{ "id": 2183306, "name": "NUDI AUTO RV AND BOAT SALES, INC., d/b/a Nudi Suzuki/Isuzu, Inc., Plaintiff-Appellant, v. JOHN DEERE INSURANCE COMPANY, Defendant-Appellee", "name_abbreviation": "Nudi Auto RV & Boat Sales, Inc. v. John Deere Insurance", "decision_date": "2002-03-06", "docket_number": "No. 1\u201401\u20141620", "first_page": "523", "last_page": "536", "citations": [ { "type": "official", "cite": "328 Ill. App. 3d 523" } ], "court": { "name_abbreviation": "Ill. App. Ct.", "id": 8837, "name": "Illinois Appellate Court" }, "jurisdiction": { "id": 29, "name_long": "Illinois", "name": "Ill." }, "cites_to": [ { "cite": "757 N.E.2d 881", "category": "reporters:state_regional", "reporter": "N.E.2d", "year": 2001, "opinion_index": 0 }, { "cite": "197 Ill. 2d 369", "category": "reporters:state", "reporter": "Ill. 2d", "case_ids": [ 259034 ], "year": 2001, "pin_cites": [ { "page": "380" } ], "opinion_index": 0, "case_paths": [ "/ill-2d/197/0369-01" ] }, { "cite": "509 N.E.2d 159", "category": "reporters:state_regional", "reporter": "N.E.2d", "year": 1987, "opinion_index": 0 }, { "cite": "156 Ill. App. 3d 617", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 3506416 ], "weight": 10, "year": 1987, "pin_cites": [ { "page": "618" }, { "page": "619" }, { "page": "619" }, { "page": "619-20" }, { "page": "621" }, { "page": "623" }, { "page": "621" }, { "page": "621" }, { "page": "621" } ], "opinion_index": 0, "case_paths": [ "/ill-app-3d/156/0617-01" ] }, { "cite": "94 N.E.2d 95", "category": "reporters:state_regional", "reporter": "N.E.2d", "year": 1950, "pin_cites": [ { "parenthetical": "abstract of op." } ], "opinion_index": 0 }, { "cite": "341 Ill. App. 422", "category": "reporters:state", "reporter": "Ill. App.", "case_ids": [ 4986336, 4989665 ], "year": 1950, "pin_cites": [ { "parenthetical": "abstract of op." } ], "opinion_index": 0, "case_paths": [ "/ill-app/341/0422-01", "/ill-app/341/0422-02" ] }, { "cite": "365 N.E.2d 1329", "category": "reporters:state_regional", "reporter": "N.E.2d", "year": 1977, "opinion_index": 0 }, { "cite": "50 Ill. App. 3d 894", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 5639622 ], "weight": 2, "year": 1977, "pin_cites": [ { "page": "898" }, { "page": "898-99" } ], "opinion_index": 0, "case_paths": [ "/ill-app-3d/50/0894-01" ] }, { "cite": "571 N.E.2d 769", "category": "reporters:state_regional", "reporter": "N.E.2d", "year": 1991, "opinion_index": 0 }, { "cite": "212 Ill. App. 3d 673", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 2598052 ], "year": 1991, "pin_cites": [ { "page": "677" } ], "opinion_index": 0, "case_paths": [ "/ill-app-3d/212/0673-01" ] }, { "cite": "692 N.E.2d 1196", "category": "reporters:state_regional", "reporter": "N.E.2d", "year": 1998, "opinion_index": 0 }, { "cite": "181 Ill. 2d 436", "category": "reporters:state", "reporter": "Ill. 2d", "case_ids": [ 821405 ], "year": 1998, "pin_cites": [ { "page": "442" } ], "opinion_index": 0, "case_paths": [ "/ill-2d/181/0436-01" ] }, { "cite": "620 N.E.2d 1073", "category": "reporters:state_regional", "reporter": "N.E.2d", "year": 1993, "opinion_index": 0 }, { "cite": "156 Ill. 2d 384", "category": "reporters:state", "reporter": "Ill. 2d", "case_ids": [ 777543 ], "year": 1993, "pin_cites": [ { "page": "390-91" } ], "opinion_index": 0, "case_paths": [ "/ill-2d/156/0384-01" ] }, { "cite": "728 N.E.2d 680", "category": "reporters:state_regional", "reporter": "N.E.2d", "year": 2000, "opinion_index": 0 }, { "cite": "312 Ill. App. 3d 998", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 411683 ], "year": 2000, "pin_cites": [ { "page": "1007" } ], "opinion_index": 0, "case_paths": [ "/ill-app-3d/312/0998-01" ] }, { "cite": "689 N.E.2d 259", "category": "reporters:state_regional", "reporter": "N.E.2d", "year": 1997, "opinion_index": 0 }, { "cite": "293 Ill. App. 3d 1089", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 847596 ], "year": 1997, "pin_cites": [ { "page": "1091" } ], "opinion_index": 0, "case_paths": [ "/ill-app-3d/293/1089-01" ] }, { "cite": "607 N.E.2d 1204", "category": "reporters:state_regional", "reporter": "N.E.2d", "year": 1992, "opinion_index": 0 }, { "cite": "154 Ill. 2d 90", "category": "reporters:state", "reporter": "Ill. 2d", "case_ids": [ 4820940 ], "weight": 4, "year": 1992, "pin_cites": [ { "page": "102" }, { "page": "102" }, { "page": "108" }, { "page": "108" } ], "opinion_index": 0, "case_paths": [ "/ill-2d/154/0090-01" ] } ], "analysis": { "cardinality": 