Menzel v. List - 24 N.Y.2d 91, 298 N.Y.S.2d 979, 246 N.E.2d 742 (1969)

Rule:

In a contract to sell or a sale, unless contrary intention appears, there is (1) an implied warranty on the part of the seller that he has a right to sell the goods; (2) an implied warranty that the buyer shall have and enjoy quiet possession of the goods as against any lawful claims existing at the time of the sale. N.Y. Pers. Prop. Law § 94.

Facts:

In 1932, plaintiff Erna Menzel and her husband purchased a painting in Belgium. In 1946, they found that the German authorities had removed the painting and left a receipt. The location of the painting between the time of its removal by the Germans in 1941 and 1955 was unknown. In 1955, Klause Perls and his wife, the proprietors of a New York art gallery, purchased the painting from a Parisian art gallery for $ 2,800. The Perls knew nothing of the painting's previous history and made no inquiry concerning it, being content to rely on the reputability of the Paris gallery as to authenticity and title. In October 1955 the Perls sold the painting to Albert List for $ 4,000. In a replevin action by plaintiff against said Albert List, List impleaded the Perls, proprietors of the art gallery, alleging that they were liable to him for breach of an implied warranty of title. The trial court charged the jury that, if it found for plaintiff, it should assess the value of the painting at such an amount as represented its present value. As a result of the action, List returned the painting to plaintiff. In addition, the jury found for List as against the Perls, on his third-party complaint, in the amount of $22,5000, the painting’s present value, plus the costs of the Menzel action incurred by List. The Perls appealed to the Appellate Division, where the judgment was modified, by reducing the amount awarded to List to $4,000, the purchase price he had paid for the painting. According to the Appellate Court, the applicable measure of damages was the price List paid for the painting at the time of purchase, together with interest. List appealed.

Issue:

In a breach of an implied warranty of title in the sale of personal property, was the proper measure of damages the current value of the property in question?

Answer:

Yes.

Conclusion:

The Court reversed the order of the appellate court as to the measure of damages and reinstated the judgment awarding List the value of the painting at the time of trial. According to the Court, the purchase price which the purchaser from the proprietors of the art gallery paid for the painting was not the applicable measure of damages, instead, the proper measure of damages for the breach of an implied warranty of title to the painting was the present market value of the painting -- the value which the purchaser would have been able to obtain if the sellers had conveyed good title. Had the warranty been fulfilled, the purchaser would have possession of a painting currently worth $ 22,500. The Court rejected the argument that the damages could have exposed innocent sellers to potential ruin, for third-party defendants should have taken steps to ascertain the status of title or exclude the warranties.