Business Law and the Regulation of Business 11th Edition by Richard Mann, Barry Roberts

Exercise 16

FACTS Mike Durham bought a used 1968 Chevrolet Camaro from Ronald and Wyman Robinson, owners of Friendly Discount Auto Sales. Unknown to either Durham or the Robinsons, the car had been stolen. In fact, when he first bought the car, Wyman Robinson had obtained tag receipts from what turned out to be the car thief and had subsequently registered the car in his name. Durham had received all prior documentation upon purchase of the car. However, the Federal Bureau of Investigation seized the car from Durham and returned it to the original owner. Durham sued the Robinsons, alleging, among other things, breach of the warranty of title. The jury awarded Durham $5,200, the amount he had paid for the car. The Robinsons appealed.
DECISION Judgment for Durham.
OPINION Wright, J. Appellants assert that the grant of summary judgment was in error because there was ''a scintilla of evidence, if not substantial evidence'' from which the trial court could have concluded that appellants held good title ''or at least voidable title'' on the automobile, thereby conveying actual title to Durham at the time of the purchase.
Appellants' argument is without merit. It is unequivocal that ''a person who has stolen goods of another cannot pass title thereto to another, whether such other knew, or did not know, that the goods were stolen.'' [Citations.] A thief gets only void title and without more cannot pass any title to a subsequent purchaser, even a good faith purchaser. [Citation.] It is undisputed that the automobile had been stolen. Therefore, at the time of purchase appellants obtained no title. In other words, the title was void. Appellants could not convey good title to Durham; therefore, the subsequent sale to Durham constituted a breach of warranty of good title.
Relying on § 2-403(1), [UCC], appellants contend that they at least acquired a voidable title when they purchased the automobile. Section 2-403 recognizes that a person with voidable title has power to transfer a good title to a good faith purchaser for value. Voidable title can only arise from a voluntary transfer, and the rightful owner must assent to the transfer. ''A possessor of goods does not have voidable title unless the true owner has consented to the transfer of title to him.'' [Citation.] In this case the rightful owner did not consent or assent to the transfer of the automobile. Appellants obtained no title.
INTERPRETATION A void title is no title. ETHICAL QUESTION Did either of the parties act unethically? Explain.
CRITICAL THINKING QUESTION Who should bear the loss between the Robinsons and Durham? Explain.