Porter v. Wertz
68 A.D.2d 141, 416 N.Y.S.2d 254 (1979)

  • Porter owned a valuable painting worth $30k. He lent it to a man named Wertz, who was considering buying the painting from Porter.
    • Wertz had already bought one valuable painting from Porter.
    • Turns out, Wertz wasn’t Wertz at all, his real name was Maker!
      • Maker was using his friend’s identity.
  • After a few months, Porter went to check on the painting, but was unable to locate Wertz or the painting.
    • The check from the first painting bounced as well, and Porter learned that Wertz was a career criminal.
  • Porter reported Wertz to the FBI, with relation to the bounced check, but didn’t mention the ‘borrowed’ painting.
  • Porter contacted Wertz’ attorney, found Wertz, and got a signed agreement that Wertz would return the paintings or pay for them within 90 days.
    • If he didn’t, then Wertz’s attorney would give Porter one of Wertz’s valuable paintings he was holding in escrow.
  • By this point, Wertz (by using the real Wertz as an intermediary) had already sold the painting to Feigen for $20k. Feigen then sold the painting to Brenner, who sold it to someone in Venezuela.
    • The real Wertz worked in a deli and was fascinated by the art world, so he was willing to go along with the fraud.
  • Porter sued Wertz, Feigen, and Brenner.
    • By this point, Wertz had no money so if Porter was going to recover for the value of his painting, he needed to sue someone other than Wertz.
  • The Trial Court found for Porter, and ordered the painting returned or its value paid to Porter. Feigen appealed.
  • The Appellate Court affirmed.
    • Feigen argued that he was a bona fide purchaser, and that Porter was barred from recovery due to statutory estoppel based on UCC §2-403(2).
      • UCC §2-403(2) states that “any entrusting of possession of goods to a merchant who deals in goods of that kind gives him power to transfer all rights of the entruster to a buyer of the ordinary course of business.”
      • Basically, under the UCC, a good faith purchaser acquires title to goods, even if the seller did not have the right to transfer title.
    • The Appellate Court found that since Wertz was not a real merchant, and was not acting in good faith, the deal for the painting was not done in the “ordinary course of business” as required under UCC §2-403(2).
      • See UCC §1-201(9)
      • Feigen made no attempt to verify who Wertz was or whether he was a legitimate art dealer as he claimed. Therefore he was not a good faith purchaser, and was not protected by UCC §2-403(1).
        • It would have been pretty easy to find out who the true owner of the painting was.
        • In order to be a good faith purchaser, you have to believe that the seller has proper title to the item, and you have to buy it at a cost that is reasonable.
      • Porter had only dealt with Maker, not the real Wertz, so it could not be said that the Porter even entrusted the real Wertz with the painting.
        • Of course, the real Wertz was just acting as the fake Wertz’s agent, and the fake Wertz, despite being a scoundrel was an art merchant, so does this argument hold?
  • Basically, if you are a merchant and you buy something in good faith, then it’s yours to keep or sell. But, you have to actually do due diligence to verify the seller is the true owner of the goods. If you don’t, then you can still be liable for the return of the goods.