1034, "char_count": 28891, "ocr_confidence": 0.773, "pagerank": { "raw": 7.351004668085048e-08, "percentile": 0.4410934768783817 }, "sha256": "6d2371690a65cb33a3687c508a8fe0a64eace7ecc18a764ab77ce1d91cc76e25", "simhash": "1:9368c5937db4641a", "word_count": 5044 }, "last_updated": "2023-07-14T17:11:21.532369+00:00", "provenance": { "date_added": "2019-08-29", "source": "Harvard", "batch": "2018" }, "casebody": { "judges": [], "parties": [ "NUDI AUTO RV AND BOAT SALES, INC., d/b/a Nudi Suzuki/Isuzu, Inc., Plaintiff-Appellant, v. JOHN DEERE INSURANCE COMPANY, Defendant-Appellee." ], "opinions": [ { "text": "JUSTICE WOLFSON\ndelivered the opinion of the court:\nThis is an insurance coverage case arising from the botched sale of 21 cars. It involves transactions between plaintiff Nudi Auto RV & Boat Sales, Inc. (Nudi), a car dealer, and MK Auto Sales, Inc. (MK), an automobile broker not a party to this lawsuit.\nBetween April and May 1997, MK bought several cars from auto auction houses. It earmarked 21 of them for Nudi. MK\u2019s intention was to sell the cars to Nudi, which it did, and then use that money to pay its debt with the auction houses. After paying off the debt, MK would deliver the certificates of title to the cars to Nudi.\nNudi paid for the cars, but MK never did deliver titles to them. It couldn\u2019t, because it never paid the auction houses. Nudi, wanting to keep the cars, ended up paying the auction houses $50,000 for the titles to the 21 cars. Then Nudi made a claim against its insurance company, John Deere Insurance Company (John Deere), for the $50,000 under its \u201cFalse Pretense Coverage.\u201d\nNudi\u2019s \u201cfalse pretense coverage\u201d applied when it acquired \u201can \u2018auto\u2019 from a seller who did not have legal title.\u201d (Emphasis added.) The issue in this case is whether MK had \u201clegal title\u201d to the 21 cars it sold to Nudi.\nThe trial court entered summary judgment for the insurance company. We reverse the trial court\u2019s decision and remand this cause with directions to enter summary judgment for the insured.\nFACTS\nThe Insurance Company\u2019s Policy\nJohn Deere, an Illinois corporation with its principal place of business in Moline, Illinois, issued an insurance policy and \u201cgarage coverage\u201d to Nudi, a Wisconsin corporation with its principal place of business \u2014 a car dealership \u2014 in Kenosha, Wisconsin. Nudi\u2019s policy included additional coverage for \u201cfalse pretense.\u201d\nNudi\u2019s false pretense coverage was effective from October 1, 1996, to October 1, 1997. The scope of this coverage is now at issue. The pertinent provisions are as follows:\n\u201cFALSE PRETENSE COVERAGE\nThis endorsement modifies insurance provided under the following:\nGARAGE COVERAGE FORM\nI. SECTION I \u2014 COVERED AUTOS is amended, for this endorsement only, by the following:\nAny \u2018auto\u2019 you have acquired is a covered \u2018auto\u2019 under the False Pretense Coverage.\nII. SECTION IV \u2014 PHYSICAL DAMAGE COVERAGE is amended, for this endorsement only, by the following:\nA. The following is added to paragraph A. COVERAGE:\n1. False Pretense Coverage.\nWe will pay for \u2018loss\u2019 to a covered \u2018auto\u2019 caused by:\na. Someone causing you to voluntarily part with the covered \u2018auto\u2019 by trick, scheme, or under false pretenses.\nb. Your acquiring an \u2018auto\u2019 from a seller who did not have legal title.\nc. Confiscation of an \u2018auto\u2019 by a governmental or civil authority, for alleged or actual violations of laws governing the distribution, sale, or use of controlled substances.\u201d (Emphasis added.)\nThe following facts are taken from the pleadings and the depositions filed with the pleadings.\nMK and the Auto Auction Houses\nIn April 1994, Mike Moses and his sister, Karen Moses, opened MK Auto Sales, Inc. MK was an automobile broker/used car dealer located in Mount Prospect, Illinois. It now is defunct. MK specialized in the wholesale selling of used cars to car dealers.\nMK bought used cars from auto auctions conducted by Greater Chicago Auto Auction, Metro Milwaukee Auto Auction, Auction Way Sales, Inc., and ADT Automotive, Inc. (collectively the \u201cauction houses\u201d). MK had financial arrangements with these auction houses through their financial services departments. These arrangements allowed MK to bid/buy cars on credit, resell them to buyers/car dealers, then use the money from the sale to pay off its debt. This process occurred as follows.