Kahr v. Markland - 187 Ill. App. 3d 603, 135 Ill. Dec. 196, 543 N.E.2d 579 (1989)

Rule:

Sections 2-403(2), (3), of the Uniform Commercial Code provide that (2) 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 ordinary course of business. (3) "Entrusting" includes any delivery and any acquiescence in retention of possession regardless of any condition expressed between the parties to the delivery or acquiescence and regardless of whether the procurement of the entrusting or the possessor's disposition of the goods have been such as to be larcenous under the criminal law. Ill. Rev. Stat. ch. 26, paras. 2-403(2), (3) (1987). 

Facts:

The owners mistakenly included bags containing sterling silver in a donation of used clothing to a charitable retailer. By the time they discovered the mistake later that day, the retailer had already sold the silver to the buyer, who refused to return it. The owners filed an action against the buyer and the retailer, and the trial court entered a replevin order against the buyer. The circuit court affirmed and the buyer appealed.

Issue:

Did the owners entrust the silver to the retailer as contemplated under Sections 2-403(2), (3), of the Uniform Commercial Code?

Answer:

No.

Conclusion:

The court affirmed. The owners did not convey title to the retailer because they did not entrust the silver to the retailer, whether intentionally or otherwise. They were not aware that it was in the bags, and there was therefore no voluntary transfer of possession and no delivery of the silver to the retailer. On these facts there could be no entrustment within the meaning of § 2-403 of the UCC, Ill. Rev. Stat. ch. 26, para. 2-403 (1987). The retailer therefore did not obtain title to the silver and could not convey title to the buyer. The silver was lost property, and the finder was entitled to possession of it against everyone except the true owner. Because the owners did not intend to donate the silver, the buyer had no title to it.