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Bergeron v. Aero Sales, Inc. - 205 Or. App. 257, 134 P.3d 964 (2006)

Rule:

The general rule under Oregon law is that a purchaser can acquire only the title that his seller had. There are exceptions to that rule. First, a person with voidable title can transfer good title to a good faith purchaser for value. Second, where a party has entrusted goods to a merchant who deals in goods of that kind, the merchant can transfer all of the rights of the entrusting party to a buyer who purchases the goods in the merchant's ordinary course of business. The entrustment exception applies only where possession of the goods is entrusted to a merchant who deals in goods of that kind.

Facts:

Fuel purchaser Kasper placed jet fuel in an underground fuel storage tank located beneath a hangar, without the knowledge of Praegitzer, who owned the hangar and the fuel tank at that time. Praegitzer then sold the hangar and the fuel tank to Curtright. When Kasper learned that the hangar had been sold, he sought to remove the fuel but Curtright refused to allow him to do so, insisting that he had purchased the fuel along with the hangar and the fuel tank. Praegitzer brought a trespass action against Kasper for using Praegitzer's hangar without permission. Kasper filed a counterclaim against Praegitzer for conversion of the jet fuel. Kasper also filed a third-party claim against Curtright for conversion of the jet fuel. Curtright counterclaimed against Kasper for trespass and conversion and filed cross-claims against Praegitzer for indemnity and breach of contract. The parties filed cross-motions for summary judgment on Kasper's conversion claims. The trial court granted the motions of Praegitzer and Curtright and denied Kasper's motion. The trial court also dismissed Praegitzer's claim against Kasper as well as Curtright's counterclaims against Kasper and cross-claims against Praegitzer. Kasper appealed, arguing that the trial court erred in denying his motion for summary judgment on his conversion claims and in granting Praegitzer's and Curtright's summary judgment motions.

Issue:

In a fuel purchaser's claim for conversion of fuel oil he stored in an underground fuel tank located beneath a hangar, but without the knowledge of the hangar owner at that time, did the fuel oil purchaser have valid or better title as against the third person who later purchased the hangar and fuel tank?

Answer:

Yes

Conclusion:

The judgment on the fuel oil purchaser Kasper's third-party conversion claim against hangar owner Curtright was reversed, but the rest of the judgment was affirmed. The appellate court determined that Curtright did not have a superior right to the fuel under Or. Rev. Stat. § 72.4030. First, Praegitzer  did not obtain "voidable title" to the jet fuel within the meaning of § 72.4030 because Kasper did not assent to the transfer of the jet fuel. Next, the entrustment exception under § 72.4030(3) did not apply because Praegitzer, as the seller of the property, did not deal in goods of the jet fuel kind. Because the exceptions did not apply, Curtright, as the purchaser of the hangar and tank, acquired the seller's right to possess the fuel unless someone else had better title. Under the facts of the case, fuel oil purchaser Kasper had better title over Curtright because the fuel was not a "treasure trove" where the rightful owner was unknown.

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