\nAfter MK filled out the appropriate paperwork and executed the proper documents \u2014 showing it was qualified and licensed to buy cars from an auction \u2014 the auction houses gave MK a \u201cfloor plan\u201d or \u201cbridge loan,\u201d i.e., a credit line, to bid or buy cars with. The auction houses accepted checks, cash, and/or floor plans as payment for auctioned cars and they guaranteed the titles to the auctioned cars were valid and free of any incumbrance.\nThrough this financial arrangement, MK went to the auction houses and placed cars on its floor plan \u2014 MK had about a $200,000 floor plan limit. If, during the auctions, MK was the successful bidder, the auction houses sold MK the cars. Although MK took possession of the cars it successfully bid on, it did so without the certificates of title. The certificates of title remained in the owner\u2019s/seller\u2019s name and in the possession of the auction houses until MK paid off its debt, i.e., floor plan.\nAfter MK took possession of the cars, it transported them to its car lot in Mount Prospect, Illinois. Once the cars were on its lot, MK stocked, inventoried, and resold them. A majority of the cars MK bought on its floor plan were resold wholesale and in bulk to other car dealers.\nWhen MK sold the cars it bought from the auction houses, i.e., the cars on its floor plan, MK could not transfer the titles of the cars to the buyer/car dealer at the time of the sale; the auction houses still had them. MK filled out the appropriate paperwork, took cash or check from the buyer, gave the car or cars to the buyer, and deposited the money into its bank account. MK then went to the auction houses and paid for the car or cars with its own check.\nOnce the auction houses were paid, that is, when MK paid off its floor plan, the auction houses gave the certificates of title to MK \u2014 the certificates were put in MK\u2019s name. MK then signed the certificates, gave them to the buyer to sign, and sent them to the Secretary of State to register the titles in the buyer\u2019s name. After some time, the Secretary of State sent the buyer certificates of title registered in its name.\nMK and Nudi\nIn about December 1996, MK approached Nudi and asked if it could sell Nudi used cars wholesale. MK wanted to be, in essence, Nu-di\u2019s \u201cwholesaler.\u201d Nudi described a wholesaler as \u201csomebody that would go out and try to place or buy an automobile for another dealer based on their wants and needs, make a small profit in the in between so that they can make a living and buy and sell and place automobiles where they feel that there\u2019s a need.\u201d\nNudi agreed. Nudi said [it] didn\u2019t \u201chave time to go out and buy and sell automobiles.\u201d Nudi had dealt with Mike Moses of MK before and trusted him.\nBetween April and May 1997, MK placed several cars on its floor plan at the various auction houses. MK then called Nudi and described the cars. Nudi was interested in them so MK took the cars to Nudi\u2019s car dealership in Kenosha, Wisconsin. Twenty-one of the cars Nudi chose to buy and pay for are at the center of this lawsuit.\nAfter Nudi chose the cars it wanted, it gave MK a \u201ccheck on the spot.\u201d The amount was about $179,000. At the time Nudi bought the cars, it did not receive the certificates of title from MK. Nudi knew that MK was going to use the money from the sale to pay off its floor plan.\nNudi allowed MK a two-week \u201cgrace period\u201d to get the certificates of title from the auction houses. It expected to get the titles from MK within that time because Nudi and MK usually did business this way \u2014 it was common industry practice to buy and sell used cars the way Nudi and MK did.\nNudi never received the certificates of title for the 21 cars. At the time MK sold the cars to Nudi, MK suffered from what Moses described as \u201cvery poor business management.\u201d As a result, MK went out of business and was unable to cover checks it wrote to the auction houses to pay off its floor plan. The auction houses refused to turn over the certificates of title to the 21 cars MK sold to Nudi. In fact, because MK did not pay them, the auction houses wanted the cars back.