February 7, 1986

Robert A. Warder 
107 Elm Street 
Box 10 
Hill City, South Dakota 57745 

Official Opinion No. 86-03

Insurance for Hill City Fire Department

Dear Mr. Warder:

You have requested an opinion from this office in regard to the following factual situation:

FACTS: 

Hill City, South Dakota, has a volunteer fire department that is comprised of a group of individuals who are not a formal partnership, association or corporation.  They own various fire trucks and equipment that the volunteer fire department has acquired over the years.  Such equipment includes ten motorized vehicles or trucks.  The title of one vehicle, a 1937 fire truck, is in the name of the Hill City Volunteer Fire Department.  The titles for four of the vehicles are in the name of Pennington County and the Volunteer Fire Department jointly.  The titles for the remaining five vehicles are in the name of Pennington County. 

The Hill City Volunteer Fire Department was insured under Hill City's insurance policy from 1984-1985.  The fire department is now insured under the Pennington County insurance policy.

Based on the above facts, you have asked the following question:

QUESTION: 

Can this equipment be titled both in the name of the City of Hill City and the Volunteer Fire Department for the purpose of acquiring insurance under Hill City's insurance policy?

The 1937 Truck:

Since the 1937 truck is in the name of the Hill City Volunteer Fire Department and since Hill City, as a municipal corporation, has the power: 

(1)  To sue and be sued and to contract in its corporate name; 

(2)  To acquire by lease, purchase, gift, condemnation, or other lawful means and hold in its corporate name or use and control as provided by law both real and personal property and easements and rights of way within or without the corporate limits for all purposes authorized by law or necessary to the exercise of any power granted; 

    . . .

(SDCL 9-12-1), it is my opinion that Hill City may receive a gift of a property interest in the 1937 fire truck from the Hill City Volunteer Fire Department.  I might add that this gift may not be a sham whereby Hill City's name is merely added to the title without the formal requisites of a legal gift.  I can, however, envisage a gift to Hill City of a property interest as a tenant in common or a tenant for years.  If such a legal gift were made, the property is then, in part or in whole, the property of Hill City, and Hill City may contract with a formally organized volunteer fire department to perform fire protection services.  

(SDCL 34-31-4).

For insurance purposes, Hill City's insurable interest 

(SDCL 58-10-7), as a tenant in common, may only be partial, and this limitation on insurance  coverage may be unacceptable to the parties involved.  I, therefore, recommend that Hill City and the Hill City Volunteer Fire Department confer with the city's insurer to see what insurance is available to Hill City if Hill City is merely a tenant in common.

It may be more desirable for Hill City to become a tenant for years.  Thus, Hill City would have a full property interest in the equipment but only for a limited period of time.  This may permit the insurer to provide full insurance rather than partial.  Again, the parties should confer with the insurer.  If this latter property interest is chosen, Hill City may not have fee title to the equipment but would have an insurable interest.

In any event, Hill City and the Hill City Volunteer Fire Department must follow some legally-recognized procedure to legitimize its insurance coverage.

The Four Vehicles in the Name of Pennington County and the Hill City Volunteer Fire Department Jointly:

It is my understanding that at some past time the Hill City Volunteer Fire Department added the name of Pennington County to the title of four pieces of fire equipment.

If this prior act was a sham (not following the above-described formal legal requirements), it is my opinion that the Hill City Volunteer Fire Department is  the true and only owner of the equipment.  In that case, the Hill City Volunteer Fire Department may do with these four pieces what is above suggested for the 1937 truck to give an insurable interest to Hill City.

If the prior act was a valid title transfer, then Pennington County will have to use some other method to insure the equipment through Hill City.

The Five Vehicles in the Name of Pennington County:

I cannot see how your question relates to this equipment, so I decline to answer.

Respectfully submitted,

Mark V. Meierhenry
Attorney General