Supreme Court of New Jersey, 1980.
83 N.J. 478, 416 A.2d 862
Synder, art gallery owner, allegedly bought three stolen, small paintings of Georgia O’Keefe’s in 1946 from a New York art gallery. An action of replevin. The defendant bought the paintings from a man named Frank who had the painting in his home.
Trial court granted summary judgment for Snyder because the statute of limitations regarding adverse possession claims is 6 years, barring O’Keefe’s actions. Appellate court granted Summary Judgment for O’Keefe because Snyder was unable to prove adverse possession. Dissenting opinion of the appellate court “stated that the appropriate measurement of the period of limitation was not by analogy to adverse possession, but by the application of the ‘discovery rule’ … the six year period of limitations commenced when O’Keefe knew or should have known who unlawfully possessed the paintings, and that the matter should be remanded to determine if and when that event had occurred.”
The issue before the courts is to decide when does O’Keefe’s cause of action begin. Is it when they were stolen in 1946(trial court)? Is it when O’Keefe lists them as stolen in 1972? Is it when O’Keefe learns where they are in September of 1975? Or is it when the possessors refusal to forfeit the items directly to the original owner (NY Replevin Statute of Limitations)? Another issue to be decided is whether or not an owner of the paintings acquired ownership via adverse possession. If that owner became a bona fide purchaser, then he could have transferred good title to the Defendant. Does O’Keefe qualify for the discovery rule?
The court holds that it will decide issues of law in the instant court, but that the case is remanded back to trial court to decide upon issues of fact. The court reverses the appellate court’s decision in favor of O’Keefe and remand the case for trial “in accordance with this opinion.”
If an item is stolen, a thief can acquire no title for it and cannot transfer good title to anyone else. However if a person with voidable title transfers to someone in good faith the item, a bona fide purchase transfers title from the original owner to the new purchaser.
In order to establish title via adverse possession, “the possession must be hostile, actual, visible, exclusive, and continuous.”
The main rule however is that there is a release valve to the Statute of Limitations on an action of replevin. That rule is called the discovery rule that “in an appropriate case, a cause of action will not accrue until the injured party discovers, or by exercise of reasonable diligence and intelligence should have discovered, facts which form the basis of a cause of action.”
The rule of discovery is now weighed with equitable considerations rather than the doctrine of adverse possession.
“The focus of the inquiry will no longer be whether the possessor has met the tests of adverse possession, but whether the owner has acted with due diligence in pursuing his or her personal property.”
“The interplay between the statute of limitations as modified by the discovery rule and the UCC should encourage good faith purchases from legitimate art dealers and discourage trafficking in stolen art without frustrating an artist’s ability to recover stolen artworks.”
Shifts the burden of proof from the purchaser to the original owner.