Entrustment Rule. Samuel Porter was the owner of a Maurice ...

[sam.t96]

Entrustment Rule. Samuel Porter was the owner of a Maurice Utrillo painting entitled Chateau de Lion-sur Mer. Harold Von Maker, who called himself Peter Wertz, bought a different painting from Porter, paying 50,000 cash and giving Porter ten promissory notes for 10,000 each. At the same time, Wertz talked Porter into allowing Wertz to hang the Utrillo painting in Wertz's home while he decided whether to buy it. When the first promissory note was not paid, Porter learned that he was dealing with Von Maker, a man with a history of arrests and judgments against him. Von Maker told Porter that the Utrillo painting was on consignment and would be returned or Porter would receive 30,000. Actually, the painting had already been sold to the Feigen Gallery, which had in turn sold it to Irwin Brenner, trading under the name Irwin Brenner Gallery. At the time of this lawsuit, the painting was in Venezuela. Porter filed suit against Wertz, the Feigen Gallery, and Irwin Brenner to recover either possession of the painting or its value. The Feigen Gallery and Irwin Brenner claimed that they had good title under UCC 2-403 and that Porter was estopped from repossessing the painting or its value. Discuss whether Porter was entitled to repossession or the value of the Utrillo painting.

Question 2

An agency may not be ended by:
 a. unilateral notice by the agent
  b. unilateral notice by the principal
  c. mutual consent by agent and principal d. lapse of agreed-upon time
  e. decision of a third party opposed to the agency

[C.mcnichol98]

Answer to Question 1

Entrustment rule
The court noted that UCC 2-403(2) provides that any entrusting of possession of goods to a merchant who deals in goods of that kind gives him power to transfer all rights of the entruster to a buyer in the ordinary course of business. A buyer in the ordinary course of business is a person who in good faith and without knowledge that the sale to him is in violation of the ownership rights or security interest of a third party in the goods buys in the ordinary course from a person in the business of selling goods of that kind. The court held for Porter for the following reasons:
(a) Porter did not entrust the painting to a merchant. Wertz was not an art dealer. In fact, he worked at a delicatessen. The painting was simply bailed to Wertz to place in his home for his determination as to its future purchase. In addition, there were given to Wertz no indicia of ownership that would lead Feigen to believe that Wertz was the owner of the painting or had authority from Porter to sell it.
(b) Feigen Gallery was not a purchaser in the ordinary course of business. Feigen did not purchase from a merchant, and the court held that the purchase was not even made in good faith. To be a purchaser in good faith, Feigen had to observe reasonable commercial standards of fair dealing in the trade. Feigen made no effort to verify whether Wertz was the owner of the painting or had the authority to sell it.

Answer to Question 2

e

[sam.t96]

TYSM

[kishoreddi]

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