54 Misc. 2d 168 | N.Y. City Civ. Ct. | 1967
Plaintiff is an automobile rental concern which from time to time would sell off its used automobiles as they were replenished with new ones. On August 23, 1965 plaintiff was offering for sale a two-year-old Chevrolet station wagon for $1,250. One Herbert Schwartzman, who had previously attempted to lease a car, offered to purchase the station wagon, and tendered his check, but it was not certified, and plaintiff’s manager testified he rejected it. Nevertheless, he permitted Schwartzman to take a test run. Schwartzman got
A week later, the car was traced to the premises of defendant Weisberg, a licensed auto wrecker and junk' dealer in The Bronx. Weisberg was also licensed as a used car dealer in Yonkers. Weisberg claimed he had purchased this car from Schwartzman for $900. He actually paid Schwartzman only $300 down, the balance to be paid at a later time. Schwartzman has never been heard from again. Weisberg received from Mm neither a bill of sale nor a registration certificate for the motor vehicle, but he immediately resold it the same day to a dealer for $1,200.
Plaintiff now sues for conversion, seeking to recover from Weisberg and Ms firm the value of its station wagon. Defendant resists, insisting that he had acquired good title to the motor vehicle. He invokes .the provisions of the Hniform Commercial Code to substantiate his argument that he could acquire good title from a merchant, or even from a thief. There appear to be no reported cases on these provisions of the code.
At common law, one could convey only such title as he himself possessed. Thus no one could obtain good title from a thief, no matter how innocent the circumstances of his acquisition. (Bassett v. Spofford, 45 N. Y. 387; Knox v. Eden Musee Americain Co., 148 N. Y. 441; Damis v. Barcia, 266 App. Div. 698; Tompson v. Goldstone, 171 App. Div. 666.)
The harshness of this rule with respect to innocent purchasers who had paid their money in perfect good faith without any indication of anything amiss in the transaction led to statutory modifications of the common-law rule, so that where the title owner had conveyed a voidable title he would not be permitted to revoke it as against a bona fide purchaser for value. (Personal Property Law, § 105.) Innocence would thus transmute the imperfect title into a state of perfection and impregnability. Impeccable virtue would receive its just reward, and title would pass from a swindler, if not from a thief. (Ross v. Leuci, 194 Misc. 345; Stanton Motor Corp. v. Rosetti, 11 A D 2d 296.)
The protection of the innocent was further developed to cover situations where the title owner had not conveyed even a voidable title, but had so clothed the transferor with apparent vestiges of authority and indicia of title that equitable principles of estoppel were invoked to preclude the title owner from asserting his title. This would cover such circumstances as the
The Uniform Commercial Code has expanded the rights of a third person who has purchased the property in all innocence, even from a thief, or from a person who has been entrusted with possession, even if not authorized to sell. (Uniform Commercial Code, § 2-403.) Under the code, title ordinarily passes when goods are delivered, unless otherwise explicitly agreed. (Uniform Commercial Code, § 2-401, subd. [2].) If passage of title is dependent upon the performance of some condition subsequent, this is a voidable title which can be transferred to a bona fide purchaser for value even if the transferor was deceived as to the identity of the purchaser, the delivery was in exchange for a check later dishonored, or procured through a fraud punishable as larcenous under the criminal law. Thus what was formerly ambiguous has been made explicit. (Uniform Commercial Code, § 2-403, subd. [1].)
Subdivision (2) provides that the entrusting of goods to a person in the business of selling goods of that kind can validate a transfer to a buyer in the ordinary course of business. This is so even if procurement of the entrusting was larcenous. (Subd. 3.)
Under these provisions, the first question posed is whether plaintiff conferred a voidable title upon Schwartzman, whis-h could be perfected in the hands of a bona fide purchaser for value. Plaintiff put the vehicle in Schwartzman’s hands, according to its testimony, solely for the purpose of permitting a test run, and not with any idea of conferring title upon him. The fact that this was done after Schwartzman’s offer of purchase ostensibly had been rejected, and that after he took the car, plaintiff’s manager “found” his check and immediately deposited it raises troublesome questions as to whether or not plaintiff had in fact intended to convey a voidable title dependent on whether the check cleared.
Beyond that, defendant’s claim to good title must founder on considerations of his own status. If he acquired the property from one who had a voidable title, he must show that he was a “good faith purchaser for value”. (Uniform Commercial Code, § 2-403, subd. [1].) That term is defined in section 1-201 and paragraph (b) of subdivision (1) of section 2-103. The requirement of good faith for a merchant like defendant is simply “ honesty in fact and the observance of reasonable commercial standards of fair dealing”. (Uniform Commercial Code, § 2-103, suibd. [b].) If he acquired the property from a merchant who was entrusted with possession, he must demonstrate that he was a “ buyer in the ordinary course of business (Uniform Commercial Code, § 2-403, subd. [2].) This term is likewise defined in subdivision (9) of section 1-201, and in requiring the purchase from one in the business of selling goods of that kind, is more restrictive than the term “ good faith purchaser for value ”. (See Commentary to Uniform Commercial Code, § 2-403 in McKinney’s Cons. Laws of N. Y., Book 62%, Part 1, p. 397.)
Plaintiff is therefore entitled to judgment in the amount of $1,200, with interest from the 30th day of August, 1965.