Bergeron v. Aero Sales, Inc.
2006 Ore. App. LEXIS 522, 134 P.3d 964, 205 Or. App. 257 (2006)
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Rule of Law:
A purchaser of goods acquires only the title that the transferor had or had power to transfer. A property owner who unknowingly possesses another's personal property stored on their land has a right to possession superior to all but the true owner, and therefore cannot transfer good title to a subsequent purchaser of the land.
Facts:
- Kasper purchased several thousand gallons of jet fuel.
- Kasper stored this fuel in an underground tank located beneath a private hangar.
- At the time of storage, Praegitzer owned the hangar and the underground tank.
- Praegitzer was not aware that Kasper had placed the fuel in the tank.
- Praegitzer subsequently sold the hangar and the fuel tank to Curtright.
- After learning of the sale, Kasper attempted to retrieve his fuel from the tank.
- Curtright refused to allow Kasper to remove the fuel, asserting that he had acquired ownership of the fuel when he purchased the hangar and tank.
Procedural Posture:
- Praegitzer initiated a trespass action against Kasper in the trial court.
- Kasper filed a counterclaim against Praegitzer for conversion of the jet fuel.
- Kasper filed a third-party claim against Curtright for conversion of the jet fuel.
- The parties filed cross-motions for summary judgment on Kasper's conversion claims.
- The trial court granted summary judgment in favor of Praegitzer and Curtright and denied Kasper's motion.
- A final judgment was entered reflecting the court's summary judgment ruling.
- Kasper (appellant) appealed the trial court's judgment to the Court of Appeals of Oregon.
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Issue:
Does a good faith purchaser of real property, which includes a storage tank, acquire title to goods stored within that tank by a third party when the seller of the real property was unaware of the goods' existence and had no title to them?
Opinions:
Majority - Armstrong, J.
No. A good faith purchaser does not acquire title to goods under these circumstances because a seller cannot transfer better title than they themselves possess. The court reasoned that under the general rule of UCC § 2-403 (ORS 72.4030), a purchaser acquires only the title held by the seller. The two primary exceptions to this rule—voidable title and entrustment to a merchant—did not apply. Praegitzer did not have 'voidable title' because Kasper never assented to transfer the fuel to him in any transaction. The 'entrustment' exception was inapplicable because there was no evidence that Praegitzer was a merchant who dealt in jet fuel. Applying common law, the court found that while Praegitzer had a possessory interest in the fuel under his land, that interest was inferior to Kasper's 'better title' as the true owner who had not abandoned or lost the property. Therefore, Praegitzer could only transfer his inferior possessory interest to Curtright, not Kasper's superior ownership title.
Analysis:
This decision reinforces the fundamental 'nemo dat quod non habet' principle ('one cannot give what one does not have') within the UCC framework. It clarifies the narrow scope of the voidable title and entrustment exceptions under UCC § 2-403, establishing that they do not apply where a seller is merely an unknowing bailee or possessor of goods without any transactional basis for their possession. The case serves as a strong protection for the rights of true owners against subsequent bona fide purchasers when the chain of title is completely broken. It confirms that mere possession of goods, without more, is insufficient to empower a seller to transfer good title to a third party.
