Business Law 11th Edition by Kenneth Clarkson,Roger LeRoy Miller,Gaylord Jentz,Frank Cross

تمرين 2

Empire Fire and Marine Insurance Co. v. Banc Auto, Inc.
Pennsylvania Superior Court, 2006. 897 A.2d 1247.
• Background and Facts In July 2001, Euro Motorcars, an auto dealership in Bethesda, Maryland, agreed to sell a used 2000 Mercedes-Benz S430 for $56,500 to Patrick Figueroa, whose job was to buy and sell cars among dealers. The parties understood that Euro would turn over a document of title to the Mercedes when the price was paid. Banc Auto, Inc., a dealer in Manheim, Pennsylvania, agreed to buy the car from Figueroa for $56,500 plus a percentage of Banc's profit in reselling the vehicle. Banc issued a check to Figueroa. Figueroa cashed the check. Figueroa did not pay Euro, however, and consequently Euro refused to deliver the document of title. Figueroa was convicted of stealing the check and paid Banc $10,000 in restitution. Empire Fire and Marine Insurance Company, Banc's insurer, filed a suit in a Pennsylvania state court against Banc and Euro, asking the court to determine Empire's obligation to its insured. The court ordered the Mercedes to be sold and awarded Banc the $40,000 in proceeds. Euro appealed to a state intermediate appellate court, asserting that Banc was not entitled to the funds because Euro still possessed the document of title.
Opinion by KLEIN, J. [Judge]:
* * * *
* * * In order to possess voidable title, one must obtain goods through the assent of the original owner, but not necessarily acquire good title. Void title, on the other hand, derives from a situation where the goods were not obtained through the assent of the original owner. In common application, this means if goods are stolen and resold, no good title can be transferred because the thief has never had proper title to the goods and so cannot pass good title to another. However, if the goods are obtained through the consent of the original owner, even though that original owner may have been fraudulently induced to part with the goods, title is merely voidable and a buyer in good faith may still obtain title to the goods. [Emphasis added.]
Euro's claim here is essentially that it still held legal ownership of the car because it still held title to the car, never having transferred that title to either Figueroa or any other entity.* * *
* * * Euro [cites] the general proposition that to own, and therefore have the ability to dispose of, an automobile, a person must have title to the automobile.* * * We have no argument with the general proposition put forth by Euro; certainly title to [a] vehicle eventually must be transferred to the new owner. Rather, it is in the application of the general principle to the specific facts of this matter where Euro runs afoul.
* * * While the [Uniform Commercial] Code does not specifically alter the notion that title is an important factor in determining ownership, it did alter notions of how and when title passes
from seller to purchaser.
Regarding the power to transfer,13 [Pennsylvania Consolidated Statutes (Pa.C.S.) Section] 2403 [Pennsylvania's version of UCC 2-403] states, in relevant part:
(a) A purchaser of goods acquires all title which his transferor had or had power to transfer except that a purchaser of a limited interest, acquires rights only to the extent of the interest purchased. A person with voidable title has power to transfer a good title to a good faith purchaser for value. When goods have been delivered under a transaction of purchase the purchaser has such power even though:
(1) the transferor was deceived as to the identity of the purchaser;
(2) the delivery was in exchange for a check which is later dishonored; or
(4) the delivery was procured through fraud punishable as larcenous under the criminal law.
(b) Any entrusting of possession of goods to a merchant who deals in goods of that kind gives him the power to transfer all rights of the entruster to a buyer in the ordinary course of business.
The Code further describes the passing of title in [S]ection 2401(2):
Unless otherwise explicitly agreed title passes to the buyer at the time and place at which the seller completes his performance with reference to the physical delivery of the goods, * * * even though a document of title is to be delivered at a different time and place * * *.
Reading these sections of the Code together, it is apparent that Euro transferred, at a minimum, voidable title to Figueroa when it delivered the Mercedes to him pursuant to their sales agreement. The fact that Euro claims to have been deceived as to the ultimate purchaser is immaterial, as is any contention that Figueroa obtained the car through a fraud which was punishable under the criminal law. Once Euro voluntarily delivered the car to Figueroa, Figueroa obtained the title, despite not having any document of title, and was free to dispose of the car to a buyer in good faith. Thus, Euro's argument that it was still the legal owner of the car fails.
* * * *
* * * [A] bona fide purchaser [is] one who buys something for value without notice of another's claim and without actual or constructive notice of any defect in title.* * * [G]enerally, a bona fide purchaser's rights to the property are not affected by the transferor's fraud against a third party. There is no evidence that Banc Auto ever acted in any way other than honestly concerning this transaction, nor is there any evidence to show that Banc should have been in any way suspicious of this transaction as opposed to the myriad of other similar transactions [among these parties]. [Emphasis added.]
• Decision and Remedy The state intermediate appellate court held that Euro had transferred voidable title to the Mercedes to Figueroa when Euro gave the car to him. Thus, Euro's possession of the document of title had no effect on Banc's award. The court affirmed the lower court's ruling in Banc's favor.
• The Ethical Dimension Given that Euro Motorcars had had prior dealings with Figueroa on a number of occasions and did not suspect that Figueroa would commit theft, was the result in this case fair Why or why not
• The E-Commerce Dimension If automobile title documents were available online, would that have helped Euro to avoid loss in this situation What problems might the online availability of title documents lead to