Question

Forell, a resident of Des Moines, purchased a nearly new Buick automobile from a seller in Cleveland for the unusually low price of $4,000. The seller explained that he was in town to take delivery of another automobile that he had just inherited from his late father. The seller produced a certificate of title. After Forell had possession of the Buick for several months, he sold it to Bates for $3,800. After Bates had driven the car for two months, he was stopped by the police for a minor traffic violation. When the police routinely checked the vehicle identification number through their computer, it was discovered that the car had been stolen from Santiago in Cleveland and that the certificate of title was forged. When Santiago learned that his car had been located, he claimed ownership.a. Will Santiago be able to recover his automobile?b. Will the certificate of title Forell obtained from the out-of-town seller entitle himto ownership?c. Was Forell a good-faith purchaser?

Answer 1

Certificate of Title

A certificate of title is proof of ownership and the right to possess the thing. Having a title to something is like having an intangible right to own it. Generally, in transactions title passes between parties when it is intended to pass.

Estoppel:

An estoppel is a legal bar in a action that prevents a party from using contradictory words or acts when making a claim against another party.

Seller Void Title:

Under Uniform Commercial Code § 2-403 a purchaser obtains title to goods that a seller is able to transfer. A seller cannot legally pass title of stolen or leased goods to another person. Exceptions to this rule include the following under UCC § 2-403:

1. Seller has a voidable title.
2. Merchant has temporary possession of goods and unlawfully sells them to a good faith purchases for value.

Par a)

No. Person Santiago cannot pursue legal action against a purchaser in good faith and will not be legally able to recover the automobile.

Part b)

No. Person Forell has good title to the car if he purchased it in good faith from the seller. Having a forged title does not entitle anyone to ownership.

Part c)

Yes. Person Forell was a good faith purchaser.