Business Law 13th Edition by Frank Cross, Kenneth Clarkson, Roger LeRoy Miller

Exercise 18

BACKGROUND AND FACTS Timothy Allen commissioned a custom motorcycle from Indy Route 66 Cycles, Inc. Indy built the motorcycle and issued a "Certificate of Origin." Two years later, federal law enforcement officers arrested Allen on drug charges and seized his home and other property. The officers also seized the Indy-made motorcycle from the garage at the home of Allen's sister, Tena. The government alleged that the motorcycle was subject to forfeiture as the proceeds of drug trafficking. Indy filed a claim against the government, arguing that it owned the motorcycle, as evidenced by the "Certificate of Origin," which the company still possessed. Indy claimed that it had been keeping the motorcycle in storage. The government filed a motion to strike the claim, asserting that title to the motorcycle had passed when it was delivered to Allen.
IN THE LANGUAGE OF THE COURT
Frederick J. Martone, Judge.
* * * * The only * * * question is whether claimant [Indy] can show an * * * ownership interest based on the Certificate of Origin.
Under Indiana law, the question of motor vehicle ownership is governed by the sales provisions of Indiana's Uniform Commercial Code ("UCC"). Although the government challenges the current significance of the Certificate of Origin, it does not dispute that claimant owned the motorcycle before selling it to Allen. With respect to the alleged sale, the government relies on [Indiana Code Section 26-1-2-401(2), Indiana's version of UCC 2-401(2)],
Unless otherwise explicitly agreed, title passes to the buyer at the time and place at which the seller completes his performance with reference to the physical delivery of the goods. Claimant does not dispute that this provision applies, and it does not contend that it agreed to different terms with Allen. Therefore, claimant's standing turns on whether it delivered the motorcycle to Allen. [Emphasis added.]
On this point, the government first offers an affidavit by claimant's former vice president, Vince Ballard, stating that the motorcycle was "built and delivered on or about 4/30/2007." Ballard also referred to the Certificate of Origin, which purported to transfer the motorcycle from "Route Sixty Six Motorcycle Co." to the company's retail division as a "distributor or dealer," on April 30, 2007. He went on to state that Allen did not pay for the motorcycle and referred to the * * * claimant storing the motorcycle starting on April 30, 2007. The affidavit is inconclusive. It implies that claimant delivered the motorcycle to Allen, and it asserts that claimant kept the motorcycle in storage.
Nevertheless, it is undisputed that the motorcycle was found in Allen's sister's garage two years later, which strongly indicates that claimant delivered it to Allen. Claimant offers no explanation for how the motorcycle ended up with Allen's sister when it was allegedly in storage. * * * Under the circumstances, we grant the government's motion to strike the claim * * * for lack of standing. DECISION AND REMEDY The district court issued a ruling in the government's favor and granted the motion to strike Indy's claim. The seller had given up possession of the goods to the buyer. This was sufficient to pass title even though the seller had kept a "Certificate of Origin." As a consequence, the cycle was subject to forfeiture as the proceeds of drug trafficking.
WHAT IF THE FACTS WERE DIFFERENT? Suppose that Indy had given the "Certificate of Origin" to Allen and had kept the motorcycle. Would the result have been different? Explain.
THE LEGAL ENVIRONMENT DIMENSION?Should the passage of title be tied so closely to the possession of the goods? Discuss.