\nAt his deposition, Mike Moses of MK explained what happened:\n\u201cQ. *** Do you know the circumstances under which the auction house was refusing to turn over the title? Do you know if the auction house was refusing to turn over the titles?\nA. I believe they were, yes.\nQ. And do you know why?\nA. They claimed they weren\u2019t paid for.\nQ. Were they, do you know?\nA. They had checks for the cars that weren\u2019t any good at that time.\nQ. The checks were not\u2014\nA. They had checks from MK that weren\u2019t any good at the time.\n* * *\nQ. Did MK ever pay for the automobiles for which checks were given that were not honored by the bank?\nA. No.\n* * *\nQ. Okay. MK gave checks to Mannheim that were not honored by MK\u2019s bank; is that correct?\nA. That\u2019s correct.\nQ. And those checks were designed to pay for cars which were sold to Nudi Suzuki Isuzu; is that correct?\nA. That\u2019s correct.\nQ. Did MK Auto Sales ever pay Mannheim for those cars for which checks were dishonored?\nA. No, sir.\nQ. So, in other words, the cars that were sold to Nudi for which MK received payment were never paid for by MK to Mannheim. Is that a correct statement?\nA. Yes.\n* * *\nQ. Okay. For those cars that were sold to Nudi, you never went through that scenario where you gave Mannheim checks and actually got titles for the cars you sold?\nA. Correct. I never actually got the titles, that is correct.\ni|t * *\nQ. Okay. Since you went out of business around the 29th of May, did MK Auto Sales have the ability then to pay for and obtain the titles to the cars that were sold to Nudi Suzuki?\nA. No.\n* * *\nQ. So, in other words, you never got \u2014 MK Auto Sales never got title, never paid for those cars directly to obtain the title, and after May 29 was unable to obtain title because it was out of business?\nA. That\u2019s correct.\u201d\n\u201cI didn\u2019t mean for all of this to happen,\u201d said Mike Moses of MK, \u201cI didn\u2019t do it on purpose, but I didn\u2019t have the money to pay for the cars either.\u201d\nNudi and The Auto Auction Houses\nThe auction houses repossessed the cars MK had bought on its floor plan and had not yet sold, that is, the cars that were still in MK\u2019s car lot. After MK discussed its situation with Nudi, Nudi moved from its lot the 21 cars it bought from MK. Nudi wanted to avoid the auction houses. It did not want them to repossess the cars it bought from MK. Nudi \u201cdecided [to] keep them out of the way until [it] got counsel and found out what [its] legal recourse was.\u201d\nRepresentatives of the auction houses contacted Nudi. They demanded the return of the 21 cars sold to Nudi by MK. They made arrangements to repossess the cars from Nudi.\nIn an effort to keep the cars it bought and paid for, Nudi entered into a settlement agreement with the auction houses. According to the settlement agreement, the auction houses gave Nudi the certificates of title for the 21 cars and Nudi gave the auction houses $50,000.\nNudi and Defendant John Deere\nOn about May 30, 1997, Nudi made a claim for loss under the false pretense coverage section of its insurance policy. Nudi told its insurer, John Deere, that it acquired 21 automobiles from a seller, MK, who did not have legal title. On about June 6, 1997, and again on about August 20, 1997, John Deere notified Nudi by letter that it was denying coverage for the losses sustained because\n\u201cM.K. Auto Sales was not selling you vehicles with illegal titles. They were transferring ownership of the vehicles when they do not hold the physical title. This is done quite often in the auto market and does not mean that they do not own the auto or that an illegal title exist[s]. All M.K. Auto Sales had to do was pay for the vehicles and they would have received the titles. This is merely a collection problem.\u201d\nIn July 1998, Nudi filed this declaratory judgment action, contending \u201cthere exists coverage for the losses sustained by Nudi under the False Pretense Coverage endorsement of the policy of insurance issued by John Deere to Nudi.\u201d After a procedural history that took both parties from the Cook County circuit court to the federal court and back, Nudi and John Deere filed separate motions for summary judgment. In April 2001, the trial court denied Nudi\u2019s motion for summary judgment and granted John Deere\u2019s motion.\nThe trial court said, \u201cI do not believe that Nudi has sustained its burden of proof proving that MK Auto Sales illicitly acquired vehicles from the Auctions when the vehicles were acquired by Nudi from MK Auto Sales. MK auto sales had legal title, and therefore I believe there was no coverage under the policy.