Cengage Advantage Books: Fundamentals of Business Law Today 10th Edition by Roger LeRoy Miller

Exercise 25

A Question of Ethics-Sales by Nonowners. Kenneth West agreed to sell his car, a 1975 Corvette, to a man representing himself as Robert Wilson. In exchange for a cashier's check, West signed over the Corvette's title to Wilson and gave him the car. Ten days later, when West learned that the cashier's check was a forgery, he filed a stolen vehicle report with the police. The police could not immediately locate Wilson or the Corvette, however, and the case grew cold. Nearly two and a half years later, the police found the Corvette in the possession of Tammy Roberts, who also had the certificate of title. She said that she had bought the car from her brother, who had obtained it through an ad in a newspaper. West filed a suit in a Colorado state court against Roberts to reclaim the car. The court applied Colorado Revised Statutes Section 4-2-403 (Colorado's version of Section 2-403 of the Uniform Commercial Code) to determine the vehicle's rightful owner. [ West v. Roberts, 143 P.3d 1037 (Colo. 2006)] (See Title and Risk of Loss.)
1. Under UCC 2-403, what title to the Corvette, if any, did "Wilson" acquire? What was the status of Roberts's title, if any, assuming that she bought the car without knowledge of circumstances that would make a person of ordinary prudence inquire about the validity of the seller's title? In whose favor should the court rule? Explain.
2. When the original owner of a vehicle relinquishes it due to fraud, should he or she be allowed to recover the vehicle from a good faith purchaser? If not, whom might the original owner sue for recovery? What is the ethical principle underlying your answer to these questions? Discuss.