Allan Nott Enters. v. Nicholas Starr Auto, L.L.C. - 2006-Ohio-3819, 110 Ohio St. 3d 112, 851 N.E.2d 479

Rule:

Under the provisions of the Ohio Certificate of Motor Vehicle Title Act, Ohio Rev. Code Ann. § 4505.01 et seq., absent any question of estoppel arising from an act of the owner, a thief cannot convey valid title to a stolen motor vehicle to a bona fide purchaser for value without notice, although the certificate of title used in the purported transfer appears valid on its face. In other words, the original owner prevails over a good-faith purchaser who purchases from the thief.

Facts:

Edward L. Raifsnider provided John and Debra Stone with a check to purchase the Stones' Honda Accord. In exchange, the Stones assigned the Missouri title to the Accord to Raifsnider. The Stones later discovered that the check provided to them by Raifsnider was counterfeit, and reported the incident to the Missouri police. In the meantime, Raifsnider sold the Accord to appellee, Nicholas Starr Auto, d.b.a. 1st Choice Auto ("Starr Auto"). Starr Auto then sold the Accord to appellant, Allan Nott Enterprises, Inc. ("Nott"). Nott in turn sold the Accord to a customer, Bradie Rice. After the Ohio Registrar of Motor Vehicles determined that the Accord was stolen, pursuant to R.C. 4505.17, he cancelled the titles, and Nott returned the Accord to the Stones. Nott voluntarily provided Rice with a replacement vehicle and requested Starr Auto to reimburse it for the cost of the Accord. Starr Auto refused, and Nott filed suit against Starr Auto seeking to recover the cost of the Accord. The trial court granted summary judgment to Starr Auto, finding that Raifsnider was able to pass valid title to the Accord to Starr Auto, which in turn sold the Accord to Nott. The court found that Raifsnider had taken possession of the Accord as part of a "transaction of purchase" within the meaning of R.C. 1302.44(A). Thus, Starr Auto could not be held liable for the sale, and Nott's complaint against Starr Auto was dismissed. The Court of Appeals affirmed. Nott sought further review, contending that Raifsnider was a thief and, therefore, could not pass valid title of the Accord to Starr Auto, citing Hardware Mut. Cas. Co. v. Gall, 15 Ohio St.2d 261, 44 O.O.2d 448, 240 N.E.2d 502.

Issue:

Under the circumstances, could Raifsnider pass a valid title to Nicholas Starr Auto, notwithstanding the fact that he acquired the car from the owners with a counterfeit check? 

Answer:

No.

Conclusion:

The supreme court held that saying the principle that a thief could not convey title, even with an apparent valid certificate of title, applied only to physical thefts, let a thief pass title of a car stolen by fraud, subverting the purpose of the Certificate of Motor Vehicle Title Act, Ohio Rev. Code Ann. § 4505.01, et seq. Using a counterfeit check to acquire the car was a theft, so the thief could not pass title to the seller. Ohio Rev. Code Ann. § 1302.44(A)(4), letting a thief acquire voidable title to goods and convey title to a bona fide purchaser for value, was less specific than Ohio Rev. Code Ann. § 4505.04, requiring a certificate of title to claim ownership of a car, so § 4505.04 controlled who a stolen car's owner was, including cars stolen by fraud or deception. It was not claimed that those from whom the car was acquired acted in a manner estopping them from retaining title to the car, so they retained its ownership. Because valid title to the car was with them, the buyer's complaint seeking to recover the car's purchase price from the seller had merit.