\u201d\nThe trial court added that even if MK did not have legal title to the cars it sold to Nudi, \u201cNudi paid for the vehicle[s] it bought from MK Auto Sales, *** it was the bona fide purchaser for value without notice of any security interest or liens.\u201d\nThis appeal followed.\nDECISION\nNudi contends the trial court erred in ruling as a matter of law that MK had legal title to the 21 cars it sold to Nudi and that, even if MK did not have legal title, Nudi was a bona fide purchaser. We agree.\nSTANDARD OF REVIEW\nSummary judgment is proper when the pleadings, depositions, and admissions on file, together with the affidavits, if any, reveal there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. See 735 ILCS 5/2 \u2014 1005(c) (West 1998); Outboard Marine Corp. v. Liberty Mutual Insurance Co., 154 Ill. 2d 90, 102, 607 N.E.2d 1204 (1992).\nWe review de novo a trial court\u2019s order granting summary judgment. Outboard Marine Corp., 154 Ill. 2d at 102. \u201cWhen all parties file cross-motions for summary judgment, the court is invited to decide the issues presented as a question of law.\u201d Container Corp. of America v. Wagner, 293 Ill. App. 3d 1089, 1091, 689 N.E.2d 259 (1997). We may affirm summary judgment based on any grounds supported by the record. International Insurance Co. v. Rollprint Packaging Products, Inc., 312 Ill. App. 3d 998, 1007, 728 N.E.2d 680 (2000).\nFALSE PRETENSE COVERAGE\nThe false pretense coverage endorsement (the endorsement) provides, in relevant part, the insurer John Deere will pay for loss to a \u201ccovered auto\u201d caused by the insured acquiring an auto from a seller who did not have \u201clegal title.\u201d Under the endorsement, any auto Nudi acquired is a covered auto.\nHere, Nudi and John Deere agree \u201cthe subject [insurance] policy, specifically, the False Pretense Coverage endorsements, is clear and unambiguous and should be given its plain and ordinary meaning.\u201d\nThe construction of an insurance provision, and a determination of the rights and obligations thereunder, is a question of law suitable for summary judgment. See Crum & Forster Managers Corp. v. Resolution Trust Corp., 156 Ill. 2d 384, 390-91, 620 N.E.2d 1073 (1993).\nWe construe the insurance policy as a whole, ascertaining the intent of the parties to the insurance contract, \u201cwith due regard to the risk undertaken, the subject matter that is insured and the purposes of the entire contract.\u201d Outboard Marine Corp., 154 Ill. 2d at 108. Where the policy\u2019s words are unambiguous, there is no need for construction; the words will be given their plain, ordinary, and popular meaning. Outboard Marine Corp., 154 Ill. 2d at 108.\nWe agree with the parties: there are no ambiguous words in the insurance policy\u2019s false pretense coverage endorsement. Although the key words in the endorsement that are the subject of this appeal \u2014 i.e., \u201clegal title\u201d \u2014 are not defined in the insurance policy, we will apply the words as written, unless they contravene public policy. See State Farm Mutual Automobile Insurance Co. v. Villicana, 181 Ill. 2d 436, 442, 692 N.E.2d 1196 (1998).\nJohn Deere contends \u201cfalse pretense coverage is meant to protect the insured from the loss of a vehicle through deception. It is not coverage for poor business practices or an ordinary business risk, such as someone writing a bad check. The very essence of false pretense coverage is that there is an intentional deceptive act.\u201d\nNudi says, \u201cIt is evident that coverage exceeds mere loss of a covered auto by trick, scheme, or false pretense, all of which imply intent on the part of the perpetrator to defraud or steal. The language in Section ILA.l.b. appears clear on its face, that acquisition of a covered auto from someone who does not have legal title is a covered event for which the insurer, defendant, is hable under the terms of its policy.\u201d\nWe agree with Nudi. Whether the seller had \u201clegal title\u201d to the auto he sold to the insured is the key fact, not whether the \u201cinsured accepts a stolen vehicle in trade from someone who did not have legal title, or from someone who acquired a vehicle by fraud or deception,\u201d as John Deere suggests, and as the trial court found.