition in favor of Jeep Eagle, and held that automobile dealers retain ownership of the cars they sell until they comply with the statutory provisions for transferring title to the purchasers. The Court of Appeals held that a valid certificate of title cannot be issued if the application contains a false or fraudulent statement. MCLA 257.219(2)(a).
In reversing the Court of Appeals and reinstating summary disposition in favor of Greenfield Jeep Eagle, the Supreme Court held that the automobile dealer was not, under the law, required to verify the vehicle purchaser's insurance coverage by sending a copy of his insurance for that vehicle. Thus, once the Secretary of State issued the transfer title, pursuant to MCLA 257.217(2), the dealer was no longer liable for any negligent acts associated with the vehicle. MCLA 2S7.240.
The Supreme Court held that nowhere in the vehicle code is it required that a dealer verify the insurance coverage of the buyer or submit a copy of the purchaser's insurance coverage to the Secretary of State. Although the no-fault act does require a purchaser to supply proof of insurance when receiving registration, there is no mention that a dealer has such a responsibility.
The Supreme Court also rejected plaintiffs contention that the Secretary of State, pursuant to a manual issued to all automotive dealerships, requires that such proof of insurance be submitted. The Supreme Court held that the dealer's failure to follow the requirements contained in the manual was not fatal to transfer of title because the manual was not a properly promulgated rule under the provisions of MCLA 24.246 governing promulgation of administrative rules. Since the manual requirements were not properly promulgated as rules, they did not have the force of law, and the failure of the dealer to comply with the manual requirements was not fatal to transfer of title. Therefore, the decision in the Court of Appeals was reversed and summary disposition in favor of Jeep Eagle was reinstated.
