Hi Charles.
From what you have stated, there does not appear to be any legal change of ownership of this vehicle.
1) you bought the car from a friend, and signed the title. Wouldn't the friend sign off on the title too? The title or "pink slip" is the official document used for transfer of title. Your friend lost it, and should have requested a new form at least for for temporary title transfers. This was not done. No legal transfer took place between you and your friend.
2) What you used to sell any interest to another buyer is not a legal document that the DMV will accept. You had essentially only a bill of sale, so no transfer of title to this third party occurred.
3) Lastly, since there was no registration change and no title change, the DMV will only show your friend as the registered owner and holder of the title. To verify this, just go to the DMV and run a check.
I do not see anyone taking ownership of the vehicle from your friend based on what you presented. Your friend may be liable, but that gets confusing, and does not apply you. As far as you are concerned, you never officially owned the vehicle. I am surprised you even were able to get insurance on the vehicle. But insurance companies have never been known to turn down money.
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Regards,
Mike
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