CAPSULE SUMMARY

Example:  P finds logs floating in a bay. He takes them and moors them with rope. The logs break loose, and are found by D, who takes them and refuses to return them to P. P may recover the value of the logs from D. P’s possession is the equivalent of ownership as against anyone but the true owner.

1. Statutes of limitations:  Although the possessor of goods holds them in trust for the true owner, all states have statutes of limitations, at the end of which the true owner can no longer recover the good from the possessor. Usually, the statute of limitations does not start to run until the true owner knows or with reasonable diligence should know the possessor’s identity.

II. BONA FIDE PURCHASERS

A. Bona fide purchasers:  The problem of the “bona fide purchaser” arises when one who is in wrongful possession of goods (e.g., a thief, defrauder, finder, etc.) sells them to one who buys for value and without knowledge that the seller has no title. (This buyer is the “bona fide purchaser” or b.f.p.)

1. General rule:  The general rule is that a seller cannot convey better title than that which he holds (but subject to exceptions summarized below).

a. Stolen goods:  This general rule is always applied when the seller (or his predecessor in title) has stolen the property.