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Porter v. Wertz - 68 A.D.2d 141, 416 N.Y.S.2d 254 (App. Div. 1st Dept. 1979)

Rule:

Although one may not be a buyer in the ordinary course of business as defined in the Uniform Commercial Code, he may be a good-faith purchaser for value and enjoy the protection of precode estoppel. N.Y. U.C.C. Law § 1-103

Facts:

Plaintiffs, owners of a painting on loan to defendant merchants, argued that the doctrines of statutory estoppel and equitable estoppel could not be invoked to preclude the recovery of a painting that was loaned to merchants and, thereafter, sold by them to defendant art dealer who conveyed it to buyer in Venezuela. The trial court dismissed the action.

Issue:

Were the doctrines of equitable and statutory estoppel available to defendant merchants and defendant art dealer to bar plaintiffs' recovery of a loaned painting that was sold by merchants to dealer to third party?

Answer:

No

Conclusion:

The court concurred with the trial court as to the inapplicability of statutory estoppel but making equitable estoppel also unavailable. Citing N.Y. U.C.C. Law § 1-201, the court found the art dealer was not a buyer in the ordinary course of business, because the merchants were not in the business of selling art. Further, the dealer did not act in good faith because it failed to investigate whether the merchants were legitimate art dealers. Nevertheless, the doctrine of equitable estoppel would be available if plaintiffs invested the merchants with indicia of title. Although the merchants had possession of the painting, it was not consigned to them; it was for residential display only. The court concluded that the art dealer could not rely on any indicia of ownership in the merchants; it simply failed to inquire into the merchants' authority to sell.

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