\nWe note that while the title of section II(A)(1) is \u201cFalse Pretense Coverage,\u201d only section II(A)(1)(a) uses the term \u201cfalse pretenses.\u201d Section II(A)(1)(c) clearly is not a false pretense provision. It refers to \u201cConfiscation of an \u2018auto\u2019 by a governmental or civil authority.\u201d\nSection II(A)(1)(b) of the endorsement contains no mention of an intent to defraud. That is, there is no requirement the cars sold by MK be stolen or acquired by fraud. As the endorsement says, \u201cAny \u2018auto\u2019 you have acquired is a covered \u2018auto\u2019 under the False Pretense Coverage.\u201d\nThe trial court erred in finding Nudi had a burden to prove that \u201cMK Auto Sales illicitly acquired vehicles from the Auctions when the vehicles were acquired by Nudi from MK Auto Sales.\u201d\nThe next question, then, is whether the record demonstrates the seller, MK, had \u201clegal title\u201d to the cars it sold to Nudi, as that term is used in the policy.\nThe record is clear, and as Mike Moses of MK agreed: \u201cMK Auto Sales never got [certificates of] title, never paid for those cars directly to obtain the [certificates of] title, and after May 29 was unable to obtain [the certificates of] title because it was out of business.\u201d\nBlack\u2019s Law Dictionary 1493 (7th ed. 1999) defines \u201clegal title\u201d: \u201cA title that evidences apparent ownership but does not necessarily signify full and complete title or a beneficial interest.\u201d\nJohn Deere contends \u201cthere is a distinction between a certificate of title and legal title.\u201d \u201cWhile MK did not receive the actual, physical certificates of title from the auction,\u201d concedes John Deere, \u201cthe understanding of the parties was for legal title to transfer, especially where possession and control of the vehicles did pass from the auction to MK, and from MK to the Plaintiff.\u201d (Emphasis in original.)\nJohn Deere cites no support for its contention. That is because its contention is mistaken \u2014 John Deere attempts to argue the term \u201clegal title,\u201d as used in the endorsement, means ownership.\nWe find John Deere\u2019s concession that MK did not receive actual physical title fatal to its case. Although John Deere is correct in saying possession and control of the cars passed from the auto auction houses to MK, it clearly is not correct in saying that the understanding of the auction houses was to pass to MK legal title. That is because no legal title could be transferred until MK paid for the cars. And MK did not.\nA certificate of title to an automobile is \u201c \u2018evidence of [legal] title.\u2019 \u201d (Emphasis omitted.) Pekin Insurance Co. v. U.S. Credit Funding, Ltd., 212 Ill. App. 3d 673, 677, 571 N.E.2d 769 (1991), quoting State Farm Mutual Automobile Insurance Co. v. Lucas, 50 Ill. App. 3d 894, 898, 365 N.E.2d 1329 (1977). See American States Insurance Co. v. White, 341 Ill. App. 422, 94 N.E.2d 95 (1950) (abstract of op.) (upon execution of a conditional sales contract, the buyer became equitable owner of the automobile and assumed the unconditional obligation to pay for the automobile, but the seller held legal title to secure the payment of the balance of the purchase price).\nOur review of the record shows MK never had legal title to the cars it sold to Nudi, because the auction houses did not intend to transfer legal title to the cars until they were paid. Dan Pilson Auto Center, Inc. v. DeMarco, 156 Ill. App. 3d 617, 509 N.E.2d 159 (1987), supports our conclusion.\nIn Dan Pilson Auto Center, the plaintiff, Dan Pilson Auto Center, brought a replevin action seeking to recover possession of six squad cars from the defendant, the sheriff of Sangamon County, William DeMarco. Pilson testified he had entered into an oral agreement to sell six used squad cars to Leo Palmeri, a buyer/broker for a car dealership. Dan Pilson Auto Center, 156 Ill. App. 3d at 618.\nSometime after the agreement was made, Palmeri told Pilson he sold the squad cars to his customer, the Sangamon County sheriff. Palmeri asked Pilson whether it would be all right if the sheriff picked up the squad cars, as the sheriff was anxious to get the vehicles. Palmeri said he would be arriving shortly after the sheriffs men, but that Pilson should allow the sheriff to take the cars. Pilson agreed to the arrangement. Dan Pilson Auto Center, 156 Ill. App. 3d at 619.