Brief Fact Summary. Plaintiff- Appellant allowed Von Maker (who posed as Wertz) borrow a painting to decide if Von Maker wished to buy the painting. Von Maker eventually sold the painting to a third party who resold the painting to a person in Venezuela, and Plaintiff- Appellant seeks to recover the painting.
Synopsis of Rule of Law. Equitable estoppel as a defense against the rightful owner is not available to Defendants unless each element of the defense is proven, specifically, that the rightful owner gave indicia of ownership to another who had the apparent right to sell and that the buyer exercised good faith in the purchase.
Facts. Plaintiff- Appellant (Porter) owned a painting by Utrillo named “Chateau de Lion-sur-Mer,” which he loaned to one who was actually named Von Maker but was posing as Wertz. The loan of the painting was made along with a purchase of another painting, which Wertz agreed to pay for in a deposit and a series of notes. When the first note was not honored, Plaintiff- Appellant sought to retrieve the Utrillo from Von Maker (posing as Wertz). Plaintiff- Appellant could not get in touch with Von Maker, but hired an investigator and discovered that he had not been dealing with Wertz, but had been dealing with Von Maker, who had a long history of fraudulent dealings. Thereafter, Plaintiff- Appellant made a contract with Von Maker (represented by counsel) which addressed the Utrillo and its return. The contract stated that the Utrillo was owned by Plaintiff- Appellant and that Von Maker had placed the Utrillo on consignment with a client and would, after 90 days, either pay $30,000 to Plai
ntiff- Appellant or return the Utrillo. Von Maker failed to perform either the payment or the return of the Utrillo. The same contract between Plaintiff- Appellant and Von Maker called for Von Maker to give a Cranach (another painting) to Plaintiff- Appellant should the 90 days run without Von Maker either paying Plaintiff- Appellant the $30,000 or returning the Utrillo. Von Maker, meanwhile, had used the real Peter Wertz to sell the Utrillo to Defendant Feigen, an art dealer, for $20,000. Thereafter, the Utrillo was bought from Feigen by Brenner, who sold the painting to a person in Venezuela. Plaintiff- Appellant then sued Feigen and Wertz for the return of the Utrillo or damages. At the trial court the Defendant Feigen raised the affirmative defenses of statutory estoppel and equitable estoppel. The trial court held the statutory estoppel defense to be inapplicable, but did sustain the defense of equitable estoppel and dismissed the Plaintiff- Appellant’s complaint. Plaintiff appea
led.
Issue. Does the defense of equitable estoppel or the defense of statutory estoppel raised by Defendant Feigen bar recovery by the Plaintiff?
Held. No. The judgment of the trial court on law and facts is reversed and vacated and judgment is entered for Plaintiff- Appellant. The matter is remanded for a determination of damages.
The defense of statutory estoppel is not available to Defendant Feigen because Defendant was not acting as a “buyer in the ordinary course of business.” This is true for two reasons: (1) Wertz, from whom Defendant Feigen purchased the Utrillo was not “a person in the business of selling goods of that kind.” Wertz was a deli worker, which Defendant Feigen could have discovered through minimal effort. (2) Defendant Feigen did not act in good faith in making the purchase from Wertz. Good faith is defined as “honesty in fact and the observance of reasonable commercial standards of fair dealing in the trade.” [U.C.C. Section:2-203]. Defendant Feigen deviated from the standard of good faith by taking no effort to determine if Wertz was authorized by the rightful owner to sell the painting.
The defense of equitable estoppel is likewise not available to Defendant Feigen. Equitable estoppel does not require the buyer to be acting as a buyer in the ordinary course of business, but extends protection to “good faith purchasers for value.” The Court noted that if Plaintiff- Appellant had provideed another (such as Von Maker) with the usual evidence of title or with the apparent authority to dispose of the Utrillo, then Plaintiff- Appellant would be estopped from recovery. However, in this case all the Plaintiff- Appellant allowed was for Von Maker to possess the Utrillo, and conveyed no other indicia of ownership. The mere fact of possession is not sufficient to create a defense of estoppel. Also, Feigen was not a purchaser in good faith because (1) he made no effort to determine who owned the painting sold by Wertz at the direction of Von Maker, (2) Wertz had no right to possess the Utrillo, and (3) Von Maker only possessed a limited right of possession to display the paint
ing.
The Court notes that this case deals with rare objects of art and as such should be decided on a policy which protects against dishonest practice in the buying and selling of art.
Discussion. This case is useful as a discussion of the estoppel doctrine. The estoppel defense is generally similar whether it arises under common law or statute.