New York Supreme Court, Appellate Division, First Department, 1979.
68 A.D.2d 141, 416 N.YS.2d 254, affirmed,439 N.Y.S.2d 105, 421 N.E.2d 500 (1981)
Facts
Plaintiff allows Defendant to borrow painting; Defendant steals painting and then sells it.
Procedural History
Defendants argued defenses of statutory and equitable estoppel but the trial court did not find evidence of statutory estoppel, but was able to hold for the defendants on the theory of equitable estoppel and that statutory estoppel does not bar recovery for the Plaintiff, but still they held for defendants.
Issue
Can statutory or equitable estoppel bar the plaintiff from recovering damages from the defendant? Statutory estoppel applies when an owner entrusts possession of goods to someone who is given the rights to transfer all rights of the owner to a buyer in the ordinary course of business. Equitable estoppel applies when an owner who has given all indicia of ownership to another and cannot use his title to argue for ownership over a bona fide purchaser who has been sold the goods by the other who has been all indicia of ownership.
Arguments for Both Parties
Defendants say that the practice of not checking of ownership of items is standard for the industry and that the Gallery is a bona fide purchaser, allowing new actual ownership. Plaintiff states that the Defendant only had possessional rights rather than ownership rights.
Holding
The court holds that there was no bona fide purchase because the seller never had the rights of the owner.
Reasoning behind Holding
Plaintiff only gave the Defendant the right to hang it up in his house.
Rule
The purchaser can become true owner if the original owner give indicia of ownership or outright ownership or Purchaser buys from seller believing in good faith (and good practice) that the seller is the true owner.
UCC Entrustment Statute
Policy Arguments
Commercial indifference of the TRUE owner is not something that is good for society. This does not encourage people to become owners of property because someone else can steal it and make it their own extremely easily. We want to encourage ownership.
Did Porter voluntarily give possession or any other indicia of ownership to Wertz?
- No
Spencer M. Durden 