\nCaptain Pyle of the Sangamon County sheriffs department arrived at Pilson\u2019s dealership. Pyle signed a \u201cdelivery receipt\u201d and took possession of the cars. Pilson kept the certificates of title. Dan Pilson Auto Center, 156 Ill. App. 3d at 619.\nPalmeri never showed up after the sheriff took possession of the squad cars and never paid Pilson, although the sheriffs department had paid Palmeri. Dan Pilson Auto Center, 156 Ill. App. 3d at 619-20.\nIn Dan Pilson Auto Center, the court held: \u201cPalmeri, the seller, had no title at all\u201d where the \u201c[e]vidence clearly established that Pilson never transferred the certificates of title for the squad cars\u201d and \u201c[b]oth parties *** acknowledged that the cars were released to Pyle as \u2018an accommodation to the sheriff,\u2019 who was in dire need of additional squad cars.\u201d 156 Ill. App. 3d at 621. \u201cSince Palmeri had nothing to convey, the sheriff never received title to the cars,\u201d said the court. Dan Pilson Auto Center, 156 Ill. App. 3d at 623.\nAccording to the court, \u201cWhile the failure to transfer certificates of title alone might be insufficient to sustain a finding for Pilson, this fact, in conjunction with evidence of the parties\u2019 intent, indicates that although possession passed, there was no concurrent intent to transfer ownership.\u201d Dan Pilson Auto Center, 156 Ill. App. 3d at 621.\nHere, the auto auction houses can be read as Pilson; MK as Palmeri; and Nudi as the sheriff.\nAs in Dan Pilson Auto Center, the record in this case shows the existence of two separate sales contracts: the first between the auto auction houses and MK, and the second between MK and Nudi. Although the auto auction houses gave MK possession of the cars, all parties understood their separate transactions were not yet complete.\nMK knew it would not receive title to the cars, and therefore not own them, until it paid the auction houses for them. Likewise, Nudi knew it would not receive title to the cars, and therefore not own them, until MK paid the auction houses for them.\nThe trial court erred in finding MK had legal title. MK did not. We find that under the false pretense coverage endorsement of Nudi\u2019s insurance policy, Nudi acquired \u201can \u2018auto\u2019 from a seller who did not have legal title\u201d and John Deere must cover Nudi\u2019s losses.\nBONA FIDE PURCHASER/BUYER IN THE ORDINARY COURSE\nJohn Deere contends that even if we find MK did not have legal title to the cars, legal title was transferred because \u201cNudi was a bona fide purchaser for value without notice of any security interest or liens.\u201d\nThis is not a case about who had lawful possession of the cars. Nudi paid an extra amount for the amended coverage endorsement at issue. The endorsement specifically limited the \u201cautos\u201d Nudi acquired to those for which the seller did not have legal title. As such, there were no additional conditions placed within the false pretense endorsement.\nJohn Deere contends the plain, ordinary, and popular meaning of the words \u201clegal title\u201d encompasses, by definition, a seller like MK, who is able to transfer legal title to a bona fide purchaser or a buyer in the ordinary course of business, like Nudi. We do not agree.\nThe endorsement says, \u201cYour acquiring an \u2018auto\u2019 from a seller who did not have legal title.\u201d (Emphasis added.) It does not say, \u201cYour acquiring an \u2018auto\u2019 from a seller who could transfer legal title to you.\u201d\nIllinois law defines a vehicle \u201cowner\u201d as \u201c[a] person who holds legal document of ownership of a vehicle.\u201d 625 ILCS 5/3 \u2014 100 (West 1998). With certain inapplicable exceptions, a certificate of title is required for every vehicle owned in Illinois. 625 ILCS 5/3 \u2014 101 (West 1998). If for some reason there is no certificate of title in existence, the owner must apply to the Secretary of State for a certificate of title. 625 ILCS 5/3 \u2014 101 (West 1998).\nThe proper way to effectuate a transfer of ownership of a motor vehicle in Illinois is by assignment and warranty of title. 625 ILCS 5/3 \u2014 112, 3 \u2014 113 (West 1998). Although failure to comply with section 3 \u2014 112 or 3 \u2014 113 does not necessarily affect passage of title to a motor vehicle (State Farm Mutual Automobile Insurance Co. v. Lucas, 50 Ill. App. 3d at 898-99), a purchaser of a motor vehicle cannot receive any greater title or interest in a motor vehicle than the seller had at the time of the sale. Dan Pilson Auto Center, 156 Ill. App. 3d at 621, citing Ill. Rev. Stat. 1985, ch. 16, par. 2 \u2014 403(1) (now 810 ILCS 5/2 \u2014 403(1) (West 1998)).