ContractsProf Blog

Editor: Myanna Dellinger
University of South Dakota School of Law

Monday, February 18, 2013

Teaching Sales 7: Valparaiso Students Revolt Against Entrustment Doctrine

Student RevoltMy mild-mannered students became unexpectedly ferocious during last week's class when we discussed entrustment doctrine last week.  UCC ยง 2-403(3) defines "entrustment" as follows:

"Entrusting" includes any delivery and any acquiescence in retention of possession regardless of any condition expressed between the parties to the delivery or acquiescence and regardless of whether the procurement of the entrusting or the possessor's disposition of the goods have been such as to be larcenous under the criminal law. 

Notwithstanding the clearly expansive nature of the doctrine, my students would not accept that, for example, a mechanic with whom you had left your car for repairs could sell same car and your only remedy against the mechanic (under the UCC) would be a suit for damages.  When I informed them of the true state of the law, their outrage was unquenchable.

"You could still have the authorities pursue criminal charges for theft," I offered.

Not good enough.

Backing away from the lectern and eyeing the emergency exit, I pleaded, "There are likely state statutory protections that would enable you to recover the car.  After all, the buyer is going to have a problem when he tries to register title to the car."

Still not satisfied.

Finally, left with no other choice, I threw Karl Llewellyn under the bus.  "Look, I just teach this stuff," I said.  "I didn't draft the UCC.  Blame Karl! Blame Karl!! Blame Karl!!!!

I put up a white flag from the teaching station that I was hiding behind to avoid the projectiles headed my way, and then it came to me.  "Wait," I said.  "Let's talk about Kahr v. Markland."  In that case, a man gave Goodwill a bag of clothes.  Unbeknowst to him, the bag also included valuable sterling silver.   The court held there had been no entrustment because Kahr intended to donate the clothes but not the silver.  It's reasoning is as follows:

An entrustment requires four essential elements: (1) an actual entrustment of the goods by the delivery of possession of those goods to a merchant; (2) the party receiving the goods must be a merchant who deals in goods of that kind; (3) the merchant must sell the entrusted goods; and (4) the sale must be to a buyer in the ordinary course of business. ( Dan Pilson Auto Center, Inc. v. DeMarco (1987), 156 Ill. App. 3d 617, 621, 509 N.E.2d 159, 162.) The record establishes there was no delivery or voluntary transfer of the sterling silver because plaintiffs were unaware of its place in the bags of clothes.

AtlasShruggedMy students were appeased.  Ahhh.  

But wait!  Whence the court's notion that "there was no delivery or voluntary transfer"?  Saying that there was no delivery in this case is more than a stretch.  It's simply factually untrue.  And saying that the transfer was not voluntary turns on what the term "voluntary," means.  Nobody put a gun to Kahr's head.  He just made a mistake.  In any case, voluntariness is not an element of the test for entrustment as laid out by the Kahr court.  

Of course, I merely thought all these things.  I didn't say them for fear of my students' wrath.  

But how about this hypothetical based on personal experience:  I donate a bunch of books to Goodwill, including an old copy of Atlas Shrugged with a hideous paper cover on it.  One week later, my wife asks me where her copy of Atlas Shrugged is.  Since she is always after me to clear away old books that we are not going to read or re-read, I proudly announce that I delivered it to Goodwill.  

Her jaw drops.  "But that was a first edition bearing the inscription, "I know who John Galt is,  It's you.  Yours, with a passion hot enough to forge Rearden steel, Ayn."  We rush to Goodwill, but we are too late.  The book was snapped up faster than a locomotive powered by an engine that transforms atmospheric static electricity into kinetic electricity.  Did I entrust it to Goodwill?

There is a bit of a discussion of the Kahr case on The Faculty Lounge blog.  


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