\nHere, MK, the seller, had no title at all. Thus, the statutory provisions regarding voidable title are inapplicable. See 810 ILCS 5/2\u2014 403(1) (West 1998). See also Dan Pilson Auto Center, 156 Ill. App. 3d at 621.\nJohn Deere also contends the Uniform Commercial Code (the UCC) additionally provides that if goods are entrusted to a \u201cmerchant[, MK,] who deals in goods of that kind,\u201d the merchant has \u201cpower to transfer all rights of the entruster to a buyer in ordinary course of business[, Nudi].\u201d See 810 ILCS 5/2 \u2014 403(2) (West 1998).\nWe find section 2 \u2014 403(2) of the UCC (810 ILCS 5/2 \u2014 403(2) (West 1998)) does not apply to this case. The UCC does not refer to \u201clegal title.\u201d The purpose of this provision of the UCC is: \u201cThe many particular situations in which a buyer in [the] ordinary course of business from a dealer has been protected against reservation of property or other hidden interest are gathered by subsections (2)-(4) into a single principle protecting persons who buy in [the] ordinary course out of inventory.\u201d 810 ILCS Ann. 5/2 \u2014 403, Uniform Commercial Code Comment, at 289 (Smith-Hurd 1993).\nNowhere is it said in the UCC that the merchant who sold the entrusted goods to the buyer in the ordinary course of business is vested with legal title. As such, whether Nudi qualifies as a buyer of the cars in the ordinary course of business does not matter. MK still did not have legal title and, by its contracts, could not get legal title until it paid the auction houses for the cars. It never did. John Deere may not claim noncoverage.\nCOSTS AND ATTORNEY FEES\nNudi contends John Deere advanced its coverage position in bad faith. Nudi argues that pursuant to section 155 of the Illinois Insurance Code (215 ILCS 5/155 (West 1998)), it is entitled to reimbursement of attorney fees, as well as sanctions against John Deere.\nSection 155(1) of the Illinois Insurance Code states:\n\u201cIn any action by or against a company wherein there is in issue the liability of a company on a policy or policies of insurance or the amount of the loss payable thereunder, or for an unreasonable delay in settling a claim, and it appears to the court that such action or delay is vexatious and unreasonable, the court may allow as part of the taxable costs in the action reasonable attorney fees, [and] other costs[.]\u201d 215 ILCS 5/155(1) (West 1998).\nNudi contends John Deere engaged in vexatious and unreasonable conduct in denying Nudi\u2019s tender. However, \u201cwhere a bona fide dispute concerning coverage exists, costs and sanctions are inappropriate.\u201d State Farm Mutual Automobile Insurance Co. v. Smith, 197 Ill. 2d 369, 380, 757 N.E.2d 881 (2001).\nHere, the trial court determined John Deere correctly relied on the false pretense coverage endorsement in denying Nudi\u2019s tender. Although we hold the trial court erred, we find there existed a bona fide dispute concerning John Deere\u2019s potential coverage in this case. Costs and sanctions are inappropriate.\nCONCLUSION\nWe reverse the trial court\u2019s decision and remand this cause with directions to enter summary judgment for Nudi on the issue of coverage. We deny any grant of costs or fees under section 155 of the Illinois Insurance Code (215 ILCS 5/155 (West 1998)).\nReversed and remanded.\nCERDA and SOUTH, JJ., concur.", "type": "majority", "author": "JUSTICE WOLFSON" } ], "attorneys": [ "John E. Passarelli, of John E. Passarelli, EC., of Schaumburg, for appellant.", "Patrick W Brennan and Lawrence J. Drabot, both of Crivello, Carlson, Mentkowski & Steeves, S.C., of Milwaukee, Wisconsin, for appellee." ], "corrections": "", "head_matter": "NUDI AUTO RV AND BOAT SALES, INC., d/b/a Nudi Suzuki/Isuzu, Inc., Plaintiff-Appellant, v. JOHN DEERE INSURANCE COMPANY, Defendant-Appellee.\nFirst District (3rd Division)\nNo. 1\u201401\u20141620\nOpinion filed March 6, 2002.\nJohn E. Passarelli, of John E. Passarelli, EC., of Schaumburg, for appellant.\nPatrick W Brennan and Lawrence J. Drabot, both of Crivello, Carlson, Mentkowski & Steeves, S.C., of Milwaukee, Wisconsin, for appellee." }, "file_name": "0523-01", "first_page_order": 541, "last_page_order": 554 }